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HomeMy WebLinkAboutRDA AG PKT 2003-10-27 #B Seal Beach Redevelopment Agency Agenda Report Date: • October 27, 2003 To: Honorable Chairman and Agency Board • From: John B. Bahorski Executive Director Subject: Response to Questions Concerning the Trailer Park Acquisition SUMMARY OF REQUEST: Agency staff has been requested to respond to questions concerning the trailer park acquisition. The following information and attachments respond to those questions, as well as some other commonly asked questions concerning the trailer park purchase. BACKGROUND: Board Member Antos requested Agency staff to respond to seven questions on the Seal Beach Trailer Park transaction (Attachment A). Staff has reviewed the files related to the purchase of the trailer park and prepared responses to the seven questions. In addition, staff has included information and responses to questions that have been asked by members of the public at various times over the past year. Clearly, this report is not intended to be the authoritative work on the trailer park acquisition but will, hopefully, provide answers to the most commonly asked questions. As staff reviewed the documents related to this transaction, it became clear that the bulk of the documents regarding the purchase were so large that it caused confusion among many of the community members seeking answers to the trailer park purchase. Staff has through tedious work assembled those trailer park acquisition documents that can best simplify a complex transaction. Clearly, reading the various regulatory and bond documents are often intimidating due to the terminology used. Staff has provided in this report the documents that best explain the trailer park transaction. When these documents are combined with the questions submitted by Board Member Antos, the community should have a clearer understanding of the trailer park purchase. This information is not intended to change the opinion of individuals who have voiced objections to the trailer park purchase; rather it is intended to provide data on the transaction in as simple a format as possible. This report is simply a presentation of information contained in existing trailer park documents. If members of the community C \DOCUME— i\Jguidry\LOCALS -1 \Temp \Trailer Park History 2003 DOC \LW\10 -21 -03 RDA Item B Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 were opposed to the purchase based on principal, the information already contained in this report will not change that view. Responses to Submitted Questions: 1) Please provide a history of the park with a discussion of the covenants /deed restrictions as they apply to preservation of low /moderate income units (120 units, 60 low and 60 moderate). Staff has prepared the following history of the trailer park that highlights key dates and documents. In 1977 the East Naples Land Company and Riverbeach Associates entered into a lease for the trailer park. Then in July 1981 the City executed an "Amended Declaration of Establishment of Covenants" and an "Amended Participation and Disposition Agreement" (Attachments B & C). Both of these documents indicate that the trailer park consisted of 126 trailer spaces, and that Riverbeach Associates agreed that 120 spaces would be maintained for low and moderate income families throughout the term of the master lease. Sixty of those spaces were designated for low- income families and 60 for low and moderate - income families. The covenant also sets forth the initial rental rate and the method for making rental adjustments. Based on the review of these two documents the total number of units in the park was 126; under the covenant, 120 were designated low and low /moderate income units. The covenant issue has been widely discussed and debated. However, the simple fact is when the agreement to purchase the park was completed, different provisions were made regarding the number of low and moderate income units within the trailer park. While many residents believe the old covenants provided them protection, that debate was rendered moot when the trailer park transaction was completed. At this point in time it is the regulatory agreements that govern how many low and moderate - income units are provided for within the trailer park. The regulatory agreements state that low and moderate income units are restricted for 25 years, with 20% of the units set aside for very low income and 60% units for moderate income residents. It is my understanding that in order to obtain and maintain tax- exempt status, 20% of the units have to be designated as affordable units. In order to preserve additional affordable units in excess of what the law requires, the Agency agreed to subsidize rents. By subsidizing rents, the Agency was able to preserve an additional 60% affordable units, without jeopardizing the source of income to pay the bonds; the sole source of funds to pay off the bonds is the trailer space rental income. Without the subsidies from the Agency, only 20% of the units would be affordable. The two controlling documents that provide for low and moderate - income units within the trailer park are the Bond Regulatory Agreement and the Regulatory Agreement between Linc and the Agency (Attachments D& E). Each quarter Rosenow Spevacek Group reviews the information supplied by Linc on whether the low /moderate income provisions are being complied with per the terms of the agreements. Attachment F is the most current compliance report prepared by Rosenow Spevacek. This report provides a breakdown by space, and identifies the distribution of low and low /moderate residents within the trailer Trailer Park History 2003 2 S7284 \0001 \751203.4 Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 park. Based on the reports, it appears that the 20% set aside for very low income is being achieved. The number of moderate - income units required by the regulatory agreement is 75; however there are 86 units verified as moderate income, exceeding the requirements of the regulatory agreement. In total, this brings the number of very low and moderate - income units to 111 with 9 units where the income is unknown and 5 units not qualified. 2) Who is /was responsible for auditing the trailer park to determine if the park management is /was complying with low /moderate income requirements. Both the 1981 amended declaration of establishment of covenants and the amended participation and disposition agreement contain the same language regarding who was responsible for auditing the trailer park: "The Agency shall examine, at least once per year, any relevant records or operation by Riverbeach's Trailer Park management, subject to the confidentiality of individual tenant financial information, to insure that such income determinations have been appropriately performed by Riverbeach in fulfilling the standards set forth in Subsection 1, 2, and 3 of this section." Staff has reviewed the files to determine when the audits were conducted, and it is clear that audits were not conducted every year. It is unclear based on the records why this was not done, however, it could be that the audit was included as part of the rent increase requests. According to staff's research, Agency staff conducted compliance audits in1990 and 1997. In 2000, Haynie and Company performed a compilation audit as part of the trailer park acquisition. The City Clerk has provided a legislative history of the audits in the trailer park that indicates the sporadic nature of the audits in the trailer park. (Attachment G) Upon the sale of the trailer park and the issuance of the bonds, new reporting requirements were implemented as part of the two regulatory agreements. In order to ensure compliance with the regulatory agreements, the Agency contracted with Rosenow Spevacek Group to ensure compliance with all terms of the agreement. Staff has attached the Oversight Agreement (Attachment H) to illustrate the level of oversight compliance reporting that is now required since the completion of the trailer park acquisition. As mentioned earlier in this report, quarterly reports are received from Rosenow Spevacek on the status of compliance. Staff is comfortable with the assistance provided by this firm and believes the oversight has improved over the sporadic audits that were done prior to the sale of the trailer park and the issuance of the bonds. 3) Was the trailer Park ever audited? If not, why not? This question was answered as part of the previous question. Clearly the trailer park was not audited on the same frequency as it has been since the sale of the trailer park and issuance of the bonds. Since the Agency now has an Oversight Agent reporting has Trailer Park History 2003 3 S7284\0001\751203.4 • Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 improved dramatically and should provide a better level of information to concerned individuals. 4) Why and how were the low /moderate covenants removed? What is the legal basis for this modification /removal in light of the City and California Coastal Commission conditions imposed on the project? The covenant was extinguished when the trailer park acquisition occurred. Staff has been unable to locate the Coastal Commission conditions imposed on the trailer park, and the Coastal Commission has not been able to provide a copy of any permit conditions relating to the trailer park. It must be acknowledged that there are some residents in the trailer park that believe the covenant offered protection from Richard Hall. Mr. Hall took a contrary position that the covenant was not binding on him. It should be noted that Lorraine French, MPROP Program Manager indicated that she believed the covenants were like "Swiss Cheese" and did not provide the protection residents believed. The position taken by Hall in the civil rights lawsuit filed against the Agency is that the covenant only bound a prior lessee of the property, not the owner. The covenant was signed on behalf of a lessee of the property (Mr. Dawson). Another company owned the underlying fee to the property, and that company was not a party to the covenant. After a number of years lapsed after the covenant was executed, Dawson's company bought the property, and the lease between Dawson and the original owner was extinguished; under a real estate law concept known as "merger," lesser interests to a property are merged into the greater estate when a lessee becomes the owner. In other words, a landlord cannot enter into a lease with itself; the same party cannot be both the lessor and the lessee. Thereafter, Dawson transferred his ownership in the property (not the rights and obligations under the extinct lease) to Hall. Hall took the position that he had not assumed any obligations the former lessee had assumed. The Agency took the position that the covenant was still valid, under a number of other legal theories. In light of the Trailer Park resident association's request to assist it in finding a way to purchase the Park from Hall, and to avoid an estimated thousands of dollars in defense costs, the issue of whether the covenant was valid was never litigated — instead, the residents worked out a way, with Agency financing, for a non - profit organization to purchase the Park from Hall. 5) What impacts do the modification of conditions (covenants) have on the City Yard subdivision, since the low /moderate income component of that project was transferred to the Seal Beach trailer park with California Coastal Commission approval? Staff has been unable to locate the Coastal Commission approval and, therefore, cannot answer this question. 6) Why did Resolution 00 -3 name the Seal Beach Trailer Park Residents Association as co- applicant for the MPROP loan application? By what Trailer Park History 2003 4 S7284 \0001 \751203.4 Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 authority was LINC Housing Corporation substituted for SBTRPA and authorized to sign the MPROP application? In June 2003, LINC received a time extension to complete the tasks related to the MPROP loan approval conditions. The extension expires on November 1, 2003, and there is only a remote chance that the MPROP Loan will receive final approval by Housing and Community Development, thereby making this question irrelevant. However, in order to keep the historical record accurate, staff has found the answer to this question. The simple explanation is that City Council authorized the co- application with LINC be submitted to the State. Mr. Gerald Gibbs prepared the MPROP loan application working in conjunction with LINC and the City. In fact, records indicate that the MPROP application was transmitted to the State HCD by a delegation of a trailer park board member and a City Council representative. During staff's review it was discovered that on November 13, 2000, a staff report was transmitted to the Agency Board that clearly explains the MPROP application process and status (Attachment I). In the November 13, 2000 staff report the following statements are made; "as this is the first such application to be received and approved, the State staff will undoubtedly take more time to insure the loan is analyzed" and "LINC Housing is the applicant for this loan and the City of Seal Beach is acting as the co- applicant. Historically, resident groups were required to have the local jurisdiction act as co- applicant to insure that there is some local interest in the project and to provide an on site monitor should things go bad. The City is not a borrower, but is a co- applicant in the sense that it must monitor the loan after it has been placed." Further the report goes on to state, " Under the proposed regulations, the local jurisdiction would not be required as co- applicants with non profits." Based on these statements it is very clear that LINC was the co- applicant and the Agency Board was aware of the application. On May 29, 2001, the Agency Board received a staff report indicating that the MPROP application was approved and the standard agreement was executed. That staff report contained an attachment clearly stating that this was a joint application between the City and LINC. Many residents questioned the joint application and N/A designation on the form submitted to the State. The simple explanation is always the best; the MPROP application submitted by LINC and the Agency was the first one submitted to the State under new program guidelines, but the application form had not changed. In fact, a memorandum dated September 11, 2000 from Interim City Manager Don McIntyre indicates that this MPROP loan application was the first one submitted by a non - profit agency since State Law was changed to provide for that option. It appears that the N/A designation was due to the use of an old form, which is not uncommon in a government bureaucracy. In a memorandum from the Gibbs law firm dated March 3, 2003, (Attachment J) Mr. Gibbs acknowledges the fact that the N/A designation was necessary due to the lack of proper forms provided by the State. The Gibbs's memorandum of March 3, 2003 also goes on to Trailer Park History 2003 5 S7284\0001\751203.4 Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 explain the co- applicant issue. It is clear based on this information that the Agency Board was aware and approved of the MPROP application submittal. 7) If the Seal Beach Trailer Park non - profit receives its non - profit status, will the membership remain as currently constituted? Do the residents of the trailer park have a right to replace the two resident members with other resident members? If not, why not? May the community members be replaced with other community members? If not, why not? The short answer to these questions is that the City is not involved with this issue, and it is solely between Linc and the trailer park residents. During staffs review of the files it was interesting to find a March 9, 2000, memorandum concerning this issue (Attachment K). In that Memorandum former City Manager Till states "Linc has offered to place two tenants on the non profit's board of directors. This is a very unusual approach that worries the underwriters, because they have to convince bond purchasers that the non-profit corporation will be run professionally." It appears that the limitation on the number of residents serving on the board was due to concerns from the underwriters, and that concern has probably not changed. In a June 25, 2001 staff report, the issue of membership is discussed as it relates to 501.C.3 status (Attachment L). According to Mr. Gibbs the nature of the bonds issued is that the funds are to be used for a public purpose. A public purpose is not served if the owner of the park is a corporation with directors elected solely by park residents. A resident only board of directors would be classified as a mutual benefit non - profit corporation and that entity could not use funds generated by tax- exempt bonds. According to the Seal Beach Affordable Housing Corporation By -Laws (Attachment M) the initial Board of Directors shall be chosen by the incorporator and shall serve for a term of three years or until his or her successor is appointed. All subsequent directors shall be selected as follows: ❑ Three directors shall be appointed by Linc Housing Corporation; ❑ Two directors shall be appointed by the Seal Beach Trailer Park Residents Homeowners Association; ❑ These five directors shall select the remaining two directors from community leaders within Seal Beach; ❑ Directors whose terms have expired may continue to serve as directors until a replacement is appointed; ❑ Directors may be reappointed for an unlimited number of successive terms; and ❑ Resident board members shall be limited to two at any one time. Additional Information: Can the current affordability requirements be extended beyond the current 35 -year period set forth in the regulatory agreements? Trailer Park History 2003 6 S7284\0001\751203.4 Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 Linc has suggested in writing that they would be willing to extend the affordability requirements to 55 years. There was some public discussion about extending the affordability requirements for the trailer park units. Staff will be discussing this with Linc in the future. What was the Agency's role in the trailer park acquisition and what is the Agency's current role in the trailer park? The Agency's role in the trailer park purchase was predominately focused on preserving low and moderate - income housing in Seal Beach. This was achieved by providing a financing mechanism to purchase the trailer park from Mr. Hall, assisting with the MPROP application, and ensuring through the regulatory agreement that affordable housing was maintained. Prior to the purchase of the trailer park and the issuance of the bonds, the Agency was under no obligation to assist the residents of the trailer park and, in fact, another city in Orange County rejected the course set by Seal Beach in favor of allowing the free market determine the land use. The current role of the Agency in the trailer park is limited to monitoring the compliance with the regulatory agreements and other bond documents. As the issuer of the bonds, the Agency has limited obligations related to the trailer park. The bonds are not a debt of the Agency or the City. In the Bond Official Statement it states " Series A bonds are not the debt of the issuer, any member of the issuer, State of California, or any political subdivision... ". However, due to the regulatory agreements, the Agency is required to ensure compliance with these agreements and the 501.C.3 requirements. The oversight agent accomplishes compliance. In the most basic terms, the role of the Agency in the trailer park is limited to the preservation of low and moderate income housing as well as ensuring that the regulatory agreements are complied with in order to maintain the tax- exempt status of the bonds. What was the financing plan for Trailer Park, where can the acquisition price of the trailer park be found and how much was the bond issue to purchase the trailer park? A majority of the financial questions related to the trailer park transaction can be found in the Bond Official Statement (Attachment N). For example, on Page 4 of the Official Statement is the best description of the financing plan for the Trailer Park. This table identifies the cost of the trailer park, the size of the bond issue, the amounts of the Agency loans, and the total costs. In addition, the Official Statement contains a copy of the appraisal that explains how the trailer park purchase price was determined. If a resident had a desire to understand the trailer park transaction, the Official Statement would be the best reference document to consult. Who prepared the original trailer park covenant? Trailer Park History 2003 7 S7284\0001\751203.4 Redevelopment Agency Staff Report re: Response to Questions Concerning the Trailer Park Acquisition October 27, 2003 Special counsel Thomas Parrington. From the 1970s through early 1990s, the Agency engaged the services of Mr. Parrington instead of Richards, Watson & Gershon for all legal services related to the Trailer Park. What is the current status of the Agency loans? If MRPOP does not fund, how is the Agency repaid? The Agency loans are payable solely from residual receipts derived from the operation of the trailer park. "Residual receipts" are all trailer park operating revenues reduced by (1) trailer park operating and maintenance expenses and (2) all principal and interest payments (and debt service reserve maintenance requirements) on the bonds. The Agency bridge loan, which was funded by the Agency in anticipation of LINC's receipt of the proceeds of the MPROP loans, was additionally payable from the MPROP loan proceeds. If MPROP loan proceeds are not received, the loan is payable solely from residual receipts. FISCAL IMPACT: There is no fiscal impact related to this report. RECOMMENDATION: Receive and file. SUPPORTING DOCUMENTS: A) Board Member Antos questions B) Amended Declaration of Covenants C) Amended Participation and Disposition Agreement D) Bond Regulatory Agreement E) Regulatory Agreement between Linc and Agency F) Compliance report by Rosenow Spevacek G) Legislative history of audits H) Oversight Agreement I) November 13, 2000 Agency Staff Report J) March 3, 2003 Memorandum for Mr. Gibbs K) Memorandum of March 9, 2000 from City Manager Till L) Agency Staff Report of June 25, 2001 M) SBAHC By -laws N) Bond Official Statement Trailer Park History.2003 8 S7284\0001\751203.4 A Charles Antos • Questions on Seal Beach Trailer Park 1— Please provide a history of the park with a discussion of the covenants/deed restrictions as they apply to: preservation of Low/Moderate income units (120 units, 60 low & 60 moderate). 2 — Who is /was responsible for auditing the trailer park to determine if the park management is/was complying with the low /moderate income requirements. • 3 — Was the trailer park ever audited? If not, why not? 4 — Why/how were the low /moderate covenants modified/removed? Whit is the legal basis for this modification/removal in light of the City and California Coastal Commission conditions imposed on the project? 5 — What impact do the modifications of conditions (covenants) have on the City Yard subdivision, since the low /moderate income component of that project was transferred to • the Seal Beach Trailer Park with California Coastal Commission approval? 6 — Why did Resolution 00 -3 name the Seal Beach Trailer Park Residents Association as co applicant for the MPROP loan application? By what authority was LINC Housing Corporation substituted for SBTPRA and authorized to sign the MPROP application? 7 — If the Seal Beach Trailer Park non profit receives its non profit status, will the membership remain as currently constituted? (3 LINC, 2 resident and 2 community) Do the residents of the Trailer Park have the right to replace the 2 resident members with other resident members? If not, why not? May the community members be replaced with other community members? If so, how? If not, why not? • • �� Z 1 AMENDED PARTICIPATION AND DISPOSITION AGREEMENT THIS AMENDED PARTICIPATION AND DISPOSITION AGREEMENT (hereinafter referred to as "Amended Agreement ") is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH (hereinafter referred to as "Agency ") and RIVERBEACH ASSOCIATES (hereinafter referred to as "Riverbeach "). who agree as follows: §1.00 RECITALS §1.01 The Agency is a redevelopment agency (a public body, corporate and politic) duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 [commencing with Section 33000) of the Health and Safety Code of the State of California) and the powers of the Agency include the power to contract for the disposition and development of real property in a manner consistent with the Redevelopment Plan for the Riverfront Redevelopment Project (hereinafter referred to as "Project ") as amended; and �. S1.02 The Agency and Seal Beach Associates (SBA) have entered into a Participation and Disposition Agreement dated ad of July 25, 1977 (hereinafter referred to as "Agreement "). Said Agreement has been amended by a First Amendment dated January 30, 1978, and a Second Amendment dated April 24, 1978. SBA has assigned all interest in said Agreement, as amended, to Riverbeach. §1.03 Pursuant to the Agreement, as amended, a portion of said Redevelopment Project area has been developed by Riverbeach as a Mobile Home and Trailer Park (hereinafter referred to as "Trailer Park "); said property used for the Trailer Park is legally described on Exhibit "A" attached hereto and made a part hereof, and is hereafter referred to as the Trailer Park Parcel. S1.04 East Naples Land Company is the owner of certain parcels of land which constitute the site of the Trailer Park as described on Exhibit "A" (hereinafter referred to as the "Site "). §1.05 East Naples Land Company is Lessor and Riverbeach is the Lessee of the Site under Lease Agreement dated October 3, 1977, which is shown in the Memorandum of Lease and recorded on June 30, 1978, as Document No. 47347, Official Records of Orange County, California (hereinafter referred to as "Master Lease "). • -1- SUL 9 1981 i 1 51.06 The Trailer Park has been developed with approximately 126 lots for mobile homes and trailers pursuant to plans submitted to and approved by Agency. 51.07 Additional property within the Site under the Master Lease is being developed by Riverbeach for residental condominium units; said property is hereinafter referred to as "Condominium Parcel" and is described on Exhibit "A." 52:00 AGREEMENT REGARDING TRAILER PARK 52.01 Trailer Park Development. Riverbeach shall develop and maintain the Trailer Park Parcel so as to provide approximately 126 mobile hone pads suitable for placement thereon of a decent, safe and sanitary mobile home or recreation trailer dwelling. S2.02 Trailer Park Plans. Agency and Riverbeach agree that Riverbeach has complied with all obligations to so develop the Trailer Park Parcel in accordance with a Development Plan prepared by SBA and Riberbeach and submitted to and approved by the Agency and other public entities, boards, or commissions having jurisdiction. S2.03 Trailer Park Management. Riverbeach shall manage and operate the Trailer Park in a sound, equitable and business- like manner. 52.04 Establishment of Rental of Trailer Space. Riverbeach shall consult with and obtain Agency's consent before establishing the initial monthly rental charge for each mobile hone pad or trailer pad within the Trailer Park Parcel. In establishing the rental charges, Agency and Riverbeach agree that the following costs and expenses are to be included: 1. Lease payments under the Master Lease between Riverbeach Associates as Lessee and East Naples Land Comany as Lessor dated June 1, 1977. 2. The purchase price for (1) the purchase of the Trailer Park leasehold pursuant to a contract of sale between SBA and the Estate of Russell B. Grotemat et al. dated July 8, 1974, and (2) the parcels purchased from Agency by Riverbeach pursuant to Section 12 of the Agreement. The amounts of such purchase prices are set forth in Amended Exhibit "B" attached hereto and made a part hereof. 3. Predevelopment costs and expenses, including real estate commission at the amounts set forth in Amended xhibit "B" attached hereto and made a part hereof. i //// z1.■ -2- L 9 X1981 - ) ' • 4. The costs of construction of the Trailer Park by Riverbeach Associates pursuant to the cost breakdown set forth in Amended Exhibit "C" attached hereto and made a part hereof. 5. Costs of financing the construction of the Trailer Park and financing the purchase price of the parcels. 6. Taxes and assessments (exclusive of the penalties and late charges) levied or assessed upon the portion of the Trailer Park Parcel including all taxes which are obligations of Riverbeach Associates as Lessee under paragraph 10 of the Master Le 7. Utility expenses for any utilities which are not separately metered to individual trailers and mobile homes. 8. Liability and Property Damage insurance at actual cost. 9. Legal and accounting services. 10. Salaries or wpges, including payroll taxes, for management of the Trailer Park,- 'which shall not exceed the amounts set forth on Amended Exhibit "D." 11. Repairs and maintenance to be based upon the opening budget, which shall not exceed the amount set forth on Amended Exhibit "D." 12. Supplies which shall not exceed the amounts set forth on Amended Exhibit "D." 13. Overhead and management to Riverbeach at Two Percent (2 %) per annum based upon the total of items 2, 3, and 4, but not to exceed the amounts set forth on Amended Exhibit "D." 14. Return on investment at Eleven and 3/10 Percent (11.3 %) per annum consisting of the portion of items 2, 3, and 4 which are not financed as part of item 5, but not to exceed the amount set forth on Amended Exhibit "D." Items 2, 3, and 4 shall / be reduced by any amount of such items which are included in the principal amount of any financing obtained as part of item 5. The maximum cost for those items set forth on Exhibit "B" to be allocated to the Trailer Park is One Million Five Hundred - Thousand Dollars ($1,500,000.00) subject to reduction as provided herein. In the event the Grand Jury of Orange County finds and determines that the maximum costs for those items set forth on Exhibit "B" are less than One Million Five Hundred Thousand Dollars ($1,500,000.00), then the maximum rental schedule as set forth in " -3- JUL 9 19W4 . ' Exhibit "E" shall be adjusted in accordance with the findings of f the Grand Jury. • §2.05 Initial Rental Rate. Riverbeach's monthly expenses based on the itemization of items to be attributed to rent pursuant to Section 2.04 is attached hereto as Amended Exhibit "D" and made a part hereof. The monthly rental9'has been established upon opening of the Trailer Park using the monthly expenses set forth on / d Amended Exhibit " ." Agency acknowledges receipt of and approval f by Agency of the monthly rental and the allocation among the lots based upon the rental schedule set forth on Amended Exhibit " E " attached hereto. S2.06 Rental Adjustment. The initial monthly rental established in accordance with Section 2.05 shall be increased or decreased on an annual basis at the commencement of the :third year after opening of the new Trailer Park which was November 16, 1979, and each year thereafter during the term of the Master Lease (hereinafter referred to as "Adjustment Date "). Increases or decreases shall reflect: 1. Increases in lease payment provided in the Master Lease between Riverbeach Associates and East Naples Land Company, which Master Lease provides for a One Percent (l%) per annum increase in rental effective every five (5) years. 2. Increases or decreases for property taxes and assessments (item 6 of Section 2.04), utility expenses (item 7 of Section 2.04), insurance (item 8 of Section 2.04), reasonable legal and accounting expenses (item 9 of Section 2.04), repairs and maintenance' (item 11 of Section 2.04), and supplies (item 12 of /// Section 2.04) based on actual out -of- pocket expenses to Riverbeach Associates or any successor lessee of Riverbeach Associates. 3. Salaries and wages (item 10 of Section 2.04), s • l/ overhead and management (item 13 of Section 2.04), ~shall be subject to increase or decrease as provided in this suTsection 3 of Section 2.06. The base for computing the adjustment is the "Consumer's Price Index s for Urban Wage Earners and Clerical Workers for the Los Angeles - Long Beach - Anaheim Metropolitan Area," published by the United ������ Stated Department of Labor, Bureau of Labor Statistics (hereinaft iii.'`: referred to a "Index "), which is published for the date nearest1. November 16, 1980 (hereinafter referred to as "Beginning Index "). r ' • If the Index published nearest the Adjustment Date (hereinafter `�►/ referred to as "Adjustment Index ") has increased or decreased from _, ��k the Beginning Index, the monthly amount of the items 10, 13, and-:4 .' of Section 2.04 to be included in monthly rental for the year following the Adjustment Date (until the next year's adjustment) ► shall be set by multiplying the amount of items 10, 13 and s t !���\ 1 7� Ik , _4- VII JUL 9 1981 a established pursuant to Section 2.04 by a fraction, the numerator ' of which is the Adjustment Index and the denominator of which is - the Beginning Index. The resulting amount shall be used as the %1►► ,,\ expense for items 10, 13, and Section 2.04 to be included in '.t►, determining the total monthly rental for the year following the Adjustment Date. If the Index is discontinued or revised, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the Adjustment Index had not been discontinued or revised. 4. ermanent financing s� obtained for the Trailer Park, Fie monthly rental shall be adjusted to reflect any increase or decrease in monthly debt servicee permanent financing is a variable interest rate loan, monthly rental shall be increased or decreased to reflect any increase ordecrease in the monthly debt service. 5. In the event that capital expenditures are made to the Trailer Park after completion of construction as evidenced by issuance of a Certificate of Occupancy by the City of Seal Beach, Riverbeach shall be entitled to increase the monthly rental by an amount sufficient to amortize any capital expenditure over the reasonable life of the investment at Riverbeach's cost plus a return on investment not to exceed Two Percent (2 %) above the prime lending rate of Bank of America in effect at the time of the expenditure. A capital expenditure is defined as an improvement to the real property of the Trailer Park which the Internal Revenge Service rules and regulations require be depreciated over the life of the improvement. S2.07 Notice of Rental Increases or Decreases. At such time as Riverbeach is entitled to increase the monthly rental or is required to decrease the monthly rental under the terms of Section 2.06, Riverbeach agrees to give written notice to Agency of the proposed change in rental rates not later .than sixty (60) days before giving written notice of increase or decrease to tenants of the Trailer Park. Agency approval shall be required, unless waived by Agency, before Riverbeach may make such change in rental. Agency shall have the right to dispute any increase by giving written notice to Riverbeach within sixty (60) days after receipt of the written notice from Riverbeach. Such Agency notice shall specify the basis on which Agency is disputing such increase under the terms of this Agreement. If Agency fails to either approve or dispute such increase within such sixty (60) day period, Agency approval shall be deemed to be waived. If Agency and Riverbeach cannot resolve any dispute within an additional sixty (60) days after Agency's written notice to Riverbeach, then either Riverbeach or Agency may take such legal actions as may be appropriate to enforce the terms of this Agreement. 411k‘ Mk la 52.08 Maintenance of Mobile Home and Trailer Park for Low and Moderate Income Persons. In addition to any other provisions of this Amended ?IV Agreement, Riverbeach agrees that not less than One Hundred Twenty 1 ( (120) of the trailer lots (including any trailers on such lots owned and leased by Riverbeach) shall be maintained as a housing 4 fr / resource for persons and families of low and moderate income throughout the term of the Master Lease between Riverbeach and East Naples Land Company. The following provisions shall apply to such lots: 1. As trailer lots or trailer units leased by Riverbeach within the Trailer Park Parcel become available through turnover (i.e., after a vacancy by a relocated resident of the old Seal Beach Trailer Court), Riverbeach shall maintain One Hundred Twenty (120) lots (including any trailer or mobile home units owned by Riverbeach on such lots) for rental to persons and families of low or moderate income as those terms are defined in California Health & Safety Code Section 50093 in effect as of the date of this Agreement, and as it may be amended. 2. Not less than half of such units (sixty [60] lots in the Trailer Park) shall be maintained for persons and families of low income as defined in health & Safety Code Section 50093 in effect as of the date of this Agreement, and as it may be amended. 3. Riverbeach shall cooperate with the Agency in accepting persons and families of low and moderate income referred by Agency or the City of Seal Beach for rental of trailers or pad spaces as they become available within the Site. 4. Notwithstanding such agreement to cooperate with Agency and City in considering referral of persons and families of low and moderate income, the final selection of tenants shall be the decision of Riverbeach. In the event that persons meeting the requirements of Section 2.08, subsections 1 and 2 are not available to rent vacant trailer lots or cannot afford the then current monthly rental after reasonable efforts by Riverbeach to locate such persons, including written notice to the Agency and City of any vacancies, Riverbeach may rent such vacant lots to persons and families having incomes above the limits set forth in subsections 1 and 2. 5. Riverbeach or its successors in interest in the / Trailer Park shall be required to determine of each tenant referred ' to in Section 2.08, subsections 1, 2 and 3, that such tenant is of low or moderate income, as defined in this Agreement. \ 1. -6- V ; aL 91981 • 6. The Agency shall examine, at least once per year, any relevant records of operation by Riverbeach's management, subject to the confidentiality of individual tenant financial information, to insure that such income determinations have been appropriately performed by Riverbeach in fulfilling the standards set forth in subsections 1, 2 and 3 of this section. 7. The Agency shall, at least once per year, submit written findings to the South Coast Regional Commission of the California Coastal Commission, or its successor agency, of any - examinations performed by the Agency pursuant to this section. 8. Upon dissolution or cessation of operation of the Agency, the City of Seal Beach shall undertake the duties imposed upon the Agency by subsections 5, 6, and 7 of this section. §2.09 Non- discrimination. Riverbeach covenants by and for Riverbeach and their assigns, and all persons claiming under or through Riverbeach 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 Site, nor shall Riverbeach or any person claiming under or through Riverbeach, 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 Site. The foregoing covenants shall run with the leasehold interest of Riverbeach in the Master Lease, and shall obligate Riverbeach and any subcontracting party or parties, or other transferees under this Agreement. S2.10 Recorded Covenants. That covenant entitled "Declaration of Establishment of Covenants" executed by the parties and recorded September 20, 1978, as Document No. 24821 shall be amended in its entirety as shown on Amended Exhibit "F" entitled "Amended Declaration of Establishment of Covenants." Such Amende•'.M Declaration shall be recorded at such time as4Jthe •ermanent lender; , approves the Amended Declaration and the Agency has issued - - -- revenue bonds for the Condominium Parcel or' .'^.. se 1- r. - • .0 . ) t, 4. it Pr 52.11 Assignment to Seal Beach Associates. Seal Beach Partners, Limited, a California limited partnership, shall be permitted to acquire the Trailer Park from Riverbeach Associates without further approval by Agency, but subject to all rights and • obligations of Riverbeach under this Amended Agreement. -7- . ,,It At 9 j• r. S3.00 AGREEMENT REGARDING TOWNHOUSE DEVELOPMENT 53.01 Townhouses. Riverbeach is planning to construct eighty (80) townhouse condominium units on a portion of the Site identified as the Condominium Parcel consisting of approximately five acres as identified on Tract Map No. 9783 submitted to and approved by the City of Seal Beach and Agency. Agency is relying upon the construction of such townhouses to increase the assessed valuation and tax increment revenues available to the Agency under Health & Safety Code Section 33670, et seq. and pursuant to the Redevelopment Plan for the Riverfront Redevelopment Project. Such increase in tax increment reveneues will assist the Agency in providing relocation assistance payments to tenants displaced from the old Seal Beach Trailer Park. 53.02 Models. Riverbeach has constructed not less than four (4) townhouse condominium models plus a sales office on the portion of the Site located at the southwest corner of Marina Drive and First Street. Such units have been constructed in accordance with schematic plans submitted and approved by City pursuant to planned United Development No. PUD -2 -72. 53.03 Construction Schedule for Units. Riverbeach further agrees to construct seventy -five (75) townhouse units in accordance with schematic plans submitted to and approved by City pursuant to Planned Unit Development No. PUD -2 -72. Riverbeach shall commence { construction of thirty -five (35) of such units not later than two (2) years from the date of completion of the Trailer Park as evidenced by a Certificate of Occupancy issued by the City. After commencement of construction, the thirty -five (35) units shall be completed within a reasonable time, but not to exceed eighteen (18) months after commencement. Riverbeach shall commence construction of the remaining forty (40) of such units not later than one (1) year after completion of construction of the first thirty -five (35) units, and shall complete construction of the remaining forty (40) such units within eighteen (18) months after commencement of construction. Riverbeach's obligation to construct such units' is subject to Riverbeach obtaining financing for each phase of such units, including obtaining a permanent loan commitment of not to exceed Ten Percent (10 %) interest for a term of thirty (30) years plus a loan fee of not to exceed Two Percent (2 %) of the principal amount. In the event financing is not available on such terms, Riverbeach shall not be obligated to construct such units, but shall be obligated to reimburse Agency for certain expenses set forth in Sections 3.04 and 3.05. 53.04 Reimbursement of Agency Cost. In the event that either: (a) construction of initial thirty -five (35) townhouse units has not commenced within the time set forth in Section 3.03; or (b) construction has commenced but not been completed on such /) i -8- 1 ‘‘►; JUL s 1981 thirty -five (35) units within eighteen (18) months after commencement of construction, Riverbeach agrees that it shall pay to Agency any relocation expenses incurred by Agency in connection wtih the relocation of the current residents of the old Seal Beach Trailer Park above the sum of Seven Hundred Twenty Thousand Dollars ($720,000.00) up to a maximum obligation of Riverbeach of Two Hundred Thirty Six Thousand Seven Hundred Dollars ($236,700.00) in the event such Agency relocation expenses exceed Nine Hundred Fifty Six Thousand Seven Hundred Dollars ($956,700.00). In the event that after construction of the initial thirty -five (35) townhouse units, either: (a) construction of the remaining forty (40) townhouse units has not commenced within the time set forth in subsection (3); or (b) construction has commenced but not been • completed on such forty (40) units within eighteen (18) months after commencement of construction, Riverbeach agrees that it shall pay to Agency one -half (1/2) of the relocation expenses incurred by Agency in connection with the relocation of the current residents of the Seal Beach Trailer Park above the sum of Seven Hundred Twenty Thousand Dollars ($720,000.00) up to a maximum Riverbeach obligation of One Hundred Eighteen Thousand Three Hundred Fifty Dollars ($118,350.00) in the event such Agency Relocation expenses exceed Nine Hundred Fifty Six Thousand Seven Hundred Dollars ($956,700.00). Agency relocation expenses for purposes of this Section 3.04 shall include all costs including consultant and appraisal fees but exclusive of Agency overhead and administration. Agency expenses shall include payments which the Agency is obligated to pay but has not yet paid to displaced persons as rental assistance. All sUch expenses which Riverbeach agrees to pay shall be in accordance with California Government Code Section 7260, et seq., the Agency's Relocation Rules and Regulations adopted by Agency Resolution A No. 77 -5, and the Relocation Plan adopted by Agency on December 27, 1977, by Agency Resolution No. 77 -13. Riverbeach's agreement hereto is in addition to Agency's obligations to make such payments / / to the residents of the old Seal Beach Trailer Park. §4.00 GENERAL PROVISIONS §4.01 Enforced Delay: Extension of Times of Performance. In addition to specific provisions of this Amended Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, flood, earthquakes, fires, casualties, acts of God, litigation, unusually severe weather, inability to secure necessary labor, materials or tools, acts of the other party, acts or failure to act of the City or any other public or governmental agency or entity (other than that act or failure to -9- sLUL 9 1981 . act of the Agency or the City shall not excuse performance by the Agency), or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of-the ___ enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the Agency and Riverbeach. • S4.02 Successors and Assigns. The Amended Agreement shall be binding on any successor or assign of Riverbeach so long as any such successor or assign has any interest in the Site. Until completion of the townhouse units in accordance with Section 3.03 or payment of the amounts specified in Section 3.04 to Agency, Riverbeach shall not assign this Agreement or any part thereof without the prior written consent of the Agency, which consent shall not be unreasonably withheld. S4.03 Effect of Amended Agreement. This Amended Agreement shall supercede and amend its entirety the prior rights and obligations of the parties under the Agreement and amendments thereto referenced in Section 1.02, provided that all conditions of that Settlement Agreement of the parties dated July , 1981, are satisfied. If that Settlement Agreement becomes null and void, I: • f" this Amended Agreement shall likewise become null and void, and the Parties shall be bound by the Agreement as previously amended. t /// §4.04 Date of Amended Agreement. The date of this Amended Agreenent shall be the date when the Amended Agreement shall have been signed by the Agency. ( - / I JUL 9 1981 I • P • IN WITNESS WHEREOF, the Agency and Riverbeach have signed this Amended Agreement. DATED: .J U l ) I ' / Mg/ / REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH By Allen J . r ker Executi Director DATED: � � I• (C 1 RIVERBEACH ASSOCIATES I dr:p. Br Joel A Rottman General Partner -11- JUL 9 1981 • AMENDED EXHIBIT A 1. Description of Site: The Site is the Trailer Park Parcel described under paragraph 2 below and the Condominium Parcel described under paragraph 3 below. 2. Description of Trailer Park Parcel: A PORTION OF THAT PARCEL OF LAND GRANTED 70 THE CITY OF SEAL BEACH BY THAT CERTAIN FINAL DRDER OF CONDEMNATION, SUPERIOR COURT. OF LOS ANGELES COUNTY, CASE NUMBER C- 78004, PARCEL 4, A CERTIFIED COPY OF WHICH WAS • RECORDED MARCH 2, 19?? IN BOOK 12115, PAGE:195 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA; AND A PORTION OF TIDE LAND LOCATION NO. 137 "SURVEY NO. 106 ", AS PATENTED BY THE STATE DF tALIFORNIA ON FEBRUARY 12, 1901 AND RECORDED APRIL 27, 1901 IN BOOK 9, PAGE 105 OF PATENTS, RECORDS OF L05 ANGELES AND RECORDED SEPTEMBER 5, 1905 IN BOOK 1, PAGE 231 OF PATENTS, RECORDS OF ORANGE . COUNTY;, SAID ABOVE PORTIONS OF LAND BEING MORE- PARTICULARLY.DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST NORTHERLY CORNER OF TRACT NUMBER 9783 IN THE :TY OF SEAL BEACH, COUNTY OF ORANGE, STATE OF .CALIFORNIA . A5 SHDUJN ON A MAP FILED IN BOOK 437, PAGES 32 TO 36, OF MAPS RECORDS OF ORANGE COUNTY; SAID CORNER BEING A POINT IN THE SOUTHEASTERLY LINE DF THE LDS ANGELES COUNTY . FLOOD CONTROL DISTRICT LAND DESCRIBED AS . PARCEL 8 IN S.C.C. NO. 231287 IN AND FOR 7HE COUNTY OF LDS ANGELES, . IN BOOK 2383, PAGE 42, RECORDS OF ORANGE COUNTY, SAID SOUTHEASTERLY LINE BEING A CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 2000.00 FEET, A RADIAL LINE FROM SAID POINT BEARS SOUTH 35 57' 55" EAST; THENCE NORTHEASTERLY ALDNG SAID CURVE AND SOUTHEASTERLY LINE AN ARC DISTANCE OF 356.05 FEET; THENCE TANGENT TO SAID CURVE AND ALONG SAID . SOUTHEASTERLY LINE NORTH 54 02'05" 'EAST 239.79 FEET TO THE NORTH- - EASTERLY LINE OF THAT 200.00 -FOOT STRIP OF LAND DESCRIBED IN THE QUIT CLAIM DEED TO THE PACIFIC ELECTRIC RAILWAY COMPANY RECORDED FEBRUARY 21, 1924 IN BOOK 514, PAGE 44 OF DEEDS, RECORDS OF•ORANGE COUNTY; THENCE SOUTHEASTERLY ALONG SAID NORTHEASTERLY LINE SOUTH 42 15' 32" EAST 492.08 FEET TO THE NORTHWESTERLY LINE OF FIRST STREET ( 7 IT NOW EXISTS, SAID LAST MENTIONED NORTHWESTERLY LINE BEING A LINE Page 1 - EXHIBIT A JUL 10 1981 • • 'PARALLEL WITH AND 015TANT, NORTHWESTERLY 11D.D0 FEET, MEASURED AT RIGHT ANGLES, FROM THE BOUNDARY LINE DF THE RANCHO L05 ALAMITOS PER MAP f - 70RDED IN BOOK 1, PAGES 460, 461 and 462 OF PATENTS OF LDS 'ANGELES LuUNTY, CALIFORNIA AND AS SHOWN ON RECORD OF SURVEY RECORDED IN • R.5. BOOK 90, PAGES 23 to 3D; AND AS MORE PARTICULARLY ESTABLISHED BY SEAL BEACH BOUNDARY LINE AGREEMENT NO. 2, DATED FEBRU- _ ARY 5, 1968 AND RECORDED APRIL B, 1968.IN BOOK: 8565, PAGE 1 DF OFFIC- I AL RECORDS OF ORANGE COUNTY; THENCE SOUTHWESTERLY ALONG SAID LAST r:,ENTIONEQ PARALLEL • LINE, AND THE NORTHWESTERLY LINE OF FIRST STREET, SOUTH 54 48' 3B" WEST 606.81 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY, AND HAVING A RADIUS OF .610.00 FEET; THENCE SOUTHWESTERLY ALONG SAID CURVE AN ARC' DISTANC •OF 6.79 FEET TO THE MOST EASTERLY BOUNDARY CORNER OF SAID TRACT NUMBER 9783; THENCE NORTHWESTERLY ALONG THE NORTHEASTERLY BOUNDARY LINE OF SAID TRACT NUMBER 9783• THE FOLLOWING COURSES; NORTH 42 17' 11" WEST 203.39 FEET - TO THE BEGINNING DF A TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 15.00 FEET; THENCE NORTHERLY.ALONG SAID CURVE AN ARC DISTANCE OF 21.79 FEET. TD THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY - kND HAVING A RADIUS OF.112.50 FEET; THENCE_NORTHEASTERLY ALONG SAID '• - ..CURVE AN ARC DISTANCE DF 10.24 FEET TO THE INTERSECTION OF A NON- TANGENT LINE BEARING NORTH 43' 37" 'WEST, A LINE FROM SAID POINT OF D INTER- SECTION BEARS NORTH 54 15' 24" WEST; THENCE NORTH 43 58' 37" WEST 230.28 FEET TO THE FIIOST NORTHERLY CORNER DF SAID TRACT NUMBER'97B3 AND THE POINT OF BEGINNING. SAID ABOVE DESCRIBED PARCEL DF LAND I5 SHOWN AS "NOT A PART" ON THE MAP OF TRACT NUMBER 9783 FILED IN BOOK 437, PAGES 32 to ,36, OF MISCELLANEOUS MAPS, .RECORDS DF ORANGE COUNTY, CALIFORNIA.' EXCEPTING THEREFROM THAT PORTION . LYING NORTHWESTERLY OF_ THE BOUNDARY LINE BETWEEN 105 ANGELES AND ORANGE COUNTIES AS SHOWN ON L05 ANGELES COUNTY SURVEYOR'S f1AP NO. 8175, SHEET 21, AND AS SHOWN ON SAID 'MAP OF TRACT NUMBER 9783. • ( dAINE ENGINEERING, INC. August 10, 1978. Page 2 - EXHIBIT 4 JUL 10 1981 . 3. Description of Condominium Parcel: t Lots 1 through 82 of Tract Map No. 9783 in the City of Seal Beach, Orange County, recorded in the office of the County Recorder of said County as Document No. 38063 on July 28, 1978. ( • ( Page 3 - EXHIBIT A JUL 10 1981 (.. AMENDED EXHIBIT B TOTAL COSTS SEAL BEACH TRAILER PARK Original Revised Original Purchase of Trailer Park $ 153,792.00 $ 153,792.00 Purchase of D.W.P. Parcel (40% of $275,000.00) 110,000.00 124,753.00 Predevelopment Costs 84,170.00 93,928.00 Real Estate Commission (40% of $25,000.00) 10,000.00 10,000.00 Construction from Exhibit C 662,550.00 1,313,389.00 Reimbursement by Agency for Temporary 1 relocation costs (24,085.00) TOTAL $1,020,512.00 $1,671,777.00 Maximum cost to be allocated to Trailer Park. 1,500,000.00 - AMENDED EXHIBIT B 1`,�,�1 • SEP 2 2 1980 • AMENDED EXHIBIT C CONSTRUCTION COST BREAKDOWN SEAL BEACH TRAILER PARK Estimated Actual Costs Costs Construction Costs: Paving $ 68,160.00 $ 172,516.00 Excavation 32,500.00 56,663.00 Drainage structures 34,290.00 52,120.00 Walls and fencing 16,000.00 38,000.00 Sewer and water installation 130,000.00 223,118.00 Underground electric 40,000.00 205,208.00 Interior lighting 10,000.00 30,000.00 Telephone and gas 7,000.00 2,400.00 Additonal paving 10,000.00 -0- Engineering 28,500.00 57,781.00 Geology and soils 5,000.00 15,536.00 Landscaping 32,600.00 65,510.00 Recreation center and office 96,500.00 87,248.00 Permits and fees 20,000.00 12,387.00 Field supervision 37,500.00 44,178.00 Contingencies 57,000.00 47,694.00 Points and interest 37,500.00 203,030.00 Total Construction Costs $ 662,550.00 $1,313,389.00 • - AMENDED EXHIBIT C - . SEP 2 2 1980 AMENDED EXHIBIT D Revised Monthly Expenses Present Financing 13% Coast Federal Ground Rent $ 3,333.00 Loan Payment 11,060.00 Auto 400.00 Dues and Subscriptions 57.50 ' Insurance 436.25 Legal and Accounting 275.00 Operating Supplies 305.00 Taxes and Licenses 631.00 Repairs and Maintenance 300.00 Salaries and Wages 2,238.50 Taxes - Payroll 294.75 Nkk‘ Telephone 145.00 ,/ Overhead and Management 2,798.00 Return on Investment 2,354.00 Utilities 540.00 Monthly Total Requirements $25,168.00 f/ I r Qp� 13 1991 AMENDED EXHIBIT E Ne14/ Rental Schedule . Rents now being charged based on rental increase notices sent out on June 1st, 1980 5 Lots Nos. 75,78,79,82,83 @ $125 $ 625 3 Lots Nos. 81,103,105 @ $130 $ 390 6 Lots Nos. 100,102,104 106,107,108 @ $135 $ 810 1 Lot No. 42 @ $145 $ 145 12 Lots Nos. 43,70,76,77, 80,84,86,88,109, 110,112,113 @ $150 $1,800 1 Lot No. 111 @ $155 $ 155 1 Lot No. 98 - @ $160 $ 160 8 Lots Nos. 72,73,74,85,96 97,99,101 @ $162 $1,296 1 Lot No. 71 @ $165 $ 165 2 Lots Nos. 87,95 @ $170 $ 340 4 Lots Nos. 68,69,89,90 @ $180 $ 720 7 Lots Nos. 93,94,132,133 134,137,139 •@ $190 $1,330 • 10 Lots Nos. 61,62,63,64,67, 123,124,135,136,138 - @ $195 $1,950 1 Lots No. 91 @ $210 $ 210 43 Lots Nos. 1-6,8- 24,26- 32,34,35,38,39,41, 92,125 -131 @ $225 $9,675 2 Lots Nos. 122,140 @ $235 $ 470 1 Lot No. 58 @ $237 $ 237 ` 13 Lots Nos. 45- 54,56,57,66 @ $250 $3,250 4 (1? 2 Lots Nos. 25,55 @ $260 $ 520 1 Lot No. 7 @ $265 $ 265 2 Nos. 44,6 0 @-$ 32 $ -6 - 5-0 1 -- 126=Lots Total Per month $25,163 Per year • $301,956 JUL 1 o 1981 Nov • Zyiii/ 1tECORDING REQUESTED BY AND KJ , J� aL S13 � ,� 2, 7 � WHEN RECORDED, RETURN TO: • Redevelopment Agency of the City of Seal Beach • 211 Eighth Street Seal Beach, California 90740 • AMENDED DECLARATION OF ESTABLISHMENT OF COVENANTS This Amended Declaration of Establishment of Covenants is entered into by the REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH (the "Agency "), a public body corporate and politic, formed and organized and existing under the provisions of the California Community Redevelopment Law and RIVERBEACH ASSOCIATES ( "Riverbeach "), a California partnership. • 51.00 RECITALS This Declaration of of Covenants is being entered into with.reference to the following facts-and c.ircum- . stances: §1.01 The City of Seal Beach (the "City ") approved and adopted a certain redevelopment plan (the "Redevelopment Plan ") by Ordinance No. 780, as amended by Ordinance Nos. 937 and 983, for a • project area located within the boundaries of the City in Orange County, State of California, entitled. the Riverfront Redevelopment Project (the "Project "). §1.02 A portion of said Redevelopment Project area is being developed by Riverbeach as a Mobile Home and Trailer Park (Trailer Park) with the Site of the Trailer Park being legally described on Exhibit "A" attached hereto and made a part hereof. S1.03 East Naples Land Company is the owner of certain parcels of land which constitute the Site of the Trailer Park as described on Exhibit "A "'(the "Site "). S1.04 East Naples Land Company is Lessor and Riverbeach is the Lessee of the Site under Lease Agreement dated October 3, 1977, • which is shown in the Memorandum of Lease and recorded on June 30, • 1978, as Document No. 47347, Official Records of Orange County, California ( "the Master Lease ").. / A -1- Amended Exhibit F WL- 9 1991 S1.05 The Trailer Park has been developed with approximately 126 lots for mobile homes and trailers pursuant to plans submitted to and approved by Agency. §1.06 Riverbeach and Agency desire to amend the rental schedule for the new Mobile Hone and Trailer Park which will apply to rental rates during the term of the Master Lease. S1.07 Riverbeach and Agency also desire to provide for the maintenance of 120 of the lots and any trailers or mobile homes owned by Riverbeach for rental by persons and families of low and moderate income. S1.08 This Amended Declaration shall replace and amend in its entirety that Declaration of Establishment of Covenants dated August 31, 1978 and recorded September 20, 1978 as Document No. 24821 in Official Records of Orange County.' • S2.00 COVENANTS 1 I III Riverbeach and Agency covenant and agree as follows: \•� §2.01 Initial Rental Rate Riverbeach's. monthly, expenses •! lk 1 ' I based on the itemization of items to be attributed to rent pursuant pyl to Section 2.03 is attached hereto as Exhibit "B" and made wart hereof. The initial monthly rental for all 126 trailer lots has been established upon opening of the Trailer Park using the monthly expenses set forth on Exhibit "B" except that: 11 (1) The loan payment expense shall be increased or decreased from the amount set forth on Exhibit "B" to reflect actual monthly loan amortization expense; and (2) The return on investment shall be increased or V f / 1.% decreased from the amount set forth on Exhibit "B" by applying 11.3% per annum to the difference between the total amount of the t/ permanent loan for the Trailer Park and the total agreed cost of $1,500,000.00 for the Trailer Park; the result shall then be 0 divided by 12 to obtain the monthly return on investment, but in no event to exceed $2,354.00. 41 The initial total monthly rental has been determined by Riverbeach and approved to Agency. The monthly rental shall be subject to allocation by Riverbeach Associates to the lots based upon the rental schedule set forth in Exhibit "C" attached hereto and made a part hereof. Any increase or in rental shall be allocated among the lots by an amount equal to the percentage increase or decrease in total rental for the Trailer Park. -2- n Ivy,/ IOW 0 1001 ' / §2.02 Rental Adjustment Monthly rental established in accordance with Section 2.01 shall be increased or decreased on a ' annual basis on November 16, 1981 (the commencement of the 't hird P' year after the opening of the Trailer Park) and. each year thereafter during the term of the Master Lease ( "Adjustment Date ") i to reflect: (1) Increases in lease payments for ground rent provided in the Master Lease between Riverbeach and East Naples Land Company, which Master Lease provides for a One Percent (1 %) per annum increase in rental every five (5) years. (2) Increases or decreases for property taxes and assessments (exclusive of penalties or assessments), utility expenses, property and liability insurance, legal and accounting expenses, repairs and maintenance, reasonable automobile expenses, reasonable dues and subscriptions, and supplies based on actual out -of- pocket expense to Riverbeach Associates or any successor in interest of Riverbeach Associates in the Trailer Park. (3) Expenses consisting of salaries and wages, payroll taxes and overhead and management shall be subject to . increase or decrease as provided in this subsection 3 of Section 2.02. The base for computing the adjustment shall be the Consumer t I Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles -Long Beach - Anaheim Metropolitan Area, publ-ished:by the _. United States Department of Labor, Bureau of Labor Statistics '. ;�` ( "Index "), which is published for the date nearest%1ovember 16, � 1980 Be innin Index"). If the Index (" g g published nearest the Adjustment Date ( "Adjustment Index ") has increased or decreased from the Beginning Index, the monthly amount of the expenses te•�!�', 4p in this subsection 3 of Section 2.03,1.usxeturn on invcstrne t•�\ `�' be included in the monthly rental for the year following the � /i Adjustment Date (until the next year's adjustment) shall be set by ; the amount of such ex enses, • hb multiplying p plus —r-e '- nvestmeFt� 1 j,v i 1 as established pursuant to Section 2.015y a fraction, the , numerator of which is the Adjustment Index and the denominator of � which is the Beginning Index. The resulting amount shall be used ''j�t� V lv ,, p as the expenseslus._ et? 1' 1 �yestme7 to be included in Nv2r )/ determining the total monthly rental for the year following the / Adjustment Date. If the Index is discontinued or revised, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the Index Adjustment had not been discontinued or revised. (4) If the Trailer Park is not permanently financed ' until after the date of the Declaration, at such time as permanent 0 1 financing is obtained, the monthly rental -shall be adjusted to /1 k� - 00 0 1 JUL 91981 • reflect any increase or decrease in monthly debt service. If the permanent financing is a variable interest rate loan, the monthly rental shall be increased or decreased to reflect any increase or decrease in the monthly debt service. (5) In the event that capital expenditures are made to the Trailer Park after completion of construction pursuant to plans and specifications approved by Agency, Riverbeach shall be entitled to increase the monthly rental by an amount sufficient to amortize any capital expenditure over the reasonable life of the investment at Riverbeach's cost plus a return on investment not to exceed Two Percent (2 %) above the prime lending rate of Bank of America N.T. & S.A. A capital expenditure is defined as an improvement to the real property of the Trailer Park which the Internal Revenue Service rules and regulations require to be depreciated over the life of the improvement. • §2.03 Notice of Rental Increases or Decreases At such time as Riverbeach is entitled to increase the monthly rental or is required to decrease the monthly rental under the terms of Section 2.02, Riverbeach agrees to give written notice to Agency of the proposed change in rental rates not later than sixty (60) days before giving written notice of increase or decrease to tenants of the Trailer Park. Agency approval shall be required, unless waived by Agency, before Riverbeach may make such change in rental. Agency shall have the right to dispute any increase by giving written notice to Riverbeach within sixty (60) day`s -after receipt= - of the written notice from Riverbeach. Such Agency notice shall specify the basis on which Agency is disputing such increase under the terns of this Declaration. If Agency fails to either approve or dispute such increase within such sixty (60) day period, Agency approval shall be deemed to be waived. If Agency and Riverbeach cannot resolve any dispute within an additional sixty (60) days after Agency's written notice to Riverbeach, then either Riverbeach or the Agency may take such legal action as may be appropriate to enforce the terms of this Declaration. §2.04 Maintenance of Lots for Persons and Families of Low and Moderate Income Riverbeach agrees that not less than One Hundred Twenty (120) of the trailer lots (including any trailers on such lots owned and leased by Riverbeach or its sublessee) shall be maintained as a housing resource for persons and families of low And moderate income throughout the term of the Master Lease between Riverbeach and Naples Land Company. The following provisions shall apply to such lots: (1) As trailer lots or trailer units leased by • Riverbeach within the portion of the Site 'occupied by the Trailer j‘ -4 - s'�4;11 • JUL 91981 . r Park become available through turnover (i.e., after a vacancy by a relocated resident of the Trailer Court), Riverbeach shall maintain One Hundred Twenty (120) lots for rental to persons and familes of • low or moderate income as those terms are defined in Health and Safety Code Section 50093 in effect as of the date of this Declaration, and as it may be amended. - (2) Not less than half of such units (sixty [60] lots on the Site) shall be maintained for persons and families of low income as defined in Health and Safety Code Section 50093 in effect as of the date of this Declaration, and as it may be amended. (3) Riverbeach shall cooperate with the Agency in accepting persons and families of low and moderate income referred by Agency or the City of Seal Beach for rental of trailers or lots as they become available within the Site. Notwithstanding such agreement to cooperate with Agency and City. in considering referral of persons and families of low and moderate income, the final selection of tenants shall be the decision of Riverbeach Associates. In the event that persons meeting the requirements of Section 2.04, subsections (1) and (2) are not available to rent vacant trailer lots or cannot afford the then current monthly rental after reasonable efforts by Riverbeach Associates to locate such persons, including written notice to the Agency and City of any vacancies, Riverbeach may rent such vacant lots to persons and families having incomes above the limits set forth in sections (1) and (2). (4) Riverbeach shall be required to determine of each tenant referred to in Section 2.04(1), (2) and (3) that such tenant is of low or moderate income, as defined in this agreement. (5) The Agency shall examine, at least once per year, any relevant records of operation by Riverbeach's Trailer Park management, subject to the confidentiality of individual tenant financial information, to insure that such income determinations have been appropriately performed- by Riverbeach in fulfilling the standards set forth in subsections (1), (2) and (3) of this section. (6) The Agency shall, at least once per year, submit written findings to the South Coast Regional Commission of the California Coastal Commission or its successor agency, of any examinations performed by the Agency pursuant to this section. (7) Upon dissolution or cessation of operation of the / Agency, the City of Seal Beach shall undertake the duties imposed ► p upon the Agency by subsections (5) and (6) of this section. d ILI -5- /Ali" JUL 9 1981 . - • .' 1 §2.05 Agency Obligation for Rental Assistance Agency's only obligation to provide any payment for rental assistance shall be to tenants of the Seal Beach Trailer Park who rented trailer spaces on the Site prior to reconstruction of the Trailer Park. Agency's obligation shall be limited to such assistance as is required by the California Government Code, Section 7260 et seq., and rules and regulations adopted by the Agency. Agency shall have no obligation to provide rental assistance or any other assistance to persons who occupy the Trailer Park as new residents under the provisions of Section 2.04. §3.00 GENERAL 53.01 The burdens and benefits of all covenants and agreements contained in this Declaration shall run with the leasehold interest of Riverbeach in the Site. All burdens shall be binding upon Riverbeach so long as it has an interest in the Site and shall be binding on any successor or assign of Riverbeach in the Site, including any sublessee of Riverbeach. The benefits of this Agreement shall accrue to the benefit of the Agency. S3.02 All covenants and agreements contained herein are subject to the terms and conditions of the Master Lease between • Riverbeach and Naples Land Company which is described in Section 1.04. Nothing in this Declaration shall apply 'to qr ..obl.gate _ Naples Land Company as owner or lessor of the Site nor shall this Declaration bind any successor or assign of Naples Land Company in the Site. 53.03 Any amendment of this Declaration or the Exhibits hereto shall require the consent of (1) Seal Beach Partners, Limited (SBP) so long as SBP is the tenant or lessee of the Site, and (2) the beneficiary of any deed of trust secured by the leasehold interest of Riverbeach in the Site. Any amendment shall not require the consent of any other lienholder, whether such lien arises voluntarily or involuntarily. The Agency and Riverbeach, its successors and assigns, from time to time, shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants or restrictions contained in this Declaration, or to subject the leasehold interest of Riverbeach to additional covenants, or restrictions, without the consent of any tenant, lessee, easement holder, licensee or any other person or entity except: (1) SBP so 110 long as SBP is the tenant or lessee of the Site, and (2) the 'U beneficiary of any deed of trust secured by the leasehold interes 1 of Riverbeach. ■4 -6 - ,► JUL 9 1981 • • 1 • • 0.04 The Agency has the right at all reasonable times to inspect the books and records of Riverbeach and its successors and assigns in the Site pertaining to the Site as pertinent to the purposes of this Declaration. Riverbeach also has the right at all reasonable times to inspect the books and records of the Agency pertaining to the Site as pertinent to the purposes of the Declaration. S3.05 Riverbeach covenants by and for Riverbeach and their assigns, and all persons claiming under or through Riverbeach, 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 Site, nor shall Riverbeach or any person claiming under or through Riverbeach, 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 Site. The foregoing covenants shall run with the leasehold interest of Riverbeach in Site, and shall obligate Riverbeach and any subcontracting party or parties, or other transferees under this Declaration. S3.06 In the event the Agency shall be dissolved or its powers suspended, the City of Seal Beach shall be the successor in interest to Agency of all rights and benefits of this Declaration. • • • • • • i • aik • JUL 9 1881 IN «ITNE_S WHEREOF, the Agency and Riverbeach have caused this instrument •ED be executed on their behalf by their respective duly authorized c this 21st day of July , 1981. i REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH By '' 4 A IP P r arke Ex tive Director • • RIVERBEACH ASSOCIATES, a limited partnership Joel A. ottman General Partner • Consent to this Amended Declaration is hereby given ,pursuant to Section 3.03. SEAL BEACH ASS. IATES ' 1prio By u ►• qi � 1 • _g_ at 9 1981 • IN WITNESS WHEREOF, the Agency and Riverbeach have caused this instrument to be executed on their behalf by their respective duly authorized officers this 21st day of July , 1981. REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH By 144 A 1�. Parker Ex:• tive Director r RIVERBEACH ASSOCIATES, a limited partnership 1 i ByV L T (1' : bi.ti —� — Joel A.%. Rottman General Partner Consent to this Amended Declaration is hereby given/ipursuant to Section 3.03. SEAL BEACH ASS. IATES By +. ( I I \\ -8- 0 111 • ,ui. 9 1981 , IN FITNESS WHEREOF, the Agency and Riverbeach have caused this instrument to be executed on their behalf by their respective duly authorized officers this 21st day of July , 1981. REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH By c2�iik A 1� . Parker Ex .,• five Director . TO 111.111 CA I11.741 (Partnership) I ra TITLE INSURANCE STATE OF CALIFORNIA AN TR UST COUNTY OF San Diego . SS. •*aO"IM I g und On Nove 171981 before me, the ersigned, a Notary Public in and for said State, personally appeared William T. Dawson W s w known to me e. to be General Partnr, the partners of the partnership s I a that executed the within instrument, and acknowledged to me ' that such partnership executed the same. WITNESS my hand and official seal. L am. = +, O FFICIAL SEAL JUDY JOHNS ' 41. � ; f ,�� N PUBLIC - CALIFORNIA I - • ./...._ ./...._ i k� SAN DIEGO COUNTY < My comm. exp;res NOV 4, 1985 ■ . Signature .. _ i,� - - - - _ Jud 4ns (This area for official notarial scan 1 • Consent to this Amended Declaration is hereby given to Section 3.03. SEAL BEACH ASS•tIATES _ \k11 . By PfIrk ,A,A.9.4 iL Pk 7 , _ 8_ . ,R 9 1981 • IN WITNESS WHEREOF, the Agency and Riverbeach have caused this instrument to be executed on their behalf by their respective duly authorized officers this 21st day of July 1981. • REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH By A 1. Parker Ex ,•five Director • RIVERBEACH ASSOCIATES, a limited partnership -Joel A. ottman General Partner Consent to this Amended Declaration is hereby given pursuant to Section 3.03. SEAL BEACH ASSOCIATES B i • 1 -8- • ,� .L 9 1981 • , Consent to this Amended Declaration is hereby given pursuant to Section 3.03. COAST FEDERAL SAVINGS AND LOAN ASSN. as beneficiary of the deed of trust of Riverbeach Associates recorded • January 30, 1980, as Document No. 35497 i ffic'al Records of Orange County, alif•f nia. / i By G A Ro er G. Marchant, Vice President BY ��---- L-i --C / _ �, Russell M. Litch, Vice President • • 1045 CA te.»i /// Corporation) TITLE INSURANCE AND TRUST STATE OF CALIFORNIA ATnAR COMPANY COUNTY OF Los Angeles } SS. On September 25 , 1981 before me, the undersigned, a Notary Public in and for said • State, personally appeared Robert G. Marchant known tome to be the Vice President, and Russell M. Litch --.- known tame to be Vice President-- g g - - of the corporation that executed the within Instrument, • known to me to be the persons who executed the within _ _ _ _ _ _ _ _ _ __ _ Instrument on behalf of the corporation therein named, and , OFFICIAL SEAL acknowledged to me that such corporation executed the 74c."0. SHIRLEY A STARKEY within instrument pursuant to its by -laws or a resolution of °,a; •. NOTARY PUBLIC - CALIFORNIA its board of directors. . • t ' ;r l LOS ANGELES COUNTY WITNESS my hand and official seal. _ _ _ , My comm. expires JUN 20_1983 / Signatur '' �• �`' - ��� • (This area for official notarial scat) • itidi • 1 . , . STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On " , 1981, before me, the undersigned, a Notary Public in and said State, personally appeared Alien J. Parker, known to me to be the Executive Director of the Rede opment Agency of the City of Seal Beach, and known to me to be the person who executed the within instrument on behalf of said public agency and acknowledged to me that such agency executed the same. WITNESS my hand and official seal. / / OFFi �.', SEAL, i STATE OF CALIFORNIA ) + NOTARY PUBLIC R GONZALES �� LIC - CALIFORNIA ` ) SS. t ORANGE COUNTY COUNTY OF Los Angeles ) -- - -_ _ _ R• Comm. expires AUG 10, 198"4 On .T/f /5/ , 1981, before me, the undersigned, a Notary Public i fi and for said State, personally appeared JOEL A: ROTTMAN known to me to be the General Partner of the'linited ° - partnership that executed the within instrument and acknowledged to me that such limited partnership executed the same. • WITNESS my hand and official seal. • - /�,.., J 7 , �: � _ ..'. C. - 7 ...... • OFFICIAL SEAL _ , THOMAS E. PARRINGTON NOTARY PUBLIC CALIFORNIA LOS ANGELES OFFICE 3UNTY PRINCIPAL I 11 7 Commission Exp. line 17, 1985 —10— UL i idwh EXHIII]'r A 1. Description of Site: The Site is the Trailer Park.Parcel described under paragraph 2 below and the Condominium Parcel described under paragraph 3' below. 2. Description of Trailer Park Parcel: - PORTION OF THAT PARCEL OF LAND GRANTED 70 THE CITY.OF SEAL BEACH . BY - (HAT CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT- OF LOS ANGELES =DUNi Y, CASE PU;fl3ER C- 78004, PARCEL 4, A CERTIFIED COPY DF WHICH WAS . RECORDED MARCH 2, 1977 IN BOOK 12115, PAGE:195 OF OFFICIAL RECORDS OF. MANGE COUNTY, CALIFORNIA;-AND A PORTION OF TIDE LAND LOCATION NO. 137 "SURVEY ND. 106 ", AS PATENTED BY THE STATE OF CALIFORNIA ON FEBRUARY 12, 1901 - . AND RECORDED APRIL 27, 1901 IN - BOOK 9, PAGE 105 OF PATENTS, RECORDS OF LOS ANGELES COUNTY, AND RECORDED SEPTEMBER 5, 1905 IN BOOK 1, PAGE 231 PATENTS, RECORDS OF ORANGE . COUNTY;, SAID ABOVE PORTIONS OF LAND BEING MIRE - PARTICCIL .ARLY.DESCRIBED AS FOLLOWS: - - - - . - BEGINNING AT THE MOST - NORTHERLY CORNER of TRACT NUMBER 9783 IN THE .. - CITY OF SEAL BEACH, COUNTY OF ORANGE, STATE DF , CALIFORNIA AS. SHOwN ON A f1AP FILED IN BOOK 437, 'PAGES 32 TO 36, DF MISCELLANEOUS MAPS RECORDS DF ORANGE COUNTY; SAID CORNER BEING A POINT IN THE - S OUTHEASTERLY LINE OF THE LOS ANGELES COUNTY FLOOD CONTROL DISTRICT LAND DESCRIBED AS • _ PARCEL 8 IN S.C.C. NO. 231287 IN AND FOR THE COUNTY OF L05 ANGELES, - IN BOOK 2383, PAGE 42, RECORDS OF 'ORANGE COUNTY, SAID SOUTHEASTERLY . LINE BEING A CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF - 2000.00 FEET, A RADIAL LINE FROM SAID POINT BEARS SOUTH 35 57' 55" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE AND SOUTHEASTERLY LINE AN ARC DISTANCE OF 356.05 FEET; THENCE TANGENT TO SAID CURVE AND ALONG SAID - SOUTHEASTERLY •LINE NORTH 54 ° - D2' - D5" - EAST 239.79 FEET TO THE NORTH EASTERLY LINE DF THAT FOOT STRIP OF• LAND DESCRIBED THE QUIT CLAIM DEED TO THE PACIFIC ELECTRIC RAILWAY COMPANY RECORDED - FEBRJf►RY 21, 1924 IN BOOK 514, PAGE 44 OF DEED5, RECORDS OF'ORANGE COUNTY; THENCE SOUTHEASTERLY ALONG SAID NORTHEASTERLY LINE SOUTH 42 15' 32" EAST 492.08 FEET TO THE NORTHWE LINE DF FIRST STREET AS IT NDw EXISTS, SAID LAST MENTIONED NORTHWESTERLY LINE BEING A LINE Pape 1 - EXHIBIT A nn 1 fl ,not • %R ALLEL WITH AND D] S7ANT NDRTNVJESTERLY 110.0D FEET, MEASURED AT RIGHT' '�'GLES, FROM THE BOUNDARY LINE OF THE RANCHO LOS ALAMITOS PER MAP ECORDED IN BOOK 1, PAGES 460, 461 and 462 OF PATENTS DF LOS'ANGELES JUNTY, CALIFORNIA AND AS SHOWN ON RECORD OF SURVEY RECORDED IN • R.S. BOOK 9D, PAGES 23 to 30; AND AS MORE PARTICULARLY . :STABLI SHED BY SEAL BEACH BOUNDARY LINE AGREEMENT ND. 2, DATED. FEBRU- _ 1RY 5, 1968 AND RECORDED APRIL 8, 1968.IN BOOK. 8565, PAGE 1. OF OFFIC- IAL RECORDS OF ORANGE COUNTY; THENCE SOUTHWESTERLY ALONG SAID LAST EN ! I O VED PARALLEL LINE, AND THE NORTHWESTERLY LINE OF FIRST STREET, SOUTH 54 48' 3B" WEST 606.81 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY, AND HAVING A RADIUS OF .610.00 FEET; THENCE SOUTHWESTERLY ALONG SAID CURVE AN ARC' DI STANCg .DF 6.79 FEET TO . THE . MOST EASTERLY BOUNDARY CORNER OF SAID TRACT NUMBER 9783; THENCE - NDRTH JESTERLY ALONG THE. NORTHEASTERLY BOUNDARY LINE OF SAID TRACT NUMBER 9783 THE FOLLOWING-COURSES; NORTH'42 17' 11" WEST 203.39 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS DF 15.00 FEET; THENCE NORTHERLY.ALONG SAID CURVE AN ARC_DISTANCE OF 21.79 FEET. TD THE BEGINNING OF 'A REVERSE CURVE CONCAVE NORTHWESTERLY • AND HAVING A RADIUS OF.112.50 FEET; THENCE-NORTHEASTERLY ALONG~SAID CURVE AN ARC DISTANCE DF 10.24 FEET TO THE INTERSECTION OF A iVON- TANGENT LINE BEARING NORTH 43 37" 'WEST, A LINE FRDIII SAID POINT DF INTER- SECTION BEARS NORTH 54 15' 24" WEST; .THENCE NORTH 43 58' 3?" [VEST 230.28 FEET TO TH.E MOST-NORTHERLY CORNER DF SAID TRACT N MBER 9783 AND THE POINT DF BEGINNING. SAID ABOVE DESCRIBED .PARCEL DF LAND IS SHOWN AS "NOT A PART" ON THE MAP OF TRACT NUMBER 9783 FILED IN BOOK - 437, PAGES 32 to .36, DF MISCELLANEOUS MAPS, .RECORDS DF ORANGE COUNTY, - CALIFORNIA.' EXCEPTING THEREFROM THAT PORTION . LYING NORTHWESTERLY OF_ THE BOUNDARY '•. LINE BETWEEN L05 ANGELES AND ORANGE COUNTIES AS SHOWN ON LOS ANGLES COUNTY SURVEYDR'S EIIAP NO. 8175, SHEET 21, AND AS SHOWN ON SAID MAP DF TRACT NUMBER 9783. - •_ • BAINE ENGINEERING, INC. . August 10, 1978. n rwTATT A n _..... 3. Description of Condominium Parcel: Lots 1 through 82 of Tract Map No. 9783 in the City of Seal Beach, Orange County; recorded in the office of the County Recorder of said County as Document No. 38063 on July 28, 1978_ c • • • • • s . Page 3 - EXHIBIT A JUL 10 1981 EXHIBIT B Revised Monthly Expenses Present Financing 13% Coast Federal Ground Rent $ 3,333.00 Loan Payment 11,060.00 Auto 400.00 Dues and Subscriptions 57.50 Insurance 436.25 Legal and Accounting 275.00 Operating Supplies 305.00 Taxes and Licenses 631.00 1 _ Repairs and Maintenance 300.00 Salaries and Wages 2,238.50 4> Taxes - Payroll 294.75 Telephone 145.00 Overhead and Management 2,798.00 Return on Investment 2,354.00 Utilities • 540.00 Monthly Total Requirements $25,168.00 qAvr riff 11 19M f • • ' EXJIII3IT C Rents ]. Schedule Ned Rents now being charged based on rental increase notices sent out on June 1st, 1980 5 Lots Nos. 75,78,79,82,83 @ $125 $ 625 • . . 3 Lots Nos. 81,103,105' @ $130 $ 390 • . 6 Lots Nos. 100,102,104 106,107,108 @ $135 $ 810 1 Lot No. 42 @ $145 $ 145 12 Lots Nos. 43,70,76,77, - 80,84,86,88,109, 110,112,113 . @ $150 : $1,800 - 1 Lot No. 111 @ $155 '$ 155 1 Lot No. 98 - @ $160 $ 160 ' 8 Lots Nos. 72,73,74,85,96 97,99,101 @ $162 $1,296 • 1 Lot No. 71 @ $165 $ 16 2 Lots Nos. 87,95 . @ $170 $ 340 ' • 4 Lots Nos. 68,69,89,90 @ $180 • $ 720 7 Lots Nos. 93,94,132,133 134,137,139 •@ $190 $1,330 ../' 10 Lots Nos.• 61,62,63,64,67, 123,124,135,136,138 . @ $195 $1,950 . • 1 Lots No.-91. @ $210 $ 210 ' 43 Lots Nos. 1 -6,8- 24,26- • - 32,34,35,38,39,41, 92,125 -131 '@ $225 • $9,675 2 Lots Nos. 122,140 @ $235 $ 470 - ./7 1 Lot No. 58 - @ $237 $ 237 Or 13 Lots Nos. 45- 54,56,57,66 @ $250 $3,250 it 2 Lots Nos. 25,55 @ $260 • $ 520 \ 1 Lot No. 7 @ $265 $ 265 - 0 ,q,...- 2 Lots Nos. 44,60 @ $325 $ 650 . 126=Lots• Total Per month $25,163 - 11IIII111111 HMI III11111111111111 Ill Mill 111111 - . - LEAD SHEET ( • GQ 1989452 - - • - RECORDED /FILED IN OFFICIAL RECORDS . RECORDERS OFFICE LOS ANGELES COUNTY CALIFORNIA - • - DEC 21 2000 , • - - , ATBA.M. SPACE ABOVE THIS LINE FOR RECORDERS USE A . • . , . . . . ,. . • A . - • . . . . . . , . TITLE(S) FEE _ D.T.T. �7 • I FEE$ 1 /5 " SS1 - • • CODE 20 . - DA. FEE Code 20 • •Z? . • . . . . . • CODE ' . , 19 - " - CODE - 9 - Assessor's Identification Number (AIN) • To Be Compl By Examiner OR Title Company In Black Ink Number of Parcels Shown • ...A- • A '. THIS FORM IS NOT TO BE DUPLICATED • This document was electronically recorded by , FIDELti). linaiv,inu LLLIZ l•VIUtAlit Fidelity Major Accounts ' RECORDING REQUESTED BY AND Recorded in Official Records,County of Orange WHEN RECORDED RETURN TO: ) Ga L. Grar1yille, Clerk- Recorder . ___. Best Best & Krieger LLP 111111 I I 8 II 00 3750 University - 400 Mission Squareen . - 20000690068 10:33am 12/20/00 Riverside, CA 92501 104 59 Al2 D05 37 Attention: Kyle A Snow, Esq. . 0.00 0.00 0.00 0.00 72.00 0.00 0.00 0.00 . REGULATORY AGREEMENT . AND DECLARATION OF RESTRICTIVE COVENANTS by and among the REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH, . as Issuer . • - . and . UNION BANK OF CALIFORNIA, N.A., • , as Trustee ( . . and - LINC COMMUNITY DEVELOPMENT CORPORATION, . ' - as Borrower • Dated as of December 1, 2000 . Relating to: $6,750,000 . Redevelopment Agency of the City of Seal Beach • Mobile Home Park Revenue Bonds (Seal Beach Mobile Home Park Project) • • Series 2000A • RVPUB\KAS\601076 - ' . . , , • ( - TABLE OF CONTENTS .. , - Page . . . Section 1. Definitions and Interpretation 2 Sedtion 2. Representations and Warranties of the Borrower 4 Section 3. Residential Rental Property . " 5 Section 3A. Additional Program Requirements 6 Section 4. . Qualified Residents 7 • ' Section 5. Tax Status of the Bonds ' . . ' •10 ' Section 6. Modification of Special Tax Covenants - 11' . . Section 7. Indemnification . 12 Section 8. Consideration - 12 • Section 9, Reliance 12 . • . • Section 10. Sale or Transfer of the Project _ • 13 Section .11. Term '. , ' • 14 . . Section'12. ' Covenants to Run With the Land • " ' ' • 14 Section 13 • Burden and Benefit , . 14 • Section 14. Uniformity; Common Plan 15 Section 15. Enforcement" • ' " • - - - 15 ' . . _ . . Section 16. Recording and Filing .. 16 . , - Section 17. - Payment of Fees . • ' • • 16 . . ( , ' Section 18. Governing Law 16 Section 19. Amendments • ' 16 . .. Section 20. Notice . ' . . . . . , , 16 Section 21. • Severability • • • ' ' 17 . . - , Section 22. , Multiple Counterparts • • . , ... . . . • • • 17' • • . ' . Section 23. Trustee Acting Solely in Such Capacity 17- , Section 24. Compliance by Borrower ' 18 . • . . . , • . Section 25. Limited Liability of the Issuer ' . . , • . 18 .. . , ., . . .• . , - • , . . . . . . . . . . . . • - . „ . - • . . . EXHIBIT A - Legal Description . - . . ' ' A-1 EXHIBIT B - Income Computation and Certification - ' . B-1' , EXHIBIT C - Certification of Continuing Program Compliance - . . C-1 . . - . . . , . . . . . • ' . . . . . . . . . . . , . . . • . . . . . . ..., , . • . , . • . . , . . . . ____ • ' ( . . . . . . . . . • ' RVPUB\KAS%601076 i . • . • • REGULATORY AGREEMENT AND L DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND - DECLARATION OF RESTRICTIVE COVENANTS (the "Regulatory Agreement "), made and entered into as ofDecember 2000, is by and among the Redevelopment Agency of the City of Seal Beach, a is a California redevelopment agency duly organized and validly existing under its charter and the Constitution and laws of the State, of California (the "Issuer "), Union Bank of California, N.A., a national banking association, as trustee , • (the "Trustee ") under an Indenture of Trust dated as of the date hereof between the Issuer and the - Trustee, and LINC Community Development Corporation, a California .nonprofit public benefit corporation, as the owner of the property described in Exhibit A attached hereto (the "Borrower "). - RECITALS: WHEREAS, the Legislature of the State of California enacted Section 33740 and - following - • of the California Health and Safety Code (the "Act ") to authorize cities, to issue bonds to finance the acquisition of mobile home parks to provide housing for persons of very low income; and - - WHEREAS, the Issuer is a political subdivision within the meaning of that term in.the - Regulations of the Department of Treasury and the rulings ofthe Internal - Revenue Service prescribed • • and promulgated pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the -, "Code "); and ' • WHEREAS, the Issuer has previously adopted a resolution (the "Resolution ") authorizing the issuance of revenue bonds in connection with the financing of the Seal Beach Mobile Home Park to be acquired by the Borrower and located in the Redevelopment Agency of the City. of Seal Beach, • (the "Project "); and • WHEREAS, in furtherance ofthe purposes ofthe Act and the Resolution, the Issuer proposes • to issue $6,750,000 aggregate initial principal amount of its revenue bonds designated "Redevelopment Agency of the City of Seal Beach Mobile Home Park Revenue Bonds (Seal Beach Mobile Home Park Project), Series 2000A" (the "Bonds "), the proceeds of which will be loaned to - the Borrower (the "Loan") which, in consideration of the Loan, will cause to be delivered to,the • • Trustee its promissory note in the aggregate principal amount of the Bonds (the "Note ") secured by the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Mortgage ") recorded in the' offices of the County Recorders for the County of Orange and the County of Los Angeles; and • WHEREAS, the Issuer, the Trustee and the Borrower have entered into a Loan Agreement, dated the date hereof (the "Loan Agreement "), pursuant to which the Issuer will make the Loan to the Borrower to finance the acquisition of the Project; and RVPUB\ICAS\601076 1 WHEREAS, the Note will be held by the Trustee in trust for the benefit of the owners from t time to time of the Bonds pursuant to the terms of the Indenture to pay when due the principal of and • interest on the Bonds; and • WHEREAS, all things necessary to make the Bonds, when issued as provided in the Indenture, the valid and binding limited obligations of the Issuer according to the import thereof, and to constitute the Indenture a valid assignment of the amounts pledged to the payment of the principal of, and premium, if any, and interest on the Bonds have been done and performed, and the creation, execution, and delivery of the Indenture and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly authorized; and • • • WHEREAS, the Code and the regulations and rulings promulgated with respect thereto and • . the Act prescribe that the use and operation of the Project be restricted in certain respects and in order to ensure that the Project will be used and operated in accordance with the Code (including Section 501(c)(3) of the Code) and the Act, and the Issuer, the Trustee and the Borrower have . determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the operation of the Project, . NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth - herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are . acknowledged, the Issuer, the Trustee and the Borrower hereby agree as follows: -- ' Section 1. Definitions and Interpretation. In addition to the terms defined in the , foregoing recitals, the following terms used in this Regulatory Agreement shall have the respective meanings assigned to them in this Section 1 unless the context in which they are used clearly requires otherwise: - . . - • ' ' • • "Adjusted Income" _ The adjusted income of all persons who intend to occupy a' Space, . calculated - in the manner determined by the Secretary of the Treasury pursuant to Section 142(d)(2)(B) of the Code. " •' - "Administration Agreement" - The Administration and Oversight Agreement, dated as of December 1, 2000, by and among the Issuer, the Borrower and the Program Administrator. - • - "Area" - The Primary Metropolitan Statistical Area in which the Project is located: • • • . "Certificate of Continuing Program Compliance" - The certificate with respect to the Project - - to be filed by the Borrower with the Issuer, the Program Administrator and the Trustee which shall • be substantially in the form attached hereto as Exhibit C.• • • • • - • . - • - "County" - The County of Orange together with the County of Los Angeles. • "Income Certification "' - The Income Computation and Certification attached hereto as " Exhibit B: _ RVPUBUCAS\601076 2 • "Median Income for the Area" - The median income for the Area as most recently determined , pursuant to the Act. "Oversight Agent" - The Oversight Agent appointed under the Administration Agreement. "Oversight Agent's Fee" - The administration fee of the Oversight Agent as set forth in the • Administration Agreement. - . - "Program Administrator" - The Program Administrator appointed under the Administration Agreement, which initially shall be Rosenow Spevacek Group Inc: ,' • - - "Program Administrator's Fee" - The administrative fee of the Program Administrator set forth in a the Administration Agreement. , . - "Qualified Project Period" - The period as defined in -Section 142(d)(2)(A) of the Code; . provided such period is subject to extension in accordance with Section 4(g) hereof • . • "Qualified Residents" - means Very Low Income Residents. • • "Qualified Space ", - a Very Low Income Space. • • ' "Space" - A mobile home space within the Project upon which a mobile home may be placed. • ( . • "Tax Certificate" - The certificate as to arbitrage of the Issuer and Bo rrower, dated as of the - Closing Date, with respect to the Bonds. . "Very Low Income Residents" - Individuals or families with an Adjusted Income which does • not exceed the amount promulgated by the U.S. Department ofHousing and Urban Development for very low income households for the Area as adjusted for household size as set forth below. In no event, however, will the occupants of a Space be considered to be Very Low Income Residents if all . the occupants are students, as defined in Section 151(c)(4) of the Code, as such may be amended, no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full -time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full -time course of institutional on farm training - under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. "Household Size" Adjustment for 1= 70 %; Adjustment for 2 = 80 %; Adjustment for 3 = 90 %; Adjustment for 4 =100 %; Adjustment for 5 = 108 %; Adjustment for 6 = 116 %; Adjustment for 7 = 124 %; Adjustment for 8 = 132 %; and assuming one person will occupy a recreational vehicle, two persons will occupy a single -wide mobilehome, and three persons will occupy a multisectional mobile home. RVPUB\ICAS\601076 3 • "Very Low Income Spaces" - The Spaces in the Project designated for occupancy by Very Low Income Residents pursuant to Section 4(a) of this Regulatory Agreement. • Such terms as are not defined herein shall have the meanings assigned to them in the Indenture. Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only, and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given , ' any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question of intent shall arise. - • Section 2. Representations and Warranties of the Borrower. The Borrower hereby . represents, as of the date hereof, and covenants, warrants and agrees as follows: (a) The Borrower has incurred a substantial binding obligation to acquire the - Project pursuant to which the Borrower is obligated to expend at least five percent (5 %) of - • • the principal amount of the Bonds. - • - • • _ (b) The Borrower's reasonable expectations respecting the use ofBond proceeds • . are accurately set forth in the Certificate Regarding Use of Proceeds executed by the Borrower on the Closing Date. • • • (c) The statements made in the various certificates deliver ed by the Borrower to . the Issuer or the Trustee are and correct. • • • • (d) . Not more than 2% of the proceeds of the Bonds shall be applied to pay Cost • of Issuance (other than the premium on the Policy). - (e) Money on deposit in any fund or account in connection with the Bonds, • whether or not such money was derived from other sources, shall not be used by or under the direction of the Borrower in a manner which would cause the Bonds to be "arbitrage bonds" , • within the meaning of Section 148 of the Code, and the Borrower specifically agrees that the " investment of money in any such fund shall be restricted as may be necessary to prevent the • ' Bonds from being "arbitrage bonds", under the Code.' • • (f) The Borrower will not take or omit to take, as is applicable, any action if such • action or omission would in any way cause the proceeds from the sale of the Bonds to be RVPUB\KAS \601076 4 • applied in a manner contrary to the requirements of the Indenture, the Loan Agreement and this Regulatory Agreement. Section 3. Residential Rental Property. The Borrower hereby represents, as of the date • hereof, and covenants, warrants and agrees as follows: (a) The Project is being owned and operated for the purpose of providing . residential rental housing, consisting of one mobile home Space for each household, together with related facilities. (b) All ofthe mobile homes in the Project will contain separate facilities for living, • sleeping, eating, cooking and sanitation, including a sleeping area, bathing and sanitation-. facilities and cooking facilities equipped with a cooking range, refrigerator and sink. • • (c) Substantially all ofthe Spaces will be available for rental on a continuous basis . . to members ofthe general public, and the Borrower will not give preference to any particular class or group in renting the Spaces in the Project, except to the extent that Spaces are required to be leased or rented to Qualified Residents. • (d) ' The Project comprises a single geographically and functionally integrated ,• project for residential rental property, as evidenced by the ownership, management, ' • ' - accounting and operation of the Project. - (e) No part of the Project will at any time be owned or used as a condominium or by a cooperative housing corporation, and the Borrower shall not take any steps toward such conversion without an opinion of Bond Counsel that interest on the Bonds will not - thereby become includable in gross income for federal income tax purposes. (f) . Should involuntary noncompliance with the provisions of this Regulatory • • Agreement be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Closing Date . which prevents the Issuer from enforcing the requirements of the Regulations, or • condemnation or similar event, the Borrower covenants that, within a "reasonable period" determined in accordance with the Regulations, it will either prepay the Note or apply any • proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements hereof. • - , (g) • There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry, national origin, • • source of income (e.g. AFDC (or its successor program, if any) or SSI) or disability in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment ofthe Project nor shall the transferee or any person claiming under or through the transferee, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, , • • ( RVPUB\KAS \601076 5 • • _ number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Project. (h) The Very Low Income Spaces shall be intermingled with, and shall be of comparable quality to, all other Spaces in the Project. Tenants in all Spaces shall have equal access to and enjoyment of all common facilities of the Project. - - • (i) In the aggregate, no more than two persons per bedroom, plus one person . shall occupy any Space in the Project, not including children born after the date of initial ' occupancy by a household. For example, with respect to a two bedroom mobilehome, maximum occupancy shall be 5 persons (exclusive of post- pccuparicy children described above). - - ' (j) • The Borrower will accept as tenants, on the same basis as all other prospective . tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United Stated Housing Act, or its successor. . The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that • is more burdensome than criteria applied to all other prospective tenants, nor shall the ' Borrower apply or permit the application of management policies or lease provisions with respect to the Project which have the effect of precluding occupancy of Spaces by such • . prospective tenants. (— - - . : - • Section 3A. - ' Additional Program Requirements. The following provisions shall apply during . • the term of this Agreement, irrespective of whether any. Bonds are outstanding. . . , (a) Any proposed sale of the Project by the Borrower shall be noticed to the - ' • Issuer no less than ninety (90) days prior to the proposed date of the sale. . • • (b) - The Borrower shall notify the Issuer and the Program Administrator of the operations/management company it will employ for the Project no less than thirty (30) days - prior to'the signing of a contract with any such entity. Qualifications of the firm(s) shall also • - . be provided at- that time and the Issuer shall have the right to submit comments on the • qualifications of the firm, which shall be considered by Borrower prior to execution of a • . contract. . (c) • The Borrower is responsible for all management functions with respect to the - Project including without limitation the selection of tenants, certification and recertification ' - of household size and income, evictions, collection of rents and deposits, maintenance, • . landscaping, routine and extraordinary repairs, replacement of capital items, and security. - The Issuer shall have no responsibility over management of the Project. In no instance shall the Borrower delegate or forego its responsibility to operate the Project in the manner set ' forth in this Agreement and the Loan Agreement, except as expressly provided in Section - 3A.(b) above. - RVPUB\KAS\601076 6 (d) The Issuer, through its Authorized Officer, reserves the right to conduct on or about December 15 of each year, commencing December 15, 2001, an annual (or more frequently, if deemed necessary by the Issuer) review of the management practices and financial status of the Project. The purpose of each periodic review will be to enable the Issuer to determine if the Project is being operated and managed in accordance with the requirements and standards ofthis Agreement. The Borrower shall cooperate with the Issuer in such reviews, including but not limited to making its books and records regarding the Project available for inspection by the Issuer. • (e) With the exception of pre- existing uses of property not owned by the Borrower, the Borrower agrees, for the entire term �f this Agreement, 'to maintain all , common area interior and exterior improvements and - common buildings on the Project • (exclusive of the mobile homes and tenant spaces), including, without limitation, landscaping - • at the Project, in good condition and repair, including necessary replacements (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, • ordinances, orders and regulations of all federal, state, county, municipal, and other -- governmental agencies and bodies having or claiming jurisdiction and all their respective • - departments, bureaus, and officials. - • - . • In the event that the Borrower breaches any of the covenants contained in this Section 3A(e) and such default continues for a period of ten (10) days after written notice. from the Issuer, with respect to graffiti, debris, waste material, and general maintenance or thirty (30) • - days after- written notice from• the Issuer with respect to landscaping and building improvements, then the Issuer, in addition to whatever other remedy they may have at law • or in equity, shall have the right to enter upon the Project and perform or cause to be . • performed all such acts and work necessary to cure the default: Pursuant to such right of - - entry, the Issuer shall be permitted (but is not required) to enter upon the Project and perform all acts and - work necessary to protect, maintain, and preserve the improvements and • • : landscaped areas on the Project, and to attach a lien on the Project, or to assess the Project, in the amount ofthe expenditures arising from such acts and work of protection, maintenance, - and preservation by the Issuer and /or costs of such cure, including a fifteen percent (15 %) - administrative charge, which amount shall be- promptly paid by the Borrower to the Issuer as - applicable, upon written demand. ' • - .. • Section 4. Qualified Residents. Pursuant to the requirements of the Code and the Act, . the Borrower hereby represents, as of the date hereof, and warrants, covenants and agrees as follows: • - - - (a) During the Qualified Project Period: - - - - (i) not less than twenty percent (20 %) of the Spaces in the Project shall • • be designated as Very Low Income Spaces and shall be continuously occupied by • _ Very Low Income Residents. The monthly rent charged for one -half of the Very Low Income Spaces (i.e., 10% of the Spaces) shall be not greater than as follows: RVPUB\KAS \601076 7 • • • (A) where a Very Low Income Resident is both the registered and legal owner of the mobile home and is not making mortgage payments for the purchase of that mobile home, the total rental charge for occupancy of the • Space (excluding a reasonable allowance for other related housing costs determined at the tine of acquisition of the Project by the Borrower and • excluding any supplemental rental assistance from the State, the federal government, or any other public agency to the Very Low Income Resident or • • , on behalf of the Space and the mobile home) shall not exceed one - twelfth of • 30 percent of 50 percent of Median Income for the Area; adjusted for • household size in the manner set forth above under the definition of Very Low • Income Resident. • • (B) where a Very Low Income Resident is the registered owner of - , the mobile home and is making mortgage payments for the purchase of that mobile home, the total rental charge for.occupancy of the .Space (excluding any charges for utilities and storage and excluding any supplemental rental assistance from the State, the federal government, or any other public agency • to the Very Low Income Resident or on behalf of the Space and mobile home), shall not exceed one - twelfth of 15 percent of 50 percent of Median • Income for the Area, as adjusted for household size in the manner set forth • above under the definition of Very Low Income Resident. • (C) - where a Very Low Income Resident rents both the mobile - . home and the Space occupied by the mobile home, the total rental payments . . paid by the Very Low Income Resident on the mobile home and the Space • occupied by the mobile home '(excluding any supplemental rental assistance • . . • . • from the State, the federal government, or any other public agency to that • • • • • Very Low Resident or on behalf of that Space and mobile home) shall not exceed one - twelfth of 30 percent of 50 percent of Median Income for the Area adjusted for household size in the manner set forth above under the • • • definition of Very Low Income Resident. • • • (b) In the event a recertification of such tenant's income in accordance with • Section 4(d) below demonstrates that such tenant no longer qualifies as a Qualified Resident - the Space occupied by such Resident shall continue to be treated as a Qualified Space unless . and until any Space in the Project thereafter is occupied by a new tenant other than a Qualified Resident. Moreover, a Space previously occupied by a Qualified Resident and then vacated shall be considered occupied by a Qualified Resident until reoccupied, other than for a temporary period, at which time the character of the Space shall be redetermined. In no • • event shall such temporary period exceed thirty -one (31) days. Notwithstanding anything herein to the contrary, if at any time the number of Qualified Residents falls below the number required by subparagraph (a) (i) of this Section, the next available vacant Space shall be • rented to a Qualified Resident. - RVPUB\KAS\601076 8 • • required by subparagraph (a) (i) of this Section, the next available vacant Space shall be rented to a Qualified Resident. (c) Immediately prior to a Qualified Resident's occupancy of a Qualified Space (or prior to the Closing Date with respect to Very Low Income Spaces previously occupied), the Borrower will obtain and maintain on file an Income Certification form from each Qualified Resident occupying a Qualified Space, dated immediately prior to the initial occupancy of such Qualified Resident in the Project (or prior to the Closing Date in the case of existing Very Low Income Residents). In addition; the Borrower will provide such further information as may be required in the future by State of California, and by the Act, as the same may be amended from time to time, as requested by the Issuer or the Program Administrator. The Borrower shall verify that the income provided by an applicant with respect to a Space to be occupied after the Closing Date is accurate by taking one or more . • of the following steps as a part of the verification process: (1) obtain a federal income tax - return for the most recent tax year, (2) obtain a written verification of income and . employment from applicant's current employer, (3) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income reasonably satisfactory to the Program Administrator or (4) such other information • • as may be reasonably requested by the Program Administrator. - Within ten days after the last day of each calendar quarter during the term of this Regulatory Agreement commencing with the quarter ending March 30, 2001, the Borrower. shall advise the Program Administrator or in the absence of a Program Administrator, the • ( • , Issuer, of the - status of the occupancy of the Project by delivering to the Program Administrator a Certificate of Continuing Program Compliance; provided, however, with the • • prior written approval of the Program Administrator or Issuer; as the case may be, such Certificate need be filed only semi - annually. Copies of the recent Income Certifications " for Qualified Residents commencing or continuing occupancy of a Qualified Space shall be ' made available to the Issuer or Program Administrator upon request. (d) On the first anniversary date of the issuance of the Bonds, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of such Qualified Spaces by obtaining a completed Income Certification based upon the current income of each occupant of the Space. The Borrower need not verify the income of tenants • in connection with any such recertification. In the event the recertification demonstrates that • such household's income exceeds 140% ofthe income at which such household would qualify as Qualified Residents, such household will no longer qualify as a Qualified Resident, and the ' Borrower either (i) will designate another qualifying Tenant and Space in the Project as a Qualified Resident and a Qualified Space, respectively, or (ii) will rent the next available' vacant Space to one or more Qualified Residents. • (e) The Borrower will maintain complete and accurate records pertaining to the • . Qualified Spaces, and will permit any duly authorized representative of the Issuer, the Program Administrator, the Trustee (who shall have no duty to inspect), the Department of the Treasury or the Internal Revenue Service to inspect during normal business hours and RVPUB KAS\601076 9 - The Borrower shall submit to the Secretary of the Treasury annually on the • anniversary date of the start of the Qualified Project Period or such other date as is required , by the Secretary, a certification that the Project continues to meet the requirements of Section 142(d) of the Code, and shall provide a• copy of such certification to the Program ' . Administrator. , - • - (f) Each lease pertaining to a Qualified Space occupied after the Closing Date - shall contain a provision to the effect that the Borrower has relied on the Income Certification and supporting information supplied by the Qualified Resident in determining qualification for ' - - occupancy of the Qualified Space, and that any material misstatement in such certification • • . (whether or not intentional) may be cause for immediate termination -of such lease: Each lease - will also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to Section 4(d) above will disqualify the - Space as a Qualified Space and provide grounds for termination of the lease. The Borrower agrees to provide to the Program Administrator and the Issuer, a copy of the form of ' • • application and lease to be provided to prospective Qualified Residents and any amendments . - thereto. . • (g) • In the event, despite Borrower's exercise of best efforts to comply with the - provisions of Section 4 of this Regulatory Agreement, the Borrower shall have been but of compliance with any of the restrictions of Section 4 hereof relative to Qualified Residents, for - a period in excess of six months, then at the 'sole option of the Issuer the term of the • • . • Regulatory Agreement shall be automatically extended for the period ofnon - compliance upon ' - written notice to the Borrower, the Trustee and the Program Administrator from the Issuer, • _ . such extension to relate to the Qualified Spaces and Qualified Residents as to w hich such noncompliance relate: - • - . , • • • Section 5. " Tax Status ofthe Bonds. The Borrower and the Issuer each hereby represents, • as of the date hereof, and warrants, covenants and agrees that: - . • (a) • It will not knowingly take or permit, or omit to take or cause to be taken, as is appropriate, any action that would adversely affect the exclusion from gross income for ' -' federal income tax purposes of the interest on the Bonds or the exemption from California - • personal income tax of the interest on the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind • • or correct such actions or omissions promptly upon obtaining knowledge thereof; • • • - (b) It will take such action or actions as may be necessary, in the written opinion . of Bond Counsel filed with the Issuer, the Trustee and the Borrower, to comply fully with the - , Act and all applicable rules, rulings, policies, procedures, Regulations or other official - • ' - statements promulgated, proposed or made by the Department of the Treasury or the Internal ' Revenue Service pertaining to obligations issued under Section 145 of the Code to the extent' , ' ' . necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds; and RVPUB\KAS\601076 10 (c) . It will file of record such documents and take such other steps as are . _ necessary, in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, in order to ensure that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the Project, including, but not limited to, the execution and recordation of this Regulatory Agreement in the real property records of the County. . The Borrower hereby covenants to include the requirements and restrictions contained in this - - Regulatory Agreement in any document transferring any interest in the Project (other than leases of • • Spaces in the Project to individual tenants) to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement. Section 6. Modification of Special Tax Covenants. The Borrower, the Trustee and the _ Issuer hereby agree as follows: - - (a) To the extent any amendments to the Act, the Regulations or the Code shall, - in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, • • . impose requirements upon the ownership or operation of the Project more restrictive than - • . those imposed by this Regulatory Agreement which must be complied with in order to - maintain the exclusion from gross income for federal income tax purposes of interest on the - '. - Bonds, this Regulatory Agreement shall be deemed to be automatically amended to impose • - • such additional or more restrictive requirements. - - . - (b) - To the extent any amendments to the Act, the Regulations or the Code shall, • • in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, , • • - • - impose requirements upon the ownership or operation of the Project less restrictive than • imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or' • modified to provide such less restrictive requirements but only by written amendment • - _ • . ' approved and signed by the Issuer (which approval will not be unreasonably denied), the • - , . Trustee and the Borrower and approved by the written opinion of Bond Counsel that such - amendment (a) will not affect the exclusion from gross income for federal income tax • • purposes of interest on the Bonds, and (b) shall not conflict with any restrictions imposed by the Issuer, the Act, the regulations promulgated under the Code or the Code, as applicable. - (c) • The Borrower, the Issuer and, if applicable, the Trustee shall execute, deliver _ and, if applicable, file of record any and all documents and instruments, necessary to • • effectuate the intent of this Section 6, and each of the Borrower and the Issuer hereby • ' _ - .. . appoints the Trustee as its true and lawful attorney -in -fact to execute, deliver and, if - applicable, file of record on behalf of the Borrower or the Issuer, as is applicable, any such • document or instrument (in such form as may be approved in writing by Bond Counsel) if • -- - either the Borrower or the Issuer defaults in the performance of its obligations under this ' subsection (c); provided, however, that the Trustee shall take no action under this subsection • ' - • (c) without first notifying the Borrower or the Issuer, or both of them, as is applicable, unless RVPUB\KAS\601076 . 1 1 �' directed in writing by the Issuer or the Borrower and without first providing the Borrower or the Issuer, or both, as is applicable, an opportunity to comply with the requirements of this Section 6. . - Section 7. Indemnification. The Borrower shall indemnify, hold harmless and defend the Issuer, the Program Administrator, the Oversight Agent and the Trustee and the respective officers, members, directors, officials and employees of each ofthem (the "indemnified party") against all loss, costs, damages, expenses, suits, judgments, actions and liabilities ofwhatever nature, joint and several (including, without limitation, attorneys' fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments), directly or indirectly resulting from or arising out-of or related to (a) the operation, use, occupancy, maintenance, or ownership of the Project (including ' compliance with laws, ordinances and rules and regulation's of public authorities relating thereto); or • (b) any written statements or representations with respect to the Borrower, the Project or the Bonds . made or given to the Issuer, the Program Administrator, the Oversight Agent or the Trustee, or any underwriters or purchasers of any of the Bonds, by the Borrower, or any of its agents or employees, . • • including, but not limited to, statements or representations of facts or financial information; provided, however, the Borrower shall not be obligated to indemnify the Issuer, the Trustee, the Oversight . Agent or the Program Administrator for damages caused_by the negligence or willful misconduct of • • the Issuer, the Trustee or the Program Administrator. The Borrower also shall pay and discharge and . shall indemnify and hold harmless the Issuer, the Program Administrator, the Oversight Agent and • the Trustee from (x) any lien or charge upon payments by the Borrower to the Issuer and the Trustee • hereunder and (y) any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim . is asserted, or any such lien or charge upon payments, or any such taxes, assessments, impositions' ' . - or other charges, are sought to be imposed, the Issuer or the Trustee shall give prompt notice to the Borrower, and the Borrower shall have the sole right and duty to assume, and. will assume, the - defense thereof, including the employment of counsel selected by the indemnified party and the ' payment of all reasonable expenses related thereto, with full power to litigate, compromise or settle - • the same in its sole discretion; pro however, that the Issuer and the Trustee shall each have the - right to review and approve or disapprove any such compromise or settlement, and provided further • that any such approval shall not be unreasonably withheld. - - Section 8. • Consideration. The Issuer has issued the Bonds to provide funds to make the Loan under the Loan Agreement to finance the Project, all for the purpose, among others, of inducing the Borrower to own and operate the Project such that the Project shall contribute to the Issuer's . efforts to provide affordable housing to Qualified Residents in the Redevelopment Project, Area of the City of Seal Beach and to the satisfaction of the Issuer's ongoing housing burden. In - consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this ' Regulatory Agreement and has agreed to restrict the uses to which the Project' can be put on the terms and conditions set forth herein. . Section 9. • Reliance. The Issuer and the Borrower hereby recognize and agree that the representations, warranties, covenants and agreements set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross income \ RVPUB\KAS \601076 12 ' for federal income tax purposes of the interest on the Bonds and the exemption from California ,- personal income tax of the interest on the Bonds. In performing their duties and obligations t hereunder, the Issuer and the Trustee may rely upon statements and certificates of the Borrower and Qualified Residents, and upon audits of the books and records of the Borrower pertaining to the Project. In addition, the Issuer and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or • suffered by the Issuer or the Trustee hereunder in good faith and in conformity with such opinion. In determining whether any default or lack of compliance by the Borrower exists under this • Regulatory Agreement, the Trustee shall not be required to conduct any investigation into or review - of the operations or records of the Borrower and may rely solely upon any notice or certificate delivered to the Trustei by the Borrower, the Issuer or the Program Administrator with respect to • • the occurrence or absence of a default. Upon receipt of any such notice, the Trustee shall provide Borrower a copy. • • . Section 10. Sale or Transfer of the Project. Except as permitted and contemplated by Section 6.32 of the Loan Agreement, the Borrower intends to hold the Project for its own account, - has no current plans to sell, transfer or otherwise dispose of the Project except in the manner - provided in the Loan Agreement, and hereby covenants and agrees not to sell, transfer or otherwise - • dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated • • - hereunder), without obtaining the prior written consent of the Issuer and upon receipt by the Issuer and the Trustee of (i) evidence satisfactory to the Issuer that the Borrower's purchaser or transferee • • has assumed in writing and in full, the Borrower's duties and obligations under .this, Regulatory - • Agreement and under the Administration Agreement, (ii) an opinion of counsel for the transferee that the transferee has duly assumed the obligations of the Borrower under this Regulatory Agreement and theAdministration Agreement and that such obligations and this Regulatory Agreement and the - Administration Agreement are binding on the transferee, (iii) the Issuer receives evidence acceptable, • • to . the Issuer that either (A) the transferee has experience in the ownership, operation and _ • management of comparable projects without any record of material violations of discrimination - restrictions • or other state or federal laws or regulations applicable to such projects, or (B) the. • • transferee agrees to retain a property management firm with the experience and record described in - subparagraph (A) above, and in either case at. its option,- the Issuer may cause the Program Administrator to provide on -site training in program compliance ifthe Issuer determines such training • - is necessary, (iv) an opinion of Bond Counsel to the effect that such sale will not cause interest on • the Bonds to become includable in the gross income of the recipients thereof for federal income tax purposes, (v) evidence that the Borrower has complied with any applicable provisions of Section 6.2 of the Loan Agreement, and (iv) evidence that the transfer and the transferee have been approved in • • writing by the Issuer. It is hereby expressly stipulated and agreed that any sale, transfer or other• disposition of the Project in violation of this Section 10 shall be null, void and without effect, shall • • cause a reversion of • title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under this Regulatory Agreement. Not less than ninety (90) days prior to consummating any sale, transfer or disposition of any interest in the Project, the Borrower shall deliver to the Issuer, the Program Administrator, the Oversight Agent and the Trustee a notice in writing explaining the nature of the proposed transfer. . - RVPUB\KAS\601076 13 • • (' Section 11. Term. This Regulatory Agreement and all and several ofthe terms hereof shall become effective upon its execution and delivery and shall remain in full force and effect during the Qualified Project Period, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement and the Note. Notwithstanding any other provisions of this Regulatory Agreement to the contrary, this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated upon agreement by the Issuer, the Trustee and the Borrower, subject to compliance with any of the provisions contained in this Regulatory Agreement only if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the exemption from State personal income tax of the interest on the Bonds. - • • The terms of this Regulatory Agreement to the contrary notwithstanding, this Regulatory Agreement, and all and several of the terms hereof, shall terminate and be of no further force and • . effect in the event of (a) a foreclosure or delivery of a deed in lieu of foreclosure whereby a third party shall take possession of the Project, (b) involuntary non - compliance with the provisions of this Regulatory Agreement caused by fire, seizure, requisition, change in a federal law or an action of a' federal agency after the date hereof which prevents the Issuer and the Trustee from enforcing the provisions hereof, or (c) condemnation or a similar event, and, in each case, the payment in full and retirement of the Bonds theretofore or within a reasonable period thereafter. Upon the termination - - of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms hereof; provided, however, that the ( execution and delivery of such instruments shall not be necessary or a prerequisite to the termination, ' of this Regulatory Agreement in accordance with its terms. - •• • When all of the Bonds have been paid or deemed paid pursuant to Article XIII of the • Indenture, the Trustee shall no longer have any duties or obligations hereunder, and all references to • • the Trustee shall thereafter be deemed references to the Issuer. Section 12. Covenants to Run With the Land. The Borrower hereby subjects the Project (including the Project site) to the covenants, reservations and restrictions set forth in this Regulatory Agreement. The Issuer and the - Borrower hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the Borrower's successors in title to the Project; provided, however, that upon the termination of this Regulatory Agreement said covenants, reservations and ' restrictions shall expire. Each and every contract,. deed or other instrument hereafter executed - covering or conveying the Project 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. - . • - ' . - - • Section 13. Burden and Benefit. The Issuer and the Borrower hereby declare their understanding and intent that the burden.ofthe covenants set forth herein touch and concern the land in that the Borrower's legal interest in the Project is rendered less valuable thereby. • The Issuer and RVPUB\ICAS \601076 14 - the Borrower 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 Very l Low Income Residents, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Bonds were issued. - Section 14. Uniformity: Common Plan. The covenants, reservations and restrictions hereof shall apply unifoi -nly to the entire Project in order to establish and carry out a common plan for the use of the Project. - - - - Section 15. Enforcement. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if such default remains uncured for a period of 60 days after notice thereof shall have been,given by the Issuer or the Trustee to the Borrower (provided, however, that the Issuer may at its sole option extend such period if the Borrower provides the Issuer with an opinion ofBond Counsel to the effect - • that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds, and provided further, in the event any default relates to Section - 4 hereof and the Borrower is exercising best efforts to comply with such restrictions as determined by the Issuer in its sole discretion, then the cure period described above shall be 6 months and shall be subject to the extension of the Qualified Project Period - under Section 4(g) hereof), then the • • Trustee, subject to the provisions of Section 9 hereof and to the extent directed in writing by the Issuer, subject to the provisions of the Indenture, acting on its own behalf or on behalf of the Issuer, - shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take any one or more of the following steps: ( (a) by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants hereunder or enjoin any acts or things . • - • - which may be unlawful or in violation of the rights of the Issuer or the Trustee hereunder; (b) have access to and inspect, examine and make copies of all of the books and ' . - records of the Borrower pertaining to the Project; and . .. - (c) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower hereunder. In addition to the enforcement remedies set forth above, upon the Borrower's default under • • this Regulatory Agreement, the Issuer shall have the right (but not the obligation) to lease up to 20% of the Spaces in the Project for a rental of $1 per Space per year. The Issuer shall sublease such units to Very Low Income Residents to the extent necessary to comply with the provisions hereof. Any - rent paid under such a sublease shall be paid to the Borrower after the Issuer has been reimbursed for , any expenses incurred by them in connection with the sublease; provided that, if the Borrower is in default under the Loan, such rent shall be used to make payments under the Loan. The Trustee shall have the right, in accordance with this Section 15 and the provisions of the Indenture, without the consent or approval of the Issuer, to exercise any or all of the rights or i RVPUB'KAS\601076 15 - remedies ofthe Issuer hereunder; provided that prior to taking any such act the Trustee shall give the Issuer written notice of its intended action. All fees, costs and expenses of the Trustee, the Issuer and the Oversight Agent (including, without limitation, reasonable attorneys' fees) reasonably incurred in taking any action pursuant to this Section 15 shall be the sole responsibility of the Borrower; provided the Trustee shall not be obligated to take -any action hereunder that results in expenses or liability to the Trustee unless it is compensated and reimbursed for its expenses, including reasonable - attorneys' fees, and indemnified to its satisfaction against liability. After the Indenture has been discharged, or if the Trustee fails to act under this Section 15, the Issuer may act in its own behalf to declare an "Event of Default" to have occurred and to take any one or more ofthe steps specified hereinabove to the same extent and with the same effect as if taken by the Trustee. - Section 16. Recording and Filing. The Borrower shall cause this Regulatory Agreement and all amendments and supplements hereto, to be recorded and filed, prior to the recording of the Mortgage and the disbursement of the Loan, in the real property records of the County and in such other places as the Issuer or the Trustee may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording. • Section 17. Payment of Fees. The Borrower will pay on each December 1, commencing December 1, 2001, to the Program Administrator, the Program Administrator's Fee, and to the • _ Oversight Agent, the Oversight Agent's Fee, each when due. Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture, throughout the term of this Regulatory Agreement, the Borrower shall continue to pay to - the Program Administrator, the Program Administrator's Fee, and to the Oversight Agent, the Oversight Agent's Fee, and, in the event of a . default hereunder, to the Issuer and the Trustee reasonable compensation for any services rendered by either of them hereunder and reimbursement for all expenses reasonably incurred by either of them • • in connection with such default. • - • • • • - Section 18. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California. Except as expressly provided herein and in the Agreement, the Trustee's rights, duties and obligations hereunder are governed in their entirety by the terms and provisions of the Indenture. - - Section 19. Amendments. Except as provided in Section 6(a) hereof, this Regulatory • 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. The parties hereto acknowledge that, as long as the Bonds are outstanding, the owners of the Bonds are third party - - beneficiaries to this Regulatory Agreement. - ' • - - • - • • Section 20. Notice. All notices, certificates or other communications shall be in writing • -and will be sufficiently given and (except for notices to the Trustee, which shall be deemed given only ' ' when actually - received by the Trustee) shall be deemed given on the date personally delivered or on ' - ( • RVPUB'KAS \601076 16 • the second day following the date on which the same have been mailed by certified mail, return receipt „ - requested, postage prepaid, addressed as follows: Issuer: _ • Redevelopment Agency of the City of Seal Beach 211 Eighth Street . • . Seal Beach, Ca 90740 . Attention: City Manager Oversight Agent and Program Rosenow Spevacek Group, Inc. • . ' Administrator: 540 North Golden Circle Drive, Suite 305- Santa Ana, CA 92705 - - , - - Attention: President ' Trustee: Union Bank of California, N.A. . 120 South San Pedro Street • - - Los Angeles, CA 90012 • • . • . Attention: Corporate Trust Dept. - Borrower: LINC Community Development Corporation • . . . • • 110 Pine Avenue, Suite 525 • - • • • Long Beach, CA 90802 . . • - • Attention: Executive Director . - . • • • , • ( • Any ofthe foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, documents or other communications shall be sent. • . • • ' Section 21. Severability. ' If any provision of this Regulatory 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. ' • . - • - . • Section 22. Multiple Counterparts. This Regulatory Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which . shall be deemed to be an original. . ' . • Section 23. Trustee Acting Solely in Such Capacity. In accepting its obligations hereunder, the Trustee acts solely as trustee for the benefit of the Registered Owners, and not in its individual • capacity; and the duties, powers, rights and liabilities of the Trustee in acting hereunder shall be ' subject to the provisions ofthe Indenture, including, without limitation, Article VIII ofthe Indenture. • " , The Trustee shall act as specifically provided herein and no implied duties or obligations shall be read into this Regulatory Agreement against the Trustee. The Trustee is entering into this Regulatory Agreement solely in its capacity as Trustee under the Indenture and not in its individual, corporate or personal capacity and except as specifically provided herein, nothing herein shall be RVPUBUCAS\601076 17 - • _ construed as imposing any duties or obligations upon the Trustee beyond those contained in the Indenture. After the date on which no Bonds remain outstanding as provided in the Indenture, the Trustee shall have no duties or responsibilities under this Regulatory Agreement, and all references herein to the Trustee shall be deemed references to the Issuer: Section 24. Compliance by Borrower. The Trustee shall not be responsible for monitoring or verifying.compliance by the Borrower with its obligations under this Regulatory Agreement. The Program Administrator shall assume such responsibilities_ under the terms of the Administration Agreement among the Program Administrator, the Issuer and the Borrower. - Section 25. Limited Liability of the Issuer. The Issuer's liability under this Regulatory Agreement shall be limited as set forth in Section 14.3 of the Indenture. ( - ( RVPUB \KAS \601076 18 - IN WITNESS WHEREOF, the Issuer, the Trustee and the Borrower have executed this Regulatory Agreement by duly authorized representatives, all as of the date first written hereinabove. REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH • BY: r Chairperso • UNION BANK OF CALIFORNIA, N.A., as Trustee • : / // B / Y A!/ Authorized Officer LINC COMMUNITY DEVELOPMENT CORPORATION, a California nonprofit public • benefit corporation • By: ni SX - - ! r-e / RVPUB\KAS \601076 19 State of California ) • ss. County of Los Angeles ) On December 18, 2000, before me, Evelyn Corselli, personally appeared Paul Yost ❑ personally known to me, OR, Er to me on the basis of satisfactory evidence to be the person(s) whose.name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her /their authorized capacity /ies, and that by his/her /their signature(s) on the instrument the persori(s), or the entity upon behalf of w hich person(s) acted, executed the instrument. - Witness my hand and official seal. ' - • • , e ti24rLt a ; • Nota Public • My Commission expires October 17, 2004 • EVELYN CORSELLI y � = COMM. #1277617 -A, NOTARY PUBLIC - ',I .1 .! , r RIVERSIDE COUNTY �� • My Comm. Expires October 17, 2004 • • • • • . EXHIBIT • • A PORTION OF THAT PARCEL OF LAND GRANTED TO THE CITY OF SEAL BEACH BY THAT CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT OF LOS ANGELES COUNTY, CASE NO. C- 78004, PARCEL 4, A CERTIFIED COPY OF WHICH WAS RECORDED MARCH 23, 1977 IN BOOK 12115, PAGE 195 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA; AND A PORTION OF TIDE LAND LOCATION NO. 137 "SURVEY NO. s. ' 106 ", AS PATENTED BY THE STATE OF CALIFORNIA ON FEBRUARY 12, 1901 AND RECORDED APRIL 27, 1901 IN BOOK 9, PAGE 105 OF PATENTS, RECORDS OF LOS • ANGELES COUNTY, AND RECORDED SEPTEMBER 5, 1905. IN BOOK 1., PAGE 231 OF ' PATENTS, RECORDS ORANGE COUNTY; SAID ABOVE PORTIONS OF LAND BEING MORE . ' PARTICULARLY DESCRIBED AS FOLLOWS: . • BEGINNING AT THE MOST NORTHERLY CORNER OF TRACT NO. 9783, AS SHOWN ON MAP FILED IN BOOK 437, PAGES 32 TO 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE - COUNTY; SAID CORNER BEING A POINT IN THE SOUTHEASTERLY LINE OF THE LOS ANGELES COUNTY FLOOD CONTROL DISTRICT LAND DESCRIBED AS PARCEL 8 IN SUPERIOR COURT CASE NO. 231287, IN AND FOR THE COUNTY OF LOS ANGELES, IN • BOOK 2383, PAGE 42, RECORDS OF ORANGE COUNTY; SAID SOUTHEASTERLY LINE BEING ' A CURVE CONCAVE SOUTHEASTERLY AND HAVING 'A RADIUS OF 2000.00 FEET, A • RADIAL LINE FROM SAID POINT BEARS • SOUTH 35° 57' 55" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE AND SOUTHEASTERLY LINE, AN ARC DISTANCE OF 356.05 FEET; THENCE, TANGENT TO SAID CURVE AND CONTINUING ALONG SAID ( SOUTHEASTERLY LINE, NORTH 54° 02' 05" EAST 239.79 FEET TO THE_ NORTHEASTERLY LINE OF THAT 200.00 FOOT WIDE STRIP OF LAND DESCRIBED IN THE QUITCLAIM DEED ' TO THE PACIFIC ELECTRIC RAILWAY COMPANY,. RECORDED FEBRUARY 21; 1926IN BOOK - - - .514, PAGE 44 OF DEEDS, RECORDS OF ORANGE COUNTY; THENCE SOUTHEASTERLY • , ALONG SAID NORTHEASTERLY LINE, SOUTH 42 °• 15' 32" EAST 492.08 -FEET TO THE • - - NORTHWESTERLY LINE OF FIRST STREET, AS IT NOW EXISTS, SAID LAST MENTIONED. NORTHWESTERLY LINE BEING A LINE PARALLEL WITH' AND DISTANT NORTHWESTERLY , - _ 110.00 FEET, MEASURED AT RIGHT ANGLES FROM THE BOUNDARY LINE OF THE RANCHO LOS ALAMITOS, PER MAP RECORDED IN BOOK 1, PAGES 460, 461 AND 462 OF PATENTS OF LOS ANGELES COUNTY, CALIFORNIA, AND AS SHOWN ON RECORD OF SURVEY RECORDED IN RECORD OF SURVEY BOOK 90, PAGES 23 TO 30, AND AS MORE • • PARTICULARLY ESTABLISHED BY SEAL BEACH BOUNDARY LINE AGREEMENT NO. 2 DATED FEBRUARY 5, 1968 AND RECORDED APRIL 8, 1968 IN BOOK 8565, PAGE 1 OF OFFICIAL • •RECORDS OF ORANGE COUNTY; THENCE SOUTHWESTERLY ALONG SAID LAST ' • . MENTIONED PARALLEL LINE, AND THE NORTHWESTERLY LINE OF FIRST STREET, SOUTH 54° 48' 38" WEST 606.81 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE' SOUTHEASTERLY, AND HAVING A RADIUS OF 610.00 FEET; THENCE SOUTHWESTERLY ALONG SAID CURVE, AN ARC DISTANCE OF 6.79 FEET TO THE MOST EASTERLY BOUNDARY CORNER OF SAID TRACT NO. 9783; THENCE NORTHWESTERLY ALONG THE NORTHEASTERLY BOUNDARY LINE OF SAID TRACT NO. 9783, THE FOLLOWING COURSES: ' ' l • ( • EXHIBIT A' (CONTINUED) • NORTH 42° 17' 11" WEST 203.39 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF, 15.00 FEET; THENCE NORTHERLY - ALONG SAID CURVE, AN ARC DISTANCE OF 21.79 FEET TO THE BEGINNING OF A , REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 112.50 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE', "'AN - ARC DISTANCE OF 10.24 FEET TO j THE INTERSECTION OF A NON- TANGENT LINE BEARING NORTH 43° 68' 37" WEST, A LINE FROM SAID POINT OF INTERSECTION BEARS NORTH 54° 15' 24" WEST; THENCE NORTH 43° 58' 37" WEST 230.28 FEET TO THE MOST NORTHERLY CORNER OF SAID TRACT NO.' 9783 AND THE POINT OF BEGINNING. THE ABOVE DESCRIBED PARCEL OF IS SHOWN AS "NOT A PART" ON THE MAP OF TRACT NO. 9783, FILED IN BOOK 437, PAGES 32 TO 36, OF MISCELLANEOUS MAPS, . RECORDS OF ORANGE COUNTY, CALIFORNIA. . - • ' • ' EXCEPT FROM THE ABOVE DESCRIBED PROPERTY, THAT PORTION OF THE SUBSURFACE , • THEREOF LYING ONE HUNDRED (100) FEET OR MORE BELOW THE SURFACE. OF SAID PROPERTY, BUT WITHOUT ANY RIGHT OF ENTRY UPON THE SURFACE THEREOF, AS SET FORTH IN MEMORANDUM OF LEASE, RECORDED JANUARY 30, 1980 IN BOOK 13484, ' , PAGE 1969 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. ALSO EXCEPT THEREFROM ALL OIL, OIL RIGHTS, NATURAL GAS RIGHTS, MINERAL RIGHTS • AND OTHER HYDROCARBON SUBSTANCES WHATEVER NAME KNOWN, TOGETHER WITH APPURTENANT RIGHTS THERETO, WITHOUT, HOWEVER, ANY RIGHT TO ENTER • UPON THE SURFACE OF' SAID LAND NOR ANY PORTION OF THE SUBSURFACE LYING ABOVE A DEPTH OF 500 FEET,, AS EXCEPTED OR RESERVED IN INSTRUMENTS OF RECORD. - • - SOME MATTERS AFFECTING SPECIFIC MOBILE HOME SITES ONLY ARE NOT ,COVERED __ • HEREIN. ' • " • ' • • " , . EXHIBIT `B" INCOME COMPUTATION AND CERTIFICATION • PART I: TO BE COMPLETED BY RESIDENT. • LINC COMMUNITY DEVELOPMENT CORPORATION - SEAL BEACH MOBILE HOME PARK PROJECT . HOUSING AFFORDABILITY SURVEY . " • We understand that completing this profile will assist LINC Community Development • Corporation in determining property tax abatement and preserving the park's tax- exempt status based on family income . - - - 1. There is/are persons in our household. There are bedrooms in our mobilehome.• 2. - My /Our home is a (check one) singlewide doublewide ' • triplewide - • - 3. The total combined income of our household from all sources* for the past calendar year was (please check one) • . . ' • Less than $23,650 • " Less than $50,200 • ' ' Less than $27,050 • " Less than $54,200 - . . • . ' Less than $30,400 Less than $56,750 ' - • ' - Less than $33,800 Less than $64,900 • • • • . • . Less than $35,150 . Less than $73,000 ' . Less than $36,500 . - • Less than $81,000 . " - • • Less than $40,150 Less than $87,600 • Less than $45,200 $87,601 or more ' ' *INCLUDES: . " - - Wages/Salary including overtime, Commissions and Fees, Tips and Bonuses, Interest and Dividends, ' Social Security, Alimony and Child Support, Gifts and Contributions, Military Pay and Income Tax - Credits, Disability Payments, Pensions. • DOES NOT INCLUDE: " - Medical Reimbursements, Scholarships, Combat Pay, Government Relocation Payments, Foster Care - Payments, Food Stamps, . Job Training Act Payments, Low - Income Home Energy Assistance • Payments. ' - - - , • • RVPUBIKAS\601076 B-1 4(a). The person(s) whose incomes are listed in item #3, above, have savings, stocks, bonds or equity in real property with a combined total value exceeding $5,000 ( DO NOT INCLUDE YOUR HOME). • - Yes No • (b) If Yes, enter the amount of income expected to be derived from such assets in the next 12 months: $ (c) • Enter the amount of such income that was included in item 3 above: $ - 5. My /Our current monthly space rent is $ • My /Our current mortgage payment (if any) is $ . • My /Our annual property tax payments are approximately $ My /Our monthly utility bill total (water, natural/propane gas, electricity) is approximately $ • We occupy space number • • • The information provided above is true and correct to the best of my /our knowledge. Head of Household Date Second Head of Household - • Date . - • • Signature - - • Signature Printed Name Printed Name • • Please return form to Park Manager's Office, or mail to: • • ' • LINC Community Development Corporation - • - - • • RVPUB\KAS \601076 B -2 • • PART II FOR COMPLETION BY PROJECT OWNER ONLY: ( -- , 1 - 1. - Calculation of eligible income: a) Enter amount entered for entire household in (3) above: $ b) (1) If the answer to 4(a) above is yes, enter the total amount entered in 4(b), subtract from - that figure the amount entered in 4(c) and enter the remaining balance ($ ); • • (2) Multiply the amount entered in 4(b) times the current passbook savings rate as determined by HUD to determine what the total annual earnings on the amount in 4(b} would be if invested in t_ • • passbook savings ($ . ), subtract from that figure the amount entered in.4(c) and enter the • remaining balance ($ ); (3) Enter the greater of the amount calculated under (1) or (2) above: $ . - • c) TOTAL ELIGIBLE INCOME ' (Line 1.a plus line 1.b(3)): $ - . . - 2. The amount entered in 1.c: ' - Qualifies the applicant(s) as- a Qualified Resident(s) • • • - Does not qualify the applicant(s) as a Qualified Resident(s) - • 3. Number of Space assigned: • , - _ The coach, payment is . • • • - . • Type of Mobile home: _ Single Wide Rent $ Multisectional Rent $ ' This Space [was/was not] last occupied for a period of 31 or more consecutive days by persons ' . • whose aggregate anticipated annual income as certified in the above manner upon their initial ' occupancy of the Space qualified them as Very Low Income Residents. ., • • 4. Method used to verify applicant(s) income: Employer income verification. ' • Copies of tax returns. . Other ( ) ' • RVPUB\KAS \601076 B-3 ( Manager INCOME VERIFICATION • . • , (for employed persons) The undersigned employee has applied for a mobile home space located in a project financed under the Redevelopment Agency of the City of Seal Beach Housing Program for persons of lower income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages; overtime, bonuses, commissions or any other form of compensation received on a regular basis. . Annual wages $ - . - - Overtime $ ' Bonuses $ Commissions . $ • Other Income $ Total current income $ , ' t I hereby certify that the statements above are true and complete to the best of my knowledge. , Signature Date Title . I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of a mobile home space located in their project which has been financed under the Redevelopment Agency of the City of Seal Beach Housing Program. , Signature Date , • • Please send to: • RVPUBUCAS\601076 B -4 • INCOME VERIFICATION - (for self - employed persons) - - I hereby attach copies of my individual federal and state income tax returns - for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. - Signature Date - - • • .. RVPUB\KAS \601076 B-5 - • --- ATTACHMENT NO. 1 Total Anticipated Income includes the following: - - . 1. all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; - , . • 2. the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowances for depreciation of capital assets except for straight line depreciation as provided in Internal Revenue Service regulations; 'any withdrawal of cash or assets from the operation of a business or profession will be included in income except to the extent the withdrawal is reimbursed of cash or assets invested in the operation by the family; . . - 3. - interest and dividends (including income from assets included below and other net income from real or personal property); 4. the full amount of periodic payments received from social, security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic. ° ' receipts, including any lump sum payment for the delayed start of a periodic payment; • 5. • payments in lieu of earnings, such as unemployment and disability compensation, workmen's ' compensation and severance pay; - . . _. . 6.. the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities plus the maximum amount _ that the public assistance agency could in fact allow for shelter and utilities; • • • - 7. periodic and determinable allowances, such as alimony and child support payments and regular . contributions and gifts received from persons not occupying the Space; and • . - 8. , all regular pay, special pay and allowances of a member of the Armed Forces (whether or not , • living in the dwelling) who is the head of the household ' or spouse (or other persons whose ' dependents are occupying the Space). • • _ - - . Excluded from such anticipated income are: - • - - • • 1. • casual, sporadic or irregular gifts; - . . - • 2. amounts which are specifically for or in reimbursement of medical expenses; . 3. lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains and settlement for personal or property losses; . RVPUB WAS N601076 B-6 • 4. amounts of educational scholarships paid directly to the student or the educational institution, , -- and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans not used for the above purposes are to be included in income; 5. hazardous duty pay to a household member in the Armed Forces who is away from home and exposed to hostile fire; - - 6. amounts received under training programs funded by HUD; .' 7. foster child care payments; . - . - • 8. amounts received by a Disabled (as defined below) person that are disregarded for a limited . time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self - Sufficiency; . 9. income of a live -in aide; - . 10; amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out -of- pocket expenses incurred and which are made solely to allow participation in a specific program; . 11. ' reparation payments paid by a foreign government pursuant to claims filed under the laws of • • • ( that government by persons who were persecuted during the Nazi era; . 12. amounts specifically excluded by any other federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes ' assistance under the United States Housing Act of 1937; - , 13. amounts received under training programs funded by HUD; • - - 14. $480 for each dependent (a member of the household (excluding foster children) other than family head or spouse, who is under 18 years of age or is a Disabled person (person who is under a . disability as defined in Section 223 of the Social Security Act or who has developmental disability as defined in Section 102(7) of the Developmental Disability Assistance and Bill of Rights Act) or Handicapped person (a person having a physical or mental impairment that is expected to be of a • long- continued and indefinite duration, substantially impedes his or her ability to live independently, _ and is of such a nature that such ability could be improved by more suitable housing conditions) or . is a full -time student. 15. $400 for any family whose head or spouse (or sole member) is an Elderly (at least 62 years of age), Disabled, or Handicapped person. - - RVPUBUCAS \601076 B -7 - 16. for any family that is not an Elderly Family (a family whose head or spouse (or sole member) is an Elderly, Disabled, or Handicapped person), but has a Handicapped or Disabled member other than the head of household or spouse, Handicapped Assistance Expenses (reasonable expenses that are anticipated during the period for which annual income is computed for attendant care and auxiliary apparatus for a Handicapped or Disabled family member and that are necessary for the family member to be employed provided the expenses are not paid to the family or reimbursed) in excess of 3% of annual income but this allowance may not exceed the employment income received by family members who are 18 years of age or older as a result of the assistance to the Handicapped or Disabled person. • 17. for any family whose head or spouse (or sole member). is an Elderly, Disabled, or • Handicapped person, that has no Handicapped Assistance Expenses, an allowance for those medical - expenses that are anticipated during the period for which annual income is computed not covered by insurance ( "Medical Expenses ") equal to the amount by which the medical expenses exceed 3% of annual income. 18. for any family whose head or spouse (or sole member) is an Elderly, Disabled, or Handicapped person, that has Handicapped Assistance Expenses greater than or equal to 3% of annual income, an allowance for Handicapped Assistance Expenses in excess of 3% of annual income (but the allowance may not exceed the employment income received by family members who are 18 years of age or older as a result of the assistance to the Handicapped or Disabled person), plus an • . allowance for Medical Expenses equal to the family's Medical Expenses. , • • 19. for any family whose head or spouse (or sole member) is an Elderly, Disabled or Handicapped . person, that has Handicapped Assistance Expenses that are less than 3% of annual income, an • ' 'allowance for combined Handicapped Assistance Expenses and Medical Expenses that is equal to the amount by which the sum of these expenses exceeds 3% of annual income. 20. amounts anticipated to be paid by the family for the care of children under 13 years of age ' during the period for which annual income is computed but only where such care is necessary to enable a family member to be gainfully employed or to further education and only to the extent such amounts are not reimbursed; the amount deducted shall reflect reasonable charges for child care and; • in the case of child care necessary to permit employment, the amount deducted shall not exceed the amount of income received from such employment. - • 21. in the case offamilies assisted by Indian housing authorities, the greater of child care expenses (as described in 20. above), or excessive travel expenses, not to exceed $25 per family per week for employment or education related travel. • Full -Time Student means an individual enrolled as a full -time student during each of five (5) calendar months during the calendar year in which occupancy of the Space begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full -time course of institutional • RVPUB\ICAS\601076 B-8 • on farm training under the supervision of an accredited agent of such an educational organization or ( . of a state or political subdivision thereof. . . .. . . . . • . . . .• . . • - • . • • „ . - - . . . . . . . . . . . . . . . . . . . • . . - . • • . . . ' - . , . • . - , . . . . - , . . .. • . . - . . ' . . - • - . . . . . - . . • . . . . . . . . . - . . . . . . . . . - • . • - . . - • . , . . . . . . - • . . . . .- . . • - . . . • . . . . . , . • • • - ..• • • • - . . • • . . . . . • " " . . . . . - . - . . - • - • • . . . . . . . . RVPUB\KAS\601076 . . • - • • ' ' - • .:... - . • . . ( -,- ' . . . . . . - . • . . . - - - - . • . _ . . . . . . .. • - - ' . . . . . ., . - • . . - ...., . . . . • . . . . , • - • • . . , . • - . . . . . . . -. . • , . • • . . . • . , . . • , . . . - - . . • . . . . . •,.. . . . . . , . . .. . . . . . . . . . . . . , . . . . . .. - - • . ' . . . . ' . . . . . , . . • • ' - • ., • • ' . , . . . , . , . . . . . . . . , . . . . . , . . . • . . , . . , . - . . . . . . . . • . . . . . , , • . . . . . • , ' ' . . . . . . . . . . • . . . . . - • . . , . . , .. - ,..... . . . - . . . . . . . . . • .. . . , . . . . . .. .. , . . . . . . . , . . . . . . . . . . . . . . . . . , • . . . . . . . _ . • . . . . . , _ • B-9 - . . . • . . . . - . EXHIBIT "C" - Period Covered [Quarterly] CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE • The undersigned, LINC Community Development Corporation (the `Borrower "), has read • and is thoroughly familiar with the provisions of: 1. The Regulatory Agreement and Declaration ofRestrictive Covenants dated as ofDecember 1, 2000 (the "Regulatory Agreement ") among the Borrower, the Redevelopment Agency of the City of Seal Beach (the "Issuer ") and (the "Trustee "); - 2. The Indenture of Trust dated as of December 1, 2000 (the "Indentur-e ") between the Issuer • • and the Trustee; and • - 3. The Loan Agreement dated as of December 1, 2000 among the Borrower, the Trustee and • the Issuer. - - ' As of the date of this Certificate, the following percentages of total Spaces in the Project (i) are occupied by Very Low Income Residents (as such terms are defined in the Regulatory Agreement) ( - or (ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Very Low Income Resident vacated such Space; as indicated: • Total Project Spaces: • Number of Spaces Occupied by . . • . Very Low Income Residents: • Percent: ' ' Held vacant for occupancy continuously since last occupied by Very Low Income - Resident • Percent • Unit Nos. - Vacant Spaces Percent Unit Nos. , • 4. . The undersigned hereby certifies that the Borrower is not in default under any of the terms ' and provisions of the above documents, and no event has occurred which, with the passage of time, - . would constitute,a default thereunder [or if such event has occurred explain below the event and the steps being taken to remedy such event]. ' • LINC COMMUNITY DEVELOPMENT ' - • - CORPORATION . • - By: • . - • - Its: - • • RVPUB\KAS \6010'76 • - C-1 • - i �+ This document was electronically recorded by • fIDELITYtNATIONAL TITLE COMPANY Fidelity Major Accounts Recorded in Official Records,County of Orange RECORDING REQUESTED BY - - Ga L. Granville, Clerk- Recorder FIDELITY NATIONAL TITLE CO I 11111 I II V II Q RECORDING REQUESTED BY NO F - -AND WHEN RE ORDED MAIL. TO: �' 20000690071 10•33am 12/20/00 Redevelopment Agency of the City of Seal 1 04 59 Al2 28 ' 211 8 Street U. 0.Q0 0.00 0.00 0.00 0.00 0.00 0.00 • Seal Beach, CA 90740 • : - Attn: Executive Director • • No fee for recording pursuant to Government Code Section 27383 • • REGULATORY AGREEMENT (Seal Beach Mobilehome Park) • • - This Regulatory Agreement (the "Agreement ") is made and entered into as of December' 1, 2000, by and between the Redevelopment Agency of the City of Seal Beach, a public body,. • . corporate and politic, (the "Agency ") and LINC Community Development Corporation, a California nonprofit public benefit corporation (the "Owner "). - RECITALS ' • 1. The Agency and the Owner have entered into a Loan and Grant Agreement • - (the "Loan and Grant Agreement ") and a Bridge Loan Agreement, each dated as of December l, • 2000, under which the Agency has loaned and granted funds (collectively, the "Loan Agreement ")_ to the Owner which will be used: (i) to pay a portion of the acquisition costs of a one - hundred twenty - five (1 - space mobilehome park known as Seal Beach Trailer Park (the "Property "), - - - located at 313 Welcome Lane, in Seal Beach, County of Orange and within the Agency's Riverfront Redevelopment Project, as more particularly described in Exhibit A attached hereto and incorporated herein (the "Real Property "); and (ii) to assist in funding a rental assistance fund • to be utilized to provide rental subsidies for eligible residents of the Property. The above - referenced loans and grant are hereinafter collectively referred to as the "Loan".' , ' 2: The funds constituting the Loan and advanced to the Owner are low and - • .moderate income housing funds (or other funds available to the Agency), and pursuant to Health . ' and Safety Code Section 33334.2, such funds are required to be utilized to increase, improve, and , • preserve the supply of housing available at affordable housing cost to persons and families of low • or moderate income. This Agreement is intended to implement such purpose. • 3. The Agency has agreed to loan and grant funds to the Owner on the S7296\1060\637507.2 12/18/00 7 condition that the Property be maintained and operated in accordance with Health and Safety Sections 33334.2 et seq., and in accordance with additional restrictions concerning affordability, (- operation, and maintenance of the Property, as specified in this Agreement. - • 4. The Agency has agreed to loan and grant funds to the Owner, as provided • in the Loan Agreement, on the condition that the Owner establishes the Rental Assistance Fund (as defined below), that the Rental Assistance Fund be utilized and maintained, and that the - - . Property be utilized and maintained as provided in this Agreement. • 5. In consideration of receipt of the Loan, the Owner has further agreed to observe all the terms and conditions set forth below. • - - - _ • 6. - In order to ensure that the entire Property will be used and operated in accordance with these conditions and restrictions, the Agency and the Owner wish to enter into • this Agreement. - . THEREFORE, the Agency and the Owner hereby agree as follows. •• - ARTICLE 1 • ' - DEFINITIONS ' - Section 1.1 Definitions. t • . , • • When used in this Agreement, the following terms shall have the respective meanings . assigned to them in this Article 1. , . •• - . (a) - : "Acquisition Date Rent" shall mean the legal monthly Rent due and payable - ' • for a space on the earlier of the date the Owner acquired the Property or November 30, 2000. • • - (b) "Actual Rent" shall mean the portion of the Property Maximum Rent that is paid by a Resident Household with its own funds for Rent and that, where required pursuant to • - this Agreement, is no greater than the Affordable Very Low Income Rent. . - - • • - (c) - "Adjusted Income" shall mean the total anticipated annual income of all ' persons in a household, as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar . • method of calculation of adjusted income. In the event that no such program exists, the Agency shall provide the Owner with a reasonably similar method of calculation of adjusted income as - . provided in said Section 6914. . . • 57296 \1060 \637507.2 -2- 12/18/00 (d) "Affordable Very Low Income Rent" shall mean Rent in an amount which, when added to the amount of Other Monthly Housing Costs paid by a Resident Household, does not exceed thirty percent (30 %) of fifty percent (50 %) of Median Income, adjusted for Household Size Appropriate to the Unit. • • (e) "Agency" shall mean the Community Redevelopment Agency of the City of Seal Beach, a public body, corporate and politic. , - J . (f) - "Agreement" shall mean this Regulatory Agreement. , (g) "Bond Documents" shall have•the meaning set forth in the Grant • Agreement. - • ' - . ' (h) "Bond Trustee" shall have the meaning set forth in the Bond Documents. • (i) "City" shall mean the City of Seal Beach, a municipal corporation. - (j) "Deed of Trust" shall mean the deed of trust which secures performance of ' • this Agreement and the Loan Agreement and repayment of the Loan in the event of default - . thereunder. • • . • • (k) "Existing Lease" shall mean a lease or rental agreement with an Existing • . ' Resident that is in existence on the earlier of the date of Owner's acquisition of the Property or • • C November 30, 2000. • • ' • • . (1) - "Existing Lease Final Rent" shall mean the final amount of monthly Rent . • , due under an Existing Lease on the date of expiration of the Existing Lease. • • • . •(m) "Existing Residents" shall mean Resident Households occupying the _ - Property on the earlier of the date of Owner's acquisition of the Property or November 30, 2000. • (n) "Funds" shall mean all funds granted to the Owner pursuant to the Loan . Agreement. • • . - • . .. • • (o) "Household Size Appropriate to the Unit" shall mean a household of one • (1) person in the case of a studio unit, two (2) persons in the case of a one - bedroom unit, three . • (3) persons in the case of a two - bedroom unit, four (4) persons in the case of a three- bedroom . • . . • unit, and five (5) persons in the case of a four- bedroomrunit: • . . . ' , • • (p) . "Lower Income Household" shall mean a household that, on the later of: - (i) the date of this Agreement, or (ii) the date of the Resident Household's initial occupancy of the _ Property, has an Adjusted Income that does not exceed the qualifying limits for lower income households, adjusted for actual household size, as established and amended from time to time pursuant to Section 8 of the U States Housing Act of 1937, and as published by the State of - . California Department of Housing and Community Development. , ' S7296 \1060 \637507.2 -3- • • • 12 /18/00 (q) "Median Income" shall mean the median gross yearly income adjusted for- _ household size, in the County of Orange, California, as published from time to time by the State . of California. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months, the Agency shall provide the Owner with . other income determinations which are reasonably similar with respect to methods of calculation . • to those previously published by the State. • • - (r) "Moderate Income Household" shall mean a household with an Adjusted Income at or below one hundred twenty percent (120 %) of Median Income, adjusted for - actual household size. Moderate Income Households include-Lower Income Households and Very Low Income Households. ' _ • ' (s) "New Resident" shall mean a Resident Household first occupying the Property after the earlier of the date of acquisition of the Property by the Owner or November 30, 2000. • - - (t) • • "Non -Owner Resident" shall mean a Resident Household that rents both a mobilehome and a Space in the Property. •, _ • - • (u) "Other Monthly Housing Costs" shall mean the monthly average of the' . . estimated actual monthly costs for the following twelve (12) months of the total of the following - • • costs associated with a ownership of a mobilehome at the Property, to the extent such cost is not • , - part of Rent, as defined in Section 1.1(z) below: (i) principal and interest on mortgage loans for • the mobilehome occupying the Space and any loan insurance fees associated therewith; (ii) property taxes and assessments; (iii) fire and casualty insurance covering replacement value of , • , ' - - property improvements; (iv) property maintenance and repairs; (v) a reasonable allowance for an . ' • • adequate level of service for utilities paid by the Resident Household, including garbage - . collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuels, but - . - not cable or telephone service; and (vi) required homeowner association fees, if any. - _ • . • • • (v) • "Owner" shall mean LINC Community Development Corporation, a . • - California nonprofit public benefit corporation, and its successors and. assigns to the Property. • • (w) "Property" shall mean the Real Property and the one - hundred twenty -five - (125) mobilehome spaces located on the Real Property, as well as all community facilities, • landscaping, roads and parking spaces existing thereon, as the,same may from time to time exist. ' - . - . - ' (x) • • "Real Property" shall mean the real property described in Exhibit A ' • . • , attached hereto and incorporated herein. • - . - - - • - - ' (y) "Rent" shall mean the total of monthly payments by a Resident Household • • • S7296 \1060 \637507.2 -4- 12/18/00 • for the use and occupancy of a Space and associated facilities, including parking, and including ' any separately charged fees, service charges, or utility charges or pass- throughs assessed by Owner. (z) "Rental Agreement" shall mean a lease or occupancy agreement between ' . . the Owner and any of the Resident Households and/or owners of mobilehomes located in the Property. - - . • (aa) "Rental Assistance Fund" shall mean the fund established and maintained by the Owner to provide rental assistance to eligible Resident Households pursuant to Section 2.7 . • - of this Agreement. - - ' ' ' - - • • .(bb) - "Rental Assistance Program" shall mean the program established and - operated by Owner to provide rental assistance to eligible Resident Households pursuant to . - _ Section 2.7 of this Agreement. . (cc) "Resident Household" shall mean a household that resides in a mobilehome • located in the Property. - • ' ' • (dd) . "Section 8 Rental Payments" shall mean, where a Resident Household receives Section 8 rental assistance, the total rental payments received by the Owner for a Space; • including amounts received by the Owner from the Resident Household and amounts received, by , . C • the Owner under the Section 8 program. • • • . • - . - • (ee) . "Space" shall mean one of the one - hundred twenty -five (125) mobilehome spaces located on the Real Property, excluding therefrom any space that may be reserved for a - . . . resident manager • - • " ' ' (ff) ,"Term" shall mean the period of time beginning on the date of recordation i • • of this Agreement in the Official Records of the County of Orange and the County of Los • • . . ' • Angeles, and ending thirty (30) years following the date of recordation of this Agreement. • • (gg) "Very Low Income Household" shall mean a Resident Household that, on - , ' the later of(i) the date of this Agreement, or (ii) the date of the Resident Household's initial ' occupancy o f the Property, has an Adjusted Income that does not exceed the qualifying limits for - - . very low income households, adjusted for actual household size, as established and amended from ' time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by . • - the State of California Department of Housing and Community Development. ARTICLE 2 AFFORDABILITY AND OCCUPANCY COVENANTS ' ( . ' • , . • S7296 \1060 \637507.2 -5- 12/18/00 Section 2.1 Very Low and Moderate Income Occupancy Requirements. - / (a) Low Income Occupancy. For the entire Term of this Agreement, a minimum of twenty percent (20 %) of the Resident Households in the Property shall be Very Low Income Households. (b) Moderate Income Occupancy. For the Term of this Agreement, a minimum of an additional sixty percent (60 %) of the Resident Households in the Property shall be Moderate _ Income Households. ' , (c) Income Certifications. The Owner shall perform income certifications of all New . Residents as a condition of approval of their occupancy. Income certifications shall be performed - pursuant to the requirements of Section 3.1 of this Agreement. The Owner shall not approve the occupancy of a New Resident or sign a Rental Agreement with such household if such ' . household's occupancy would cause the Property to be out of compliance with the requirements of this Section 2.1. Section 2.2 Owner Occupancy Requirement. • . . . - (a) Owner Occupants. Except as provided in subsection (b) below, all residents of the Property shall be required to own and occupy their mobilehomes in the Property as their . principal place of residency, and shall not be permitted to rent -out their mobilehomes. All New ' Residents shall be required to sign a certificate stating their intent to own and occupy their . : ' . f . mobilehome in the Property as their principal place of residency prior to execution of a Rental ' Agreement. The Owner may grant limited exceptions to the owner- occupancy requirement and permit rental of mobile homes by Resident Households for a maximum of six (6) months (with : • • two (2) three (3) month extensions for good cause) in the event of hardship circumstances • • ` • . requiring an owner to temporarily vacate the mobile home, provided the owner intends in good - faith to re- occupy the mobilehome at the end of such time period. The Owner shall obtain from all New Residents, and shall utilize best efforts to obtain from all Existing Residents (except for Non- . Owner Residents), annual owner- occupancy certifications, in which each resident certifies under - • . penalty of perjury that he or. she owns his or her mobilehome (or the mobilehome is_owned by . • . another resident member of the household) and he or she occupies the mobilehome as his or her . - principal place of 'residence, and submit copies of such certifications to the Agency with the _ - annual report required pursuant to Section 3.2 below. For purposes of this Agreement, "principal -. . . . place of residency" shall mean the principal residence of the resident as claimed for property and . income tax purposes. - . - - - - • - . (b) Non -Owner Residents. As of the date of this Agreement, there are a" - . - number of mobilehomes in the Property which are occupied by Non -Owner Residents that rent . rather than own the mobilehomes they occupy. These mobilehomes shall not be required to be ' ' owner- occupied so long as they are owned by the person or entity that owned them on November • 30, 2000, and in no event shall Owner displace or cause the displacement of the occupying • - households from the Property solely based upon non -owner resident status; provided, however, ( 57296 \1060 \637507.2 -6- 12/18/00 l pursuant to City permits and approvals for the Property, one of these mobilehomes may be occupied by a resident manager of the Property. Owner shall utilize best efforts to enable and assist such households to purchase the mobilehomes they currently occupy. Section 2.3 Rent Structure and Use of Rental Assistance Fund. (a) Property Maximum Rents. As of the date hereof, a majority of the Resident Households have agreed that average Rents in the Property may be increased to Five Hundred Twenty -Seven Dollars ($527) per month per space upon acquisition of the Property by • • ' the Owner. This rental amount, including permitted increases pursuant to subsection (d) below, shall be referred to in this Agreement as the "Property-Maximum Rent "; provided, however, that if an Existing Lease provides for a higher rent for a particular space, the Property Maximum Rent • • for such space shall, at the Owner's election and for the term of the Existing Lease, be the rent - • provided under the Existing Lease. Upon the expiration of any Existing Lease, the Rent for such space shall not exceed the Existing Lease Final Rent, and there shall be no increases in Rent until • • - • such time as the Property Maximum Rent equals or exceeds the Existing Lease Final Rent. No ' Rental Agreement entered into or extended after the earlier of the date df Owner's acquisition of , ' • the Property or November 30, 2000, shall provide for Rent in excess of the Property Maximum Rent."' . (b) '. Affordable Rents. As set forth in detail in Sections 2.4 and 2.5 below, the - Owner and the Agency, agree that eligible Very Low Income Households in the Property shall. - each pay an Actual Rent that is equal to that portion of the Property Maximum Rent that is • , . . • affordable to the income level of such household, adjusted for Household Size Appropriate for the Unit. " • . • ,' . . . " (c) • Use of Rental Assistance Funds. The Owner is authorized to utilize Rental , Assistance Fund monies, to make monthly payments to the Owner equal the amount of the, . • • ' • . • Property Maximum Rent minus the Actual Rent paid by an eligible Resident Household pursuant . • - to Section 2.4 and 2.5 of this Agreement; provided, however, if a Resident Household receives ' - • Section 8 assistance, the Owner may utilize Rental Assistance Fund monies to make monthly - • payments to the Owner equal to the amount (if greater than zero) of the Property Maximum Rent _ • • minus the total Section 8 Rental Payments received by the Owner. The Owner is also authorized " . to utilize Rental Assistance Fund monies to provide rental assistance to an Eligible Resident in the amount determined to be necessary to alleviate hardship and avoid displacement pursuant to - ; . , Section 2.4(b) below. The procedure for access by the Owner to the Rental Assistance Fund is set • - forth in Section 2.8 below. Non -Owner Households shall not be eligible to participate in the . • ' Rental Assistance Program. • • . • . (d) Annual Increases. Owner may increase Rents no more often than once a : • • year, with a minimum ninety (90) day advance written notice to the Resident Household; . ' provided, however, that no Rent increases shall be permitted 'for a Resident Household with an • • 'expired Existing Lease until the Property Maximum Rent equals or exceeds the Existing Lease Final Rent. Increases in Property Maximum Rents shall be limited to an amount not to exceed two • , ( S7296\1060\637507.2 -7- 12/18/00 - ' .• - , • percent (2 %) of the previous year's rental or such other rent increase or temporary assessment as the Agency may approve upon the request of the Owner with input from the Property residents. Final authority to approve such an additional rent increase or temporary assessment under this . • .Section 2.3(d) rests with the Agency in the sole and absolute exercise of its discretion. • Section 2.4 Allowable Rent for Existing Very Low Income Residents: Hardship Rent. . ' (a) Very Low Income Existing Residents. (i) For so long as such household resides in the Property, no Existing Resident who qualifies as a Very Low Income Household at - the time of acquisition of the Property by the Owner shall pay Actual Rent that is greater than the - Acquisition Date Rent for the household plus annual increases equal to an amount not to exceed - '• two percent (2 %) of the previous year's rental; (ii) in addition, any Existing Resident that is counted by the Owner and reported to the Agency as a Very Low Income Household for . purposes of meeting the twenty percent (20 %) occupancy requirement of Section 2.1(a) above . shall pay an Actual Rent which does not exceed Affordable Very Low Income Rent. ' ' (b) - Hardship/Nondisplacement Rent for Existing Residents. No Existing , Resident of the Property shall be displaced by reason of the Owner's acquisition of the Property. • This prohibition shall be construed to prohibit economic displacement of Existing Residents due . - • ' • • .. _ to any rent increase imposed in connection with Owner's acquisition of the Property. • • • • Consequently, any Existing Resident that: (i) qualifies as a Very Low Income Household or a ' • - Lower-Income Household; (ii) whose Rent plus Other Monthly Housing Costs on November 30, - . • 2000, exceeded one- twelfth (1/12) of thirty percent (30 %) of the household's actual Adjusted - . . ' Income; (iii) who does not hold an Existing,Lease, and who certifies in writing that an - • - increase in rent to the Property Maximum Rent constitutes a hardship that may cause the • - - household to be displaced from the Property, shall be entitled, through participation in the Rental Assistance Program, to pay Actual Rent which does not exceed the Acquisition Date Rent of the • . • household, plus annual increases in an amount not to exceed two percent (2 %) of the, previous, , - • ' year's rental. - ' - . - - . Section 2.5 Allowable Rent for New Residents. • • . • , New Residents shall not be charged Rents in excess of the Property Maximum Rent and .. . . no Rental Agreement for a New Resident shall include Rent in excess of the Property Maximum • , Rent. In addition, any New Resident who is counted by the Owner and reported to the Agency as - 'a Very Low Income Household for purposes of meeting the very low income occupancy - requirement of Section 2.1(a) above shall pay Actual Rent which does not exceed Affordable • • . • Very Low Income Rent. ' • - Section 2.6 •.• Non -Owner Households . • • (a) . Rents for the spaces described in Section 2.2(b) above shall not be . • restricted by this Agreement so long as the mobilehomes are owned by the person or entity that • owned them on November 30, 2000. At such time as these mobilehomes are sold and become - • 57296 \1060 \637507.2 -8- 12/18/00 • owner- occupied, their Rents and occupancy shall be subject to the restrictions set forth in this Agreement. (b) Owner shall utilize best efforts to assist and cause Non -Owner Residents to purchase the mobilehomes they occupy, and shall work cooperatively with the Agency to structure such purchase in a manner that will permit the Agency to claim housing production credit for the home and Space pursuant to Health and Safety Code Section 33413. The Owner . shall cooperate with the Agency and use Owner's best efforts to cause the mobilehome to be rented or sold to an eligible low or moderate income household at affordable housing cost in compliance with applicable requirements of the Community Redevelopment Law s� that the Agency may claim housing production credit for the home Space pursuant to Health and , Safety Code Section 33413. Section 2.7 Rental Assistance Program. • ; • " Owner shall establish, market, and operate the Rental Assistance Program, which shall _ include the following elements: • (a) All Existing Residents that do not hold Existing Leases and who qualify as • Very Low Income Households shall be eligible to participate in the Rental Assistance Program. . Existing Residents that qualify for hardship assistance pursuant to Section 2.4(b) above shall also = - . • be eligible to participate in the Rental Assistance Program. New Residents who are counted by • . Owner toward the very low income occupancy requirements of Section 2.1(a) shall also be • . " eligible to participate in the Rental Assistance Program. Non -Owner Households shall not be • ; . eligible to participate in the Rental Assistance Program: (b) Immediately .following Owner's acquisition of the Property, and at least • every six (6) months thereafter, Owner shall notify all Resident Households in writing of the • availability of the Rental Assistance Program and provide them with eligibility information for the program, including maximum income levels to qualify as Very Low Income Households and . •- Lower Income Households and an explanation of the method of calculation of Affordable Very . Low Income Rent as well as the availability of hardship assistance pursuant to Section 2.4(b) • above. All interested Resident Households shall be invited to request an application and, if • , • desired, a personal interview to screen the household for program eligibility and, if threshold qualifications are met, to initiate income and housing cost verification procedures. After • • - • submission of an application, all screened households shall receive a written determination (the . "Eligibility Determination ") of their eligibility to receive assistance from the Rental Assistance Fund, the amount of Actual Rent required to be paid by such household pursuant to this - . - - • . • . Agreement, and the amount of rental assistance the household is eligible to receive. All screened . households who are determined by the Owner not to qualify for the Rental Assistance Program • shall be offered a personal interview to explain the Eligibility Determination and to permit the , household to appeal any provisions of the determination. • • . • • • ' . S7296 \1060 \637507.2 -9-' • 12/18/00 (c) Owner shall verify household income of household applying to participate- ( — in the Rental Assistance Program. Owner shall also verify Other Monthly Housing Costs paid by such households, in order to calculate the Affordable Very Low Income Rent for such households, as applicable, and the appropriate amount of rental assistance for the household. Owner shall reverify household income and Other Monthly Housing Costs on an annual basis. Owner shall maintain records including copies of income certificates, cost verifications, and rent calculations for all participants in the Rental Assistance Program for a minimum of five (5) years following the collection of such information. The Agency shall have the right to review and, in the -• - Agency's discretion, audit such records, to determine the Owner's compliance with the requirements of this Agreement. • Section 2.8 Administration of Rental Assistance Fund. • The Rental Assistance Fund shall be established, maintained, and supplemented by the Owner in the manner set forth in Section 2.9 and 3.2 of the Loan and Grant Agreement. Withdrawals by the Owner from the Rental Assistance Fund shall be subject to approval by the • Oversight Agent (as defined in the Loan and Grant Agreement) pursuant to the following . . procedure. No more often than once every 30 days, the Owner may submit a Rental Assistance • • Fund Withdrawal Request to the Oversight Agent, utilizing the form attached to this Agreement as Exhibit B, which form shall detail the calculation of the amount of Rental Assistance Funds • ' • - required by the Owner, including information on the annual income, household size, size of ' mobilehome, amount of Actual Rent, and amount of Other Monthly Housing Costs of each - participating Resident Household, together with a certification by the Owner that all such • ' ' amounts have been verified by the Owner within the previous twelve months. Provided that the - Rental Assistance Fund Withdrawal Request Form is certified as correct by the Owner, and . provided that the Oversight Agent determines that it conforms to the requirements of this Agreement for use of Rental •Assistance Funds, the Oversight Agent shall promptly authorize ' • • • disbursal of the requested amount of funds to the Owner. The Oversight Agent shall submit : . - - quarterly reports to the Agency summarizing the utilization of Rental Assistance Funds over the ' ' . preceding quarter, and setting forth the outstanding balance of the Rental Assistance Fund. . . Section 2.9 Rental Agreement. . - - . - • • • The Owner shall include in occupancy agreements for all Spaces which are entered into •. • with New Residents provisions which authorize the Owner to immediately terminate the tenancy ' of any household where one or more household members misrepresented any fact material to the household's qualification as a Very Low Income Household, or Moderate Income Household, - where any household member misrepresented its intention to occupy the Property as his or her principal place of residency, or where any household,member fails to occupy its mobilehome in • . the Property as the principal place of residency. - - - . - Section 2.10 Subdivision Conversion. • (. S7296 \1060 \637507.2 -10- - 12/18/00 • The Owner shall not convert the Property to subdivided ownership, including, without limitation, condominiums, planned parks, townhouse projects or land projects, or subdivide the Property into separate lots or condominiums, during the Term of this Agreement, without first obtaining the prior written consent of the Agency in the sole exercise of its discretion. . . • ARTICLE 3 - - ' INCOME CERTIFICATION AND REPORTING - , Section 3.1 Income Certification. - The Owner shall obtain, complete and maintain on file, immediately prior to initial . occupancy, income certifications from each household first occupying the Property after the acquisition of the Property by the Owner (excluding any Space that may be occupied by a resident manager)-. The Owner shall also obtain, complete and maintain on file, on an annual basis, income certifications from each household participating in the Rental Assistance Program. The Owner • shall make a good faith effort to verify that the income provided by applicants for rental assistance and by New Residents in income certifications is accurate by taking one or more of the following • steps as a part of the verification process: (1) obtain a pay stub for the most recent pay period; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency or similar - • search; (4) obtain an income verification form from the applicant's current employer; (5) obtain an - income verification form from the Social Security Administration and/or the California . Department of Social Services if the applicant receives assistance from either of such agencies; or . (6) if the applicant is unemployed and has no such tax return, obtain another form of independent • verification. Copies of household income certifications shall be available to the Agency upon request. - - " • . • - • Section 3.2 - Annual Report to Agency. • . • ' Each year the Owner shall submit to the Agency not later than two (2) months prior to the , close of each fiscal year an annual report in a form-approved by the Agency. The a nnual report shall include the following information: (a) a listing of all Spaces counted by the Owner to meet the requirements of Section 2.1(a) and 2.1(b) of this Agreement, the income and household size of the Resident • Households occupying such Spaces, the Actual Rent paid by each such Resident Household, and - the amount, if any, of Rental Assistance Fund monies utilized by such household. (b) an accounting of all Rental Assistance Fund monies utilized in the . - preceding year, the income and household size of the households participating in the Rental Assistance Program, and the Actual Rents paid by such Households. l . • S7296\1060\637507 2 -11- - 12/18/00 • (c) a listing of all Spaces in which there was a new occupying household in the prior year, the income and household size of such households, and copies of the income certifications and certifications that the households intend to own and occupy that mobilehome in the Property as their principal place of residency, obtained by the Owner from such households. The report shall state the date the occupancy commenced for each such Space, the purchase price paid by the New Resident for the mobilehome occupying the Space (if such information is available), and such other information as the Agency may be required by law to obtain. . (d) copies of the annual owner - occupancy certification to the extent required _ • pursuant to Section 2.2 above. Section 3.3 Additional Information. The Owner shall provide any additional information reasonably requested by the Agency. . The Agency shall have the right to examine and make copies of all books, records or other • documents of the Owner which pertain to any Space. • Section 3.4 . Records. The Owner shall maintain complete, accurate and current records pertaining to the Spaces • and the Property, and shall permit any duly authorized representative of the Agency to inspect . • records, including, without limitation, records pertaining to household income and household size . of resident households upon their initial occupancy, housing costs of Resident Households, • . • , Affordable Very Low Income Rent calculations,. the use of Rental Assistance Fund monies, and the marketing and administration of the Rental Assistance Program. The Agency shall have the right to perform audits of the Owner's records from time to time to determine Owner's • compliance with the requirements of this Agreement. ' Section 3.5 Welfare Reform Act Compliance. :- Unless the Owner is otherwise exempt from the following requirement under applicable law, the Owner shall comply with -the requirements of the Public Responsibility and Work , Opportunity Reform Act of 1996, as amended, including, without limitation, verifying the . . citizenship or immigration status of prospective tenants in accordance with the verification procedures established under such Act. . • ( S7296 \1060 \637507.2 -12- 12/18/00 • ARTICLE 4 1. OPERATION OF THE PROPERTY - Section 4.1 Residential Use. . The Property shall be operated only for residential use. No part of the Property shall be operated as transient housing. . - Section 4.2 Compliance with Loan Agreement. The Owner shall comply with all the terms and provisions of the Loan Agreement. Section 4.3 Taxes and Assessments. • The Owner shall pay all real and personal property taxes, assessments, if any, and charges, and all franchise, income, employment, old age benefit, withholding, sales, and other taxes , . assessed against it, or payable by it, at such times and in such manner as to prevent any penalty ' from accruing, or any lien or charge from attaching to the Real Property; provided, however, that the Owner shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Owner exercises its right to contest any tax, assessment, or charge against it, the Owner, on final determination of the proceeding or contest, shall immediately pay or discharge - any decision or judgment rendered against it, together with all costs, charges and interest. Section 4.4 Nondiscrimination. - - • . • ' ' ' (a) ' All of the Spaces shall be available for occupancy on a continuous basis to . • members of the general public who are income eligible and (except for the Non -Owner Residents occupying the Property on the date of this Agreement), intend to own' and occupy their :- mobilehomes in their Space as a primary residence. The Owner shall not give preference to any particular class or group of persons in leasing Spaces, except to extent that new occupants are • . required to be Very Low Income Households, Moderate Income Households, owner- occupants, City or Agency displaces pursuant to Section 4.5 below, or households that meet any lawful - - senior housing restrictions adopted by the Owner. There shall be no discrimination against or • segregation of any person or group of persons, on account of race, color, creed, religion, - disability, sex, sexual orientation, marital status, national origin, or ancestry, in the renting, - . leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Space, nor shall the . ' • Owner or any person claiming under or through the Owner, establish or permit any such practice • or practices of discrimination or segregation with reference to the selection, location, number, . use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any Space, or in . - connection with the employment of persons for the operation and management of the Property. All deeds, leases or contracts made or entered into by the Owner as to the Spaces or the Property or portion thereof, shall contain covenants concerning discrimination as prescribed by Section . 4.10 of the Grant Agreement. - . ' - 57296 \1060 \637507.2 -13- 12/18/00 (b) If the Owner chooses to operate the Property as senior citizen housing, it shall do so in compliance with the provisions of the Fair Housing Act which relate to requirements for lawful housing for older persons and any applicable provisions of state and local law related to senior housing and discrimination on the basis of age or familial status. The Owner agrees to . indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the Agency) the Agency, and its board members, officers and employees, from all suits, actions, claims, causes • of action, costs, demands, judgments and liens arising out of the Owner's failure to comply with applicable legal requirements related to housing for seniors. The provisions of this section shall survive expiration of the Term or other termination of this Agreement, and shall remain in full s force and effect. - - - 'Section 4.5 Preference to Agency and City Displaces. ' The Owner shall grant preference in occupancy of the Property to New Residents who were displaced by action of the Agency or the City, and are referred to the Owner by the Agency or City. The Owner shall cooperate with the Agency and City in implementing such a preference. . Costs associated with the relocation of displaced persons to the Property pursuant to this, Section - • ' 4.5 shall not be the responsibility of Owner, but all such persons shall be considered New Residents hereunder and shall,be entitled the same protections and Rent requirements as all New - Residents . . • . - - • . ARTICLE 5 - . PROPERTY MANAGEMENT AND MAINTENANCE - ' - • ' • Section 5.1 Management Responsibilities. - • - The Owner -is responsible for all management functions with respect to the Property , , - ' • including, but not limited to, the selection of Resident Households, certification of household size - ' and income, certification of the ages of all household members pursuant to any lawful senior - housing requirements, evictions, collection of rents and deposits, maintenance, landscaping, - routine and extraordinary repairs, replacement of capital items, and security. The Agency shall - - have no responsibility for or over management of the Property: The Owner shall retain a - , . professional property management company approved by the Agency in its reasonable discretion to perform its management duties hereunder. A resident manager shall also be retained, if required • • by law. The Agency hereby approves LINCommunity Management Services as the initial , • . Management Agent. - - - . • Section 5.2 Management Agent: Periodic Reports. - , . • The Property shall at all times be managed by an experienced management agent reasonably acceptable to the Agency, with demonstrated ability to operate residential facilities like the Property in a manner that will provide decent, safe, and sanitary housing (as approved, the S7296 \1060 \637507.2 -14- 12/18/00 "Management Agent "). The Owner shall submit for the Agency's reasonable approval (by its Executive Director) the identity of any proposed Management Agent. The Owner shall also submit such additional information about the background, experience and financial condition of • any proposed Management Agent as is reasonably necessary for the Agency to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the Agency shall approve the proposed Management Agent by notifying the Owner in writing. Unless the proposed Management Agent is disapproved by the Agency within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, , it shall be deemed approved. Section 5.3 Performance Review. - . The Agency reserves the right to conduct an annual (or more frequently, if deemed reasonably necessary by the Agency) review of the management practices and financial status of ' the Property. The purpose of each periodic review will be to enable the Agency to determine if - the Property is being operated and managed in accordance with the requirements and standards of this Agreement. The Owner shall cooperate with the Agency in such reviews. Section 5.4 Replacement of Management Agent. . . - - ' (a) If, as a result of a periodic review, the Agency determines in its reasonable • • - ( _ judgement that the Property is not being operated and managed in accordance with any of the . material requirements and standards of this Agreement, the Agency shall deliver notice to the • - Owner of its intention to cause replacement of the Management Agent, including the reasons • therefor. Within fifteen (15) days of receipt by the Owner of such written notice, Agency staff and . . the Owner shall meet in good faith to consider methods for improving the financial and operating - • - ' status of the Property. If after a reasonable period as determined by the Agency (not to exceed - - ' sixty (60) days), the Agency determines that the Owner is not operating and managing the • • . • Property in accordance with the material requirements and standards of this Agreement, the - , Agency may require replacement of the Management Agent. • .. • ' (b) If, after the above procedure, the Agency requires in writing the - - • ' replacement of the Management Agent, the Owner shall promptly dismiss the Management Agent, and shall, within thirty (30) days, appoint as the Management Agent a person or entity meeting • • • - . the standards for a Management Agent set forth in Section 5.2 above and approved by the Agency pursuant to Section 5.2 above. Owner and Agency acknowledge that the bondholders and the - insurer of the Bonds (as defined in the Loan and Grant Agreement) also have rights to approve • ' any new Management Agent. _ - . . • • - (c) Any contract for the operation or management of the Property entered into - . by the Owner shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section shall constitute - S7296\1060\637507.2 -15- . 12/18/00 - default under this Agreement, and the Agency may enforce this provision through legal proceedings as specified in Section 6.3. Section 5.5 Approval of Management Policies. The Owner shall submit its written management policies with respect to the Property to the Agency for its review, and shall amend such policies in any way necessary to ensure that such policies comply with the provisions of this Agreement. Section 5.6 Property Maintenance. (a) The Owner agrees, for the entire Term of this'Agreement, to maintain all interior and exterior community improvements, including landscaping, on the Real Property in • good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, • municipal, and other governmental agencies and bodies having or claiming jurisdiction and all " their respective departments, bureaus, and officials. . . (b) The Agency places prime importance on quality maintenance to protect its • investment and to ensure that all Agency - assisted affordable housing projects within the City are not allowed to deteriorate due to below- aveiage maintenance. Normal wear and tear of the Property will be acceptable to the Agency assuming the Owner agrees to provide all necessary ., improvements to assure the Property is maintained in good condition. The Owner shall make all repairs and replacements necessary to keep the improvements in good condition and repair. - (c) In the event that the Owner breaches any of the covenants contained in this . - section and such default continues for a period of seven (7) days after written notice from the - Agency with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days . (or such longer period deemed appropriate approved in writing by the Agency) after written notice from the Agency with respect to landscaping and building improvements, then the 'Agency, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Real Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the Agency shall be permitted (but is not- . required) to enter upon the Real Property and perform all acts and work necessary to protect, ' • maintain, and preserve the improvements and landscaped areas on the Real Property, and to attach a lien on the Real Property, or to assess the Real Property, in the amount of the • expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a ten percent (10 %) administrative charge, which amount shall be promptly paid by the Owner to the Agency upon demand. - - Section 5.7 Annual Budget. (a) • The Owner shall submit to the Agency, not later than two (2) months prior to the close of each fiscal year, a proposed budget for the following fiscal year, including the • • S7296 \1060 \637507.2 -16- 12/18/00 .. . . (-- proposed rental charge for each Space in the Property, the Actual Rent for each space, and the amount of Rental Assistance Fund monies the Owner projects will be utilized. The Agency Executive Director shall reasonably approve or disapprove the proposed budget within thirty (30) days after receipt (and if the Agency has not disapproved the budget within thirty (30) days then the proposed budget shall be deemed approved). If the Agency reasonably disapproves the proposed budget, then it shall provide specific reasons for disapproval, and the Owner shall have fifteen (15) days after receipt of disapproval to resubmit a revised proposed budget. This procedure shall continue until a budget isapproved. • • ' (1?) _ The purpose of the Agency's review and approval of the annual budget is limited to ensuring the following: • ' ~ _ . • • (i) that the proposed Property Maximum Rents and Actual Rents do . not exceed the maximum permitted under Section 2.4 and Section 2.5 of this Regulatory • Agreement; • (ii) that the proposed rent charges for Existing Residents are not so high that they could reasonably be expected to result in involuntary displacement; • , - - ' ' (iii) that the Owner maintains a prudent budget, including adequate • - • . reserves; and • ( ' - . . .: ' . . (iv) that the Rental Assistance Fund is adequately funded. ' • ' • ARTICLE 6 . - • • . . MISCELLANEOUS - • Section 6.1 Term. . • • - The provisions of this Agreement shall apply to the Real Property for the entire Term even'. • if the entire Loan is repaid in full prior to the end of the Term. This Agreement shall bind any • - successor, heir or assign of the Owner, whether a change in interest occurs voluntarily or • • involuntarily, by opera law or otherwise, except as expressly released by the Agency. The Agency makes the Loan on the condition, and in consideration of, this provision, and would not do so • ' otherwise. The terms of this Regulatory Agreement to the contrary'notwithstanding, this - . - . ' Regulatory Agreement, and all and several of the terms hereof, shall terminate and be of no further force and effect in the event ofTa) foreclosure of the deed of trust securing the Bonds, whereby a third party shall take possession of the Property,_(b) deed in lieu of foreclosure for the . . ' benefit only o —the holders of the Bonds following a default called by the Bond Trustee under the _ • Bonds, whereby a third party shall take possession of the Property. In the event of involuntary noncompliance with material provisions of this Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal agency after the date hereof, which prevents the S7296 \1060 \637507 2 -17- 12/18/00 • • Agency from enforcing such provisions, the provisions shall be deemed suspended during the time period of such involuntary noncompliance, and the Agency shall not declare a default hereunder • - by reason of such involuntary noncompliance. Section 6.2 Covenants to Run With the Land. . . The Agency and the Owner hereby declare their express intent that the covenants and • restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Real Property, provided, however, that on the expiration of the Term of this Agreement , • said covenants and restrictions shall expire. Each and every contract, lease, deed or other - - instrument hereafter executed covering or conveying•the Real Property or any portion thereof • ' shall be held conclusively to have been executed, delivered and accepted subject to such . ' covenants and restrictions, regardless of whether such covenants �r restrictions are set forth in , such contract, lease, deed or other instrument, unless the Agency expressly releases such conveyed portion of the Real Property from the requirements of this Agreement. - ' Section 6.3 - Enforcement by the Agency. - , • , ' • If the Owner fails to perform any obligation under this Agreement, and fails to cure any . • default within thirty (30) days after the Agency has notified the Owner in writing of the default or, . , • if the default cannot be cured within thirty (30) days, failed to commence to cure within thirty - (30) days and thereafter diligently pursue such cure, the Agency shall have the right to enforce , ' , - • this Agreement by any or all of the following actions, or any. other, remedy provided by law: ' • •( (a) Repayment of Loan. The Agency may declare a default under the Loan • ; - Agreement, require repayment of the Loan with penalties and default interest as required under the Loan Agreement, and proceed with foreclosure under the Deed of Trust. ' - (b) Transfer of Rental Assistance Fund. The Agency may realize its security . - interest in the Rental Assistance Fund, and may transfer or cause the transfer of the Rental - - . • Assistance Fund into Agency possession, in which event the Agency shall continue to make such , funds available to provide rental assistance to eligible residents of the Property in compliance with • the requirements of this Agreement. _ . - . ' (c) Action to Compel Performances or for Damages. The Agency may bring an . action at law or in equity to compel the Owner's performance of its obligations under this - Agreement, and/or for damages. - . • • • - - , • • (d) Remedies Provided Under Loan Agreement. The Agency may exercise any other remedy provided under the Loan Agreement. - - , ' - • S7296 \1060 \637507.2 - -18- 12/18/00 - • • Section 6.4 Enforcement by the City. - . Following termination or dissolution of the Agency, this Agreement shall be fully , . enforceable by the City in place of the Agency. • Section 6.5 Agency Approval. - - Whenever this Agreement calls for Agency approval, consent, or waiver, the approval, consent, or waiver of the Agency Executive Director shall constitute the approval, consent, or • - waiver of the Agency, without further authorization required from the Agency Board. The Agency hereby authorizes the Agency Executive Director or or her designee to deliver such approvals or consents as are required by this Agreement, to extend time deadlines, or to waive . • requirements under this Agreement, on behalf of the Agency, and to take such actions and - , execute such documents on behalf of the Agency as may be necessary to carry out this • . • Agreement. • - Section 6.6 - Attorneys Fees and Costs. • • • • , -' In any action brought to enforce this, Agreement, the prevailing party shall be entitled to all costs - and expenses of suit, including attorneys' fees. This section shall be interpreted in accordance . • • , with California Civil Code Section 1717 and judicial decisions interpreting that statute. ( - Section 6.7 Recording and Filing. , • - > . • - The Agency and the Owner shall cause this Agreement, and all amendments and • ' .. , supplements to it, to be recorded against the Real Property in the Official Records of the County . . . • of Orange. . - - • - . . • . Section 6.8. ; Governing Law. . This Agreement shall be governed by the laws of the State of California. • . • Section 6.9 Amendments. • This Agreement may be amended only by a written instrument executed by all the parties -' . , hereto or their successors in title, and duly recorded in the real property records of the County of . • , Orange, California. - . Section 6.10 Notice. - - • ' All notices given or certificates delivered under this Agreement shall be in writing, addressed as shown on the signature page, and shall be personally delivered by a commercial , service which furnishes signed receipts of delivery, or mailed by certified mail, return receipt • requested, postage prepaid. Notices shall be deemed received on the delivery or refusal date ( . S7296 \1060 \637507.2 -19- 12/18/00 - • shown in the delivery receipt. Any of the parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or communications shall be ( sent. Section 6.11 Severability. . If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall not in any way be affected or impaired thereby. - - • - 'C. : • , (. • 57296 \1060 \637507.2 -20- - 12/18/00 IN WITNESS WHEREOF, the Agency and the Owner have executed this C - Agreement by duly authorized representatives, all on the date first written above. • - Address for notice purposes: AGENCY: 212 8th Street Seal Beach, CA 90740 REDEVELOPMENT AGENCY OF THE CITY • Attn: Executive Director ' OF SEAL BEACH, a public body, corporate and politic • By: Its: C..1 a • • • Address for notice purposes: THE OWNER: 110 Pine Avenue • #525 LINC COMMUNITY DEVELOPMENT - - Long Beach, CA 90802 CORPORATION, a California nonprofit • Attn: President - public benefit corporation , • - - • . • • -y. u • Its: 1 1' r1 • ALL SIGNATURES MUST BE NOTARIZED • , • • • • • • S7296 \1060 \637507.2 •12/18/00 • State of California ) . ss. County of Los Angeles ) • - On December 18, 2000 me, Evelyn Corselli, personally appeared Paul Yost ❑ personally known to me, OR, Improved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her /their authorized capacity/ies, and that by his/her /their signature(s) on the instrument the person(s), or the entity upon behalf of which person(s) acted, executed the instrument. Witness my hand and official seal. . . - • ' - 6Aid - • No Public - My Commission expires October 17, 2004 • EVELYR CORSELLI • � ; 1q.,. COMM. #1277617 - H . ; =+r - . . � '�r = NOTARY PUBLIC - CALIFORNIA y ` - • • ' • - - . Elk / RIVERSIDE COUNTY • • My Comm. Expires October 17, 20041 • • - • (._ STATE OF CALIFORNIA ) )ss. COUNTY OF RIVERSIDE ) On December 19, 2000, bef9re me, Evelyn Corselli, personally appeared Hunter L. . Johnson, 0, personally known to me or I proved to me on the basis of satisfactory evidence to' be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her /their authorized capacity(ies), and that by his/her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.. - ' - - . WITNESS my hand and official seal. - . 6/Addle". . . Signature of otary ' . [SEAL] " . • - f EVELYNI CORSELLI l - / . COMM. #1277617 1 - • s�� y ti NOTARY PUBLIC - CALIFORNIA w . 1- , wf RIVERSIDE COUNTY . ' ° -� Pay Comm. Expires October 17, 2004 • EXHIBIT A [Legal Description] [To Come] ' v I • • • ■ ■ • • • • • • • • . 1 , • S7296 \1060 \637507.2 A -1 • 12/18/00 C EXHIBIT A - •A PORTION OF THAT PARCEL OF LAND GRANTED TO THE CITY OF SEAL B BY THAT S CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT OF - - COUNTY; CASE NO. C- 78004, PARCEL 4, A CERTIFIED COPY OF WHICH WAS RECORDED ' MARCH 23, 1077 .IN BOOK 12115, PAGE 195 OF OFFICIAL RECORDS OF ORANGE , COUNTY, CALIFORNI; AND A PORTION OF TIDE LAND LOCATION NO. 1'37 "SURVEY NO. 1. AND • 106 ", AS PATENTED BY THE STATE OF CALIFORNIA - ON FEBRUARY 12, 1 1 90 1. LOS • RECORDED APRIL 27, 1901 IN BOOK 9, PAGE 105 ,OF PATENTS, RECORDS ANGELES COUNTY; AND GE C PATENTS, RECORDS ORANGE COUNTY; SAID ABOVE PORTIONS OF LAND BEING MORE . PARTICULARLY DESCRIBED AS FOLLOWS: . . • : ' ' BEGINNING AT THE MOST NORTHERLY CORNER OF TRACT NO. 9783, AS SHOWN ON MAP FILED IN BOOK 437, PAGES 32 TO 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE . COUNTY; SAID CORNER BEING A POINT IN THE SOUTHEASTERLY -LINE OF. THE LOS ANGELES COUNTY FLOOD CONTROL DISTRICT LAND DESCRIBED AS, PARCEL 8 N • : SUPERIOR COURT CASE NO. 231287, IN AND FOR THE COUNTY OF LOS ANGELES; IN - BOOK 2383, PAGE 42, RECORDS OF ORANGE COUNTY, SAID SOUTHEASTERLYLINE BEING ..r • A CURVE CONCAVE SOUTHEASTERLY AND HAVING- A RADIUS OF 2000.00 FEET, A . 1 R ADIAL "LINE •• FROM . SAID POINT BEARS • S • 35 0 ' 55" ARC - THENCE NCE . NORTHEASTERLY ALONG 'SAID CURVE AND SOUTHEASTERLY OF 356.05 FEET; THENCE TANGENT TO SAID CURVE- AND CONTINUING ALONG SAID • - SOUTHEASTERLY. LINE, NORTH 54° 02' 05" EAST 239.79 FEET TO THE NORTHEASTERLY • LINE OF THAT 200.00 FOOT WIDE•STRIP OF LAND DESCRIBED IN THE QUITCLAIM DEED _ • TO THE PACIFIC ELECTRIC RAILWAY - COMPANY, RECORDED FEBRUARY 21, 1926IN BOOK 514; -P -AGE. 44 -0F. DEEDS, RECORDS OF ORANGE COUNTY; THENCE' SOUTHEASTERLY • ALONG SAID NORTHEASTERLY LINE,'SOUTH 42° 15'.32" EAST 492.08 FEET•TO THE NORTHWESTERLY LINE OF FIRST STREET, AS IT NOW EXISTS, SAID LAST MENTIONED NORTHWESTERLY LtNE BEING A LINE PARALLEL WITH AND DISTANT NORTHWESTERLY 1 10.00 FEET, MEASURED AT RIGHT ANGLES FROM THE BOUNDARY LINE OF THE RANCHO • • LOS ALAMITOS, PER MAP RECORDED IN BOOK 1, PAGES 460, 461 AND 462 OF PATENTS • OF LOS ANGELES COUNTY, CALIFORNIA, AND AS SHOWN ON RECORD OF SURVEY RECORDED IN RECORD OF SURVEY BOOK 90,, PAGES 23 TO 30, AND AS MORE PARTICULARLY ESTABLISHED BY SEAL BEACH BOUNDARY LINE AGREEMENT NO. 2 DATED FEBRUARY 5, 1968 AND RECORDED APRIL 8, 1968 IN BOOK 8565, PAGE 1 OF OFFICIAL - •RECORDS OF ORANGE COUNTY; THENCE SOUTHWESTERLY ALONG .SAID LAST T • MENTIONED PARALLEL LINE, AND THE NORTHWESTERLY LINE OF FIRST STREET, SO • 54 ° 48' 38" WEST 606.81_FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE • . . SOUTHEASTERLY, AND HAVING A RADIUS OF 610.00 FEET; THENCE SOUTHWESTERLY • • • ALONG SAID CURVE, AN ARC DISTANCE OF 6.79 FEET TO THE MOST EASTERLY BOUNDARY CORNER OF SAID TRACT E OF SAID TRACT NO. NORTHWESTERLY ALONG THE NORTHEASTERLY BOUNDARY LINE ,THE FOLLOWING COURSES: ( . EXHIBIT R • (CONTINUED) - • NORTH 42° 17'. 11" WEST 203.39 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY AND HAVING • A RADIUS OF 15.00 FEET; THEN • ALONG• SAID •CURa/E, AN ARC DISTANCE OF AND HAVI A' ADIUS OF 11.F50 -�� F T REVERSE CURVE CONCAVE NORTHWESTERLY THENCE NORTHEASTERLY ALONG SAID CURVE, R NG NORTH 43° 58 WEST A LINE , THE INTERSECTION OF A NON- TANGENT LINE BEA FROM SAID POINT OF INTERSECTION BEARS NORTH COR SAID TRAC NO ' 43° 58' 37• WEST 230.28 FEET TO THE MOST N ORTHERLY . 9783 AND THE POINT OF BEGINNING. • • - • THE ABOV E DESCRIBED PARCEL OF LAND IS SHOWN AS "NOT A PART" ON THE MAP O F • TRACT NO. 9783, FILED IN BOOK 437, PAGES 32 TO - 36, OF MISCELLANEOUS. RECORDS OF ORANGE COUNTY, CALIFORNIA. • • , - - •' THEREOF FROM THE ABOVE DESCRIBED PROPERTY, THAT PORTION 0 SURFACE OF SACD - '` THEREOF LYING ONE HUNDRED (100) FEET, OR MORE ANY RIGHT OF ENTRY UPON THE SURFACE T.HEREOF, -AS SET •, • '• PROPERTY, BUT•WITHOUT - ( FORTH IN MEMORANDUM OF LEASE, RECORDED JANUARY 30, 1980 IN BOOK 13484, - ' - PAGE 1969 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA— . • ALSO EXCEPT THEREFROM ALL OIL, OIL RIGHTS, NATURAL GAS RIGHTS, MINERAL RIGHTS • TOGETH • " � • , . AND OTHER HYDROCARBON SUBSTANCES 0 WITHOUTAHOWEVERMANY RIGHT TO ENTER • '- • • ' WITH APPURTENANT RIGHTS•THER - OF THE I - - 'UPON THE SURFACE OF SAID LAND' NOR ANY PO R Ti RESERVED IN IN •(NSTRUM NTS OF - • - : _ , ABOVE A DEPTH OF .500 FEET, AS EXCEPTED O • • RECORD. • • ' • • • SOME MATTER S AFFECTING SPECIFIC MOBILE HOME SITES ONLY ARE NOT ,COVERED • HEREIN. ,,.. . - •• • • O c3 c g U . ° o a N ' +� : ' . don Aa ' • • . Aw ' - V • o - '° 0 - o • `� p, a a . . . -4tg - 0 0 0 . o . 0 - 4. 6 U U o rn V i Q Q i N ; i• . • , fa, 0 Ca. '.` 8 c d , • . r en- z z o o • 0 o * * (_ y . 0 X . • ma a2 , 0 fil A . p, Et a) , „ . o ' -° 2 o tx la a) °' • . 0 6' = b `� 2 O C _ ° o . o oo +� w , -° ! U • .... c o o ' • _ " • • .. U O N �iC4r , mo ,_,o Z .--, ^ .s r W - 1 , N ++ v r • ti. O O y 0 C • ›+O y O O .+ O . . N a) • m .� y , ., • ' - • v O O UI 0 0 w x ' • � • n j ,•' N �- • • C O._ - • • . n N • � a-+ o v3�., . . •• . ' ' 0 3 a) . • , • • �.. 0 ti a $ > o • o o � o 0 O �� o . o 2 0.1 . " 0 .9d c4u . ' N O. O 0) . a) v "O 0 y C• y o p A. O R r= • .O -- . S Z - . . ti y 'U - E • - a) • �. " 73' N O N • O a) N O A Q • - p - r - a V > - ' • 0 a) C N. • z l - o a. 0 o- a. ; a� * e CA ■ r I . • ,., � -,� � :. 1 I r,,,0„.., 1 -7' DT 1LI o ` /7- — , e � ROSENOW SPEVACEK GROUP 1NC. ~� ,--, 1 i i 1 � REAL ESTATE ECONOMICS GOVERNMENT SERVICES 217 NORTH MAIN STREET TEL. 714 541 -4585 ECONOMIC DEVELOPMENT SUITE300 FAX 714 836 -1748 REDEVELOPMENT PLANNING HOUSING SANTA ANA, CALIFORNIA EMAIL. 1NFOOWEBRSG COM REAL ESTATE ACQUISITION 92701-4822 WWW.WEBRSG COM FINANCING September 29, 2003 1/ Mr. John Bahorsky Ms. Julia Moore City Manager Asset Manager CITY OF SEAL BEACH LINC HOUSING 211 Eighth Street 110 Pine Avenue, Suite 525 Seal Beach, California 90740 Long Beach, California 90802 SEAL BEACH TRAILER PARK PROJECT - Quarter Ending 6/30/03 Dear Mr. Whittenberg and Ms. Moore: Pursuant to the bond Regulatory Agreement for the referenced project, the following status report is submitted. Program Administrator: Quarterly Certificate of Continuing Program Compliance. - I have reviewed the Quarterly Certificate of Continuing Program Compliance for the quarter ending 6/30/03 provided by Housing. The following summary, which is -based on my analysis of the report's detail; illustrates the project meets the number of units required to be rented to very low income households at affordable rent under the 2003 income limits pursuant to the bond Regulatory Agreement. For purposes of comparison, the table also provides the number of affordable units pursuant to the Affordable Housing Agreement with the City Redevelopment Agency (the "Agency "). Linc Housing has now provided income information to substantiate that it meets the moderate income requirement of the Agency Agreement. BOND REGULATORY AGREEMENT AFFORDABLE HOUSLNG AGREEMENT # units req'd, Y2 @ Actual Actual Actual Actual aff rent # units # (aff aff rent # units req'd # units # @ aff rent Very Low Income 25 25 23 25 25 23 Moderate Income N/A 75 86 UNK TOTALS 25 25 23 100 111 23 Vacant Units Income unknown 9 - 9 . Not Qualified 5 . - 5 • • Employee Housing , TOTALS 125 - - .. ..125 ''A SEAL BEACH TRAILER PARK PROJECT September 29, 2003 Page 2 Oversight Agent: Monthly Confirmation of Trustee Deposits. The attached spreadsheet, which has been compiled from the project's monthly financial reports (unaudited), summarizes the debt service payments made to the Trustee compared to Net Operating Revenue through June 30, 2003. At the end of the second quarter, the park's net operating income meets the budget figures represented in the financial reports. However, these budget figures appear to be from a different version of the budget than the one submitted for review and comment at the start of the fiscal year. I asked Linc to research this difference at the beginning of this month and I am waiting for their response. Debt service payments, which are being made to the Trustee monthly, exceed the .year to date budget. Reporting Requirements. Linc has not yet submitted audited financial reports for the year ending December 31, 2002. They were required to submit their 2002 coverage requirement certificate by April 10, 2003 (Loan Agreement Section 6.16) and arbitrage rebate calculations were to be submitted by February 25, 2003 (Indenture Section 7.14). The quarterly report required by Section 6.6 (c) of the Loan Agreement, which was received and reviewed by this office, reported no unusual issues. It is not known whether the report was also submitted to the City. Quarterly Physical Inspection. The most recent physical inspection of the park's common areas was made on July 8, 2003; the results of that inspection are enclosed. The park, which has not been upgraded in recent years, appears to be in a condition commensurate to its age and signs of deterioration have been noted. They have completed the walkway repaving, accepted a bids for the trash enclosure upgrades, and have made plans to make upgrades to the clubhouse and office building exterior walls as well as resurface the streets and parking areas in the near future. Respectfully submitted, ROSENOW SPEVACEK GROUP, INC. A L44.4.4.44 . Nancy Ma rid Oversight Agent Enclosure cc: Lee Whittenberg, Director of Development Services, City of Seal Beach Gillian Wallace, Union Bank of California Pam Newcomb, Kinsell Newcomb & DeDios SealBeach\mhp\qtrrpt • SEAL BEACH TRAILER PARK _ ; - , - ; 3 , ; _ : 4 ; EXHIBIT "C" Period Covered: April 1 through June 30, 2003 CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE The undersigned, LINC Community Development Corporation (the "Borrower "), has read and is thoroughly familiar with the provisions of: 1. The Regulatory Agreement and Declaration of Restrictive Covenants dated as of December 1, 2000 (the "Regulatory Agreement ") among the Borrower, the Redevelopment Agency of the City of Seal Beach (the "Issuer") and Union Bank of California (the "Trustee "); 2. The Indenture of Trust dated as of December 1, 2000 (the "Indenture ") between the Issuer and the Trustee; and 3. The Loan Agreement dated as of December 1, 2000 among the Borrower, the Trustee and the Issuer. As of the date of this Certificate, the following percentages of total Spaces in the Project (1) are occupied by Very Low Income Residents and /or Low Income (as such terms are defined in the Regulatory Agreement) or (2) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Very Low Income Resident Vacated such Space; as indicated: Total Project Spaces: 125 Number of Spaces Occupied by Very Low Income Residents: 25 Percent: 20% Unit Nos: 2, 11, 12, 13, 15, 17, 20, 21, 22, 23, 24, 28, 29, 30, 31, 41, 47, 52, 54, 56. 57, 72, 74, 76, 109 Number of Spaces Occupied by Low Income Residents: 62 Percent: 49.6% Unit Nos: 1, 3, 4, 6, 7, 10, 16, 18, 25, 27, 32, 33, 35, 38, 42, 43, 48, 49, 55, 58, 62, 69, 70, 71, 75, 78, 80, 82, 84, 85, 86, 88, 89, 90, 93, 94, 95, 96, 98, 100, 101, 102, 103, 106, 107, 108, 110, 113, 122, 123, 124, 125, 126, 127, 128, 130, 131, 134, 135, 136, 139,140 Number of Spaces Occupied by Moderate Income Residents: 13 Percent: 19% Unit Nos: 5, 9, 19, 26, 39, 46, 50, 61, 63, 64, 67. 68, 73, 79, 87, 91. 92. 104, 111, 112, 129, 132, 137, 138 Held Vacant for occupancy continuously since - Iast occupied by Very Low Income Resident: 0 Percent Unit Nos: None Vacant Spaces: 0 Percent Unit Nos: None At this time 20% of the spaces in the park are at or below 50% of the median income. There are an additional 86 units at or below the moderate level of 120 %, for a percentage of 68.8 %. These numbers meet the requirements set forth by the City. Additionally, 69.6% of the units are at or below 80% of median income. 4. The undersigned hereby certifies that the Borrower is not in default under any terms and provisions of the above documents, and no event has. occurred which, with the passage of time, would constitute a default thereunder [or if such event has occurred explain below the event and the steps being taken to remedy such event]. LINC C • nity Development Corporation By: J/ a Moore Its: Asset Manager • • We CV 0 CO o DB _ fn cm g = O .O c. 7.1 .--e ¢ a t; `a ; O c A u >, c/a 6 _w Q 6 › ,CO O A gw Q ti ti °� • N N p C M n M el [ y N N N M O O p O O O D O O O >y d O O O N N . . N - + .. N N hi hi CV M vl Q C� e h O co n .--( W .-I ...1 M v1 .� \ .-. 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C7 134 W.1 • ' Seal Beach Trailer Park Oversight Agent Quarterly Physical Inspection 7-43 Report Date: ~0 Quarter Ending: —03 !Status: 1 Exc Sans | Def 1 Immed Cwmnmeotm: Entrance | | Signage L~ | � Small - not o visible — - ' - - Landscaping Lighting None noted Sprinklers __ Resident directory None Streets 1 Visitor parking Residents and visitors use central areas Sidewalks None Lot numbers 'Located on unit mailboxes Lot line markers None Fire hydrants I Lightffig Street name signs t Signage, other Minimal Paving 'MIME _ Curbs, gutters None Clubhouse - Exterior Landscaping I _ Sprinklers Roof Wood shake shingles Gutters None Exterior walls - Weathered wood Patio General maintenance 1 | � Clubhouse - Interior Kitchen facilities, multi-purpose room, rest rooms Flooring Walls, ceiling Plumbing '-- - ----'- -'---- ----- '--'- - - -- --- '--- Electrical ----- Air con uoing None _ __ - ----'---- Rest rooms | - '-- - - Exit ' ------__- __. _ - Sprinklers -'---_-__--_--'----_--- None ' -' - - Smoke detectors None__ Kitchen ------- - facilities Pool - spa None Pool walls Tile -- Fencing Signage ----' --'-- - - Pool - - ---- - ----' - - ----- | ' | .� -^' -_ -L —'� ] RSG, Inc park kmsprept.xlo 9/29/2003 • , • Seal Beach Trailer Park Oversight Agent Quarterly Physical Inspection Report Date: 7-8-0 3 Quarter Ending: U -0_ !Status: 1 oZ I Exc f Satis Def 3 Immed (Comments: Laundry facilities ; ---------- - - - - -- -- -- - -- - - - - - - Electrical J 1 - - — - — - -- - - -- Fire safety ✓ I Flooring I -------- - - - - -- ----------------- - Equipment - - - ✓ -- I - - -- t RV Storage —_ —_ !Paved and lighted -- - Fencing None g -- - -- - -- -- — - - -- - - - -- - Lighting ✓ ! Paving 1 � ✓ 1 Other amenities j g Exercise room None Car wash area -- `. None - Playground j Tot lot needs renovation I - --------------- - - - - -- - -- - -- - - - -- DEFINITIONS: Exc. Excellent condition - recently replaced or upgraded. Satis. Satisfactory condition - no deficiencies noted, repair /replacement needs not apparent. Def. Deficiency noted - does not require immediate or emergency attention, but repair /replacement should be scheduled. lmmed. Needs immediate attention. RSG, Inc.\sealbeach\s.b.trailer park \insprept.xls 9/29/2003 rOPIC LEGISLATIVE HISTORY RECORD FILE no. RDA -44 #17 PROJECTS - AREAS - GENERAL DETAIL A DATE • ACTION OF COUNCIL OR BOARD MINUTE BOOK 1 VOLUME PAGE t • 12 -27 -78 Contract - -JAMES McNAMARA ENTERPRISES -- Trailer Cabana Moving o RDA _ •� 30 t 11 -27 -78 Mr.Gray e pressed concern re certain as.ects of T.P. redevel.. e t A.. Consensus that Gra Kredell Courtemarche e .$ ,! -- . 1 • to discuss. 1 -22 -79 Consensus that Ex Dr meet w Putman and Mr. Guther to discuss, 46 concerns and c. 'plaints of Trailer Park residents. 2 -26 -79 Recommendation -- Relocatio A..eals Brd - -to hi :outside no act 24 • • - 6111 . - • ' a. w ' �• ru 2 -26 -79 A, . . . . . 111 6 - . L -. - i .,.11 6- Failed 23 32 performed _ • 3 -26 -79 Re.. -- - •. . -$ 48 Daws. Associates no act, 3 anticipated construction schedule was presented 3 -26 -79 Mtn to hold stud session re Trailer Pk devel..ment Failed FILE NO. TOPIC 44-RDA PROJECTS - AREAS - GENERAL #17 !f TOPIC FILE NO. LEGISLATIVE HISTORY RECORD 44 - RDA #21 PROJECTS - AREAS - GENERAL DETAIL a DATE ACTION OF COUNCIL OR BOARD MINUTE BOOK VOLUME PAGE 2 -11 -80 Motion to reconsider - -RES 80 -1 - TP A. eement -3rd amendment A. r 30,50 2 -11 -80 Mtn to reconsider Feb 19th Appr 30,50 j 2 -11 -80 Mtn that CM, CA $ rep of Coastal Conservancy meet w /DWP to Appr discuss purchase of UWE property 2 -19 -80 Reconsideration of Res 80- 1 - -3rd Amendment to SB TP Agree. -- Failed 30,50 Mtn to adopt 80 -1 w /Amendments 2 -19 -80 Order of Chair that EX DR contact Diehl -Evans for proposal for 23 procedural $ fiscal audit 2 -19 -80 Mtn that EX DR be denied authority to increase /decrease TP rents Appr even on tempora basis. 2 -25 -80 Discussion -AUDIT PROPOSAL -SB TP - -Mtn that develo er be re.uested Lv.r 23 to provide detailed rpt of constr.costs, incl. info re bidding process, circumstances for delay $.staff to verify costs based • { FILE N0. L1d1 #21 ` RDA -44 PROJECTS - AREAS - GENERAL TOPIC . LEGISLATIVE HISTORY RECORD FILE NO. PROJECTS - AREAS - GENERAL RDA - -44 #22 S', F DETAIL I. i DATE ACTION OF COUNCIL OR BOARD MINUTE BOOK VOLUME PAGE if 4 - - Order of Chair that FxDr r on jrt ritj . ;i,1,: t f:.,.,,, re cost items ADD / 23 to be ..._ - - . . _ - N. • - 00 ,- mt. -27 -80 R.e.ort- Trailer Pk audit - -one proposal rec'd to date - - -Ex Dr to Appr 23 re•ue . .1.. . .m ' N u •• - . . _ . resort at next mt. I . L-9 -80 - _ _ - -Audit .r..osals recd from Diehl Evans =A..r 23 Linford C. o . - ...,, lir . , . ' 1 to . rovide back. oun• t e erience review of T.i n ford auditing firm for next mt.. • -23 -80 Trailer Pk ' _. ' t - -vt _ • -_. - ._.we w ' ord Jensen Bradford & IMII 23 • Cp _� o/Rf . • s•P . Vii -- .. ! !•sed that f' ' .r :- -:s ' - -•-• " As. . .I • -- _ ...� . s Cann. • .. - - -1st & PCH-- status of no act. 45 racquetball proposed development; Alien discussed encouraging } other uses for the site. FILE NO. TOPIC I RDA -44 PROJECTS - AREAS - GENERAL # 1 OPIC - LEGISLATIVE HISTORY RECORD FILE NO. PROJECTS - AREAS - General 44 -RDA #34 I :TAIL f i DATE ACTION OF COUNCIL OR BOARD MINUTE BOOK 4 VOLUME PAG 7 -10 -89 1 • ICE OF SPECIAL MEETING - Trailer Park Rental Increase. 7 -10 -89 I•'sner MIN to adopt rental increases, effective Sept. 1, 1989, Appr . corrected to reflect rent for space 137 & 138 as $245 and $251 9 - 15 - 69 SUBORDINATION AGREELvENT - Zoeter Place Assoc. - Coastal Permit Appr 30, 51 3 5 -88 -731 10 -19 -89 AGREE:M - T TO BE BOUND - Zoeter Sr-hoo3 Site -- Droved A7 or 30, 51 10 -30 -89 GRANT OF EASEMENT -SCE -- •.roved. '• Appr 1,55,59 ; 6 -25 -90 Hastings MTN staff prepare Deed of Greenbelt Property to City : Appr. 45 -RDA 1 for park purposes in perpetuity. ; 10 -8 -90 Gen'l Disc., re: Requests for audit of SB Trailer Park & r appropriateness & responsibility of agency to act . bb litaller 10 -8 -90 Hunt Mtn. no action be taken on alloc. of funds for / Audit Mtn 10 -8 -90 Oral Comm. - re.uests for audit anSBcTrailertPark inequities, • FILE NO. TOPIC 46 :4 -RDA PROJECTS - AREAS - General #34- • TOPIC LEGISLATIVE HISTORY RECORD FILE No. • 7i • I• i'PROJECTS - AREAS - GENERAL 44 -RDA Pg. 35 DETAIL • DATE ACTION OF COUNCIL OR BOARD MINUTE BOOK VOLUME PAGE 10 -8 -90 Request & disc., re: tax implications of removal of undeveloped property from the Redev. Agency 45, 47 10 -8 -90 Clarification of Trailer Park Boundaries by Exec. Director 11 -26 -90 Publ. Hrg. contn. re: conveyance of Elect. Ave. Greenbelt to Cit 45 • 11 -26 -90 RES. #90 -2 - AUTHORIZING CONVEYANCE OF ELECTRIC AVE. GREENBELT APPR. 45,50 1 1 -28/91 Extensive Oral Comm. re: Trailer Park - # of units, low income provisions, legalities, etc. a 2 - 25/91 Oral Comm. disc. of Trailer Park & status of PAC ec. *4-22-91 3 -25/91 Rec & file Tax Increment Revenue Summary,'71 -'90, Trailer Park file 56 Update Rpts. presented on 1)history of approval process, SB 48 Trailer Park; Reformation of Proiect Area Committee for Trailer Park Audit Purposes; 3) ability of City or Agency to require prep of lease -line survey of Trailer Park; advantages & disadv. FIIE NO. TOPIC 44 -RDA PROJECTS - AREAS - GENERAL P • g • #35 TOPIC - _ - - - _ .. _ -. �_.._____ __ .. FILE NO. LEGISLATIVE HISTORY RECORD PROJECTS - AREAS -- General 44 -RDA Pg. 138 DETAIL DATE ACTION OF COUNCIL OR BOARD MINUTE BOOK VOLUME PAGE 1 -9 -95 Dept. of Water & Power Specific Plan - Request for Qualification/ Apprv'd 81,97CRA- -Proposals. Gen,104 5 -22 -95 Department of Water and Power Specific Plan proposed 45 modifications. 6 -26 -95 Agency Concerns - Modifications to DWP Specific Plan desired. 61 2 -26 -96 Public Hearing -Dept of Water & Power Spe ;f2 Plan - Ame dmeT�ts/ 47 n,4�& CC i Negative T)erlaration 95 -5_ Motion to Approve as Amended. Apprv'd 4 -22 -96 Request research Re: Height limitations & restrictions - Trailer Park. 97 RDA 2 - - Ptlhlir TiParing - AnpPa1 - 7nne Tait AmandmPnt 9h - R - Minimum 100 ' Setback - Two -story Cabanas. 7 -28 -97 Comments = TP rents. 8 -25 -97 Public /agency comments re Trailer Park. Issues, audit, ,9 -8 -97 Trailer Park Compliance - Review /Audit, etc. - Brown & Appr. FILE NO TOPIC 44 -RDA PROJECTS - AREAS -- General #38 T OPIC r FILE NO. __..._ LEGISLATIVE HISTORY RECORD - PROJECTS - AREAS - GENERAL 44 -RDA # 39 DETAIL - F 4 ACTION OF COUNCIL OR BOARD MINUTE BOOK 9- X10 -20� VOLUME PAGE 7 Joint Hearing Hellman Ranch Specific. 1 n -Ord,*" & Reso's. 11 -24 -97 Audit - Trailer Park - mtn - tale TY& 'audit pending availability of further info. 23 RDA 1 • 2 -23 -98 Public Hearing Res. No. 98 -1 - Implementation Plans- Riverfront/ Surfside rroject Areas. AppL. 50 3 -22 -99 Len:th disc. - new Trailer Park ownershi. rent increase covenants, etc. 7 6-28 -99 Public comments re Trailer Park proposed rent increase 30CRA 6 -28 -99 Trailer Park Comments 30 7 -26 -99 Re•ort- Dis•ute- Pro•osed Trailer Park Rent Increases •- -'9 Pu•lic Hearing - Appeal - Planning Commission •enia - to deny the appeal Appr 100 -97 # : re Tailer Park, Rents, etc. _ __substandard 1 -10 -00 Comments re Trailer Parkm rents, • etc trai er -LATT' ' ppr . 1 -10 -00 Trailer Park -Rent Increas -7.8 percent Appr. FILF NO. TOPIC 44 -RDA PROJECTS - AREAS - GENERAL #39 • 1 s • 7/ - • ADMINISTRATION AND OVERSIGHT AGREEMENT by and among • _ •: - , REDEVELOPMENT AGENCY. OF THE CITY OF SEAL BEACH • . • Issuer' • and" . • - ROSENOW SPEVACEK GROUP INC., • • - ' as Oversight Agent and Program Administrator - . • • ' • , ifs• ,5 ��•' ,' ' ' s • 4 • •, . , • I.INC COMMUNITY DEVELOPMENT CORPORATION, • . as Borrower = '- • • • • - ' i ' Dated as of December' . 2000- • • . • ' - • • . . Relating to: : • , , • • • ' • $6,750,000 •. • Redevelopment Agency of the City of Seal Beach .• . • • • • • ' • • ,Mobile Home Park Revenue Bonds '. : - , (Seal Beach Trailer Park Project) - • - • Series 2000A ' • • • • • . . • • • RVPUB\KAS\601079 - ADMINISTRATION AND OVERSIGHT AGREEMENT THIS ADMINISTRATION AND OVERSIGHT AGREEMENT (the "Administration Agreement ") is made and entered into as of December 1, 2000, by and among the • ' REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH, a California redevelopment . . agency duly organized and validly existing under its charter and the Constitution and laws of the • ' State of California (the "Issuer "), LINC COMMUNITY DEVELOPMENT CORPORATION, a ' • California nonprofit public benefit corporation (the "Borrower "), and ROSENOW SPEVACEK ' . • GROUP, INC. (the "Oversight Agent" and the "Program Administrator "): - . • - RECITALS: WHEREAS, to assist the Borrower in its acquisition of the Seal Beach Mobile Home Park . - (the "Project "), the Issuer has issued its Mobile Home Park Revenue Bonds (Seal Beach Mobile ' • • .- Home Park Project) Series 2000A - (the "Bonds ") pursuant to an Indenture of Trust, dated as of - • December 1, 2000 (the "Indenture "), by and between the Issuer and Union Bank of California, N.A., as Trustee thereunder (the "Trustee "); and . - ' .. , ' WHEREAS, the Issuer has made a loan (the "Loan") of the proceeds of the Bonds to the , - , Borrower, as provided in the Loan Agreement, dated as of December 1, 2000 (the "Loan ' . = ' . . • . , Agreement "), by and among the Issuer, the Borrower and the Trustee, which agreement provides for certain oversight provisions relating to the management of the Project; and ' , , ' , - , • , , 7 .. ( . . WHEREAS, the Issuer has entered into a Regulatory , Agreement and Declaration of _ - ' ' . . • • Restrictive Covenants, dated as ofDecember 1, 2000 (the "Regulatory Agreement "), with the.Trustee . • • • . and the Borrower,' which agreement; among other things, sets forth certain restrictions applicable to • the property being financed with the proceeds of the Loan, which restrictions are intended to assure - . continued - compliance with the provisions of the Internal Revenue Code of 1986, as amended (the • . • .. "Code "); and • ' . , • • • .. ' - • • WHEREAS, the Issuer desires to appoint Rosenow, Spevacek Group, Inc., as Program ' • . • • • . Administrator under the Loan Agreement to monitor the income levels of the residents of the • Qualified Spaces (as defined in the Regulatory Agreement) and as Oversight Agent under the Loan • . . • Agreement to carry out the duties of the Oversight Agent set forth in the Loan Agreement; and ' _ .. WHEREAS, Rosenow, • Spevacek Group, Inc. • also . will act as the initial Program Administrator under the Regulatory Agreement to monitor the compliance thereunder; and • , • ' . . WHEREAS, Rosenow, Spevacek Group; Inc. represents that it has the necessary experience - and expertise required to evaluate whether the Project complies with the requirements set forth in the Loan Agreement and the Regulatory Agreement; and - WHEREAS, the Redevelopment Agency of the City of Seal Beach (the "Agency ") has made (_ • a revocable grant to the Borrower pursuant to a Revocable Grant Agreement dated December 1, RVPUBTAS\601079 - 1 C . 2000 •(the, "Agency Grant Agreement "). In connection with such grant, the Borrower has executed • and recorded against the Project a Regulatory Agreement and Declaration of Restrictive Covenants by and between the Agency and the Borrower (the "Agency Grant Agreement "); and • • WHEREAS, pursuant to the Agency Regulatory Agreement and the Agency Grant Agreement, the Borrower has established a Rental Assistance Fund and a Resident Services Fund held • , • • • by the Trustee; and - • . . WHEREAS,Rosenow; Spevacek Group, Inc. has agreed.to administer the Rental Assistance Fund and the Resident Services Fund as described in the Agency Grant Agreement and the Agency . Regulatory Agreement; • '. . - • , • . • -- - NOW, THEREFORE, in consideration of the premises and respective representations and , • covenants herein contained, the parties hereto agree as follows:. • ' • • . ' • . . . ' . ARTICLE I . • - , - - • DEF NITIONS AND INTERPRETATION - • • . . : • ., . • .1.1.- Definitions ofTerms. All capitalized terms used in this Administration Agreement and . nototherwise defined hereinshall have the respective meanings given to them in the Indenture and/or • ' • • the Regulatory Agreement.. ' . - • . • , • • • - • . ' - : • • • ; ' • . . 1.2. Article and Section Headings: The heading or titles ofthe several articles and sections ' • • • hereof shall be solely for the convenience of reference and shall not affect the meaning, construction , , or effect of the provisions hereof. . :. - ; .;. 1.3.. 'Interpretation: The singular form of any word used herein, including terms defined • • in the. Indenture and/or the Regulatory • Agreement, shall include the plural and vice versa, if , . • applicable. The use of a word of any gender shall include all genders, if applicable.. '•r: �- • • . , ARTICLE II . _ - , , ' REPRESENTATIONS AND WARRANTIES - • 2.1. Representations of the Issuer. The Issuer makes the following representations: •, , - ' ' (a)' - It is a is a California redevelopment agency duly organized and validly existing • ' . •• . • under its charter and the Constitution and laws of the State of C'alifornia.•' ' • • • . - : . (b) '• . It has .the. power to enter into the transactions contemplated by• this '•• •• • • Administration Agreement and to carry out its obligations hereunder and to consummate all • - other transactions on its part contemplated herein; and it has duly authorized the execution • ' • ' and delivery this Administration Agreement. • • . • ' 2.2. ' Representations and Warranties ofthe Borrower. The Borrower makes the following - - • representations and warranties:. - - - . • • - . ' ' ' • - , RVPUBUCASW01079 2 . • ' . • • - (e) In the event that the Borrower fails to file with Program Administrator any ' , • report, certification (including, in particular, the certification to the Secretary of the Treasury required by Section 4(e) ofthe Regulatory Agreement) or other document required pursuant . to either the Regulatory Agreement or the Agency Regulatory Agreement within the time set forth in the Regulatory Agreement or the Agency Regulatory Agreement, as applicable, the , . Program Administrator shall immediately give written notice of that fact to the Issuer, the ' , • Agency, ACA, the Trustee and the Borrower. .. , (i ) The Program Administrator shall prepare, and file all initial and annual reports . .. - required by Section 8855.5 of the Government Code ofthe State of California with respect ' . to the Project. ' , . , ' • '. (g) On behalf of the Issuer, the Program Administrator shall, at least annually and ' . ' , .whenever requested bythe Issuer, audit the survey of the tenants ofthe Qualified Spaces with . • , . - respect, to income levels, household sizes and such other information as the Issuer may • - _ • specify, and all as further required under Section 4 of the Regulatory Agreement. Based on` . , such information,, the Issuer. shall determine compliance with the affordability requirements • - • under the Act - and the Code. In the event of any noncompliance the Program Administrator : ' . . . . shall' notify the Issuer and ACA as to the nature and extent of the noncompliance and the , . Program. Administrator shall suggest alternatives for bringing the Qualified Spaces into . • : - compliance.. . . , , • < , .. • . . - 13.2. Duties of Oversight Agent. The Oversight Agent will perform on a timely basis all " • • duties ascribed to the Oversight Agent in the -Indenture, the Loan Agreement, and the Regulatory . - . ' ' Agreement, the Agency Grant Agreement and the Agency Regulatory Agreement, including without . - limitation the following: (i) annual review of the Borrower's financial statements, (ii) review the . • ' . . • coverage calculation for release of surplus cashflow and report comments to the Borrower and the - - . - City, (iii) review thefinal budget and forward comments to theBorrower, the Issuer and the Agency, • ' • (iv) physical inspection ofthe Project oda quarterly basis, including examination ofthe infrastructure, ; • , . the clubhouse, and- any other common areas,_ (v) monthly confirmation report to the Issuer, the . . . Agency ACA and any Bondholder requesting such information that the Trustee has received the monthly deposit in accordance with the approved budget and, in the event that the Trustee has not,' : furt _ , to take such her steps as. required by_ the Loan Agreement, (yi) review requests by- the Borrower _ _ •_ _ - - . __-_ ' • to withdraw funds from the Rental Assistance Fund, determine if such requests conform to the requirements of the Agency Regulatory Agreement, and, if so, approve such requests in writing and forward them to the Trustee for release of funds; (vii) review joint requests by the Borrower and the . Project residents to withdraw from the Resident Services Fund,. submit such requests to the . Agency for approval pursuant to the Agency, Grant Agreement, and, if approved in writing by the Agency, forward the requests to the Trustee for release of funds; and (viii) submit annual reports (and more frequent reports if requested by the Agency) to the Agency summarizing all withdrawals from ' the Rental , Assistance Fund, the Resident Services Fund and the Agency Loan Fund and the . • outstanding balance of each such fund. . - - • • - . - • • 3.3. , Compensation. , For its services as Program Administrator and as the Oversight Agent,' Rosenow, Spevacek Group, Inc. shall be paid an annual fee of $6,000, payable in equal quarterly RVPUBWAS\601079 5 - installments commencing March 15, 2001, subject to adjustment as provided in the definition of "Administration Fee" set forth in the Indenture. The fee of the Program Administrator and Oversight Agent shall be paid to the Program Administrator and Oversight Agent by.the Trustee upon receipt . by the Trustee of an invoice from the Program Administrator and Oversight Agent. If the Program - Administrator and Oversight Agent provides services outside the scope of this Agreement, as . requested in writing by the Issuer, the compensation shall be paid - at the then prevailing fee schedule • . of Program Administrator and Oversight Agent. • . • ARTICLE IV - . . . - - - , - TERM - , . 4.1. Term of Agreement. Unless sooner terminated pursuant to the provisions of Sections' 4.2 -and 4.3 hereof, this Administration Agreement shall remain in full force and effect for the term • • . ' of the Regulatory Agreement. , 4.2. Termination: At its sole discretion, the Issuer, with a copy of any such notice to the •• . City, may terminate this Administration Agreement upon giving the Program Administrator, • ' • Oversight Agent and the Borrower thirty (30) days written notice of its intention to do so. This , ' . Administration Agreement may be terminated in whole or in part only as to the services described in ' • - ' . . Section 3.1 or 3.2, whereupon a partial fee for the services not terminated will be agreed upon by the • • ' parties and memorialized in an amendment hereto. • ' ' • • . • .• •_. 4.3. Resignation ofProgram Administrator or Oversight Agent. With the written consent _ • ' of the Issuer, the Program Administrator or the Oversight Agent may resign from its position and - terYninate this Administration Agreement by giving the other parties hereto thirty (30) days written , : , • - notice of its intention to do so.. . - . ARTICLE V " • ' . • MISCELLANEOUS P ROVISIONS - ' . ' • 5.1. Execution in Counterparts. This Administration Agre may be executed in any number of counterparts, each of which shall be deemed to be an origin 1, and such counterparts shall -_ . • constitute but one and the same instrument. ' ' . • • 5.2. Business Days. If any action is required to be taken on a date which falls on other than a Business Day, :such action shall be taken on the next succeeding Business Day. • ' . . 5.3. Governing Law. - This Administration Agreement shall be construed in accordance . . • with the laws of the State of California and the obligations, rights and remedies of the parties - hereunder shall be determined in accordance with such laws.' . . , - .. ' 5.4. Notices. All notices, certificates or other communications hereunder shall be , , . - sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed to the appropriate Notice Address set forth in the Regulatory Agreement.. The . Notice Address of the Program Administrator and Oversight Agent is: 540' North Golden Circle, ' • Suite 350, Santa Ana, California 92705; Attention: Kathleen Rosenow. - , • RVPUB\KAS\601079 ' 6 - IN WITNESS WHEREOF, the parties hereto have caused this Administration Agreement to be executed on their behalf by their duly authorized representatives, all as of the date hereinabove written. • - REDEVELOPMENT AGENCY OF THE CITY - - • OF SEAL BEACH' . . , • . By: ,s . - - - ' ' Executive Director ' .. • ' • , ' - LINC •COMMUNITY • DEVELOPMENT • CORPORATION, a California nonprofit public • • • . ' • , ' benefit corporation • , • .. _ • ' ; . • • Executive Director . • ' - • • • • • . • • , • ' 'ROSENOW, SPEVACEK GROUP, INC., ' '• �' - • - , , •as Program Administrator and Oversight Agent . • • • By: - • • • • • Authorized Signatory • • • ,, � ! RVPUB\KAS \601079 7 • - ' • . , IN WITNESS WHEREOF, the parties hereto have caused this Administration Agreement to be executed on their behalf by their duly authorized representatives, all as of the date hereinabove . - written. CITY OF SEAL BEACH ' ' REDEVELOPMENT AGENCY • By: - ■ Executive Director • • - LINC COMMUNITY DEVELOPMENT '• ' • • ' • ' • • _ CORPORATION, a California nonprofit. public , . • benefit corporation , By: • • • • • Executive Director • • . • • • . • • " • ROSENOW, SPEVACEK GROUP, INC.; • • • . . ' • • • • • ' • • ' • as Program Administrator and Oversight Agent • • • BY / . / . . ' • • . _ • • Authorized Signatory • • • • • • • • • . • . • . RVPUB\KAS \601079 • . 7 - - I ) t"" / November 13, 2000 STAFF REPORT •� To: Chairman and Members of the Redevelopment Agency Attention: Donald F. McIntyre, Acting Executive Director of Redevelopment Agency From: Lee Whittenberg, Director of Development Services Subject: ADOPTION OF RESOLUTIONS APPROVING OF BOND ISSUANCE BY REDEVELOPMENT AGENCY - SEAL BEACH TRAILER PARK ACQUISITION FINANCING SUMMARY OF REQUEST Adopt Resolution No. 00 -4, A Resolution of the Redevelopment Agency of the City of Seal Beach Authorizing the Issuance of Its Not To Exceed $7,000,000 Aggregate Principal Amount of Mobilehome Park Revenue Bonds (Seal Beach Mobile Home Park Project) and Approving . Certain Documents and Authorizing Certain Actions in Connection Therewith Adopt Resolution No. 00 -5, A Resolution of the Redevelopment Agency of the City of Seal Beach Approving as to Form and Authorizing the Execution and Delivery of Certain Documents, Making Certain Findings and Authorizing Other Matters Relating Thereto (Seal Beach Mobile Home Park Project) BACKGROUND - Section 33740 and following of the California Health and Safety Code (the "Law ") authorizes redevelopment agencies to issue bonds to make loans to nonprofit corporations for the purpose of acquiring mobilehome parks. The Law requires that twenty percent of the spaces within mobilehome parks financed with bond proceeds be reserved as low- income spaces. The Law additionally requires that certain rent restrictions apply to these lower income spaces. In accordance with the Law, the Redevelopment Agency is considering issuing bonds to make a loan to LINC Housing of California, a California nonprofit public benefit corporation (the AGENDA ITEM -��T C: My Documents\TRAILERP\Bond Issuance. RDA Staff Report.doc\LW - -00 Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 "Corporation ") that would allow the Corporation to acquire the Seal Beach Trailer Park (the "Project "). The Bonds would be secured solely by loan repayments made by the Corporation and no City or Agency funds would be pledged to the Bond repayment. The Agency is also considering a loan and grant arrangement with the Corporation to provide additional financing for the Project. Agency" counsel has prepared documentation including an Agency resolution, with respect to this proposed financing. Before the Agency can issue the Bonds, Federal tax law requires the City Council to approve the Bonds after a public hearing is held. Notice of a joint public hearing of the Agency and the City Council was published on September 29, 2000. At the October 23, 2000 meeting, the City Council adopted Resolution No. 4853, approving the issuance by the Redevelopment Agency of its City of Seal Beach Redevelopment Agency Mobile Home Park Revenue Bonds (Seal Beach Trailer Park Project) (the "Bonds "). The attached Resolutions of the Redevelopment Agency authorize the issuance of the Bonds by the Agency. If Bonds are authorized and sold, the net sale proceeds would be loaned to LINC Housing of California, a California nonprofit public benefit corporation (the "Corporation "). The Corporation would then use proceeds of the loan together with other moneys to acquire the Seal Beach Trailer Park. The Bonds, if any are issued, would be repayable solely from income derived from the Trailer Park. No Agency moneys would be pledged to the repayment of the Bonds. The first attached Resolution, Attachment 1, approves all the necessary documents to complete the financing. These documents are as follows: ❑ Indenture of Trust. The Indenture establishes the terms and conditions under which the Bonds will be issued and establishes debt service and project funds. Union Bank of California, N.A. will act as Trustee for the Bonds under the Indenture. ❑ Loan Agreement. Under the Loan Agreement, the Agency will loan the bond proceeds to the Corporation and the Corporation agrees to repay the loan from Project revenues. The Corporation will pledge rent revenues received from the Trailer Park to the repayment of the loan. These revenues are assigned to the Trustee under the Indenture and are used to make debt service payments on the Bonds. ❑ Regulatory Agreement. The Regulatory Agreement establishes the number of low- income spaces and rent restrictions required by the Law. The Regulatory Agreement will be recorded against the Trailer Park and will remain in place for as least as long as the Bonds remain outstanding. Bond Issuance.RDA Staff Report 2 Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ❑ Administration and Oversight Agreement. Under this agreement, the Agency appoints Rosenow Spevacek Group Inc. as its agent to ensure that the Corporation remains in compliance with the Regulatory Agreement and that the Project is adequately run and maintained. Rosenow Spevacek Group Inc. is paid from Project Revenues. ❑ Deed of Trust. The Deed of Trust is recorded against the Project to secure the Corporation's loan obligation incurred under the Loan Agreement. The beneficiary is of the Deed of Trust i`s the trustee named in the Indenture for the benefit of the Owners of the Bonds. ❑ Preliminary Official Statement. The Preliminary Official Statement is the document used by the Underwriter for the Bonds, Kinsell, Newcomb & DeDios Inc. and Girard Securities • Inc. (the "Underwriters "), for marketing purposes. It describes the bonds, the nature of the Project, the Corporation and other relevant information concerning the Bonds. ❑ Bond Purchase Contract. The Bond Purchase Contract is the agreement by which the Underwriters will purchase the Bonds from the Agency. The maximum principal amount of the Bonds will not exceed $7,000,000, the maximum interest rate on the Bonds will not exceed 7.50% and the Underwriter's discount will not exceed 2.5 %. The second attached Resolution of the Agency, Attachment 2, authorizes the execution and delivery of a Loan and Grant Agreement, a Regulatory Agreement, a Bridge Loan Agreement and related documents providing for additional Agency support of the Project, as described below: ❑ Loan and Grant Agreement. Through this Agreement and accompanying documents, the Agency is providing a loan to the LINC Housing in the amount of $1,000,000 from the Agency's Low and Moderate Income Housing Fund (the "Residual Receipts Loan ") to assist in the acquisition of the Park by LILAC Housing and a grant to LINC Housing in the amounts described below from the Agency's Low and Moderate Income Housing Fund (or from other monies available to the Agency) (the "Grant ") to assist in funding a rental assistance fund to be utilized to provide subsidies for eligible residents of the Park. ❑ Grant assistance from Low and Moderate Income Housing Fund. The acquisition financing program for the Trailer Park has always included a rental assistance component to assist residents of the trailer park in adjusting to the greater rent payments necessary to support the bond retirement. As was initially presented to the Agency, this would encompass approximately $340,000 for the first three years after the acquisition by LINC Housing. Further financial analysis has estimated that amount of assistance to range between approximately $172,000 and $300,000. Bond Issuance.RDA Staff Report 3 Approval ofBondlssuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 It was initially assumed that the MPROP funding did not accrue interest. That is incorrect, the MPROP funding will have a 3% simple interest financing attached to the loan, requiring additional funding from the Operating Reserve Fund to fund the interest payments. This will require additional funding from the Agency to replace the shortfall in order to maintain the required funding level of the Operating Reserve Fund. Given the financial projections, it is estimated that an additional $425,000 may be necessary over the next 9 years to ensure all residents of the trailer park are not expending more than 40% of their gross income for housing. Therefore, the Loan and Grant Agreement establishes a maximum rental assistance from the Agency Low and Moderate Income Housing Fund of $765,000 over the first 12 years, beginning with the acquisition of the trailer park by ZINC Housing. ❑ Regulatory Agreement. The funds constituting the Loan and advanced to LINC Housing are low and moderate income housing funds (or other funds available to the Agency), and pursuant to Health and Safety Code Section 33334.2, such funds are required to be utilized to increase, improve, and preserve the supply of housing available at affordable housing cost to persons and families of low or moderate income. This Agreement is intended to implement such purpose. ❑ Bridge Loan Agreement. LINC Housing and the Agency contemplate a financing structure for acquisition and rehabilitation of the Park which is principally described in the Senior Loan Agreement. Following satisfaction of the conditions of this Agreement, the Agency will make the Bridge Loan to or for the benefit of LINC Housing for the purpose of paying certain costs in anticipation of receipt of the proceeds of the State MPROP Loan. Upon receipt of the MPROP Loan, the bridge loan is to be repaid, interest free. Uncertainty of Certain Information: In all of the above discussion, it is necessary to clarify that the final deal points and required documentation may require adjustments and amendments, based upon the financing terms obtained at the time of the bond issuance and the terms of the MPROP Loan. The consultant team and City staff have provided the most conservative figures, assuming appropriate due diligence and conservative estimates. The attached documents contain many items of information that will not be able to be completed until the results of the following activities and actions are known: ❑ Acceptance of Trailer Park Residents of the proposed rental program proposed by LINC Housing on November 9 to the residents of the trailer park. Based on the results of that meeting, certain information items may need to be revised at the Agency meeting on November 13. Bond Issuance.RDA Staff Report 4 ) ) Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ❑ Financing terms of the Mobile Home Park Bond Revenue Bonds and of the State of California MPROP Loan. The necessary information related to these two funding mechanisms cannot be fully known until the time of the actual bond issuance and loan approval, respectively. DISCUSSION Plan of Finance: The finance plan currently includes: ❑ Tax- Exempt Bonds in the amount of approximately $6,750,000, repaid by trailer park revenues; ❑ a State MPROP loan of $1,000,000; ❑ a Redevelopment Agency Low/Moderate Income Housing Set -Aside "bridge loan" in the amount of $1,000,000 payable from the proceeds of the State MPROP loan; ❑ a Redevelopment Agency Low/Moderate Income Housing Set -Aside loan in the amount of $1,000,000; and ❑ a Redevelopment Agency Housing Agency initial and annual set -aside grant for rental subsidy not to exceed $765,000 over 12 years from the date of acquisition by LINC Housing of the Seal Beach Trailer Park. The tax- exempt Bond debt is proposed to either be (1) insured by an "A" rated ACA insurance policy, (2) be rated "BBB," or (3) be issued as non -rated debt with a coverage ratio of 1.25 to 1.35 times coverage. It will be amortized over 35 years. The $1,000,000 State MPROP loan will be second in priority of payment and will be amortized over 30 years. It is proposed that initial payments of principal will be deferred for 5 years. The rate of interest is anticipated to be 3 %. Final approval of this loan is not anticipated until December 8, 2000, and final funding will not be provided for 6 -12 months. Since funding is being provided after bond closing, it will be necessary for the RDA to provide up to a 1 -year bridge financing for this loan. No interest will be paid on this bridge loan. Additionally, if for some reason this financing is never finalized, this bridge loan will convert to a long -term loan with the same terms and interest rate as the MPROP loan. The $1,000,000 Redevelopment Agency loan will be third in priority of payment (after the Bonds and the MPROP loan) and will be amortized over 25 years. Payment of principal and interest will be deferred for 5 years. The rate of interest is estimated to be 3 %. Bond Issuance.RDA Staff Report 5 ) ) Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 The Agency will also provide a Low/Moderate Income Housing Set -Aside grant in an initial approximate amount of $765,000 to provide rental subsidy funding for rent increases in the first 12 years of the project operation by the non - profit. The formula for calculating these monthly subsidies will comply with the MPROP loan requirement. The MPROP loan generally requires that residents pay no more than 40% of their income toward housing. Due Diligence Studies: Below is a current discussion of the status of the three due diligence studies. Appraisal: As a result of investigation and analysis, the appraiser formulated the following three values for the Seal Beach Trailer Park: 1. Market Value (Assuming Modifications to the Covenant) $ 6,150,000, 2. Market Value (Market Rents, No Covenant) $11,000,000, 3. Value in Use to a Non -Profit Agency Purchaser $ 7,750,000. Scenario one takes into account the planned increase in rents over a three -year period. Scenario two assumes there are no restrictions on residents' rents or income. And finally, Scenario 3 takes into consideration the special financing and tax considerations available to non -profit corporations. Independent Accountant's Report: Based on the procedures performed by Haynie & Company nothing came to the attention of the firm that caused it to believe the accounting records related to the rental activities of Seal Beach Trailer Park are not being accounted for correctly. The historical and forecast cash flow figures are adequate to provide the necessary debt service coverage for the projected financing. Physical Needs Assessment: The Physical Needs Assessment completed by the Meterman Company indicates that repairs needed during the first year will cost approximately $100,900. The highest cost repairs recommended for the first year include asphalt - resurfacing, improvements to street lighting at 12 locations and electrical preventive maintenance. Additional maintenance and repair work needed Bond Issuance.RDA Staff Report 6 7 1 1 Approval of Bond Issuance by the Redevelopment Agency of Mobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report • November 13, 2000 from year 2 to 10 is estimated to cost $30,550 and includes asphalt double slurry sealing, providing for shake roofing re- mediations, and repairing wood fences and property walls. A Repair and Replacement Account will be funded with bond proceeds to the recommended level of $131,450. Status of State Mobilehome Park Resident Ownership Program ( MPROP) Loan: The State of California has, through legislation in the early 1980's, created a program to assist resident groups in the acquisition of rental parks from proprietary owners. That program is now known as the Mobilehome Park Resident Ownership Program (MPROP). Last year that program was modified by the legislature to allow the applicants for these loans to include cities and public benefit, non -profit corporations. The enabling statutes are found in the California Health and Safety Code at Sections 50780 through 50786.5. The intent of this legislation id to "facilitate the mobilehome parks to resident ownership or ownership by qualified non -profit housing sponsors or by local public entities, to protect low income mobilehome park residents from ... displacement." The underlined passage was recently added to enlarge the program's use. Loans under MPROP may be used for a number of purposes, including loans for conversion. In this instance, the program will be used as a long -term blanket loan to refinance a portion of the project funded by the City of Seal Beach. A blanket loan of this type will carry an interest rate of 3% per annum. The interest is not compounded (i.e., simple interest). The term of the loan is normally 30 years, but the repayment may be deferred for a length of time to allow the maximum benefit for the low- income residents. These loans, to the extent possible, should not exceed 50% of the conversion costs attributable to the low - income spaces. That rate, however, may be exempted and increased to 95% of the conversion costs attributable to low - income spaces as approved by the California Department of Housing and Community Development (HCD). The total debt in a superior position to the MPROP loan shall not exceed the value of the collateral securing the loan. The program is administered by HCD. The applicable rules for the Department are set forth in Title 25 of the California Administrative Code (Part 1, Chapter 7, Subchapter 13). That Code is presently being amended for purposes of allowing the local entities and qualified non - profits participation. Because of the lengthy delay between enactment and approval of the revised Administrative Regulations, HCD has adopted interim regulations and issued its first Notice of Fund Availability Bond Issuance.RDA Staff Report 7 Approval of Bond Issuance by the . Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 (NOFA) under the new legislation. The Seal Beach Trailer Park is the first non -profit application received under the new program. LINC Housing is the applicant for this loan and the City of Seal Beach is acting as co- applicant. Historically, resident groups were required to have the local jurisdiction act as co- applicant to insure that there is some local interest in the project and to provide an "on- site" monitor should things go bad. The City is not a borrower, but is a co- applicant in the sense that it must monitor the loan after it has been placed. This involves annual review of reports submitted and counseling if there should be problems with repayment. Under the proposed regulations, the local jurisdiction would not be required as co- applicants with non - profits. The local entity would simply be required to certify as to certain conditions. The present application has been reviewed by HCD staff and is scheduled for approval before the Loan and Grant Committee on December 8, 2000. If approved by the Loan and Grant Committee, the loan will be sent to the director of HCD for final approval. Once the director has approved the loan, the loan must be completely underwritten and documented. That process can take a number of months due to the shortage of staff and the volume of data required to be gathered before funding. Since the purpose of the loan is to assist low income residents, an individual file must be prepared for each low and very low income resident of the park wishing to apply for any rental assistance. Those files contain what appears to be a full loan application and verification. Although no loan is made to individual residents, the file is used to verify the person's status and eligibility. That process takes time. The resulting loan will most likely be for $1,000,000 and carry an interest rate of 3 %. The repayment will be delayed if approved by the state staff. In the interim, interest accrues as simple interest (i.e., no compounding). Our best estimate is that the deferral of payments may be from 3 to 7 years. This cannot be known until the individual recipients of assistance are determined and the level of assistance calculated. The program also carries a proscription against economic displacement of persons within the park. The goal of the program is to maintain low- income housing and not drive residents from their homes. The city contributions can also assist in meeting this requirement. As this is the first such application to be received and approved, the state staff will undoubtedly take more time to insure the loan is fully analyzed and underwritten. After consultation with state staff, Mr. Gibbs, counsels to the residents, believes this loan may not fund until as late as the summer of 2001. Bond Issuance.RDA Staff Report 8 Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 Status of Resident Rent levels and City Contribution On November 1, 2000, LINC Housing star met with representatives of the resident organization to review the acquisition financing structure as then proposed and to discuss options for increasing tenant rents. LINC staff presented several options for rent increases and residents proposed others, each of which fit within the financing structure provided by the City's financial consultants. LINC staff was asked by the residents to provide additional analysis of one rent increase proposal. LINC staff provided the resident representatives with this analysis on November 2nd and will reconvene a meeting with the representatives. The goal is for the resident representatives to make a final recommendation regarding the rent increase method to LINC and the full resident organization. A meeting of the full resident organization is scheduled for the evening of November 9th, 2000. At this meeting, LINC staff will present the financing structure and the rent increase structure as recommended by the resident representatives. LINC Housing is also analyzing the potential need for rent subsidies for low- income residents and expects to provide this data to the City's financial advisors by November 7th. FISCAL IMPACT The financial contribution on the part of the Redevelopment Agency will include 3 primary items funded from the Low/Moderate Income Housing Set -Aside Fund. First, a rent subsidy fund in the amount of approximately $765,000 will be provided by the Agency as a grant and will be used during the first 12 years of operation to subsidize the rent increases. At bond closing the rent starts at $364.00 and increases to $446.00 in 2001and $527.00 in 2002. The second component of the Agency funding will include a $1,000,000, 30 -year loan with a 5- year deferral of principal and interest. The loan will be in third position behind the tax- exempt bonds, and it will be amortized at a 3% rate of interest. The third component of the Agency funding will be a $1,000,000 bridge loan provided to fill the time gap between the State MPROP funding being approved and funded. It is anticipated that this loan will be in place for 6 to 12 months. No interest will be paid during this time, since the State loan is deferred for 3 to 5 years. The total fiscal impact to the Low/Moderate Income Housing Set -Aside Fund will be approximately $2,340,000 over the first 3 years. Currently the Fund has a reserve for the set -aside of $3,054,000; therefore the Agency will not experience a negative financial impact during the first 3 years. In Bond Issuance.RDA Staff Report 9 4 ) / Approval ofBond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 addition, the Agency will receive sufficient funds in the Low and Moderate Income Hosing Set -Aside Fund to provide the additional rent subsidies in years 4 through 12. RECOMMENDATION Adopt Resolution No. 00 -4, A Resolution of the Redevelopment Agency of the City of Seal Beach Authorizing the Issuance of Its Not To Exceed $7,000,000 Aggregate Principal Amount of Mobilehome Park Revenue Bonds (Seal Beach Mobile Home Park Project) and Approving Certain Documents and Authorizing Certain Actions in Connection Therewith Adopt Resolution No. 00 -5, A Resolution of the Redevelopment Agency of the City of Seal Beach Approving as to Form and Authorizing the Execution and Delivery of Certain Documents, Making Certain Findings and Authorizing Other Matters Relating Thereto NOTED AND APPROVED Whittenberg, Director Donald F. McIntyre Development Services Department Acting Executive Director of Redevelopment Agency Attachments: (6) ATTACHMENT 1: Resolution No. 00 -4, A Resolution of the Redevelopment Agency of the City of Seal Beach Authorizing the Issuance of Its Not To Exceed $7,000,000 Aggregate Principal Amount of Mobilehome Park Revenue Bonds (Seal Beach Mobile Home Park Project) and Approving Certain Documents and Authorizing Certain Actions in Connection Therewith ATTACHMENT 2: Resolution No. 00 -5, A Resolution of the Redevelopment Agency of the City of Seal Beach Approving as to Form and Authorizing the Execution and Delivery of Certain Documents, Making Certain Findings and Authorizing Other Matters Relating Thereto (Seal Beach Mobile Home Park Project) Bond Lssuance.RDA Staff Report 10 Approval of Bond Issuance by the Redevelopment Agency of Mobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ATTACHMENT 3: City of Seal Beach — MHP Revenue Bonds, 35-Year Cash Flow Schedule, MPROP 5 Year Deferral ATTACHMENT 4: City of Seal Beach — MHP Revenue Bonds, Series 2000A, MPROP Loan and Agency Loan — Total Issue Sources and Uses ATTACHMENT 5: Seal Beach Trailer Park - Mobilehome Park Revenue Bond Documents, prepared by Best Best and Krieger LLP ATTACHMENT 6: Seal Beach Trailer Park - Mobilehome Park Revenue Bond Documents, prepared by Richards, Watson & Gershon Bond Issuance.RDA Staff Report 11 ) ) Approval of Bond Issuance by the Redevelopment Agency of Mobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 • ATTACHMENT 1 RESOLUTION NO. 00 -4, A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH AUTHORIZING THE ISSUANCE OF ITS NOT TO EXCEED $7,000,000 AGGREGATE PRINCIPAL AMOUNT OF MOBILEHOME PARK REVENUE BONDS (SEAL BEACH MOBILE HOME PARK PROJECT) AND APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH • Bond Issuance.RDA Staff Report 12 ' .. ) ) Approval of Bond Issuance by the Redevelopment Agency of Mobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report • November 13, 2000 ATTACHMENT 2 RESOLUTION NO. 00 -5, A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH APPROVING AS TO FORM AND AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS, MAKING CERTAIN FINDINGS AND AUTHORIZING OTHER MATTERS RELATING THERETO (SEAL BEACH MOBILE HOME PARK PROJECT) Bond Issuance.RDA staff Report 1 r ' ) Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ATTACHMENT 3 CITY OF SEAL BEACH - MHP REVENUE BONDS, 35 -YEAR CASH FLOW SCHEDULE, MPROP 5 YEAR DEFERRAL Bond Issuance RDA Staff Report 23 i` ) ) , City of Seal Beach MHP Revenue Bonds 35 Year Cashflow Schedule MPROP Five Year Deferral Year 1 2 3 4 5 6 7 Income Space Rent 545,640 667,620 789,600 805,392 821,500 837,930 854,688 Extra Parking 4,590 4,682 4,775 4,871 4,968 5,068 5,169 Laundry Income 3,006 3,066 3,127 3,190 3,254 3,319 3,385 RDA Project Subsidy 208,896 92,454 0 0 0 0 0 Total Gross Income 762,132 767,822 797,503 813,453 829,722 846,316 863,243 Less Vacancy 2% Total Gross 11,065 13,507 15,950 16,269 16,594 16,926 17,265 Total Scheduled Income 751,067 754,315 781,553 797,184 813,128 829,390 845,978 Expenses Salaries 18,600 18,972 19,351 19,738 20,133 20,536 20,947 Salary OH 6,971 7,110 7,253 7,398 7,546 7,697 7,850 Marketing 0 0 0 0 0 0 0 Repairs & Maint. 10,000 10,200 10,404 10,612, 10,824 11,041 11,262 Administrative 6,000 6,120 6,242 6,367 6,495 6,624 6,757 Utilities 31,532 32,163 32,806 33,462 34,131 34,814 35,510 License, Fees, Permits 5,000 5,100 5,202 5,306 5,412 5,520 5,631 Professional Fees 1,500 1,530 1,561 1,592 1,624 1,656 1,689 - Property Management 30,288 30,894 31,511 32,142 32,784 33,440 34,109 Legal Fees - 500 510 520 531 541 552 563 Property Taxes 35,000 35,700 36,414 37,142 37,885 38,643 39,416 Property Insurance 17,000 17,340 17,687 18,041 18,401 18,769 19,145 Total 162,391 165,639 168,951 172,330 175,777 179,293 182,878 Net Operating Income 588,676 588,676 612,601 624,853 637,351 650,098 663,100 Series A DSR Eamings 28,246 28,246 28,246 28,246 28,246 28,246 28,246 Total Income 616,922 616,922 640,847 653,099 665,597 678,344 691,346 Series A Debt Service 454,499 454,435 456,135 452,535 453,895 454,942 455,712 Coverage Factor 1.36 1.36 1.40 1.44 1.47 1.49 1.52 Trustee 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Program Administrator/Oversight 7,500 7,500 7,500 7,500 7,500 7,500 7,500 MPROP Loan 0 0 0 0 0 64,500 68,600 Coverage Factor 1.32 1.32 1.37 1.40 1.43 1.28 1.29 RDA Loan 0 0 0 0 0 54,700 58,950 Coverage Factor 1.32 1.32 1.37 1.40 1.43 1.16 1.16 Cashflow after Debt Service 149,923 149,987 172,212 188,064 199,202 91,702 95,584 Asset Management Fee 11,065 13,507 15,950 16,269 16,594 16,926 17,265 Surplus Cashflow 138,858 136,480 156,262 171,795 182,607 74,775 78,319 Beg. Balance of Repair& Replacement 131,450 88,075 78,125 78,125 78,125 78,125 78,125 Estimated R &R Expenditures 43,375 43,375 43,375 25,000 25,000 25,000 25,000 Balance of R & R after Expenditures 88,075 44,700 34,750 53,125 53,125 53,125 53,125 Replenish R & R to $78,125 0 33,425 43,375 25,000 25,000 25,000 25,000 Cashflow after R & R Replenishment 138,858 103,055 112,887 146,795 157,607 49,775 53,319 Beg. Balance of Operating Reserve 0 69,429 120,956 177,400 228,200 228,200 228,200 Replenish Operating Reserve Fund to $228,200 69,429 51,527 56,444 50,800 0 0 0 Cashflow After Deposit to Operating Reserve 69,429 51,527 56,444 95,995 157,607 49,775 53,319 Max. Estimated Rental Assistance 63,200 95,100 140,600 140,600 140,600 140,600 140,600 Deposit to Rent Subsidy Fund from Surplus 63,200 51,527 56,444 95,995 140,600 49,775 53,319 Estimated RDA Assistance 0 43,573 84,156 44,605 0 90,825 87,281 Net Cashflow 6,229 0 0 0 17,007 0 0 ) , City of Seal Beach MHP Revenue Bonds 35 Year Cashflow Schedule MPROP Five Year Deferral Year 8 9 10 11 12 13 14 Income Space Rent 871,782 889,218 907,002 925,142 943,645 962,518 981,768 Extra Parking 5,272 5,378 5,485 5,595 5,707 5,821 5,938 Laundry Income 3,453 3,522 3,592 3,664 3,738 3,812 •3,889 RDA Project Subsidy 0 0 0 0 0 0 0 Total Gross Income 880,508 898,118 916,080 934,402 953,090 972,152 991,595 Less Vacancy 2% Total Gross 17,610 17,962 18,322 18,688 19,062 19,443 19,832 Total Scheduled Income 862,897 880,155 897,759 915,714 934,028 952,709 971,763 Expenses Salaries 21,366 21,793 22,229 22,673 23,127 23,589 24,061 Salary OH 8,007 8,168 8,331 8,498 8,668 8,841 9,018 Marketing 0 0 0 0 0 0 0 Repairs & Maint. 11,487 11,717 11,951 12,190 12,434 12,682 12,936 Administrative 6,892 7,030 7,171 7,314 7,460 7,609 7,762 Utilities 36,220 36,945 37,684 38,437 39,206 39,990 40,790 License, Fees, Permits 5,743 5,858 5,975 6,095 6,217 6,341 6,468 Professional Fees 1,723 1,757 - 1,793 1,828 1,865 1,902 1,940 Property Management 34,791 35,487 36,197 36,921 37,659 38,412 39,180 Legal Fees 574 586 598 609 622 634 647 Property Taxes 40,204 41,008 41,828 42,665 43,518 44,388 45,276 Property Insurance 19,528 19,918 20,317 20,723 21,137 21,560 21,991 Total 186,536 190,267 194,072 197,953 201,913 205,951 210,07d Net Operating Income 676,361 689,889 703,687 717,760 732,115 746,758 761,693 Series A DSR Eamings 28,246 28,246 28,246 28,246 28,246 28,246 28,246 Total lncome 704,607 718,135 731,933 746,006 760,361 775,004 789,939 Series A Debt Service 456,200 456,400 456,307 455,917 455,167 454,047 452,547 Coverage Factor 1.54 1.57 1.60 1.64 1.67 1.71 1.75 Trustee 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Program Administrator/Oversight 7,500 7,500 7,500 7,500 7,500 7,500 7,500 MPROP Loan 67,550 66,500 65,450 64,400 68,350 67,150 65,950 Coverage Factor 1.31 1.34 1.37 1.40 1.42 1.45 1.49 RDA Loan 58,050 57,150 56,250 55,350 54,450 58,550 57,500 Coverage Factor 1.19 1.21 1.24 1.27 1.29 1.31 1.34 Cashflow after Debt Service 110,307 125,585 141,426 157,839 169,894 182,757 201,442 Asset Management Fee 17,610 17,962 18,322 18,688 19,062 19,443 19,832 Surplus Cashflow 92,697 107,622 123,104 139,151 150,833 163,314 181,610 Beg. Balance of Repair & Replacement 78,125 78,125 78,125 78,125 78,125 78,125 78,125 Estimated R &R Expenditures 25,000 25,000 25,000 25,000 25,000 25,000 25,000 • Balance of R & R after Expenditures 53,125 53,125 53,125 53,125 53,125 53,125 53,125 Replenish R & R to $78,125 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Cashflow after R & R Replenishment 67,697 82,622 98,104 114,151 125,833 138,314 156,610 Beg. Balance of Operating Reserve 228,200 228,200 228,200 228,200 228,200 228,200 228,200 Replenish Operating Reserve Fund to $228,200 0 0 0 0 0 0 0 Cashflow After Deposit to Operating Reserve 67,697 82;622 98,104 114,151 125,833 138,314 156,610 Max. Estimated Rental Assistance 140,600 140,600 140,600 140,600 140,600 140,600 140,600 Deposit to Rent Subsidy Fund from Surplus 67,697 82,622 98,104 114,151 125,833 138,314 140,600 Estimated RDA Assistance 72,903 57,978 42,496 26,449 14,767 2,286 0 Net Cashflow 0 0 0 0 0 0 16,010 City of Seal Beach MHP Revenue Bonds 35 Year Cashflow Schedule MPROP Five Year Deferral Year 15 16 17 18 19 20 21 Income Space Rent 1,001,404 1,021,432 1,041,860 1,062,698 1,083,952 1,105,631 1,127,743 Extra Parking 6,056 6,178 6,301 6,427 6,556 6,687 6,820 Laundry Income 3,966 4,046 4,127 4,209 4,293 4,379 4,467 RDA Project Subsidy 0 0 0 0 0 0 0 Total Gross Income 1,011,426 1,031,655 1,052,288 1,073,334 1,094,801 1,116,697 1,139,030 Less Vacancy 2% Total Gross 20,229 20,633 21,046 21,467 21,896 22,334 22,781 Total Scheduled Income 991,198 1,011,022 1,031,242 1,051,867 1,072,905 1,094,363 1,116,250 Expenses Salaries 24,542 25,033 25,534 26,044 26,565 27,097 27,639 Salary OH 9,198 9,382 9,570 9,761 9,956 10,155 10,359 Marketing ' 0 0 0 0 0 0 0 Repairs & Maint. 13,195 13,459 13,728 14,002 14,282 14,568 14,859 Administrative 7,917 8,075 8,237 8,401 8,569 8,741 8,916 Utilities 41,606 42,438 43,287 44,152 45,035 45,936 46,855 License, Fees, Permits 6,597 6,729 6,864 7,001 7,141 7,284 7,430 Professional Fees 1,979 2,019 2,059 2,100 2,142 2,185 2,229 Property Management 39,964 40,763 41,579 42,410 43,258 44,124 45,006 Legal Fees 660 673 686 700 714 728 743 Property Taxes 46,182 47,105 48,047 49,008 49,989 50,988 52,008 Property Insurance 22,431 22,880 23,337 23,804 24,280 24,766 25,261 Total 214,271 218,557 222,928 227,386 231,934 236,573 241,304 Net Operating Income 776,927 792,465 808,315 824,481 840,971 857,790 874,946 Series A DSR Eamings 28,246 28,246 28,246 28,246 28,246 28,246 28,246 Total Income 805,173 820,711 836,561 852,727 869,217 886;036 903,192 Series A Debt Service 455,657 453,097 455,122 451,520 452,560 452,955 452,695 Coverage Factor 1.77 1.81 1.84 1.89 1.92 1.96 2.00 Trustee 5,000 5,000 5,000 5,000 5,000 5,000 5,000 • Program Administrator /Oversight 7,500 7,500 7,500 7,500 7,500 7,500 7,500 MPROP Loan 64,750 63,550 67,350 66,000 64,650 68,300 66,800 Coverage Factor 1.51 1.55 1.56 1.61 1.64 1.66 1.70 RDA Loan 56,450 55,400 59,350 58,150 56,950 55,750 54,550 Coverage Factor 1.37 1.40 1.41 1.45 1.48 1.50 1.54 Cashflow after Debt Service 215,816 236,164 242,239 264,557 282,557 296,531 316,647 Asset Management Fee 20,229 20,633 21,046 21,467 21,896 22,334 22,781 Surplus Cashflow 195,587 215,531 221,193 243,090 260,660 274,197 293,866 Beg. Balance of Repair & Replacement 78,125 78,125 78,125 78,125 78,125 78,125 78,125 Estimated R &R Expenditures 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Balance of R & R after Expenditures 53,125 53,125 53,125 53,125 53,125 53,125 53,125 Replenish R & R to $78,125 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Cashflow after R & R Replenishment 170,587 190,531 196,193 218,090 235,660 249,197 268,866 Beg. Balance of Operating Reserve 228,200 228,200 228,200 228,200 228,200 228,200 228,200 Replenish Operating Reserve Fund to $228,200 0 0 0 0 0 0 0 Cashflow After Deposit to Operating Reserve 170,587 190,531 196,193 218,090 235,660 249,197 268,866 Max. Estimated Rental Assistance 140,600 140,600 140,600 140,600 140,600 140,600 140,600 Deposit to Rent Subsidy Fund from Surplus 140,600 140,600 140,600 140,600 140,600 140,600 140,600 Estimated RDA Assistance 0 0 0 0 0 0 0 Net Cashflow 29,987 49,931 55,593 77,490 95,060 108,597 128,266 " . ) City of Seal Beach MHP Revenue Bonds 35 Year Cashflow Schedule MPROP Five Year Deferral Year 22 23 24 25 26 27 28 Income Space Rent 1,150,298 1,173,304 1,196,770 1,220,706 1,245,120 1,270,022 1,295,422 Extra Parking 6,957 7,096 7,238 7,383 7,530 7,681 7,835 Laundry Income 4,556 4,647 4,740 4,835 4,932 5,030 5,131 RDA Project Subsidy 0 0 0 0 0 0 0 Total Gross Income 1,161,811 1,185,047 1,208,748 1,232,923 1,257,582 1,282,733 1,308,388 Less Vacancy 2% Total Gross 23,236 23,701 24,175 24,658 25,152 25,655 26,168 Total Scheduled Income 1,138,575 1,161,346 1,184,573 1,208,265 1,232,430 1,257,079 1,282,220 Expenses Salaries 28,191 28,755 29,330 29,917 30,515 31,126 31,748 Salary OH 10,566 10,777 10,993 11,212 11,437 11,665 11,899 Marketing 0 0 0 0 0 0 0 Repairs & Maint. 15,157 15,460 15,769 16,084 16,406 16,734 17,069 Administrative 9,094 9,276 9,461 9,651 9,844 10,041 10,241 Utilities 47,792 48,748 49,723 50,717 51,732 52,766 53,822 License, Fees, Permits 7,578 7,730 7,884 8,042 8,203 8,367 8,534 Professional Fees 2,273 2,319 2,365 2,413 2,461 2,510 2,560 Property Management 45,906 46,824 47,761 48,716 49,690 50,684 51,698 Legal Fees 758 773 788 804 820 837 853 Property Taxes 53,048 54,109 55,191 56,295 57,421 58,570 59,741 Property Insurance 25,766 26,282 26,807 27,343 27,890 28,448 29,017 Total 246,130 251,053 256,074 261,195 266,419 271,748 277,183 Net Operating Income - 892,445 910,294 928,499 947,069 966,011 985,331 1,005,038 Series A DSR Eamings 28,246 28,246 28,246 28,246 28,246 28,246 28,246 Total Income 920,691 938,540 956,745 975,315 994,257 1,013,577 1,033,284 Series A Debt Service 451,485 454,685 452,000 453,725 454,565 454,520 453,590 Coverage Factor 2.04 2.06 2.12 2.15 2.19 2.23 2.28 Trustee 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Program Administrator/Oversight 7,500 7,500 7,500 7,500 7,500 7,500 7,500 MPROP Loan 65,300 63,800 67,300 65,650 64,000 67,350 65,550 Coverage Factor 1.74 1.77 1.80 1.83 1.87 1.90 1.94 RDA Loan 58,350 57,000 55,650 59,300 57,800 56,300 54,800 Coverage Factor 1.57 1.60 1.63 1.65 1.69 1.72 1.76 Cashflow after Debt Service 333,056 350,555 369,295 384,140 405,392 422,907 446,844 Asset Management Fee 23,236 23,701 24,175 24,658 25,152 25,655 26,168 Surplus Cashflow 309,819 326,854 345,120 359,482 380,240 397,252 420,676 Beg. Balance of Repair & Replacement 78,125 78,125 78,125 78,125 78,125 78,125 78,125 Estimated R &R Expenditures 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Balance of R & R after Expenditures 53,125 53,125 53,125 53,125 53,125 53,125 53,125 Replenish R & R to $78,125 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Cashflow after R & R Replenishment 284,819 301,854 320,120 334,482 355,240 372,252 395,676 Beg. Balance of Operating Reserve 228,200 228,200 228,200 228,200 228,200 228,200 228,200 Replenish Operating Reserve Fund to $228,200 0 0 0 0 0 0 0 Cashflow After Deposit to Operating Reserve 284,819 301,854 320,120 334,482 355,240 372,252 395,676 Max. Estimated Rental Assistance 140,600 140,600 140,600 140,600 140,600 140,600 140,600 Deposit to Rent Subsidy Fund from Surplus 140,600 140,600 140,600 140,600 140,600 140,600 140,600 Estimated RDA Assistance 0 0 0 0 0 0 0 Net Cashflow 144,219 161,254 179,520 193,882 214,640 231,652 255,076 City of Seal Beach MHP Revenue Bonds 35 Year Cashflow Schedule MPROP Five Year Deferral Year 29 30 31 32 33 34 35 Income Space Rent 1,321,331 1,347,758 1,374,713 1,402,207 1,430,251 1,458,856 1,488,033 Extra Parking 7,991 8,151 8,314 8,480 8,650 8,823 9,000 Laundry Income 5,234 5,338 5,445 5,554 5,665 5,778 5,894 RDA Project Subsidy 0 0 0 0 0 0 0 Total Gross Income 1,334,556 1,361,247 1,388,472 1,416,241 1,444,566 1,473,457 1,502,927 Less Vacancy 2% Total Gross 26,691 27,225 27,769 28,325 28,891 29,469 30,059 Total Scheduled Income 1,307,865 1,334,022 1,360,702 1,387,916 1,415,675 1,443,988 1,472,868 Expenses Salaries 32,383 33,031 33,691 34,365 35,052 35,754 36,469 Salary OH 12,137 12,379 12,627 12,880 13,137 13,400 13,668 Marketing 0 0 0 0 0 0 0 Repairs & Maint 17,410 17,758 18,114 18,476 18,845 19,222 19,607 Administrative 10,446 10,655 10,868 11,086 11,307 11,533 11,764 Utilities 54,898 55,996 57,116 58,258 59,423 60,612 61,824 License, Fees, Permits 8,705 8,879 9,057 9,238 9,423 9,611 9,803 Professional Fees 2,612 2,664 2,717 2,771 2,827 2,883 2,941 Property Management 52,732 53,786 54,862 55,959 57,079 58,220 59,385 Legal Fees 871 888 906 924 942 961 980 Property Taxes 60,936 62,155 63,398 64,666 65,959 67,278 68,624 Property Insurance 29,597 30,189 30,793 31,409 32,037 32,678 33,331 Total 282,726 288,381 294,148 300,031 306,032 312,153 318,396 Net Operating Income - 1,025,138 1,045,641 1,066,554 1,087,885 1,109,643 1,131,836 1,154,472 Series A DSR Earnings 28,246 28,246 28,246 28,246 28,246 28,246 470,898 Total Income - 1,053,384 1,073,887 1,094,800 1,116,131 1,137,889 1,160,082 1,625,370 Series A Debt Service 456,775 453,780 454,900 454,500 452,900 455,100 455,800 Coverage Factor 2.31 2.37 2 41 2 46 2 51 2.55 3 57 Trustee 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Program Administrator /Oversight 7,500 7,500 7,500 7,500 7,500 7,500 7,500 MPROP Loan 63,750 66,950 0 0 0 0 0 Coverage Factor 1.98 2.01 2.34 2.39 2.44 2.48 3.47 RDA Loan 58,300 56,650 0 0 0 0 0 Coverage Factor 1.78 1.82 2.34 2.39 2.44 2.48 3.47 Cashflow after Debt Service 462,059 484,007 627,400 649,131 672,489 692,482 1,157,070 Asset Management Fee 26,691 27,225 27,769 28,325 28,891 29,469 30,059 Surplus Cashflow 435,368 456,782 599,631 620,806 643,597 663,012 1,127,012 Beg. Balance of Repair& Replacement 78,125 78,125 78,125 78,125 78,125 78,125 78,125 Estimated R &R Expenditures 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Balance of R & R after Expenditures 53,125 53,125 53,125 53,125 53,125 53,125 53,125 Replenish R & R to $78,125 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Cashflow after R & R Replenishment 410,368 431,782 574,631 595,806 618,597 638,012 1,102,012 Beg. Balance of Operating Reserve 228,200 228,200 228,200 228,200 228,200 228,200 228,200 Replenish Operating Reserve Fund to $228,200 0 0 0 0 0 0 0 Cashflow After Deposit to Operating Reserve 410,368 431,782 574,631 595,806 618,597 638,012 1,102,012 Max. Estimated Rental Assistance 140,600 140,600 140,600 140,600 140,600 140,600' 140,600 Deposit to Rent Subsidy Fund from Surplus 140,600 140,600 140,600 140,600 140,600 140,600 140,600 Estimated RDA Assistance 0 0 0 0 0 0 0 Net Cashflow 269,768 291,182 434,031 455,206 477,997 497,412 961,412 ) Approval of Bond Issuance by the Redevelopment Agency ofMobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ATTACHMENT 4 CITY OF SEAL BEACH - MHP REVENUE BONDS, SERIES 2000A, MPROP LOAN AND AGENCY LOAN - TOTAL ISSUE SOURCES AND USES Bond Issuance.RDA Staff Report 2 4 • • Preliminary City of Seal Beach MHP Revenue Bonds Series 2000 A, MPROP Loan & Agency Loan TOTAL ISSUE SOURCES AND USES Dated 12/13/2000 Delivered 12/13/2000 Series A MPROP RDA LoanCssue Summary SOURCES OF FUNDS Par Amount of Bonds $6,750,000.00 $1,150,000.00 $990,000.00 $8,890,000.00 Planned Issuer Equity contribution 301,350.00 - - 301,350.00 TOTAL SOURCES $7,051,350.00 $1,150,000.00 $990,000.00 $9,191,350.00 USES OF FUNDS Original Issue Discount (OID) 66,481.85 - - 66,481.85 Total Underwriter's Discount. (1.519 %) 135,000.00 - - 135,000.00 Costs of Issuance 136,204.04 23,205.13 19,976.58 179,385.75 Gross Bond Insurance Premium (150.0 bp) 238,510.11 - - 238,510.11 Deposit to Debt Service Reserve Fund (DSRF) 456,775.00 - - 456,775.00 Deposit to Aquisition Fund 5,503,181.71 976,794.87 970,023.42 7,450,000.00 Deposit to Capital Replacement Fund 131,450.00 - - 131,450.00 Deposit to Working Capital Fund 7,397.29 - - 7,397.29 Non - Profit Aquisition Fee 75,000.00 - - 75,000.00 Deposit to Project Subsidy Fund 301,350.00 - - 301,350.00 Deferred and Unpaid Interest - 150,000.00 - 150,000.00 TOTAL USES $7,051,350.00 $1,150,000.00 $990,000.00 $9,191,350.00 Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary-Issue Summary Public Finance 11/ 8/2000 11:29 AM . Preliminary City of Seal Beach MHP Revenue Bonds Series 2000 A, MPROP Loan & Agency Loan DETAIL COSTS OF ISSUANCE Dated 12/13/2000 Delivered 12/13/2000 COSTS OF ISSUANCE DETAIL Financial Advisor $15,000.00 Physical Needs Assessment $4,000.00 Accounting Fees $4,900.00 Appraisal $3,800.00 Bond CounseVDisclosure Consel $50,000.00 501(c)3 Counsel $10,000.00 Local Counsel $10,000.00 Trustee & Counsel Fees $6,000.00 Rating Agency Fee $50,000.00 POS/Official Statement $10,000.00 Title /Escrow $10,000.00 Miscellaneous $5,685.75 TOTAL $179,385.75 Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary -Issue Summary Public Finance 11/ 8/2000 11:29 AM 1 - ) Preliminary City of Seal Beach MEP Revenue Bonds Series 2000 A DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I 12/15/2000 - - - - 12/15/2001 70,000.00 4.200% 384,499.31 454,499.31 12/15/2002 75,000.00 4.400% 379,435.00 454,435.00 12/15/2003 80,000.00 4.500% 376,135.00 456,135.00 12/15/2004 80,000.00 4.550% 372,535.00 452,535.00 12/15/2005 85,000.00 4.650% 368,895.00 453,895.00 12/15/2006 90,000.00 4.700% 364,942.50 454,942.50 12/15/2007 95,000.00 4.750% 360,712.50 455,712.50 12/15/2008 100,000.00 4.800% 356,200.00 456,200.00 12/15/2009 105,000.00 4.850% 351,400.00 456,400.00 12/15/2010 110,000.00 4.900% 346,307.50 456,307.50 12/15/2011 115,000.00 5.000% 340,917.50 455,917.50 12/15/2012 120,000.00 5.100% 335,167.50 455,167.50 12/15/2013 125,000.00 5.200% 329,047.50 454,047.50 12/15/2014 130,000.00 5.300% 322,547.50 452,547.50 12/15/2015 140,000.00 5.400% 315,657.50 455,657.50 12/15/2016 145,000.00 5.500% 308,097.50 453,097.50 12/15/2017 155,000.00 5.550% 300,122.50 455,122.50 12/15/2018 160,000.00 5.600% 291,520.00 451,520.00 12/15/2019 170,000.00 5.650% 282,560.00 452,560.00 12/15/2020 180,000.00 5.700% 272,955.00 452,955.00 12/15/2021 190,000.00 5.900% 262,695.00 452,695.00 12/15/2022 200,000.00 5.900% 251,485.00 451,485.00 12/15/2023 215,000.00 5.900% 239,685.00 454,685.00 12/15/2024 225,000.00 5.900% 227,000.00 452,000.00 12/15/2025 240,000.00 5.900% 213,725.00 453,725.00 12/15/2026 255,000.00 5.900% 199,565.00 454,565.00 12/15/2027 270,000.00 5.900% 184,520.00 454,520.00 12/15/2028 285,000.00 5.900% 168,590.00 453,590.00 12/15/2029 305,000.00 5.900% 151,775.00 456,775.00 12/15/2030 320,000.00 5.900% 133,780.00 453,780.00 12/15/2031 340,000.00 6.000% 114,900.00 454,900.00 • 12/15/2032 360,000.00 6.000% 94,500.00 454,500.00 12/15/2033 380,000.00 6.000% 72,900.00 452,900.00 12/15/2034 405,000.00 6.000% 50,100.00 455,100.00 12/15/2035 430,000.00 6.000% 25,800.00 455,800.00 Total 6,750,000.00 - 9,150,674.31 15,900,674.31 YIELD STATISTICS Bond Year Dollars $156,707.50 Average Life 23.216 Years Average Coupon 5.8393340% Net Interest Cost (NIC) 5.9679059% True Interest Cost (TIC) 6.0478400% Bond Yield for Arbitrage Purposes 6.1839197% All Inclusive Cost (AIC) 6.5578753% IRS FORM 8038 Net Interest Cost 5.9411719% Weighted Average Maturity 23.212 Years Rinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary- Series A Public Finance 11/ 8/2000 11:29 AM • - Preliminary City of Seal Beach MEP Revenue Bonds Series 2000 A PRICING SUMMARY Maturity Type of Bond Coupon Yieldsturity Value Price)ollar Price 12/15/2001 Serial Coupon 4.200% 4.300% 70,000.00 99.902% 69,931.40 12/15/2002 Serial Coupon 4.400% 4.500% 75,000.00 99.809% 74,856.75 12/15/2003 Serial Coupon 4.500% 4.600% 80,000.00 99.721% 79,776.80 12/15/2004 Serial Coupon 4.550% 4.650% 80,000.00 , 99.638% 79,710.40 12/15/2005 Serial Coupon 4.650% 4.750% 85,000.00 99.558% 84,624.30 12/15/2006 Serial Coupon 4.700% 4.800% 90,000.00 99.483% 89,534.70 12/15/2007 Serial Coupon 4.750% 4.850% 95,000.00 99.411% 94,440.45 12/15/2008 Serial Coupon 4.800% 4.900% 100,000.00 99.344% 99,344.00 12/15/2009 Serial Coupon 4.850% 4.950% 105,000.00 99.280% 104,244.00 12/15/2010 Serial Coupon 4.900% 5.000% 110,000.00 99.219% 109,140.90 12/15/2011 Serial Coupon 5.000% 5.100% 115,000.00 99.165% 114,039.75 12/15/2012 Serial Coupon 5.100% 5.200% 120,000.00 99.114% 118,936.80 12/15/2013 Serial Coupon 5.200% 5.300% 125,000.00 99.068% 123,835.00 12/15/2014 Serial Coupon 5.300% 5.400% 130,000.00 99.025% 128,732.50 12/15/2015 Serial Coupon 5.400% 5.500% 140,000.00 98.986% 138,580.40 12/15/2016 Serial Coupon 5.500% 5.600% 145,000.00 98.951% 143,478.95 12/15/2017 Serial Coupon 5.550% 5.650% 155,000.00 98.915% 153,318.25 12/15/2018 Serial Coupon 5.600% 5.700% 160,000.00 98.882% 158,211.20 12/15/2019 Serial Coupon 5.650% 5.750% 170,000.00 98.852% 168,048.40 12/15/2020 Serial Coupon 5.700% 5.800% 180,000.00 98.824% 177,883.20 12/15/2030 Term 1 Coupon 5.900% 6.008% 2,505,000.00 98.500% 2,467,425.00 12/15/2035 Term 2 Coupon 6.000% 6.034% 1,915,000.00 99.500% 1,905,425.00 - Total - - - - 6,750,000.00 - 6,683,518.15 BID INFORMATION Par Amount of Bonds $6,750,000.00 Reoffering Premium or (Discount) (66,481.85) Gross Production $6,683,518.15 - Total Underwriter's Discount (2.000 %) $(135,000.00) Bid (97.015 %) 6,548,518.15 Total Purchase Price $6,548,518.15 Bond Year Dollars $156,707.50 Average Life 23.216 Years Average Coupon 5.8393340% Net Interest Cost (NIC) 5.9679059% True lnterest Cost (TIC) 6.0478400% Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary- Series A Public Finance 11/ 8/2000 11:29 AM i Preliminary City of Seal Beach BHP Revenue Bonds Series 2000 A COVERAGE RATIO Date Total Revenues Total D/S Coverage 12/15/2000 154.57 - - 12/15/2001 616,922.60 454,499.31 1.3573675x 12/15/2002 616,922.60 454,435.00 1.3575596x 12/15/2003 616,922.60 456,135.00 1.3525000x 12/15/2004 616,922.60 452,535.00 1.3632594x 12/15/2005 616,922.60 453,895.00 1.3591747x , 12/15/2006 616,922.60 454,942.50 1.3560452x 12/15/2007 616,922.60 455,712.50 1.3537540x 12/15/2008 616,922.60 456,200.00 1.3523073x 12/15/2009 616,922.60 456,400.00 1.3517147x 12/15/2010 616,922.60 456,307.50 1.3519887x _ 12/15/2011 616,922.60 455,917.50 1.3531453x 12/15/2012 616,922.60 455,167.50 1.3553749x 12/15/2013 616,922.60 454,047.50 1.3587182x 12/15/2014 616,922.60 452,547.50 1.3632218x 12/15/2015 616,922.60 455,657.50 1.3539174x 12/15/2016 616,922.60 453,097.50 1.3615670x 12/15/2017 616,922.60 455,122.50 1.3555089x 12/15/2018 616,922.60 451,520.00 1.3663240x 12/15/2019 616,922.60 452,560.00 1.3631841x 12/15/2020 616,922.60 452,955.00 1.3619953x 12/15/2021 616,922.60 452,695.00 1.3627776x 12/15/2022 616,922.60 451,485.00 1.3664299x 12/15/2023 616,922.60 454,685.00 1.3568132x 12/15/2024 616,922.60 452,000.00 1.3648730x 12/15/2025 616,922.60 453,725.00 1.3596839x 12/15/2026 616,922.60 454,565.00 1.3571714x 12/15/2027 616,922.60 454,520.00 1.3573057x 12/15/2028 616,922.60 453,590.00 1.3600886x 12/15/2029 616,922.60 456,775.00 1.3506050x 12/15/2030 616,922.60 453,780.00 1.3595192x 12/15/2031 616,922.60 454,900.00 1.3561719x 12/15/2032 616,922.60 454,500.00 1.3573655x 12/15/2033 616,922.60 452,900.00 1.3621607x 12/15/2034 616,922.60 455,100.00 1.3555759x 12/15/2035 1,073,697.60 455,800.00 2.3556332x Total 22,049,220.57 15,900,674.31 - Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary- Series A Public Finance 11/ 8/2000 11:29 AM • 1 Preliminary City of Seal Beach MHP Revenue Bonds MPROP Loan DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I 12/15/2005 - _ - - 12/15/2006 30,000.00 3.000% 34,500.00 64,500.00 12/15/2007 35,000.00 3.000% 33,600.00 68,600.00 12/15/2008 35,000.00 3.000% 32,550.00 67,550.00 12/15/2009 35,000.00 3.000% 31,500.00 66,500.00 12/15/2010 35,000.00 3.000% 30,450.00 65,450.00 12/15/2011 35,000.00 3.000% 29,400.00 64,400.00 12/15/2012 40,000.00 3.000% 28,350.00 68,350.00 12/15/2013 40,000.00 3.000% 27,150.00 67,150.00 12/15/2014 40,000.00 3.000% 25,950.00 65,950.00 12/15/2015 40,000.00 3.000% 24,750.00 64,750.00 12/15/2016 40,000.00 3.000% 23,550.00 63,550.00 12/15/2017 45,000.00 3.000% 22,350.00 67,350.00 12/15/2018 45,000.00 3.000% 21,000.00 66,000.00 12/15/2019 45,000.00 3.000% 19,650.00 64,650.00 12/15/2020 50,000.00 3.000% 18,300.00 68,300.00 12/15/2021 50,000.00 3.000% 16,800.00 66,800.00 12/15/2022 50,000.00 3.000% 15,300.00 65,300.00 12/15/2023 50,000.00 3.000% 13,800.00 63,800.00 12/15/2024 55,000.00 3.000% 12,300.00 67,300.00 12/15/2025 55,000.00 3.000% 10,650.00 65,650.00 12/15/2026 55,000.00 3.000% 9,000.00 64,000.00 12/15/2027 60,000.00 3.000% 7,350.00 67,350.00 12/15/2028 60,000.00 3.000% 5,550.00 65,550.00 12/15/2029 60,000.00 3.000% 3,750.00 63,750.00 12/15/2030 65,000.00 3.000% 1,950.00 66,950.00 Total 1,150,000.00 - 499,500.00 1,649,500.00 YIELD STATISTICS Bond Year Dollars _ $16,650.00 Average Life 14.478 Years Average Coupon 3.0000000% Net Interest Cost (NIC) 3.0000000% True Interest Cost (TIC) 3.0000000% Bond Yield for Arbitrage Purposes 6.1839197% All Inclusive Cost (AIC) 3.1832510% . IRS FORM 8038 Net Interest Cost 3.0000000% Weighted Average Maturity 14.478 Years Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary -MPROP Public Finance 11/ 8/2000 11:29 AM 71 . • 1 1 Preliminary City of Seal Beach MHP Revenue Bonds MPROP Loan PRICING SUMMARY Maturity Type of Bond Coupon Yield aturity Value Price lollar Price 12/15/2030 Term 1 Coupon 3.000% 3.000% 1,150,000.00 100.000% 1,150,000.00 Total - - - - 1,150,000.00 - 1,150,000.00 BID INFORMATION Par Amount of Bonds $1,150,000.00 Gross Production $1,150,000.00 Bid (100.000 %) 1,150,000.00 Total Purchase Price $1,150,000.00 Bond Year Dollars $16,650.00 Average Life 14.478 Years Average Coupon 3.0000000% Net Interest Cost (NIC) 3.0000000% True Interest Cost (TIC) 3.0000000% Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary -MPROP Public Finance 11/ 8/2000 11:29 AM 1 , 1 , 1 ) Preliminary City of Seal Beach MHP Revenue Bonds Agency Loan DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I 12/15/2005 - - - - 12/15/2006 25,000.00 3.000% 29,700.00 54,700.00 12/15/2007 30,000.00 3.000% 28,950.00 58,950.00 12/15/2008 30,000.00 3.000% 28,050.00 58,050.00 12/15/2009 30,000.00 3.000% 27,150.00 57,150.00 12/15/2010 30,000.00 3.000% 26,250.00 56,250.00 12/15/2011 30,000.00 3.000% 25,350.00 55,350.00 12/15/2012 30,000.00 3.000% 24,450.00 54,450.00 12/15/2013 35,000.00 3.000% 23,550.00 58,550.00 12/15/2014 35,000.00 3.000% 22,500.00 57,500.00 12/15/2015 35,000.00 3.000% 21,450.00 56,450.00 12/15/2016 35,000.00 3.000% 20,400.00 55,400.00 12/15/2017 40,000.00 3.000% 19,350.00 59,350.00 12/15/2018 40,000.00 3.000% 18,150.00 58,150.00 12/15/2019 40,000.00 3.000% 16,950.00 56,950.00 12/15/2020 40,000.00 3.000% 15,750.00 55,750.00 12/15/2021 40,000.00 3.000% 14,550.00 54,550.00 12/15/2022 45,000.00 3.000% 13,350.00 58,350.00 12/15/2023 45,000.00 3.000% 12,000.00 57,000.00 12/15/2024 45,000.00 3.000% 10,650.00 55,650.00 12/15/2025 50,000.00 3.000% 9,300.00 59,300.00 12/15/2026 50,000.00 3.000% 7,800.00 57,800.00 12/15/2027 50,000.00 3.000% 6,300.00 56,300.00 12/15/2028 50,000.00 3.000% 4,800.00 54,800.00 12/15/2029 55,000.00 3.000% 3,300.00 58,300.00 12/15/2030 55,000.00 3.000% 1,650.00 56,650.00 Total 990,000.00 - 431,700.00 1,421,700.00 YIELD STATISTICS Bond Year Dollars $14,390.00 Average Life 14.535 Years Average Coupon 3.0000000% Net Interest Cost (NIC) 3.0000000% True Interest Cost (TIC) 3.0000000% Bond Yield for Arbitrage Purposes 6.1839197% All Inclusive Cost (AIC) 3.1825963% IRS FORM 8038 Net Interest Cost 3.0000000% Weighted Average Maturity 14.535 Years Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary -RDA Loan Public Finance 11/ 8/2000 11:29 AM ) Preliminary City of Seal Beach MHP Revenue Bonds Agency Loan PRICING SUMMARY Maturity Type of Bond Coupon Yield aturity Value Price liar Price 12/15/2030 Term 1 Coupon 3.000% 3.000% 990,000.00 100.000% 990,000.00 Total - - - - 990,000.00 - 990,000.00 BID INFORMATION Par Amount of Bonds $990,000.00 Gross Production $990,000.00 Bid (100.000 %) 990,000.00 Total Purchase Price $990,000.00 Bond Year Dollars $14,390.00 Average Life 14.535 Years Average Coupon 3.0000000% Net Interest Cost (NIC) 3.0000000% True Interest Cost (TIC) 3.0000000% Kinsell, Newcomb & De Dios, Inc. File = SERIES 2000.SF -Issue Summary -RDA Loan Public Finance 11/ 8/2000 11:29 AM I , I , • ) .) Approval of Bond Issuance by the Redevelopment Agency of Mobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ATTACHMENT 5 SEAL BEACH TRAILER PARK - MOBILEHOME PARK REVENUE BOND DOCUMENTS, PREPARED BY BEST BEST AND KRIEGER LLP ❑ INDENTURE OF TRUST ❑ LOAN AGREEMENT ❑ REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS ❑ DEED OF TRUST ❑ ADMINISTRATION AND OVERSIGHT AGREEMENT ❑ PRELIMINARY OFFICAL STATEMENT Bond Issuance.RDA Staff Report 25 r ., Approval of Bond Issuance by the Redevelopment Agency of Mobile Home Park Revenue Bonds — Acquisition of Seal Beach Trailer Park Redevelopment Agency Staff Report November 13, 2000 ATTACHMENT 5 SEAL BEACH TRAILER PARK - MOBILEHOME PARK REVENUE BOND DOCUMENTS, PREPARED BY BEST BEST AND KRIEGER LLP ❑ INDENTURE OF TRUST ❑ LOAN AGREEMENT ❑ REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS ❑ DEED OF TRUST ❑ ADMINISTRATION AND OVERSIGHT AGREEMENT ❑ PRELIMINARY OFFICAL STATEMENT Bond Issuance.RDA Staff Report 25 03r, /03 MON 15:29 FAX 562 435 1054 LINC HOUSING 10002 The l ot GIBBS LAwFiRM y;`lk 1 0 • A !'JZOFt'sslntinL COltit)4ntlpN l GERALD R GIBBS 40- TIMOTHY J. GIBBS March 3, 2003 Our Fire No.: 4266.010 VL4 FACSIMILE Hunter Johnson LINC Housing 110 Pine Avenue, Suite 525 Long Beach CA 90802 Dear Hunter: 1 have been seeing some "bits" of information regarding the MPROP application and assertions being made by third parties who had nothing to do with the application. The items 1 found of interest are: 1. Confusion as to the purchase price of the park. If you look at Page 2 of the application, Project Summary, you will note the total cost of project is listed as $8,000,000. That same entry requites that you use the total contained on Line 6 of Exhibit C. Exhibit C is found at Attachment 30 to the application. That Exhibit C gives the purchase price of $7,450,000 phis other costs reflected. We did not include in that number the operating bond, nor the replacement reserves and scvetal other items that represented money in the bank. Quite clearly the purchase price is set forth in Exhibit C at Line 1. Before the MPROP is funded, all of the items iu Exhibit C must be revised to reflect the actual costs of acquisition, rather than the current estimate. That sum $8,000,000 was used on Page 6 as an attempt to cover all costs of acquisition. You will note at Attachment 4, Evidence of Site Control, the contract price negotiated is the sane $7,450,000 used in Exhibit C. 2. Another apparent confusion is contained in Exhibit A wherein the abbreviation N/A (not applicable) was used in several places. This application was the cooperative effort of the City, Line and the park resident's association. This was the first time MPROP was made available to 501(c)3 public benefit corporations. In prior applications, the City and the residents would have been the applicants. Because no forms were specially developed for this round of funding with non- profits, we were forced to use the forms from prior years and modify them for this application. (949) 492 -3350 - FAx (949) 492 -3697 - EMAIL: mailegilthxlaw.com - wwwgibbslawcom PALI7Af)A PROFESSIONAL BUILDING •- 110 EAST AVENIDA PALI%AUA, SUIT!: 201, SAN C!.FMF.NTF., CA 92672 - 3956 03/ /03 MON 15:29 FAX 562 435 1054 LINC HOUSING 1(11 003 r Hunter ohnson March 3, 2003 Page Two of Two To accommodate this, we placed "not applicable" throughout the top of the form to indicate there were no membership implications ar this time. In the second half of the form we spelled our that only when available will memberships be considered. We spelled out "available" in that instance 35 the N/A was clearly not applicable. You will note that this is consistent with the discussion on Page 2 of the resident participation. Linc was the buyer and borrower. Although there were discussions as to future resident control, that was not considered ar the time and would only come at some future time if it could be done without affecting the tax exempt nature of the transaction. 3. Attachment 36 to the application was executed by the City Redevelopment Agency as co- applicant with the residents for the loan to be granted to Linc. That Resolution was executed to note the City and the residents supported the Line purchase. The Language was not the suggested language from the State, but rather drafted by the City staff to denote that this was a cooperative venture with the residents and not just Linc and the City. Throughout the remainder of the document it is quite dear that Linc was the applicant borrower. The city's authorization for the application is a left over from the days before the city and not -for- profit entities could apply for and receive funds. Under the present applications by not - for - profits, the city does not have to be a co-applicant. 2000 was the last year for the use of the city as co- applicant. If one reads the entire package, which the City did before it committed itself to this course, you cannot conclude that the residents were borrowers or applicants. It is, however, important to note that the residents had to support the application. Thar support is evidenced by over 80% of the in -park residents. The next step is that two- thirds of the residents must provide their support before the loan funds. Given the subsequent turmoil and animosity, that may never happen. The foregoing represents my recollection of items that seem to be in controversy by those who were not there and who aren't residents of the park. Very truly yours, THE GIBBS LAW FIRM B Y Ge d R. . ibbs The at La - 1 GIBBS LAw Rim A PROFESSIONAL (:URPORAT!ON MEMORANDUM March 9, 2000 TO: REDEVELOPMENT CHAIR CAMPBELL 3e t o° DIRECTOR YOST FROM: KEITH TILL, 1-14 EXECUTIVE DIRECTOR RE: Agency's committee review of trailer park non-profit With the assistance of our financial advisor and underwriting team, I have prepared some materials for your review in considering the options for designation of a non - profit entity to negotiate the purchase and, if successful, direct the management of the park on behalf of residents and the Agency. But first, you should consider the basic question of whether the Agency has a responsibility or interest in selection of the non - profit. In San Juan Capistrano, the city left it entirely to the mobile home park tenants, and they chose Linc Housing. But other cities have been concerned enough that the city council made virtually unilateral decisions on the non - profit. . The basic argument for letting the tenants make the decision is that it is they who have the greatest•interest in seeing the park transfer from a commercial investor to a non - profit organization. It is also the tenants who have the most direct state in the ongoing affairs and management of the park once it's in a non - profit's hands. The basic argument for a city to make the selection is that it's in the overall public interest to ensure that an experienced and effective entity is the one accountable for dealing with the complex and inevitable disputes that are unique within mobile home parks. To the extent the non - profit is ineffective in dealing with problems that arise, it is the city /redevelopment agency that gets dragged into the middle — which is somewhere we don't belong. Understanding these basic arguments for and against city control over the decision, we took the approach of inviting resident participation. We had hoped a clear consensus would be reached after interviewing three nonprofits. As you will see by the attachments, • this hasn't occurred. One interpretation of this outcome is that all three non - profits are good. They exist to "remove the City's burden" of preserving well operated and maintained housing for low and moderate - income households. We agreed unanimously that any of the three would be far superior to the current situation. 1 Linc Housing has been by far the most aggressive. While very active in conversions of low- income apartments, Linc has limited experience with mobilehome or trailer parks. It's located in Long Beach, and is headed by a former City of San Francisco redevelopment manager. He and his staff met several times with tenants' representatives and developed an early rapport. Linc offered to place two tenants on the new non - profit's board of directors. This is a very unusual approach that worried the underwriters, because they have to convince bond purchasers that the non - profit corporation will be run professionally and will make decisions independent of undue influence. Not surprisingly, however, the idea is very popular with the Seal Beach Trailer Park Tenants. In fact, it appeared that the trailer park tenants might have pretty much made up their minds prior to the interview of the other two non - profits. Keep in mind that there are two distinct components of the non - profit's role: 1. Negotiating with Richard Hall the price and terms of the sale, and; 2. Ongoing oversight and management of the park. If the non - profit is not successful in negotiating a sale, the second part is moot. Linc has been negotiating with Richard Hall in San Juan Capistrano for somewhere between six months and a year. I am told that the impasse is over price, and Hall is trying to pressure the city into making a very large financial contribution (to his profit margin!). Caritas housing is the largest of the three in terms of experience and personnel specializing in mobilehome park transactions and management. Augusta housing, a smaller operation headed by a former principal in Caritas housing, would use a former partner of Hall's in the negotiation, George Turk. It's well known that Hall and Turk had a major parting of the ways. But Turk has successfully negotiated recent transactions with Hall through Hall's representative, Bill Talley. My original approach was to complete the assessment of the three non - profits with the participation of the tenants' representative, and then bring a recommendation to the Redevelopment Agency. I was leaning toward Augusta, because I was impressed by the oral presentation and what I considered a very realistic assessment of the most crucial task ahead — getting Hall to agree. The other interviewers were split between Caritas and Augusta, except Frank preferred Linc. We hadn't reached a conclusion before the matter was brought up at the last Redevelopment Agency meeting, and the subcommittee was appointed. At this point, I think the subcommittee should first consider whether you agree the Agency should be involved in the decision: whether it should be left entirely up to the tenants, entirely up to the Agency, or whether we should work with tenants on a more thorough review of the three non - profits and see if a consensus emerges. The latter would obviously be the most time - consuming, and might delay somewhat the timeframe for commencing the price negotiations. 2 r 1 , • , . I think it makes sense to meet or have a telephone conference to discuss your preferred approach, and we'll take it from there. Please call and we'll set something up. C: Agency members _ 3 _ City of Seal Beach 0 Redevelopment Agency Agenda Report . Date: June 25, 2001 To: Agency Board of Directors From: John B. Bahorski Executive Director Subject: Review of Trailer Park Cooperation Agreement and Concerns of Trailer Park Resident SUMMARY OF REQUEST: At the May 29th Redevelopment Agency meeting, concerns were raised over the Trailer Park Cooperation Agreement. The Agency Board requested that this item be placed on the next Agency agenda. Supporting document "A" contains the draft minutes from the May 29, 2001 Agency meeting that reflect the concerns of Mr. Ken Williams. Staff has prepared this report so that City Council can discuss the concerns expressed about the Cooperation Agreement. DISCUSSION: The Cooperation Agreement was executed on March 5, 2001 between LINC Community Development Corporation and the Seal Beach Trailer Park Resident Owners Association. This document set forth terms and conditions that govern how LINC and the resident owners association would interact. At issue is Section 7 (Page 2) of the Cooperation Agreement that states " Upon repayment of the bonds and other financing, and upon request by a majority of the households in the park, LINC irrevocably commits to relinquish its right to appoint its three directors of SBAHC. Replacement directors shall be selected by the remaining four directors." Mr. Williams is requesting elimination of the language "and other financing" and a date certain be inserted in this section to clarify when the transfer of control to the park residents will occur. Once this issue was raised the board of directors of the Seal Beach Trailer Park researched the concerns and responded to Mr. Williams. Attached, is a letter from Mr. Bruce Stanton that seeks to address the concerns over a date certain and eliminating the phrase "and other financing ". According to Mr. Stanton the present language in the Cooperation Agreement and other documents protects the residents from any attempt by LINC to restructure or refinance the financial obligations that have been created. Mr. Stanton's letter indicates that the refinancing potential is limited by the fact any lender `.. would review all of the agreements and would not lend any money if it believed that other agreements would block its right to collect. Agenda Item A With respect to a date certain, Mr. Stanton believes that a specific date would not work because the specific date could occur before full payment is made thereby obligating LINC to make the transfer while part of the debt is still outstanding. Mr. Stanton has provided an opinion on the issues raised by Mr. Williams and this letter was distributed to the residents of the Trailer Park. One of the concerns expressed by the Gibbs Law firm is the status of the non - exempt 501 -© 3 status. If the corporation loses its 501 status, the bonds would have to be paid immediately and potentially subject the City to penalties. According to Mr. Gibbs, the nature of the bonds issued is that the funds are to be used for a public purpose. A public purpose is not served if the owner of the park is a corporation with directors elected _ solely by the park residents. Again, Mr. Gibbs believes that a resident -only board of directors would be classified as a mutual benefit non -profit corporation and that entity could not use funds generated by tax exempt bonds. Once again, the Cooperation Agreement is between Link and the Association and neither the Agency nor the City is a party to the Agreement. The Agency's involvement in the Park has been limited to facilitating affordable housing to Seal Beach residents. The issues raised by Mr. Williams are not related to the provision of affordable housing. RECOMMENDATION: Receive and file. SUPPORTING DOCUMENTS: A. Draft Agency Minutes from May 29, 2001 B. Seal Beach Trailer Park Cooperation Agreement C. Correspondence from Mr. Bruce Stanton ( ( Seal Beach Trailer Park Cooperation Agreement ( This Cooperation Agreement ( "The Agreement ") is made between LINC Community Development Corporation (LING CDC), LINC Housing Corporation (LINC), and the Seal Beach Trailer Park Resident Owners Association (SBTPROA) on March 5, 2001. Whereas, on December 21, 2000 LINC CDC purchased the Seal Beach Trailer Park (The Park) with the 501(c)(3) tax exempt bonds (The Bonds) and the financial assistance of the City of Seal Beach (The City); and its Redevelopment Agency (The Agency); and, Whereas, additional financial assistance is to be provided by the State of California Department of Housing and Community Development's "MPROP" program. Whereas, the documents related to The Bonds, The Agency's and The State's financial assistance (collectively the Financing Documents), impose certain affordability requirements on the owner of The Park: and, Whereas, the ability of LINC CDC to purchase The Park and subsequently transfer it to another organization with resident - homeowner representation is predicated on LINC's experience and financial stability; and, Whereas, SBTPROA represents the homeowner residents of The Park; and ( Whereas, LINC, LINC CDC and SBTPROA all desire to enable the residents of The Park to participate in the governance of The Park and the establishment of park policies, budgets, and community guidelines; It is therefore agreed: 1. LINC, LINC CDC and SBTPROA will form a 501(c)(3) non - profit corporation to be known as Seal Beach Affordable Housing Corporation (SBAHC). In the event this name is not available, another similar name shall be chosen -. 2. The SBAHC by -laws shall provide that SBAHC shall have seven (7) directors, two (2) of which shall be appointed by SBTPROA and three (3) of which shall be appointed by LINC. These five (5) directors shall elect the remaining two (2) directors from community leaders in Seal Beach or surrounding communities. The term of office for directors and term - limits (if any) shall be described in the by -laws of SBAHC, however the directors appointed by SBTPROA shall be among those holding the longest term of office. 3. SBTPROA agrees that it will continue to be an association of resident - owners with the purpose of promoting and protecting the general welfare of the residents and owners of mobile homes within The Park. Only those households that both own and occupy a home in the Park will be eligible for voting membership in SBTROA. SBTPROA will hold Park -wide elections of its directors in a time and manner specified in its by -laws. Such elections shall be monitored by a qualified, neutral Seal Beach Trailer Park Cooperation Agreement March 5, 2001 Page 2 third -party entity. SBTPROA will determine a process for selecting their appointments to the SBAHC Board of Directors and amend its by -laws to describe and require this process as well as owner - occupancy membership. SBTPROA shall provide SBAHC and LINC CDC with a written certification of both the election and the appointments. 4. This agreement shall serve as LINC CDC's non - revocable commitment to transfer The Park to SBAHC upon receipt by SBAHC of Federal and State tax exempt status. LINC CDC and LINC shall pursue formation and tax exemption with reasonable diligence. Transfer shall be subject to approvals by the City, the Agency, the Bond Trustee, and the Bond Insurer as detailed in the Financing Documents. 5. In the event that conditions prevent the establishment of SBAHC as a new single asset 501c3 corporation, LINC CDC and SBTPROA each shall use its best efforts to affect the intent of this agreement through the entity that holds title to The Park. 6. Upon the transfer of The Park to SBAHC, LINC shall be retained to provide asset management services under a separate agreement that shall run for the term of The Bonds. LINC shall receive compensation equal to 2% of the gross rental receipts of The Park as specified in The Financing Documents. 7. Upon repayment of The Bonds and other financing, and upon request by a majority of the households in The Park, LINC irrevocably commits to relinquish its right to appoint its three (3) directors of SBAHC. Replacement directors shall be selected by the remaining four (4) directors. 8. From the execution of this agreement until the transfer of The Park to SBAHC, LINC CDC and LINC will meet and consult with SBTPROA on all major policy and operational decisions including community guidelines, operating budgets, capital improvements, and guidelines for building additions to homes in The Park. 9. Current rules and regulations shall remain in effect until changed. New community guidelines supplanting the existing rules and regulations will be established jointly with LINO CDC and SBTPROA. This process will include a workshop open to all residents prior to drafting the guidelines. 10. The Finance Documents limit rent increases to 2% per year following April 1, 2003, unless otherwise approved by The City and /or The Agency. LING CDC and SBTPROA acknowledge that the 2% rent increases will be necessary for an unknown number of years until various reserve funds are fully funded. Subsequent to funding all reserve requirements and subject to meeting the debt service ( coverage obligations of the bonds, the need for such rent increases will be Seal Beach Trailer Park Cooperation Agreement March 5, 2001 Page 3 ( assessed each year with the goal of minimizing or eliminating rent increases to the maximum extent possible. 11. SBTPROA will use its best efforts to obtain the cooperation of all residents of The -Park in providing information required to document compliance with the Finance Documents. SBTPROA will convene regular meetings of all residents to disseminate information and report on progress. 12. The operation of The Park will be consistent with two (2) separate regulatory agreements included as part of The Financing Documents specifying affordability and other obligations arising from: a) the tax - exempt bonds; b) The Agency's loan and grant assistance. Copies of the regulatory agreements will be available for review in The Park office. Should . individual residents desire personal copies, they will be provided for the • - cost of duplication. . An additional regulatory agreement may be required for the State loan. . 13. Rents shall be increased in accordance to the Financing Documents, requirements, and projections. Initial rent increases for owner occupied homes protected by the previous covenant shall be as follows. . On or before April 1, 2001 $79.00 per space . On April 1, 2002 $79.00 per space On April 1, 2003 $80.00 per space Non -owner occupied homes shall be charged a rent of $800.00 per space per month. Spaces 44, 45, 59 and 60 are not protected by the previous covenant and shall be charged market rate rents of $800 per month or higher. 14. New leases will be available to all residents and will be for a term of 34 years. Leases- will require owner occupancy except in certain hardship cases and will • provide for the minimum income certification required for ensuring: a) Compliance with the Financing Documents; b) Eligibility of The Park for the California MPROP Loan; c) Property tax exemption for The Park; d) Long -term rental assistance e) Compliance with The Park Rules and Regulations. 15. No new sub - leases will be permitted except in the case of hardship. Hardship will be defined as ( a) illness or unemployment of the head of the household with a loss of income that makes it impossible to pay housing costs existing prior to such illness or unemployment; or . ( ( Seal Beach Trailer Park Cooperation Agreement March 5, 2001 _ Page 4 b) an involuntary transfer of employment more than 100 miles from The Park. Hardship subleases shall be for a maximum of one year, but may be reviewed and renewed for one additional year. 16. Approved subleases existing as of November 30, 2000 shall be permitted to remain in effect, but shall be subject to rent increases to market rate rents. Existing sublessees who are able to buy the home in which they are residing will have their rent payments reduced to a level consistent with other owner - occupants in The Park. , 17. New Tong -term leases will remain in effect upon any sale or transfer of The Park and, upon transfer of a home, will be fully assumable by the qualified buyer of that home in The Park. Long -term leases shall also be assumable by heirs of the Homeowner - Lessee, provided they meet all regular requirements for owner - occupancy. Should an heir not choose to live in The Park, the long -term lease shall remain in effect upon the sale of the home to a qualified buyer. 18. Existing long -term leases will be honored to the extent that they are not terminated ' , by this or any prior sale of The Park. All allowable rent increases and pass- throughs will be implemented until such time as the lease payment increase is equivalent to the increases paid by residents who did not have a lease on November 30, 2000. 19. No legal resident of The Park on November 30, 2000 shall be displaced because the household income is found to exceed those rent levels specified in the regulatory agreements or Financing Documents. In the event The Park, in aggregate, fails to comply with the income levels specified in the regulatory agreements, sales of homes may be restricted to households meeting the Financing Documents' affordability requirements. 20. In order to mitigate any economic hardship that could arise from the purchase of The Park, two assistance programs will be provided: a) A debt service bridge payment will allow the agreed upon rent increases to be phased in over three equal installments. Residents will be responsible for 1/3 of the increase in 2001, 2/3 of the increase in 2002, and become responsible for the full increase in 2003. The Agency has funded the difference between the average rent of $527 per space and the resident's portion for each of the first two years. This assistance in not available for spaces with subleases nor for spaces 44, 45, 59 and 60. I, b) Additionally, long -term rental assistance is available to those owner- occupants who lived in The Park as of November 30, 2000 and whose income is such that their increased rent would exceed ' 30% of their • I • ( Seal Beach Trailer Park Cooperation Agreement March 5, 2001 Page 5 income. Such long -term rental assistance must be applied for on an annual basis and all income must be verified in writing by each source. , State and Federal income tax returns may be required as part of the application for this assistance. 21. Park Management Staff are employees of the property manager. As such, they will not expect to receive direction or supervision from resident directions of SBTPROA or SBAHC and they will not follow such direction or supervision if it is given. 22. The primary point of contact between residents and The Park Management is to be the Resident Manager. In the event a resident is dissatisfied with the resident manager's actions, an appeal should be directed to the manager's supervisor by telephone or in person. Further appeals shall be in writing and directed first to the local or regional manager of the property manager, then to the Vice - President of • LINC. If, following this procedure, the resident is still dissatisfied, a written appeal may be directed to the Chairman of the Board of SBAHC who will convene a grievance Committee of Directors to consider the matter. 23. Those homeowners who have building plans that were complete and submitted to The City on or before December 21, 2000 and that meet city and state codes will be allowed to build subject to reasonable design review. - 24. LINC CDC and SBTPROA shall work together to define guidelines for improvements and additions to individual homes. Such guidelines will be consistent with state and local codes and designed to preserve the unique character of the park while maximizing each homeowner's opportunity to improve his or her home. 25. LINC CDC and SBTPROA recognize that the Gibbs Law Firm (Gibbs) has provided valuable advice and service related to the financing of The Park in an amount that has not been agreed upon by all parties. When a reasonable fee is agreed upon by all parties, LINC CDC and SBTPROA agree to pay Gibbs that amount from the proceeds of the MPROP loan at its closing to the extent there are funds available to do so. In the event that funds sufficient to pay Gibbs the agreed upon amount are not available at MPROP closing, LINC CDC and SBTPROA agree that any remaining balance owed Gibbs shall be paid form the cash flow of The Park after paying all _operating expenses and debt service as defined in The Financing Documents. 26. Subject to approval by The Agency, LINC, LINC CDC, and the SBTPROA agree to increase the length of the term of The Agency regulatory agreement to be ( consistent with the Bond regulatory agreement. . • . t' f Seal Beach Trailer Park Cooperation Agreement March 5, 2001 Page 6 27. This Agreement may be amended from time to time by unanimous mutual agreement of all parties. 28. LINC and LINC CDC shall each be bound by the actions of the other in all matters related to management of The Park. 29. As long as homes in the park meet the requisite standard under state and city codes they can continue to be sold in place Agreed • P i - LIN CDC Community Developmen • •oration By unter L. Johnson President LINO ousing Corpor ion By Hunter L. Johnson President Seal B - ach Trail- r P k Reside t Owner Association 1 t, President ., , BRUCE E. STANTON 8uS,l' ,S PLAM4 r C LAW OFFICES OF BRUCE E. STANTON TFLi ?}ZONE CIVIL LITIGATION (408) 971 -0900 ESTATE PLANNING THE GARDEN ALAMEDA - FAC5IMIlE MO81( LAW 1530 THE ALAMEDA, SUITE 115 (408) 971.6810 SAN 105E. CA 95125 March 15, 2001 File iiSEA99082 Ms. Frank Boychuck, President Seal Beach Trailer Park Resident Owners' Assoc. Re: Seal Beach Trailer Park Cooperation Agreement; List of Concerns from Residents Dear Mr. Boychuck: - At your request, I have reviewed the list of "concerns" which have becn raised by some residents about the Cooperation Agreement I believe that most can be easily addressed, while some others are not entirely clear to me as phrased. I will, however, attempt to do my best to address each. 1. Refinance Concern This is certainly a valid question to be asked, and would be one that is of natural concern to the residents. However, having reviewed the documents and thought more about this, I believe that thc present Agreement language, coupled with the other contracts which have been signed, protects the residents from any attempt by LINC to restructure or refinance the financial obligations which have been created. First, it is a given that as long as ZINC owns the property, it must have some flexibility to protect its investment One could not expect that LINC would give up all right to refinance if required by some legitimate business reason. Once ownership is t; ansferred to SBAHC, the residents will have a voice in any such matter by virtue of the representation which they enjoy on the Board. They will always receive notice and will have an opportunity to vote "no ". If ourvotcd, if it is thought that LINC's actions violate thc spirit or letter of the various agreements, the residents could always go to court to have the Agreement enforced. Herein lies one of the other protections against some sort of indiscriminate - refinancing which could affect the integrity of the agreements. The manner in which the agreements have been constructed and synchronized to run concurrently obviously cannot be lightly varied from. 1 believe that LINC could not successfully refinance accept for a legitimate business reason, and that the new obligation would have to stay within the time confines of the other t t . Mr. Frank Boychuck March 15, 2001 Page 2 Agreements. Remember that any potential lender with whom ZINC might do business would also be reviewing all of the agreements, and would not lend any money if it believed that the other agreements would block its right to collect. In reality, this issue would be dealt with under the Regulatory Agreement with the City or the bond financing documents which have been signed, rather than the Cooperation Agreement. 2. Specific Date for Exit of LINC- Paragraph 7 specifically states that LINC's departure coincides with payment in full of the financial obligations. I do not sec how any date can be inserted here. A promissory note often has an amortization schedule of all intended payments. But until the payments are actually made, one does not know that the obligation has been satisfied. Tbc language can only really turd "upon repayment", since we do not know when that will actually occur. The dates cited in the other agreements will, in effect. be the operative dates for the transfer, unless payment occurs earlier. Language proposing a specific transfer date would not work, because the 'specific date" could occur before full payment is made, thereby obligating LINC to make the transfer while part of the debt is still outstanding. This is obviously not what was inteade d. 3. Articles and Bylaws- I form and represent non-profit corporations, and am thus familiar with the requirements for doing so. Thus, I could assist the residents on these issues, much as I have assisted on others. The Articles consist of a short, boilerplate statement that is common to Mutual Benefit Non -profits like SBAHC. This is generic language that must be present to achieve a tax exemption. Bylaws, on the other hand, are lengthy, detailed and not completely generic. However, I would expect that since they are participating in the operation of SBAHC, the residents would have input into the drafting of the Bylaws. I would be surprised if LINC opposed this, and the immediate appointment of Directors after the Articles arc filed should ensure that Seal Beach residents have a voice in the Bylaws drafting. If the concern is that the Bylaws should be drafted now, rather than later. I would agree that they should be done as soon as possible. But since the number of resident directors has already been established, the essence of resident "control" is already set forth; i.e. the residents have a guaranteed voice in all decisions. 4. Pane 2, Pars. 7 "Clarification" re: Permanent Exempt Purpose- I confess that I do not understand this question; it is vague as written. Its thrust appears to be that the Articles should contain the proper exempt language. I agree. But again, this is very basic, generic language which should Mr. frank Boychuck March 15, 2001 Page 3 - not be difficult to draft. In fact, the Franchise Tax Board Tax Exemption instructions for Form 3500 contain samples of just how this language should look. As to the balance of the question, I confess that I do not understand what sort of "clarification" is being asked for. 5. If Non - profit Not Achieved I can see no reason why non -profit wouldn't occur, since the entity would be holding real property for the future benefit of the residents. Of course, paragraph 5 references the possibility that this would not occur. That paragraph is enforceable as written, and the covenant of good faith and fair dealing which is implied in all contracts, together with the legal meaning which is given to the term "best efforts" will bind LILAC to act appropriately. If someone is proposing new language, I cannot comment further without seeing that precise new language. 6. Voting Power - This will be contained in the Bylaws, although I am not sure what sort of "voting power" is being questioned here. Otherwise, the number of directors for SBAHC has been stated, along with their identities. If there is one vote per director, then the weight of the voting power is obvious. 7. New Leases - In fact, I have previously analyzed the proposed lease language in detail, and have commented upon the issue of the term. 8. Longer Period of Dedication Frankly, this sounds like an uninformed - lay person interpreting law which he does not understand. (With all due respect, that is exactly what is occurring!) If the tax exemption is denied for this reason, then changes can be made. But I do not see how the Franchise Tax Board or IRS will condition their exemptions upon some sort of extension beyond the original bond period. This issue should be left to the experts who are pursuing the exemption. To clarify, it is "exempt" status which will be sought. A corporation is classified as "non- profit" merely by inserting that word in its Articles. But it means nothing unless a tax exemption is thereafter obtained. In sum, I do not find that any of these questions exposes the Cooperation Agreement to some sort of serious defect, and would continue to endorse it as written pending the further steps which should now be jointly taken to draft and file Articles, draft Bylaws and put together the applications for tax exemption. I hope that my responses shall assist you in clearing up and responding to these issues. Please do not hesitate to contact me should you require further assistance. MEMORANDUM To: Agency Board of Directors • From: John B. Bahorski Executive Director V Date: June 21, 2001 Subject: Supplemental information for Agency report on Trailer Park • Staff obtained two documents that the Agency Board may wish to review as part of the agenda item scheduled for June 25, 2001. These documents were obtained after the report was prepared and are being distributed under a separate memorandum. Attachments - - - - • Jun -12 -01 12:08P P.O1 Sent By: The Glbbs Law Fira; 949 492 3697; Jun -12 -01 10:19; Page 2 The GT3BS LAW FIRM A Hi O F £33ld. 4t COArO *.+TtnN GERALD R. GIBBS - TIMOTHY J. GIBBS June 11, 2001 Via Fro:ienyg nd Reguhr My] Jaynes E. rodeo 11140 Los Alamitos Blvd., Suite 205 - Los Alamitos, CA 90780 • Thomas S Salingcr Rutan 8c Tucker 611 Anton Blvd., 14th Floor Costa Mesa, CA 9262( Re: Seal Beach Trailer Park Our File No. 4266.01 tear Attorney fader vNd Attorney Sal►nger. I have been provided each of your letters generated at the request of Mr. Williams. I am sure each of you is zealously attempting to represent the best interests of your individual client. I do not, however, believe that Mr. ll�i hams' interest and that of the general population of the park are as one. The City of Seal Beach, with a large expenditure of public funds, has generated a bond issue of Sufliaent sae to cause the purctase of Seal Beach Trailer Park by Line, a 501(c)3 public benefit non - profit corporation. - By utilizing tax exempt bonds, the City enabled lint's purchase of the park, which could never have been done by the residents themselves, while still maintaining the lowest possible rents and the covenants ro assist low - income persons in the community. The city is continuing to make available low cost housing in the community, and co relieve the burden of the local government. Mr. Williams has seeentfy distributed a petition within the pack seeking to obtain is desired changes to the cooperation agreement. That agreement was a voluntary document negotiated in good firth by a hard mocking group of volunteers elected by the vast cnajotity of the residents to monitor tie purchase and sale transaction for the benefit of the residents. That committee had to work within the limits established by the city and the buyer. That committee has done its job, and should be congratulated not vilified by persons seeking their own benefit. That committer after Mr. (9491 492 -3350 - F,.x (949) 493 -3697 - boar. mail tgibbslaw.com - www.gibbstaw.csitm Pr►i z. ow Pa ulerssi( w, r. nuC.Pn+c - 1 to fuss Arownw Pwaawo,, Sum 201 . S.0 G.wsan 92672-3956 Jun - I2 -Ol 12:08P P 0 Sent 8y: The Gibbs Law Firm; 949 492 3697; _ -- Jun -12 -01 10 :20; Page g 3/5 James E. Foden Thomas Salinger June 11, 2001 Page 2 Saling?s request to review the agreement, decided that if it accepted counsel from one person's attorney it could also be placed in a positron of having its judgment questioned by 125 families or their counsel. As you are aware, a corporate board is not required to seek counsel from each of its members, but rather is charged with doing its best for the benefit of the majority, and to exercise ins own collective judgment. For those reasons. the committee requested that I not seek Mr. Salinger' i'. er tevtew of the documents. In Mr. Williams' oral discussions with park residents as to his most recent pennon, he has allegedly made some statements, which, if true, are actionable, as they are dearly defamatory. 1 am very disappointed m your chart's actions, which seem to have one fact when he has spoken to me • and another in his attempts to obtain his personal desires. Although I do not nor will I ever represent individual board Members or Liric a Staff members, t .would ask that you caution your client not to continue malting these statements. My hope is &Sat his comments and atiegaricrs ar_ being reported incorrectly, but his actions to dace scan to verify at least some of the comments as having been shade. I have written before that the residents did not purchase the park, nor could they have done so, given the price paid. As such the residents art sill tenants, albeit tenants under the protection • of the various requirements of the bond issue and the city's agreements with Linc. The nature of the bonds issuer. is that the funds are to be used for public purpose. A public purpose is not served, if the owner of the park is a cotporation with directors elected solely by the park residents. That could be classified as a mutual benefit non - profit corpoation acid that entity could not use funds generated by tax - exempt bonds. Until these bonds are paid in full, or any subsequent bonds issued by the city for a refinance are paid in full. the agreement must be carefully drafted to protect the tax aspects of the transaction. The tax - exempt status of the bonds is critters for the City of Scat Beach arid, in fact, for the residents of the park. If the corporation loses its 501(c)3 status, the bonds would have co be paid tmnsedi rely. and ever, then there are potential penalties to be paid. Should the bond issue require repayment, the only source of funds would be taxable, be it bonds or a commercial loan. A commercial loan would also require 1 significant down payrncnt. A taxable bond or a commercial loan evould require inteeest payments significantly above that being paid today: Additionally; there would be no exemption fcotn real property taxation. which would also but-den the cost of the park's continued operation. If this were to happen, here is onty source for those additional funds and that is tent from the residents. The current bond issue protects against further subatansia1 rent increases, once The • GIBBS l.4WFIRM • • l u r e ] ) , O Y, i o s D f) * A P I O N 9 i Sun -12 -01 12:O9P P.03 - Sent 8y: The Git:ts Law Farm; 949 492 3697; Jun -12 -01 10:20; Page 415 c :iced t e z i r A u w muellnellora wcr do • r 'aww W James E. Foden Thomas Salingcr June al, 2001 Pagel the resin reach the required level for debt service. The bond and city re:yuutsnents must be met to achieve the continued tax - exempt nature of the new operating entity. It has been repotted that Mr. Williams states that a doctor in Riverside, who I must presume has no detailed knowledge of -the present bond documentation,- has opined that - Line is just scanning the residents," because of a lack of a date arum. The apparent discussion has then alleged that this doctor has successfully completed over 200 such mobnlehome park purchases _ through 501(c)3 bond issues. To my knowledgt there have been less than 30 such purchases in the Sate of California, and the current project b the only such project to have even 2 discussion of uhitnate resident controL A S01(c)3 purchase of a mobilehome park nt•not at all commonplace. As - - such, the counsel involved tend to be aeaemely cautious as a result of the necessity of protecting the bond holders from having tax exempt issue become taxable. Any such action would affect all parses involved and certainly injure the residents -rho would surely suffer the consequences of the increased cost. In another reprinted conversation, ltilr. Williams is alleged to have stated that the state staff (Lorraine French) agrees with his position. At a meeting in Sacramento, the week before last; Lorraine denied snaking such a statctnent, and requested that she he left out of this controversy. . Subtly hidden in Mr. Williams agenda seems to be the fact that he is concerned about the sale of homes being restricted to certain income classes. I can understand his concern, bur that is not the concern of the majority of the peopic who own but one house and who need to keep their housing costs at a rnuunum. Those people will be seriously affcc rcd if the bond issue were to become arable. At some point in time, it may be advantageous for the city to refinance the bond issue for the economic benefit of the residents. Should. as Mr. 9P,Iliarns suggests, a Fixed date be placed on the cooperation agreement; the date could use the new issue to becotrc difficult if not-impossible. Also, Mr. Williams' concern as to Lint pursuing a refinance is difficult to understand since the city and 34t Line is the borrower, and effectively controls any tax - exempt refinattang that may be available, now or in the future. The date certain could be a burden on the city, which would be unacceptable. Probably more important however, is the fit that a contract ce9uucment to tuns control of the corporation over to a8 zesidents, could end the tax- exempt status of that corporation. To show such a pattern fmrn the start of the transaction aught be viewed by the IRS as some form of plan to simply receive tax exempt treaty ierit for a group of residents, not the public and the governmental agency. should that happen and the taut- QCnnpr aratw be jcopaedised the residenta would sutler through m1Ath hignersenta. t believe your client muse understand that the city, Line and the resident committee, have dope their absolute best to benefit the park at large. Mr. Williams' efforts, even though funded by - The Gli3BSLAwFiRm • rra�ESSlor•1 cOR /Pr4ravr Jun -12 -01 12:09P P_04 Sent 8y: The Gibbs Law Firm; 940 492 3687; Jun -12 -01 10:21; Page 515 !!e James E. Fob Thomas Salinger - Jute 11, 2001 Page 4 - - his money are increasingly counter - productive. The residents are going to have to cooperate with Lnc to ob rental assistance, real property tax exemptions and the MPROP funding. The •- Nc� .c .•.per:.... apparent Ming waged by Mr. Williams is preventing. fu cooperation by all ur< �r..Y�. . J y '� , ceuilcais to the jeopardy of all lower income persons. If Line Housing or the city wish to ,employ counsel to research the matter fully, they certainly may do so, but I do not believe it incumbent on either party to do so. The comrnrttee does nut have funds to pay such additional fees. Finally, since such a plan has not been implemented m any transaction 1 am aware of, I sense char there is no directly parallel precedent. if soy credible counsel 13 employed, I suspect he or she will err on the conservarrvc side and dismiss the date specific as either an undue burden or art outright danger to the tax exempt bond issue. Very truly yours, THE GIBBS LAW FIRM • .x- GERALD R. GIBBS GRG:k - cc Clients ems_- - - rermwa•r I.e...s 1+•,rly wear - ran +1121 wr • The GIBBSiwFi r • COR•.J .titio+ PETITION To: Board of Directors of the Seal Beach Trailer Park Resident Owner's Association Re: Linc Housing transfer of control The undersigned respectfully request the Board make all reasonable efforts to: 1) amend the current Cooperation Agreement # 7 to drop the wording "and other financing ", 2) and add a date certain for Linc Housing to transfer control of the corporation of the Seal Beach Trailer Park by giving up its right to appoint board members to the corporation, not later than 35 years after the execution of the Regulatory Agreement /s. The residents can provide a 501 c3 specialist to explain how this indeed can be done, the procedures for such, the protection of the residents in doing so now, and the procedures thereof. We request that the board open a line of clear communication with these experts to the maximum extent of protection to the residents, and report to the residents on their progress. Date Name Address • r CrTY OF SEAL BEACH REIUEVELUPMEN 1 A3E'NC',' ' OFFICE OF THE GIIY Al Icot(NL' M t'.M0FiA141)Ut. lu: Holm aWc Chair and board ineinbets FROM: Agency Counsel Quinn M. !allow 1)/111. June 2U, 2001 `JUH.A. CI; 'hailer Park Cuopct a fl Icen,c+tt . We have reviewed the letter from the Ciibbs Law fine and the stall repots concerning Kenny Williams' request to revise the Cooperailutt Ag+rett,c,+l that wnb fl,lly •nV. :utiA in' Muruh S, 2001. As a threshold issue, the Cooperation Agt eetltet,l was Om ) H uduet ul' v.x.wl,;.ive. negotiations between 1..INC Communiry Development Corporation and the Seal iseaeh '1'+aile Park Resident Owner's Association. both parties were tcpi csc,ttcd by wuuaul. Mom importantly, neither the Agency nor the City Is a party to the Agreement. The Age+nc.y'b involvement in the Park has been limited to facilitating afrordable housing to Seal B3eacl, residents. The issues raised by Mr. Williams are, at most, marginally related to the provision of at1'u+dabte housing Nonetheless, the Agency has a stake in both maintaining atl'ut Liable I,oubi+tg and in ' avoiding default of bonds it issues. While we do nol necessarily disagree with Mr. Gibbs' analysis, any change to the transaction that has the potential of adversely atTuctittg the tax exempt status of the bonds should be the subject of an independent opinion of counsel acceptable to the Agency. Further, we do not recommend that Agency funds De us to pay i'v, dial i„del,c„clu„t opinion In sum, the Cooperation Agreement should not be revised until the Agency has - received an independent opinion of qualified bond counsel th at any ptupuxca L;l,a,tgen will t,t,t adversely aff et the tax exempt status uf bond issue.' , CONFIDEN1IAL THIS MATERIAL IS Outs.m.r1 lo Tile Al t t.I :T- ouc,r AND/OR THE ATTORNEY WORK PRODUCT PRMLEOES . DO NO1 DISCLOSE THE CONTENTS HERCOP. DO NOT FILE WITH ----_ I�uRuGtI Acce9311;LP ki t.4. _. N /2h4\MIIU\(I.iKG0G 1 71 IL 1 n ',At Men r1 ■,t•. n �' �,ti • BYLAWS OF SEAL BEACH AFFORDABLE HOUSING CORPORATION ARTICLE 1: NAME Section 1.01. The name of this corporation is Seal Beach Affordable Housing Corporation (The "Corporation "). ARTICLE 2: OFFICES Section 2.01. Principal Executive Office. The principal executive office of the Corporation shall be 110 Pine Avenue, Suite 525, Long Beach, California 90802. The Board of Directors may change the principal executive office from one location to another. Any changes may be noted on these Bylaws by the Secretary, opposite this section, or this section may be amended to state the new location. Section 2.02. Other Offices. Other offices may at any time be established at any place or places specified by the Board of Directors. ARTICLE 3: OBJECTIVES AND PURPOSES Section 3.01. Objectives and Purposes. The Corporation shall be dedicated primarily to lessening the burdens of Government by assisting in the provision of housing for low and moderate income persons for whom no other adequate housing exists, as stated in greater detail elsewhere in this Corporation's Articles of Incorporation and in the Bylaws. In addition, this Corporation is formed for the purposes of performing all things incidental to, or appropriate in, the achievement of the foregoing specific and primary charitable purposes. More specifically, the Corporation shall own and operate the Seal Beach Trailer Park, a mobile home park in Seal Beach, California This Corporation has been formed under the California Nonprofit Public Benefit Corporation Law for the charitable purposes described herein, and it shall be nonprofit and nonpartisan. No substantial part of the activities of the Corporation shall consist of the publication or dissemination of materials or statements with the purpose of attempting to influence legislation, and the Corporation shall not participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office. • SBAHC Bylaws Page 1 of 17 May 13,2002 i This Corporation shall not, except to an insubstantial degree, engage in any activities or exercise any powers that are not in furtherance of its primary charitable purposes. This Corporation shall hold and may exercise all such powers as may be conferred upon a nonprofit corporation-by the laws of the State of California and as may be necessary or expedient for the administration of the affairs and attainment of the purposes of the Corporation, provided, however, that in no event shall the Corporation engage in activities which are not permitted to be carried on by a Corporation exempt under Section 501(c)(3) of the Internal Revenue Code. ARTICLE 4: DEDICATION.OF ASSETS Section 4.01. Dedication of Assets. The properties and assets of this nonprofit corporation are irrevocably dedicated to charitable purposes. No part of the net earnings, properties, or assets of this Corporation, on dissolution or otherwise, shall inure to the benefit of any private person or individual, or any member, director or officer of this Corporation. On liquidation or dissolution, all remaining properties and assets of the Corporation shall be distributed and paid over to one or more organizations organized and operated for the charitable purpose of providing housing for low income persons in Los Angeles County, California, and, if no such organizations are in existence, to organizations providing housing for low income persons in the State of California, as long as any such organization has tax - exempt status under Section 501(c)(3) of the Internal Revenue Code at the time of the distribution. ARTICLE 5: MEMBERSHIP Section 5.01. Statutory Members. The Corporation shall not have any members within the meaning of Section 5056 of the California Corporations Code. Section 5.02. Nonstatutory Members. Upon designation of criteria for advisory membership by the Board of Directors, the Corporation may have advisory members who are not members within the meaning of Section 5056 of the California Corporations Code. ARTICLE 6: BOARD OF DIRECTORS Section 6.01. Powers. Subject to the provisions of the California Nonprofit Corporation Law, the activities and affairs of the Corporation shall be managed and all Corporate powers shall be exercised by or under the direction of the Board of Directors. The Board of Directors may delegate the management of the day -to -day operation of the business of the Corporation to a management company, committee (however composed), or other person or entity, provided that the activities and affairs of the Corporation shall be managed and all SBAHC Bylaws Page 2 of 17 May 13,2002 1 Corporate powers shall be exercised under the ultimate direction of the Board of Directors. Section 6.02. Number of Directors. The authorized number directors of the Corporation shall be seven (7). Section 6.03. Fees and Compensation. Directors and members of committees shall not receive any compensation for their services as such, but may receive reasonable reimbursement of expenses as may be fixed or determined by resolution of the Board of Directors. Section 6.04. Restriction on Interested Directors. Not more than forty - nine percent (49 %) of the persons serving on the Board of Directors at any time may be interested persons. An interested person is (a) any person being compensated by the Corporation for services rendered to it within the previous twelve (12) months, whether as a full -time or part-time employee, independent contractor, or otherwise, excluding any reasonable compensation paid to a director as director; and (b) any brother, sister, ancestor, descendant, spouse, brother -in -law, sister -in -law, son -in -law, daughter -in- law, mother -in -law, or father -in -law of any such person. However, any violation of the provisions of this section shall not affect the validity or enforceability of any transaction entered into by the Corporation. Section 6.05. Selection and Term of Office. The initial Board of Directors shall be chosen by the Incorporator and shall serve for a term of three (3) years or until his or her successor is appointed. All subsequent directors shall selected as follows: Three (3) Directors shall be appointed by LINC Housing Corporation; Two (2) Directors shall be appointed by the Seal Beach Trailer Park Residents Homeowners Association. These five (5) Directors shall select the remaining two (2) Directors from community leaders within Seal Beach, California. Directors whose terms have expired may continue to serve as directors until a replacement is appointed. Directors may be reappointed for an unlimited number of successive terms. Resident Board members shall be limited to two (2) at any one time. Section 6.06. Vacancies and Removal. A vacancy shall be deemed to exist in the event that the actual number of directors is less than the authorized number for any reason. Vacancies shall be filled by the respective appointed organization. Section 6.07. Resignation of Directors. Except as provided below, any director may resign by giving written notice to the president or secretary of the Board of Directors of the Corporation. The resignation shall be effective when the notice is given unless it specifies a later time for the resignation to become effective. Except on notice to the Attorney General of California, no director may resign if the Corporation would be left without a duly elected director or directors. SBAHC Bylaws Page 3 of 17 May 13,2002 1 Section 6.08. Place of Meetings: Meetings by Telephone. Regular meetings of the Board of Directors may be held at any place within or outside the State of California that has been designated from time to time by the Board of Directors. In the absence of such designation, regular meetings shall be held at the principal executive office of the Corporation. Special meetings of the Board shall be held at any place within or outside the State of California that has been designated in the notice of the meeting or, if not stated in the notice, or if there is no notice, at the principal executive office of the Corporation. Notwithstanding the above provisions of this Section 6.08, a regular or special meeting of the Board of Directors may be held at any place consented to in writing by all the Board members, either before or after the meeting. If consents are given, they shall be filed with the minutes of the meeting. Any meeting, regular or special, may be held by conference telephone or similar communications equipment, as long as all directors participating in the meeting can hear one another, and all such directors shall be deemed to be present in person at such meeting. Section 6.09. Annual Meeting. The Board of Directors shall hold a regular meeting each year for the purpose of obtaining the consent of the directors to their directorship of the Corporation, for the purpose of obtaining the consent of the officers to their office in the Corporation, and for the transaction of other business. Notice of the annual meeting shall be given in the manner set forth in Section 6.12 of these Bylaws. Section 6.10. Other Regular Meetings. Other regular meetings of the Board of Directors shall be held at such times as are fixed by the Board of Directors. Such regular meetings may be held without notice. Section 6.11. Special Meetings. Special meetings of the Board of Directors for any purpose may be called at any time by the president or any vice president, or the secretary, or any two directors. Section 6.12. Notice of Meetings. Written notice of the date, time, and place of any regular or special meetings shall be delivered personally to each director or communicated to each director by telephone, facsimile, telegraph, express mail service, first -class - mail, or by other means of written communication, with charges prepaid, addressed to the director at the director's address as it is shown upon the records of the Corporation or, if it is not so shown on such records or is not readily ascertainable, at the place at which the meetings of the directors are regularly held. In case such notice is mailed, it shall be deposited in the United States mail or given to the express mail company or other carrier at least four (4) days prior to the time of the holding of the meeting. In case such notice is delivered personally or by telephone, facsimile, or telegraph, it shall be so delivered at least forty -eight (48) hours prior to the time of the holding of the meeting. Such mailing or delivery, personally or by SBAHC Bylaws Page 4 of 17 May 13,2002 telephone, facsimile, or telegraph, shall be due, legal, and personal notice to such director. The notice need not specify the purpose of the meeting. Section 6.13. Waiver of Notice. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes of the meeting, whether before or after the meeting, or who attends the meeting without protesting, prior to the meeting or at its commencement, the lack of notice to such director. The waiver of notice or consent need not specify the purpose of the meeting. All such waivers, consents, and approvals shall be filed with the Corporate records or made a part of the minutes of the meeting. Section 6.14. Action at a Meeting: Quorum and Required Vote. Presence of a majority of the directors then in office at a meeting of the Board of Directors constitutes a quorum for the transaction of business, except as otherwise provided in these Bylaws. Every act done or decision made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number, or the same number after disqualifying one or more directors from voting, is required by the Articles of Incorporation, these Bylaws, or the California Nonprofit Corporation Law. Directors may not vote by proxy. A meeting at which a quorum is initially present, including an adjourned meeting, may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a disinterested majority of the required quorum for such meeting, or such greater number as required by the Articles of Incorporation, these Bylaws or the California Nonprofit Corporation Law. Section 6.15. Adjourned Meeting and Notice. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than twenty -four (24) hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Such notice may be waived in the manner provided for in Section 6.13, regardless of quorum. Section 6.16. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board individually or collectively consent in writing to such action. Such written consent or consents may occur prior to or subsequent to the action and shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as the unanimous vote of such directors. For purposes of this section only, "all members of the - Board" does not include any "interested directors" as defined in Section 5233 of the California Corporations Code. SBAHC Bylaws Page 5 of 17 May 13,2002 ARTICLE 7: COMMITTEES Section 7.01. Committees of Directors. The Board of Directors may, by resolution adopted by a majority of the directors then in office, provided that a quorum is present, designate one or more committees, each of which shall consist of three or more directors and may also include persons who are not on the Board of Directors, to serve at the pleasure of the Board. The Board may designate one or more alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the directors then in office, provided that a quorum is present. Any committee that includes voting members who are not on the Board of Directors may not be delegated any of the authorities or powers of the Board of Directors. Any committee whose voting members consist only of directors, to the extent of the powers specifically delegated in the resolution of the Board of Directors or in these Bylaws, may have all or a portion of the authority of the Board of Directors, except that no committee, regardless of Board resolution, may: (a) Approve any action that, under the California Nonprofit Corporation Law, also requires the affirmative vote of the members of a public benefit corporation; (b) Fill vacancies on the Board of Directors or on any committee that has the authority of the Board; (c) Establish or fix compensation of the directors for serving on the Board or on any committee; (d) Amend or repeal the articles of incorporation or bylaws or adopt new bylaws; (e) Amend or repeal any resolution of the Board of Directors that by its express terms is not so amendable or repealable; (f) Create or appoint any other committees of the Board of Directors or the members of such committees; (g) Approve or revoke a plan of merger; consolidation; voluntary dissolution; bankruptcy or reorganization; or the sale, lease, or exchange of all or substantially all of the property and assets of the Corporation otherwise than in the usual and regular course of its business; or (h) Approve any self - dealing transaction, except as provided by Section 5233 of the California Corporations Code. SBAHC Bylaws Page 6 of 17 May 13,2002 No committee or its member(s), acting in that capacity, shall bind the Corporation in a contract or agreement or expend or commit Corporate funds, unless expressly authorized to do so by the Board of Directors. Section 7.02. Meetings and Actions of Committees. Meetings and actions of all committees established pursuant to Section 7.01, herein, shall be governed by, and held and taken in accordance with, the provisions of these Bylaws, concerning meetings and actions of directors, with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members, except that the time for regular meetings of committees may be determined either by resolution of the Board of Directors or by resolution of the committee. Special meetings of committees may also be called by resolution of the Board of Directors. Notice of special meetings of committees shall also be given to any and, all alternate members and each director on the Board of Directors, who shall each have the right to attend all meetings of the committee. Minutes shall be kept of each meeting of any committee and shall be filed with the Corporate records. The Board of Directors may adopt rules not inconsistent with the provisions of these Bylaws for the governance of any committee. ARTICLE 8: OFFICERS Section 8.01. Officers. The officers of the Corporation shall consist of a chairperson of the board or a president or both, vice chairperson, vice president, secretary and chief financial officer. The Corporation may also have, at the Board's discretion, one or more vice presidents, one or more assistant secretaries, one or more assistant chief financial officers and such other officers as may be appointed in accordance with Section 8.03 of these Bylaws. Any number of offices may be held by the same person, except that neither the secretary nor the chief financial officer may serve concurrently as the president. Section 8.02. Election and Term of Office. The officers of the Corporation, except those appointed under Section 8.03 of these Bylaws, shall be chosen annually by a majority of the Board and shall serve at the pleasure of the Board. Section 8.03. Other Officers. The Board may appoint or may authorize the president, or other officer, to appoint any other officers that the Corporation may require. Each officer so appointed shall have the title, hold office for the period, have the authority, and perform the duties specified in the Bylaws or determined by the Board. Section 8.04. Vacancies and Removal. A Vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to that office, SBAHC Bylaws Page 7 of 17 May 13,2002 1 provided, however, that vacancies may be filled as they occur. The Board may appoint or may authorize the president, or other officer, to appoint any other officers that the Corporation may require. Each officer so appointed shall have the title, hold office for the period, have the authority, and perform the duties specified in the Bylaws or determined by the Board. Section 8.05. Resignation of Officers. Any officer may resign at any time by giving written notice to the president or secretary of the Corporation. The resignation shall take effect as of the date the notice is received or at any later time specified in the notice and, unless otherwise specified in the notice, the resignation need not be accepted to be effective. Any resignation shall not affect the rights, if any, of the Corporation under any contract to which the officer is a party. Nor shall the resignation of any officer from the office he or she holds affect his or her position as a director of the Corporation. Section 8.06. Reimbursement of Expenses. The Corporation shall provide reimbursement for monies expended on behalf of the Corporation by its officers. Section 8.07. Chairperson of the Board. The chairperson of the board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as my be from time to time assigned to him or her by the Board of Directors or prescribed by the Bylaws. Section 8.08. Vice Chairperson. In the absence or disability of the chairperson of the board, the vice chairperson shall preside at all meetings of the Board of Directors. He or she shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws. Section 8.09. President. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the chairperson of the board, if there be such an officer, the president shall be the chief executive officer of the Corporation and shall, in the absence of the chairperson of the board and vice chairperson, preside at meetings of the Board. The president shall exercise and perform such other powers and duties as may from time to time be assigned to the president by the Board. Subject to the control of the Board, the president shall be the general manager of the Corporation and shall supervise, direct, and control the Corporation's activities, affairs, and officers. Section 8.10. Vice Presidents. If the president is absent or disabled, the vice presidents, if any, in order of their rank as fixed by the Board, or if not ranked, a vice president designated by the Board, shall perform all duties of the president. When so acting, a vice president shall have all powers of and be subject to all restrictions on the president. The vice presidents shall have such SBAHC Bylaws Page 8 of 17 May 13,2002 1 other powers and perform such other duties as the Board or the Bylaws may prescribe. Section 8.11. Secretary. The secretary shall have the following duties: (a) The secretary shall keep or cause to be kept, at the Corporation's principal office or such other place as the Board may direct, a book of minutes of all meetings, proceedings, and actions of the Board and of committees of the Board. The minutes of the meeting shall include the time and place that meeting was held, whether the meeting was annual, regular, or special, and, if special, how authorized and the notice given. (b) The secretary shall keep or cause to be kept at the principal office, a copy of the Articles of Incorporation and Bylaws of the Corporation, as amended to date. (c) The secretary shall give, or cause to be given, notice of all meetings of the Board and of committees of the Board required by these Bylaws to be given. The secretary shall keep the corporate seal in safe custody and shall have such other powers and perform such other duties as the Board or the Bylaws may prescribe. Section 8.12. Chief Financial Officer. The chief financial officer shall have the following duties: (a) The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and accounts of the Corporation's funds, properties and transactions. The chief financial officer shall send or cause to be given to the directors such financial statements and reports as are required to be given by law, by these Bylaws, or by the Board. The books of account shall be open to inspection by any director at all reasonable times during the business hours of the Corporation. (b) The chief financial officer shall deposit, or cause to be deposited, all money and other valuables in the name and to the credit of the Corporation with such depositories as the Board may designate, shall disburse the Corporation's funds as the Board may order, shall render to the chairperson, president and the Board, when requested, an account of all transactions as chief financial officer and of the financial condition of the Corporation, and shall have other powers and perform such other duties as the Board or the Bylaws may prescribe. SBAHC Bylaws Page 9 of 17 May 13,2002 i 1 In addition to the duties specified in this Article 8, officers shall perform all other duties customarily incident to their office and such other duties as may be required by law, by the Articles of Incorporation, or by these Bylaws, subject to control of the Board of Directors, and shall perform such additional duties as the Board of Directors shall from time to time assign. ARTICLE 9: STANDARD OF CARE Section 9.01 General. A director shall perform the duties of a director, including duties as a member of any committee of the Board on which the director may serve, in good faith, in a manner that such director believes to be in the best interest of this Corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like situation would use under similar circumstances. In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by: (a) One or more officers or employees of the Corporation whom the director believes to be reliable and competent in the matters presented; (b) Counsel, independent accountants or other persons as to matters which the director believes to be within such person's professional or expert competence; or (c) A committee of the Board upon which the director does not serve, as to matters within its designated authority, which committee the director believes to merit confidence, so long as in any such case, the director acts in good faith, after reasonable inquiry when the need therefore is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted. Except as provided in Section 13.01 in these Bylaws, a person who performs the duties of a director in accordance with the above shall have no liability based upon any failure or alleged failure to discharge that person's obligations as a director, including, without limiting the generality of the foregoing, any actions or omissions which exceed or defeat a public or charitable purpose to which a corporation, or assets held by it, are dedicated. Section 9.02. Investments. Except with respect to assets held for use or used directly in carrying out this Corporation's charitable activities, in investing, reinvesting, purchasing, acquiring, exchanging, selling and managing this Corporation's investments, the Board shall avoid speculation, looking instead to the permanent disposition of the funds, considering the probable income, as well SBAHC Bylaws Page 10 of 17 May 13,2002 as the probable safety of this Corporation's capital. The provisions of Section 9.01 of these Bylaws shall apply to this Subsection. Section 9.03. Self - Dealing Transactions. Except as provided below, the Board shall not approve a self - dealing transaction. A self - dealing transaction is one in which the Corporation is a party and in which one or more of the directors has a material financial interest or a or a transaction between this Corporation and any entity in which one or more of its directors has a material financial interest. The Board may approve a self - dealing transaction if a majority of the Board, not including the self- interested director, determines that the transaction is fair and reasonable to this Corporation and, after reasonable investigation under the circumstances, determines that they could not have secured a more advantageous arrangement with reasonable effort under the circumstances. Section 9.04 Indemnification. To the fullest extent permitted by law, this Corporation shall indemnify its directors, officers, employees, and other persons described in Section 5238(a) of the California Nonprofit Public Benefit Corporation Law, including persons formerly occupying any such position, against all expenses legal or otherwise, judgments, fines, settlements, and other amounts actually and reasonably incurred by them in connection with any "proceeding," as that term is used in said Section 5238(a), and including an action by or in the right of the Corporation, by reason of the fact that the person is or was a person described in that Section. "Expenses" shall have the same meaning as in said Section. To the fullest extent permitted by law and except as otherwise determined by the board in a specific instance, expenses incurred by a person seeking indemnification in defending any "proceeding" shall be advanced by the Corporation before final disposition of the proceeding upon receipt by the Corporation of an undertaking by or on behalf of that person to repay such amount unless it is ultimately determined that the person is entitled to be indemnified by the Corporation for those expenses. In all cases where indemnification is sought, the Corporation shall be subject to the following restrictions and requirements: (a) Where the action or proceeding is brought on behalf of the Corporation or involves self - dealing transactions as defined in Section 9.03 of these Bylaws, the Corporation shall not indemnify against amounts paid in settlement or judgment amounts, but shall, upon the express authorization of the Board indemnify the director, officer, employee or agent against expenses incurred in defense of an action arising from his or her relation to the Corporation. To indemnify in such cases the Board must find the person met the statutorily prescribed standard of care by acting (i) in the best SBAHC Bylaws Page 11 of 17 May 13,2002 interests of the Corporation; (ii) in good faith; and (Hi) with the care of an ordinarily prudent person. (b) Where the person seeking indemnification under has been held liable, or has settled his or her liability to the Corporation, the Corporation shall not indemnify against expenses without the approval of the court or the Attorney General. (c) The Board shall determine whether the person seeking indemnification has acted in accordance with the standard of care set forth in subsection (a) of this section by a majority vote of a quorum consisting of disinterested directors. The termination of any proceeding in a manner adverse to the defendant seeking indemnification shall not create a presumption that such person failed to meet the standard of care. (d) Where the person seeking indemnification has been successful on the merits in defense of any action or proceeding brought on behalf of the Corporation or in defense of any claim or issue involved in such action or proceeding, the Corporation shall indemnify against all expenses actually or reasonably incurred. (e) The Corporation shall not advance any money to the person seeking indemnification for the purpose of defending against any action or proceeding without the receipt of an undertaking by such person to repay all advances unless it is ultimately determined that he or she is entitled to indemnification. Section 9.05. Insurance. The Corporation shall have power to purchase and maintain insurance to the full extent permitted by law on behalf of its officers, directors, employees, and other agents, against any liability asserted against or incurred by such persons in such capacity or arising out of the person's status as such. ARTICLE 10: EXECUTION OF CORPORATE INSTRUMENTS, AND VOTING OF STOCKS AND MEMBERSHIPS HELD BY THE CORPORATION Section 10.01. Execution of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers or other person or persons, to execute any Corporate instrument or document, or to sign the Corporate name without limitation, except when otherwise provided by law, and such execution or signature shall be binding upon the Corporation. SBAHC Bylaws Page 12 of 17 May 13,2002 i 1 Unless otherwise specifically determined by the Board of Directors or otherwise required by law, formal contracts of the Corporation, promissory notes, deeds of trust, mortgages, and other evidences of indebtedness of the Corporation, and other Corporate instruments or documents, and certificates of shares of stock owned by the Corporation, shall be executed, signed, or endorsed by one of the following: the Chairperson of the Board, Vice - Chairperson of the Board, the President, Or Vice President. All checks and drafts drawn on banks or other depositories on funds to the credit of the Corporation, or in special accounts of the Corporation, shall be signed by such person or persons as the Board of Directors shall authorize to do so. Section 10.02. Voting of Stocks Owned by Corporation. All stock of other corporations or memberships in other corporations owned or held by the Corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect to such stock or memberships shall be executed, by the person authorized to do so by resolution of the Board of Directors, or in the absence of such authorization, by the chairperson of the board, the vice - chairperson of the Board, the president, or by any other person authorized to do so by the chairperson of the board or the president. ARTICLE 11: ANNUAL REPORT TO DIRECTORS Section 11.01. Fiscal Year. The fiscal year for the Corporation shall end each year on December 31. Section 11.02. Annual Report. If the Corporation has more than twenty - five thousand dollars ($25,000) in gross receipts in any fiscal year, the president shall provide to the directors no later than 120 days after the close of its fiscal year, a report containing the following information in appropriate detail: (a) The assets and liabilities, including the trust funds, of the Corporation as of the end of the fiscal year. (b) The principal changes in assets and liabilities, including trust funds, during the fiscal year. (c) The revenue or receipts of the Corporation, both unrestricted and restricted to particular purposes, for the fiscal year. (d) The expenses or disbursements of the Corporation, for both general and restricted purposes, during the fiscal year. (e) Any information required by Section 6322 of the California Corporations Code concerning certain self - dealing transactions SBAHC Bylaws Page 13 of 17 May 13,2002 • f I involving more than $50,000 or indemnifications involving more than $10,000 which took place during the fiscal year. The report shall be accompanied by any pertinent report(s) of independent accountants, or, if _there are no such reports, the certificate of an authorized officer of the Corporation that such statements were prepared without audit from the books and records of the Corporation. ARTICLE 12: MAINTENANCE AND INSPECTION OF CORPORATE RECORDS Section 12.01. Maintenance and Inspection of Articles of Incorporation and Bylaws. The Corporation shall keep at its principal executive office, or if its principal executive office is not in the State of California, at its principal business office in California, the original or a copy of its Articles of Incorporation and Bylaws as amended to date, which shall be open to inspection by any of the directors at all reasonable times during office hours. If the principal executive office of the Corporation is outside the State of California and the Corporation has no principal business office in California, the secretary shall, on the written request of any director, fumish to that director a copy of the Articles of Incorporation and Bylaws as amended to date within a reasonable time not to exceed 15 calendar days. Section 12.02. Maintenance and Inspection of Other Corporate Records. The accounting books, records, and minutes of proceedings of the Board of Directors and any committees of the Corporation shall be kept at such place or places designated by the Board of Directors, or, in the absence of such designation, at the principal executive office of the Corporation. The minutes shall be kept in written or typed form, and the accounting books and records shall be kept either in written or typed form or in any other form capable of being converted into written, typed, or printed form. Upon leaving office, each officer, employee, or agent of the Corporation shall turn over to his or her successor or the chairperson of the board or president, in good order, such Corporate monies, books, records, minutes, lists, documents, contracts or other property of the Corporation as have been in the custody of such officer, employee, or agent during his or her term of office. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of every kind and the physical properties of the Corporation and each of its subsidiary corporations. The inspection may be made in person or by an agent or attorney, and shall include the right to copy and make extracts of documents. No advance notice is necessary for any such inspection. SBAHC Bylaws Page 14 of 17 May 13,2002 ARTICLE 13: CONTRACTS AND LOANS WITH DIRECTORS AND OFFICERS Section 13.01. Contracts or Transactions with Directors and Officers. (a) The Corporation shall not be a party to any contract or transaction: (i) in which one or more of its directors or officers has a material financial interest; or (ii) with any corporation, firm, association, or other entity in which one or more of its directors or officers has a material financial interest; or (iii) with any corporation, firm, association, or other entity (other than another California nonprofit public benefit corporation) in which one or more of its directors is a director. (b) The prohibitions of Subsection (a) of this Section shall not apply if each of the following occurs: (i) the material facts concerning the contract or transaction and such director's or officer's financial interest or common directorship are fully disclosed in good faith and are noted in the minutes, or are otherwise known to all members of the board prior to consideration by the board of such contract or transaction; (ii) such contract or transaction is authorized or approved in good faith by a majority of the board by a vote sufficient for that purpose without counting the vote of such interested directors or officers; (iii) prior to authorizing or approving the contract or transaction, the Board considers and in good faith determines after reasonable investigation under the circumstances that the Corporation could not obtain a more advantageous arrangement with reasonable effort under the circumstances; (iv) this Corporation enters into the contract or transaction for its own benefit; and (v) the contract or transaction is fair and reasonable to this • Corporation at the time the contract or transaction is entered into. (c) In any case, the prohibition of Subsection (a)(iii) of this Section does not apply to contracts or transactions in which LINC is a party. SBAHC Bylaws Page 15 of 17 May 13,2002 (d) A director or officer of this Corporation shall not be deemed to have a "material financial interest" in a contract or transaction that implements a charitable program of this Corporation solely because such a contract or transaction results in a benefit to a director or officer or their families by virtue of their membership in the class of persons intended to be benefited by the charitable program of this Corporation, as long as the contract or transaction is approved or authorized by the Corporation in good faith and without unjustified favoritism. Section 13.02. Loans to Directors and Officers. The Corporation shall not make any loan of money or property to or guarantee the obligation of any director or officer, unless approved by the Attorney General of the State of California; provided, however, that the Corporation may advance money to a director or officer of the Corporation or any subsidiary for expenses reasonably anticipated to be incurred in the performance of the duties of such director or officer, provided that in the absence of such advance, such director or officer would be entitled to be reimbursed for such expenses by the Corporation. Further, the Corporation may advance money as described in Section 9.02 of these Bylaws. ARTICLE 14: CONSTRUCTION AND DEFINITIONS Section 14.01. Construction and Definition. Unless the context otherwise requires, the general provisions, rules of construction, and definitions contained in the California Nonprofit Corporation Law as amended from time to time shall govern the construction of these Bylaws. Without limiting the generality of the foregoing, the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term "person" includes a corporation or other entity as well as a natural person. If any court of law shall deem any portion of these Bylaws invalid or inoperative, then so far as is reasonable and possible (i) the remainder of these Bylaws shall be considered valid and operative, and (ii) effect shall be given to the intent manifested by-the portion deemed invalid or inoperative. ARTICLE 15: CORPORATE SEAL Section 15.01. Corporate Seal. This Corporation may have a seal which shall be specified by resolution of the Board of Directors of the Corporation. The seal shall be circular in form and shall bear the name of the Corporation and words and figures showing that it was incorporated in the State of California in the year 1997. The seal may be affixed to any corporate instruments, as directed by the Board or any of its officers, but failure to affix it shall not affect the validity of the instrument. SBAHC Bylaws Page 16 of 17 May 13,2002 ARTICLE 16: AMENDMENTS Section 16.01. Amendments. These Bylaws may be adopted, amended or repealed by a vote of a majority of the directors then in office, present at a meeting duly held at which a quorum is present. SBAHC Bylaws Page 17 of 17 May 13,2002 • FIRST AMENDED AND RESTATED ARTICLES OF INCORPORATION OF LINC -Seal Beach Affordable Housing Corporation a California nonprofit public benefit corporation The undersigned certify that: 1. They are the President and Secretary, respectively, of LINC — Seal Beach Affordable Housing Corporation, a California nonprofit public benefit corporation (the "Corporation"). 2. The articles of incorporation of the Corporation were filed by the Secretary of State of California on the 20th of November, 1997, and a certificate of amendment was filed by the Secretary of State of California on the 6th of May, 2002. 3. The Articles of Incorporation of the Corporation are amended and restated as follows: ARTICLE I The name of this corporation is Seal Beach Affordable Housing Corporation. ARTICLE II a. This Corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the California Nonprofit Public Benefit Corporation Law for the charitable and public purposes. - b. The specific charitable and public purposes for which this Corporation is -- organized include: (1) re the Widens of government, and in particular, the governmental burdens of the City of Seal Beach; (2) providing affordable housing for very low, low and moderate income persons in the City of Seal Beach, California, where an inadequate supply of housing exists for such groups; (3) increasing, improving or preserving the supply of very low, low and moderate income housing in the City of Seal Beach, including maintaining the community's supply of mobile homes; and (4) lessening neighborhood tensions and combating neighborhood deterioration. ARTICLE III The name and address in the State of California of this Corporation's initial agent for service of process is on record with the California Secretary of State: ARTICLE IV The property of the Corporation is irrevocably dedicated to charitable purposes set forth Page 1 of 3 November 11, 2002 in Article II, above. No part of the net - income earnings or assets of the Corporation shall inure to the benefit of, or be distributable to, its directors or officers thereof, or to any private persons, except that the Corporation shall be authorized and empowered to pay reasonable compensation to private persons (other than its directors) for services actually rendered and to make payments and distributions in furtherance of its exempt purposes. ARTICLE V a. No substantial part of the activities of the Corporation shall consist of the carrying on of propaganda or otherwise attempting to influence legislation, and the Corporation shall not participate or intervene in (including the publishing or distribution of statements) any political campaign on behalf of, or in opposition to, any candidate for public office. b. The Corporation is organized exclusively for charitable purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States internal revenue law). Notwithstanding any other provision of these articles, this corporation shall not, except to an insubstantial degree, engage in any activities or exercise any powers that are not in furtherance of the purposes of this corporation, and the corporation shall not carry on any other activities not permitted to be carried on (i) by a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986 or the corresponding provision of any future United States internal revenue law, or (ii) by a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States internal revenue law). ARTICLE VI The Corporation is empowered: a. On its own account, to buy, own, sell, assign, mortgage, or lease any interest in real estate and personal property and to construct, maintain, and operate improvements thereon necessary or incident to the accomplishment of the purposes set forth in Article II, above. b. To borrow money and issue evidence of indebtedness in furtherance of any or all of the objects of its business, and to secure the same by mortgage, pledge, or other lien of and on the Corporation's property. c. Upon the dissolution or winding up of the Corporation and after paying or adequately providing for the debts, obligations, and liabilities of the Corporation, the remaining assets of the Corporation shall be distributed to a nonprofit fund, foundation or corporation which has established its tax- exempt status under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States internal revenue law), and which has established its tax- exempt status under Section 23701d of the California Revenue and Taxation Code (or the corresponding section of any future California revenue and tax law). Any such assets not so disposed of shall be disposed of by a court of competent jurisdiction of the county in which the principal office of the Corporation is then located, exclusively for such purposes as set forth in Article II above, or to such organization(s) as said court shall determine, which are organized and operated for such purposes. Page 2 of 3 : November 11, 2002 ARTICLE VII a. The Corporation has no members. b. The directors of the Corporation shall serve their terms without compensation. c. The officers of the Corporation, as provided by the bylaws of the Corporation, shall be elected by the directors of the Corporation in the manner therein set out, and shall serve until their successors are elected. d. The bylaws of the Corporation, and any amendments thereto, may be adopted by the directors at any regular meeting or any special meeting called for that purpose, so long as the bylaws and/or their amendments are not inconsistent with the provisions of these articles. 4. The foregoing amendment and restatement of Articles of Incorporation has been duly approved by the board of directors. 5. There are no members. I further declare under penalty ofperjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. November 11, 2002 Hunter L. Johnson President J' �i 1 Glenn Clark, etary Page 3 of 3 November 11, 2002 NEW ISSUE (BOOK -ENTRY ONLY) Rating: Standard & Poor's "A" N (ACA Insured.See "Rating" herein) in the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, under existing law, and assuming, among other things, compliance with certain covenants, interest on the Senes A Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes. In the opinion of Bond Counsel, interest on the Series A Bonds is not a specific preference item for purposes of 410 the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that it is included in adjusted current earnings. See "TAX MATTERS" herein. $6,750,000 REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH SEAL BEACH MOBILE HOME PARK REVENUE BONDS SERIES 2000A Dated: Date of Delivery Due: December 15, as shown below • The Serves A Bonds will be delivered in fully registered form only and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( "DTC "). DTC will act as secunties depository of the Series A Bonds. Ownership interests in the Series A Bonds may be purchased, in denominations of $5,000, or any integral multiple thereof, in book -entry form only as described herein. .Upon receipt of payments of pnncipal of, premium, if any, and interest on the Series A Bonds, DTC will in turn remit such principal, premium, if any, and interest to the participants in DTC (as described herein) for subsequent disbursement to the beneficial owners of the Senes A Bonds Interest on the Series A Bonds is payable semiannually on June 15 and December 15 of each year, commencing June 15, 2001. The Senes A Bonds are subject to optional, mandatory and special redemption prior to their respective matunty dates as described herein. • • The Bonds are being issued pursuant to an Indenture of Trust, dated as of Decembdr 1, 2000 (the "Indenture"), between the Redevelopment Agency of the City of Seal Beach (the 'Issuer ") and Union Bank of California, N.A., as trustee (the "Trustee "). The proceeds of the Series A Bonds are to be used to fund a loan to LINC Community Development Corporation, a California non - profit public benefit corporation (the `Borrower ") to ' (i) finance the acquisition by the Borrower of certain real property constituting the Seal Beach Trailer Park located in the City of Seal Beach, California (the "Project "), (ii) fund the Series A Bonds Debt Service Reserve Fund, (iii) make deposits to the Repair and Replacement Fund established under the Indenture and the Borrower's operating account for the Project, and (iv) pay the bond insurance premium for the Series A Bonds and other costs of issuance of the Bonds. The Senes A Bonds are special limited obligations of the Issuer, payable solely from Pledged Revenues (as hereinafter defined) and secured as to the payment of the interest on and the pnncipal of and the redemption premiums, if any, on the Series A Bonds in accordance with their terms and the terms of the Indenture, from Pledged Revenues and other funds as provided therefor in the Indenture. • • Pledged Revenues consist of Revenues, except for amounts on deposit in the Repair and Replacement Fund, the Administration Fund and • the Rebate Fund created under the Indenture. Revenues consist of Operating Revenues (as defined in the Indenture), Prepayments (as defined m the Indenture), the proceeds of certain insurance required to be maintained under the Loan Agreement, the amounts in the funds and accounts held by the Trustee under the Indenture, all proceeds of rental interruption insurance policies, if any, required to be maintained under the Loan Agreement, any procedds derived from the exercise of remedies under the Deed of Trust and any additional property that may be subjected to the lien of the • Indenture by the Issuer, all as more fully set forth in the Indenture. _ As more fully described under "BOND INSURANCE" herein, the scheduled payment of principal of and interest on the Series A Bonds when due will be guaranteed under a bond insurance policy to be issued concurrently with the delivery of the Series A Bonds by ACA Financial Guaranty Corporation. This cover page contains certain information for general reference only. It is not intended as a summary of this transaction. Investors are advised to read the enure Official Statement to obtain information essential to making an informed investment decision with respect to the Series - - A Bonds. • • NEITHER THE ISSUER NOR ANY PERSON EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE SERIES A BONDS OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THE SERIES A BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER AND ARE NOT A DEBT, NOR A PLEDGE OF THE FAITH AND CREDIT, OF THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER ARE THEY LIABLE ON THE SERIES A BONDS, NOR ARE THE SERIES A BONDS PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE PLEDGED REVENUES AND - _NOR PLEDGED UNDER THE INDENTURE FOR THE PAYMENT THEREOF. THE SERIES A BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE ISSUANCE OF THE SERIES A BONDS DOES NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE ISSUER, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT THE ISSUER HAS NO TAXING POWER. PLEASE SEE THE MATURITY SCHEDULE ON THE INSIDE COVER HEREOF The Series A Bonds are offered when, as and if executed and delivered, subject to the approval as to their legality of Best Best & Krieger LLP, Riverside,-California, Bond Counsel and Disclosure Counsel, and certain other conditions Certain legal matters will be passed upon for the Issuer by Richards, Watson & Gershon, a professional corporation, Los Angeles, Agency Counsel, and for the Borrower by Procopio Cory Hargreaves & Savrtch LLP, California. It is anticipated that the Series A Bonds will be available for delivery through the facilities of DTC in New York, New • ' York on or about December 21, 2000. KINSELL NEWCOMB DE DIOS, INC. , GIRARD SECURITIES, INC. � INVESTMENT BANKING The date of this Official Statement is December 18, 2000 • Maturity Schedule S1,490,000 Series Bonds Maturity Date Principal Interest Yield or - (December 15) Amount Rate - Price 2001 $80,000 4 00% 4.30% . 2002 - 75,000 4.20 4.50 2003 80,000 4.30 4.60 2004 80,000 4.40 4.65 2005 85,000 4.50 4.70 2014 130,000 5.30 5.40 2015 140,000 5.40 5.50 2016 145,000 5.45 5.55 2017 155,000 5.50 5.60 2018 165,000 5.55 5.65 2019 175,000 5.60 5.70 2020 180,000 5.65 5.75 • $285,000 — 5.00% Term Bonds due December 15, 2008 Price 100% $575,000 — 5.20% Term Bonds due December 15, 2013 Yield 5.30% $4,400,000 — 5.75% Term Bonds due December 15, 2035 Yield 5.85% 111 III REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH BOARD OF DIRECTORS - Paul Yost, Chairman of RDA John Larson, Vice Chairman Patricia Campbell, Member Shawn Boyd, Member William Doane, Member AGENCY OFFICERS Donald McIntyre, Interim Executive Director SPECIAL SERVICES Bond Counsel Best Best & Krieger LLP Riverside, California Trustee Union Bank of California, N.A. • Los Angeles, California Underwriters Kinsell, Newcomb & De Dios, Inc. Solana Beach, California Girard Securities, Inc. San Diego, California Disclosure Counsel Best Best & Krieger LLP Riverside, California ' 111 , • [THIS PAGE INTENTIONALLY LEFT BLANK] • • • , . . . III TABLE OF CONTENTS . • INTRODUCTION 1 Priority of Payments After Series A Bonds Event General 1 of Default 30 Forward Looking Statements 3 Limitations of Rights of Bondowners 30 THE PLAN OF FINANCING 4 Remedies Not Exclusive 31 ESTIMATED SOURCES AND USES OF Limited Liability of the Issuer • 31 FUNDS 4 THE LOAN AGREEMENT 32 DEBT SERVICE REQUIREMENTS 5 Amount and Source of Loan 32 THE SERIES A BONDS 6 Loan Repayment 32 General 6 Nature of the Borrower's Obligations 34 Redemption 6 Borrower Not to Dispose of Assets; Conditions Purchase of Series A Bonds 9 Under Which Exceptions Permitted 34 Book -Entry System 9 Cooperation in Enforcement of Regulatory SECURITY FOR THE SERIES A BONDS ... 11 Agreement 35 Operating Revenues 11 Additional Instruments 35 Pledge 12 Books and Records; Annual Reports 35 The Loan Agreement and the Note 12 Notice of Certain Events 36 Rental Assistance 13 Consent to Assignment ` 36 Borrower Obligations Non - Recourse 13 Title to the Project 36 Reserve Fund 13 Operation of the Project 37 BOND INSURANCE 13 Continuing Disclosure 37 Payment Pursuant to Bond Insurance Policy . 13 Minimum Rents; Coverage Requirement 37 ACA's Rights Under the Financing Documents 14 Certificate • ACA Financial Guaranty Corporation 14 Public Liability and Workers' Compensation 37 THE INDENTURE 15 Insurance Project Fund 15 Casualty Insurance 38 Cost of Issuance Fund 15 Rental Interruption Insurance 38 Deposits 15 Repair and Replacement 39 Revenue Fund 16 Other Debt, No Recourse Debt 40 Series A Bonds Debt Service Fund 17 Payments to ACA 40 Series A Bonds Redemption Fund 18 Replenishment of Series A Bonds Debt Service Administration Fund 18 Reserve Fund 41 Repair and Replacement Fund 19 Project Transfer Restrictions 41 Series A Bonds Debt Service Reserve Fund .. 19 Project Management Agreements 41 Operating Reserve Fund 20 Operating Account 42 Rebate Fund 20 Transfer to Single Purpose Entity 42 Surplus Fund 20 Events of Default 42 Rental Assistance Fund 21 Remedies 43 Resident Services Fund 21 - Beneficiaries 44 Agency Loan Fund 21 THE REGULATORY AGREEMENT 45 Investment and Deposit of Funds 21 Residential Rental Property; Qualified Covenants of the Issuer 23 Residents 45 Rights of ACA 27 Issuer Requirements 46 Supplemental Indentures 27 Qualified Residents 47 Powers of Amendment 28 Sale or Transfer of the Project 48 Series A Bonds Events of Default 29 Term 49 Remedies 29 Enforcement 49 III i THE BORROWER 50 Insufficient Insurance and Land Sale Proceeds .. 69 Organization 50 Enforceability and Bankruptcy 6. THE PROJECT 56 Anti- Deficiency Laws of the State of Mobile Home Park Overview 56 California 70 Vicinity Description 56 Forward Looking Statements 71 The Project 57 TAX MATTERS 71 Environmental Site Assessment 57 LEGAL OPINIONS 73 _ Flood and Earthquake Hazard 57 CONTINUING DISCLOSURE 73 Physical Needs Assessment 58 LITIGATION 74 Historical Operating Results 59 The Issuer 74 Vacancy Rates 61 .The Borrower 74 Agency Assistance and Restrictions • 61 RATING 74 Projected Operating Results 62 UNDERWRITING 75 Oversight Agent/Program Administrator .... 63 FINANCIAL ADVISOR 75 THE ISSUER 63 MISCELLANEOUS 75 RISK FACTORS 63 Series A Bonds Are Limited Obligations of the Issuer 64 APPENDIX A GENERAL INFORMATION Loan Payments Non - Recourse 64 REGARDING THE CITY OF SEAL BEACH A -1 Loan Payments Not Preference Proof 64 APPENDIX B DEFINITIONS B -1 Rent Restrictions, the Regulatory Agreement and APPENDIX C HISTORICAL AND the Agency Regulatory Agreement 64 FORECASTED PROJECT RECEIPTS AND Litigation 65 DISBURSEMENTS C -1 Risk of Taxability 65 APPENDIX D FORM OF OPINION OF BOND Conditions Which May Affect Borrower's Ability COUNSEL D -1 to Pay 65 • APPENDIX E APPRAISAL E -• Value of Project; Economic Feasibility 67 APPENDIX F FORM OF CONTINUING Competing Facilities 68 DISCLOSURE AGREEMENT F -1 Risks of Ownership of Real Property 68 APPENDIX G SPECIMEN MUNICIPAL BOND Environmental Risks 69 INSURANCE POLICY G -1 ii III No broker, dealer, salesman or other person has been authorized by the Issuer or the Underwriters to give III any information or to make any representations in connection with the offer or sale of the Series A Bonds other than as set forth herein and, if given or made, such information or representation must not be relied upon as having been authorized by the Issuer or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Series A Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. The information set forth in this Official Statement has been obtained from sources which are believed to be reliable, but it is not guaranteed as to the accuracy or completeness, and is not to be construed as a representation by the Borrower or the Issuer. The information and expressions of opinion stated herein are subject to change ' without notice. Neither the delivery of this Official Statement nor the sale of any of the Bonds implies that the information herein is correct as of any time subsequent to the date hereof. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Issuer, the Borrower, or the major participants in the Project. All summaries of the Bonds, the resolution authorizing their issuance, the Indenture and the other documents discussed herein are made subject to the provisions of such documents and do not purport to be complete statements of any or all of the provisions thereof. Reference is hereby made to the Bonds, said resolution, the Indenture and such other documents on file with the Trustee for further information. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their • responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption contained in such act. The Bonds have not been registered or qualified under the securities laws of any state. These securities have not been approved or disapproved by the Securities and Exchange Commission or any State Securities Commission nor has the Securities Exchange Commission or any State Securities Commission passed upon the accuracy or adequacy of this Official Statement. Any representation to the contrary is a criminal offense. III . _ • [THIS PAGE INTENTIONALLY LEFT BLANK] • • OFFICIAL STATEMENT III $6,750,000 _ Redevelopment Agency of the City of Seal Beach , Seal Beach Mobile Home Park Revenue Bonds Series 2000A INTRODUCTION This Official Statement, including the cover page and Appendices hereto, provides certain information concerning the sale and delivery of the Redevelopment Agency of the City of Seal Beach Mobile Home Park Revenue Bonds Series 2000A (the "Series A Bonds" or "Bonds "), in the initial aggregate principal amount of $6,750,000. . THE SERIES A BONDS ARE SUBJECT TO CERTAIN RISKS, INCLUDING THE RISK THAT THE PROJECT MAY NOT GENERATE NET OPERATING REVENUES SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE SERIES A BONDS. SEE THE SECTION HEREIN ENTITLED "RISK FACTORS" FOR A DISCUSSION OF SPECIAL RISK FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING THE INVESTMENT QUALITY OF THE SERIES A BONDS. General • The Bonds will be issued by the Issuer pursuant to an Indenture of Trust, dated as of December 1, 2000 (the "Indenture "), between the Issuer and Union Bank of California, N.A., as trustee (the "Trustee "). The proceeds of the sale of the Bonds will be used to fund a loan (the "Loan") to LINC Community Development Corporation, • a California non -profit public benefit corporation (the "Borrower ") pursuant to a Loan Agreement, dated as of December 1, 2000 (the "Loan Agreement ") among the Issuer, the Borrower and the Trustee. The Borrower will use the proceeds of the Loan to (i) finance the acquisition by the Borrower of certain real property constituting the Seal Beach Trailer Park located in the City of Seal Beach, California (the "Project ") and any structures, site improvements, facilities, and fixtures at the Project (the "Improvements "), (ii) fund the Series A Bonds Debt Service Reserve Fund, (iii) make a deposit to the Repair and Replacement Fund and the Borrower's operating account for the Project, and (iv) pay the bond insurance premium for the Series A Bonds and a portion of the costs of issuance of the Bonds. Additional funds to finance the acquisition of the Project at the time of delivery of the Series A Bonds will be provided by a bridge loan of the Issuer in the amount of $1,000,000. There is currently an application in process to replace this loan of the Agency with a subordinate low interest loan of the State Mobilehome Park • Resident Ownership Program ( "MPROP "). In the event the MPROP loan does not occur, then the Agency's bridge loan will convert to a long term loan. The Issuer will provide a separate loan in the amount of $985,000 and grants to the Borrower for improvements to the Project and rental assistance, repayment of which is on a subordinate basis to the Series A Bonds and the Agency's bridge loan or MPROP loan. The bridge loan and the rental subsidy loan are more completely described herein. See "THE PLAN OF FINANCING" and "ESTIMATED SOURCES AND USES OF FUNDS." The Borrower currently has no substantial assets other than its investment in the Project. See "THE BORROWER,— Operations." The Series A Bonds are special limited obligations of the Issuer, payable sdlely from and secured as to the payment of the interest on and the principal of and the redemption premium, if any, from Pledged Revenues (as hereinafter defined) and other funds and property as provided therefor in the Indenture. See "SECURITY FOR THE SERIES A BONDS" herein. "Pledged Revenues," in turn, consist primarily of the Net Operating Revenues of the III Project, the principal source of which is the monthly rental income for mobile home spaces (the "Spaces ") within 1 • the'Project. See "SECURITY FOR THE SERIES A BONDS" and "THE PROJECT" herein. THE SERIES A BONDS ARE NOT A DEBT OF THE ISSUER, ANY MEMBER OF THE ISSUER, THE STATE OF • CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS FOR ' PURPOSES OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION, NOR IN ANY EVENT SHALL THE SERIES A BONDS BE PAYABLE OUT OF FUNDS OR PROPERTIES OTHER THAN AS PLEDGED PURSUANT TO THE INDENTURE. The scheduled payment of principal of and interest on the Series A Bonds when due will be guaranteed under a bond insurance policy to be issued concurrently with the delivery of the Series A Bonds by ACA Financial Guaranty Corporation. See "BOND INSURANCE" herein. Pursuant to the Loan Agreement, the Issuer will agree to loan the proceeds of the Bonds to the Borrower (the "Loan") by causing such proceeds to be deposited with the Trustee and applied in accordance with the Indenture. Under the Loan Agreement, the Borrower is obligated to make payments to the Trustee at such times • and in such amounts as are required to enable the Trustee to pay the principal and premium, if any, of and interest on the Bonds. The obligations of the Borrower under the Loan Agreement and the Note (as defined in the Indenture) are non - recourse obligations of the Borrower secured by a Deed of Trust on the Project. See "THE LOAN AGREEMENT" and "SECURITY FOR THE SERIES A BONDS" herein. The Project to be acquired with the proceeds of the Bonds has been appraised by John P. Neet, MAI, Lake Elsinore, California as of October 6, 2000, at $7,750,000 based upon an income approach with support from a sales comparison approach and assuming use by a nonprofit corporation (see "THE PROJECT" and "APPENDIX E- Appraisal" herein). The Issuer, the Borrower and the Trustee will enter into a Regulatory Agreement and Declaration of Restrictive Covenants dated as of December 1, 2000 (the "Regulatory Agreement ") with respect to the operation 410 of the Project. Under the Regulatory Agreement, the Borrower is to rent not less than 20% of the Spaces in the Project to Very Low Income Residents (all as defined in the Regulatory Agreement). The monthly rental rate which the Borrower may charge some of the Very Low Income Residents is also restricted by the Regulatory Agreement, as well as the City Law and the Agency Regulatory Agreement discussed below. See "THE REGULATORY AGREEMENT," "THE PROJECT — Agency Assistance and Restrictions" and "RISK FACTORS — Valuation of Project; Economic Feasibility" herein. In addition to the Loan Agreement, the Issuer will enter into two separate loan arrangements with the Borrower. The first Loan Agreement is a Bridge Loan Agreement dated as of December 1, 2000 (the "Bridge Loan Agreement ") with the Borrower, pursuant to which the Issuer will make a loan (the "Issuer Bridge Loan ") to the • Borrower in the amount of $1,000,000. This loan is payable subordinate to the Series A Bonds and it is due one year from the date of delivery of the Bonds. The Borrower expects the bridge loan to be substituted with an MPROP loan in the amount of $1,000,000 (the "MPROP Loan") which is currently under application. The Borrower expects to hear from the State in early December 2000 whether the MPROP Loan will be approved and the MPROP Loan could be funded in mid -2001. In the event that the MPROP Loan is not funded, then the Issuer Bridge Loan will convert to a subordinate long-term loan amortized over 25 years at an interest rate of 3% per annum which will have interest payments deferred for 5 years. The Issuer is providing a second loan (the "Issuer Loan") in the amount of $980,000 pursuant to a Loan and Grant Agreement dated as of December 1, 2000 (the "Grant Agreement ") for the purposes of paying a portion of the acquisition price of the Project, and to make a deposit to the Rental Assistance Fund. In consideration of the Grant Agreement, the Borrower will enter into a Regulatory Agreement, dated as of December 1, 2000 (the "Agency Regulatory Agreement ") with the Issuer, which will require that, among other restrictions, for the 25 -year term of the Agency Regulatory Agreement, 20% of the resident households in the Project be Very Low Income Households and 60% of the resident households in the Project be Moderate Income Households, all as more fully set forth in such agreement. The Agency Regulatory Agreement contains additional restrictions on rents that may be charged for spaces in the Project and requires the • 2 Borrower to establish and maintain the Rental Assistance Fund. See "THE PROJECT — Agency Assistance and Restrictions" herein. The obligation of the Borrower to repay the Issuer Loan under certain circumstances (such • as following a violation by the Borrower of the terms of the Issuer Loan Agreement or the Agency Regulatory Agreement), will be secured by a Grant Deed of Trust, dated as of December 1, 2000 by the Borrower for the benefit of the Agency, and a Security Agreement (collectively, the "Agency Deed of Trust "). The Issuer and the Borrower will, however, enter into a Subordination Agreement with the Trustee, whereby the Issuer will subordinate the Agency Deed of Trust and the Agency Regulatory Agreement to the Deed of Trust securing the repayment of the Loan and the Regulatory Agreement, and the Agency will be granted various cure rights in the event of a default under the Bond Loan Documents, as defined therein. See "THE PROJECT — Agency Assistance and Restrictions" herein. The Issuer and the City have no obligation whatsoever with respect to the repayment of the Bonds or the Loan. The Grant Agreement also provides a subsidy to be given the Borrower by the Issuer. Approximately $273,358 will be initially deposited into the Rental Assistance Fund and will be available to bridge the initial rent increase within the Project for the first three years of operation, the Issuer will also provide an annual rental subsidy beginning in the second year up to approximately $120,000 for the next twelve years thereafter. Amounts offered under the Grant Agreement as rental subsidy are not pledged to the repayment of the Series A Bond. However, it is possible that without the rental assistance of the Issuer, rental income would not be sufficient to cover debt service on the Senes A Bonds without raising rental rates beyond the expectation of the current residents. The summaries and references to documents, statutes, reports and other instruments referred to herein do ' not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each document, statute, report or instrument. Capitalized terms not defined elsewhere in this Official Statement or in Appendix B hereto have the meanings assigned to such terms in the Indenture. • Forward Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute "forward - looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, "« expect, "« estimate, "« project, "« budget or other similar words. Such forward - looking statements include, but are not limited to, certain statements contained in the information under the caption "THE PROJECT — Projected Operating Results." The achievement of certain results or other expectations contained in such forward - looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. The Issuer does not plan to issue any updates or revisions to those forward - looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur, other than as described under "CONTINUING DISCLOSURE" herein. 11111 3 THE PLAN OF FINANCING • The proceeds of the Bonds will be used to fund the Loan to the Borrower pursuant to the Loan Agreement. The proceeds of the Loan will be used by the Borrower to acquire the Project and to make certain deposits required tinder the Indenture. The Borrower's acquisition of the Project is pursuant to a Purchase and Sale Agreement dated November 21, 2000 for an acquisition price of $7,450,000. The proceeds of the Issuer Bridge Loan and the Issuer Loan, together with other funds provided under the Grant Agreement will be used to pay a portion of the costs of the acquisition by the Borrower of the Project, and to make a deposit to the Rental Assistance Fund. The Project consists of certain real property and the Improvements thereon (which consist of the structures, site improvements, facilities and fixtures at the Project), commonly known as the Seal Beach Trailer Park, located within the City. The Project does not include the mobile homes located on the Project site. See "THE PROJECT." ESTIMATED SOURCES AND USES OF FUNDS Following are the estimated sources and uses of funds for the financing. Issuer Loan Sources Series A Bonds Bridge Loan and Grant Total Principal Amount of Series A Bonds $6,750,000.00 $6,750,000.00 Proceeds of the Issuer Loan $985,000.00 985,000.00 Proceeds of Issuer Bridge Loan 1,000,000.00 1,000,000.00 Issuer Grant 294,531.58 294,531.58 Total Sources of Funds $6,750,000.00 .$1,000,000.00 $1,279,531.58 $9,029,531.58 Uses Original Issue Discount 85,331.50 85,331.50 • Total Underwriter's Discount 133,293.37 133,293.37 Costs of Issuance 114,107.09 97,735.21 211,842.30 . Gross Bond Insurance Premium 213,807.29 213,807.29 Deposit to Debt Service Reserve Fund 448,051.83 448,051.83 Deposit to Acquisition Fund 5,655,668.72 .885,892.91 908,438.37 7,450,000.00 Deposit to Capital Replacement Fund 131,450.00 131,450.00 Deposit to Working Capital Fund 7,397.29 7,397.29 Non -Profit Acquisition Fee 75,000.00 75,000.00 Deposit to Rental Assistance Fund 273.358.00 273,358.00 Total Uses of Funds $6,750,000.00 $1,000,000.00 $1,279,531.58 $9,029,531.58 Source: Kinsell, Newcomb, De Dios, Inc. • 4 DEBT SERVICE REQUIREMENTS • The following table sets forth the annual debt service requirements for the Series A Bonds, assuming no redemptions other than Sinking Fund redemptions. Series A Bonds Debt Service Schedule December 15 Principal Interest Total Debt Service 2001 $80,000.00 $368,051.83 $448,051.83 2002 75,000.00 371,090.00 446,090.00 2003 - 80,000.00 367,940.00 447,940.00 2004 80,000.00 364,500.00 444,500.00 2005 _ 85,000.00 360,980.00 445,980.00 2006 90,000.00 357,155.00 447,155.00 2007 95,000.00 352,655.00 447,655.00 2008 100,000.00 347,905.00 447,905.00 2009 105,000.00 342,905.00 447,905.00 2010 110,000.00 337,445.00 447,445.00 2011 115,000.00 331,725.00 446,725.00 2012 120,000.00 325,745.00 445,745.00 2013 125,000.00 319,505.00 444,505.00 • 2014 130,000.00 313,005.00 , 443,005.00 2015 140,000.00 306,115.00 446,115.00 • 2016 145,000.00 155,000.00 298,555.00 443,555.00 2017 290,652.50 445,652.50 2018 165,000.00 282,127.50 - 447,127.50 2019 175,000.00 272,970.00 447,970.00 2020 180,000.00 263,170.00 443,170.00 2021 195,000.00 253,000.00 448,000.00 2022 205,000.00 241,787.50 446,787.50 2023 215,000.00 230,000.00 445,000.00 2024 230,000.00 217,637.50 447,637.50 2025 240,000.00 204,412.50 444,412.50 " 2026 255,000.00 190,612.50 445,612.50 2027 270,000.00 175,950.00 445,950.00 2028 285,000.00 160,425.00 445,425.00 2029 300,000.00 144,037.50 444,037.50 2030 320,000.00 126,787.50 446,787.50 2031 335,000.00 108,387.50 443,387.50 2032 355,000.00 89,125.00 444,125.00 2033 375,000.00 68,712.50 443,712.50 2034 400,000.00 47,150.00 447,150.00 2035 420.000.00 24.150 00 - 444.150.00, Total $6,750,000.00 $8,856,371.83 $15,606,371.83 III .. 5 THE SERIES A BONDS General • The Series A Bonds will be delivered in fully registered form only and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the Series A Bonds. Ownership interests in the Series A Bonds may be purchased, in denominations of $5,000, or any integral multiple thereof, in book entry form only. See "THE SERIES A BONDS - Book -Entry System." The Series A Bonds will mature on the respective dates and in the respective principal amounts, and will bear interest at the respective rates, all as set forth on the cover page of this Official Statement. The Series A Bonds will be dated their date of delivery. Interest on the Series A Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be payable semiannually on June 15 and December 15 of each year, commencing June 15, 2001 (each such date an "Interest Payment Date "), by check or draft mailed on such Interest Payment Date to the Owners of Series A Bonds as they appear on the registration books of the Trustee, or, upon the written request of a Bondowner of at least $1,000,000 in principal amount of Bonds received -by the Trustee not later than fifteen days prior to the Record Date for such payment, by wire transfer to an account in the United States designated by such Bondowner. Each Series A Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof to which interest has been duly paid or provided for, unless a Series A Bond is authenticated before the first Record Date, in which case interest will accrue from the Delivery Date, or unless authenticated as of a date during the period from the Record Date to and including the next Interest Payment Date, in which case it shall bear interest from such Interest Payment Date. Each Series A Bond shall bear interest on overdue principal at the rate then in effect on such Series A Bond. In the event of any default in the payment of interest, such defaulted interest shall be payable to the Bondowner of such Bond on a special Record Date for the payment of such defaulted • interest, which date shall be established by the Trustee, in accordance with the Indenture. Principal and premium, if any, due on the Series A Bonds shall be paid only upon surrender of such Series A Bond at the office designated by the Trustee. Redemption Optional Redemption. The Series A Bonds maturing after December 15, 2011 are subject to optional redemption by the Issuer, at the request of the Borrower, in whole, or in part from among maturities as may be directed by the Issuer, at the request of the Borrower, on any date on or after December 15, 2011, at the following Redemption Prices (expressed as a percentage of the principal amount to be redeemed) subject to the availability of funds for such purpose on the redemption date, plus accrued interest thereon to the date fixed for redemption, during the following respective periods: Redemption Period (dates inclusive) Redemption Price December 15, 2011 through December 14, 2012 102% December 15, 2012 through December 14, 2013 101% December 15, 2013 and thereafter 100% Such redemption will be effective only if, on the date of redemption, the Trustee holds money sufficient to pay the principal of, accrued interest on and any premium due on all Outstanding Series A Bonds to be redeemed. • 6 Special Redemption Generally. In accordance with and for purposes of the Indenture, the Series A Bonds shall be subject to redemption, at the option of the Issuer, at the request of the Borrower, prior to the stated • maturities thereof on a pro rata basis, in whole or in part at any time, on the earliest practicable date for which notice of redemption can be given as provided in the Indenture at a Redemption Price equal to 100% of the Principal Amount of such Series A Bonds or portions thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium, in a Principal Amount having an aggregate Redemption Price equal to the amount of moneys which are deposited in or transferred to the Redemption Fund, (i) from any Net Proceeds or any Prepayment made by the Borrower in order to fully retire the Loan in connection with a condemnation or casualty loss which results in Net Proceeds, and (ii) from excess amounts in the Series A Bonds Debt Service Reserve Fund resulting from a reduction in the Series A Bonds Debt Service Reserve Fund Requirement after giving effect to any special redemption under the aforementioned provisions of the Indenture. The Trustee shall apply any such amounts described above in accordance with applicable provisions of the Indenture from time to time as directed by a certificate of a Borrower's Representative, with notice to the Issuer; provided, however, that (i) such amount to be applied to such redemption or purchase shall be rounded to the next lower authorized denomination, and (ii) unless otherwise directed by a certificate of a Borrower's Representative, with notice to the Issuer, no such redemption shall be effected unless the total amount to be applied to redeem Series A Bonds on such date shall be at least $25,000. Mandatory Sinking Fund Redemption. The Series A Bonds maturing on December 15, 2008 are also subject to mandatory sinking fund redemption by lot on December 15 in each year beginning December 15, 2006, at a redemption price equal to 100% of the principal amount to be redeemed, together with accrued interest thereon to the redemption date, without premium, as follows: Series A Bonds Maturing on December 15, 2008 • • • Sinking Fund Redemption Date Principal Amount (December 15) To Be Redeemed 2006 , $90,000 2007 95,000 2008 (maturity) 100,000 The Series A Bonds maturing on December 15, 2013 are also subject to mandatory sinking fund redemption by lot on December 15 in each year beginning December 15, 2009, at a redemption price equal to 100% of the principal amount to be redeemed, together with accrued interest thereon to the redemption date, without premium, as follows: Series A Bonds Maturing on December 15, 2013 Sinking Fund Redemption Date Principal Amount (December 15) To Be Redeemed 2009 $105,000 2010 , 110,000 2011 115,000 2012 120,000 2013 (maturity) 125,000 The Series A Bonds maturing on December 15, 2035 are also subject to mandatory sinking fund redemption • by lot on December 15 in each year beginning December 15, 2021, at a redemption price equal to 100% of the 7 principal amount to be redeemed, together with accrued interest thereon to the redemption date, without premium, as follows: Series A Bonds Maturing on December 15, 2035 11110 Sinking Fund Redemption Date Principal Amount (December 15) To Be Redeemed 2021 $195,000 2022 205,000 2023 215,000 2024 230,000 2025 240,000 2026 255,000 2027 270,000 • 2028 285,000 2029 300,000 2030 320,000 2031 335,000 " 2032 355,000 2033 375,000 - 2034 400,000 2035 (final maturity) 420,000 Redeemed Bonds as Satisfaction of Sinking Fund Installments. Upon any purchase or redemption of Series A Term Bonds (other than by application of Sinking Fund Installments) an amount equal to the applicable Redemption Prices thereof shall be credited towards a part of all of any one or more of the above - listed Sinking Fund • Installments, as directed by a certificate of a Borrower Representative, with a copy to the Issuer or, failing such direction by November 15 of each year, toward such Sinking Fund Installments pro rata. Such applicable Redemption Prices shall be the respective Redemption Prices which would be applicable upon the redemption of such Bonds from the respective Sinking Fund Installments on the due dates thereof. The portion of any such Sinking Fund Installment remaining after the deduction of any such amounts credited toward the same (or the original amount of any such Sinking Fund Installment if no such amounts shall have been credited toward the same) shall constitute the unsatisfied balance of such Sinking Fund Installment for the purpose of the calculation of Principal Installments due on a future date. Selection of Series A Bonds to be Redeemed by Lot. • Except as may be otherwise provided in the Indenture, in the event of redemption of less than all of the Outstanding Series A Bonds of like maturity, the Trustee shall assign to each such Outstanding registered Series A Bond of the maturity to be redeemed a distinctive number for each $5,000 of the Principal Amount of such Series A Bond and chail select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers assigned to such Series A Bonds as many numbers as, at $5,000 for each number, shall equal the Principal Amount of such Series A Bonds to be redeemed. The Series A Bonds to be redeemed shall be the Series A Bonds to which were assigned numbers so selected; provided, however, that only so much of the Principal Amount of each such registered Series A Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. For - purposes of this paragraph, Series A Bonds which have theretofore been selected by lot for redemption shall not be deemed Outstanding. Notice of Redemption. When the Trustee receives notice from the Issuer of its election or direction to redeem Senes A Bonds pursuant to the Indenture, and when redemption of Series A Bonds is required pursuant to the .Indenture, the Trustee shall give notice, which notice shall specify the maturities of the Series A Bonds to be • 8 redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable, whether such redemption is conditioned upon the availability of funds for such purpose on the redemption date (in • the case of optional redemption and special redemption pursuant to the Indenture) and, if less than all of the Series A Bonds of any maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Series A Bonds so to be redeemed, and, in the case of Series A Bonds to be redeemed in part only, such notice shall also specify the respective portions of the Principal Amount thereof to be redeemed. Such notice shall further state that on such date there shall become due and payable upon each Series A Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portion of the Principal Amount thereof in the case of Series A Bonds to be redeemed in part only, together with interest accrued on such Series A Bonds to.the redemption date, and that from and after such date interest on such Series A Bonds shall cease to accrue and be payable; provided, that, if the redemption is conditioned upon funds being available therefor no later than the opening of business on the Business Day prior to the redemption date, the notice shall so state. The Trustee shall mail a copy of such notice, by first class mail, postage prepaid, not less than thirty (30) days (provided, however, in the case of special redemption described in the Indenture, such notice shall be given not less than ten (10) days) nor more than forty-five (45) days before the redemption date, to the Owners 6f any Series A Bonds or portions of Series A Bonds which are to be redeemed, at their last addresses, if any, appearing upon the registration book. Failure to give such notice which respect to any Series A Bonds, or any defect therein, shall not affect the validity of the proceedings for redemption of any other Series A Bonds. Purchase of Series A Bonds In lieu of redemption of Series A Bonds as provided in the Indenture, amounts held by the Trustee for such redemption will, at the written request of the Borrower set forth in a certificate of a Borrower Representative, with a copy to the Issuer, received by the Trustee prior to the selection of Series A Bonds for redemption, be applied by the Trustee to the purchase of Series A Bonds at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the Borrower may in its discretion direct, but not to exceed the • redemption price which would be payable if such Series A Bonds were redeemed. The aggregate principal amount of Series A Bonds of the same maturity purchased in lieu of redemption may not exceed the aggregate principal amount of Series A Bonds of such maturity which would otherwise be subject to such redemption. Book-Entry System The Series A Bonds will be initially delivered in the form of one fully registered Series A Bond for each of the maturities of the Series A Bonds, registered in the name of Cede & Co., as nominee of DTC, as registered owner of all the Series A Bonds. The Series A Bonds will be retained and immobilized in the custody of DTC. So long as the Series A Bonds are held in book -entry only form, all references herein to the holders or owners of the Bonds shall mean DTC, and shall not mean beneficial owners of the Series A Bonds. DTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agent" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds securities that its participants (the "Participants ") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct 9 Participant, either directly or indirectly (the "Indirect Participants "). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. III Purchases of the Series A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series A Bonds on DTC's records. The ownership interest of each actual purchaser of each Series A Bond (the "Beneficial Owner ") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series A Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series A Bonds except in the event that use of the book -entry system for the Series A Bonds is discontinued. To facilitate subsequent transfers, all Series A Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Series A Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series A Bonds. DTC's records reflect only the identity of the Direct Participants - to whose accounts such Series A Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices will be sent by the Trustee to Cede & Co. If less than all of the Series A Bonds are • being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Any failure of DTC to advise any Participant, or of any Participant to notify any Beneficial Owner, of any notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the Series A Bonds called for redemption or of any other action premised on such notice. THE ISSUER, THE TRUSTEE AND THE UNDERWRITERS HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS OF THE RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO BENEFICIAL OWNERSHIP, OF INTERESTS IN THE SERIES A BONDS. Neither DTC nor Cede & Co. will consent or vote with respect to the Series A Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the Series A Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. _ Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name ", and will be the responsibility of such Participant and not of DTC, the Trustee, or the Issuer, subject to any statutory or regulatory requirements as may be m effect from time to time. Payment of principal and mterest to DTC is the responsibility of the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of III 10 DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect • Participants. THE ISSUER, THE TRUSTEE AND THE UNDERWRITERS CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS TO DTC PARTICIPANTS, OR THAT PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE SERIES A BONDS RECEIVED BY DTC OR ITS NOMINEES AS THE REGISTERED OWNER, ANY REDEMPTION NOTICES OR OTHER NOTICES TO THE BENEFICIAL OWNERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL SERVICE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. In the event the Issuer and the Trustee determine not to continue the DTC book -entry only system or DTC determines to discontinue its services with respect to the Series A Bonds and the Issuer does not select another qualified securities depository, the Issuer and the Trustee will deliver one or more Series A Bonds in such principal amount or amounts, in denominations of $5,000 or any integral multiple thereof, and registered in whatever name or names, as DTC shall designate. In such event, transfers and exchanges of Series A Bonds will be governed by the provisions of the Indenture. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer and the Underwriters believe to be reliable, but they take no responsibility for the accuracy thereof. SECURITY FOR THE SERIES A BONDS • The Series A Bonds are special limited obligations ofthe Issuer, payable solely from Pledged Revenues (as hereinafter defined) and secured as to the payment of the interest on and the principal of and the redemption • premiums, if any, on the Series A Bonds in accordance with their terms and the terms of the Indenture, from Pledged Revenues and other funds as provided therefor in the Indenture. The Series A Bonds are not a debt of the Issuer, the City, the State of California or any of its political subdivisions, for purposes of any constitutional or statutory debt limitation or restriction, nor in any event shall the Series A Bonds be payable out of funds or properties other than as described in the preceding sentence. Operating Revenues The Series A Bonds are secured principally by a pledge of, and are payable ,principally from, Operating Revenues of the Project. "Operating Revenues" include all rents, income, receipts and other revenues derived by the Borrower arising from the operation ofthe Project, including rental income from mobile home spaces, determined in accordance with Generally Accepted Accounting Principles, but not including resident security deposits. The Borrower will deposit to the Trustee `filet Operating Revenues" which include all Operating Revenues less Operation and Maintenance Costs, consisting of the reasonable and necessary costs and expenses of operating the common areas ofthe Project and of managing and repairing and other expenses necessary to maintain and preserve the common areas of the Project in good repair and working order, determined in accordance with Generally Accepted Accounting Principles. See "APPENDIX B - Definitions." Under the Regulatory Agreement, the Borrower is to rent not less than 20% of the Spaces in the Project to Very Low Income Residents (all as- defined in the Regulatory Agreement). The monthly rental rate which the Borrower may charge Very Low Income Residents is also restricted by the Regulatory Agreement. See "THE REGULATORY AGREEMENT" herein. Under the Agency Regulatory Agreement, the Borrower is to rent not less than 20% of the Spaces in the Project to Very Low Income Households and an additional 60% of the Spaces in the Project to include Moderate Income Households, and rental rates and increases in rental rates for all the spaces • in the Project are restricted. See "THE PROJECT — Agency Assistance and Restrictions" herein. See "THE 11 REGULATORY AGREEMENT" herein. These provisions may limit the Net Operating Revenues available to pay debt service on the Bonds. See "RISK FACTORS" herein. Pledge • g Pursuant to the Indenture, the following are pledged to the payment-of the principal of, Redemption Price, if any, and interest on the Series A Bonds: (i) the Pledged Revenues, and (ii) the rights, title and interest of the Issuer in the Loan, the Loan Agreement (other than certain specified rights reserved to the Issuer) and the Deed of Trust, all Funds and Accounts created under the Indenture for the benefit of the Series A Bonds, and any other property pledged to the payment of the Series A Bonds in the granting clauses of the Indenture. Pursuant to the "granting clauses" referred to in the Indenture, the Issuer pledges and assigns to the Trustee, for the benefit of the Series A Bonds, the "Series A Bonds Trust Estate," which consists of all proceeds, Funds, Accounts, Revenues, Prepayments, the Loan, the Loan Agreement (other than certain rights to fees and indemnity reserved by the Issuer), the Deed of Trust, rights, interests, collections, and other property pledged to the payment of the Series A Bonds pursuant to the Indenture. "Pledged Revenues" by definition consist of the Revenues, but excluding therefrom amounts on deposit in the Repair and Replacement Fund, the Administration Fund, the Rental Assistance Fund, the Resident Services Fund and the Rebate Fund. "Revenues," in tum, by definition consist of (i) Operating Revenues; (ii) Prepayments; (iii) the proceeds of any insurance, including the proceeds of any self - insurance covering loss relating to the Project; provided, however, that the Net Proceeds of any public liability insurance, casualty insurance or title insurance required to be maintained pursuant the Loan Agreement will be applied as specified in the Loan Agreement and the Indenture; (iv) all amounts on hand from time to time in the funds and accounts established by the Trustee under the Indenture; (v) all proceeds of rental interruption insurance policies, if any, carried with respect to the Project pursuant to the Loan Agreement; (vi) any proceeds derived from the exercise of remedies under the Deed of Trust; and (vii) any additi6nal property that may from time to time, by delivery or by writing of any kind, be subjected to • the lien of the Indenture by the Issuer or by anyone on its behalf, subject only to the provisions of the Indenture. The Loan Agreement and the Note Pursuant to the Loan Agreement, the Issuer will make the Loan for the benefit of the Borrower' in an amount equal to the aggregate principal amount of the Bonds. The Borrower's obligation to repay the Loan will be evidenced by the Note. The Borrower is obligated under the Loan Agreement, notwithstanding the schedule of payments under the Loan Agreement and the Note, to make such payments at such times as shall be sufficient, when added to the amounts otherwise available under the Indenture, to pay the principal and premium, if any, of and interest on the Bonds when due, whether at maturity, by optional or mandatory redemption or by acceleration. Under the Loan Agreement the Borrower agrees to pay, in repayment of the Loan, all Net Operating Revenues for the immediately preceding calendar month to the Trustee until the principal of, premium (if any) and interest on the Bonds shall have been paid or provision for payment shall have been made. As security for the repayment of the Loan, the Borrower grants the Issuer a security interest in the Project pursuant to the terms of the Deed of Trust. See "THE LOAN AGREEMENT" herein. The Project to be acquired with the proceeds of the Bonds has been appraised by John P. Neet, MAI, Lake Elsinore, California, as of October 6, 2000, at $7,750,000 based upon an income approach with support from a sales comparison approach and assuming use by a nonprofit corporation (see "THE PROJECT' and "APPENDIX E- Appraisal" herein). • 12 Rental Assistance • Pursuant to the Grant Agreement, the Agency has agreed to provide amounts at the date of delivery of the Senes A Bonds and annually thereafter as rental assistance. Initially, $273,358.00 will be deposited in the Rental Assistance Fund and will be available to bridge the initial rent increases. Beginning in the second year, the Agency will annually provide rental assistance up to a total of $120,000 for the next twelve years. Although these funds are not pledged directly to the repayment of the Series A Bonds, it is likely that the Borrower would have to raise rental rates beyond the expectations of the current tenants if there was no such rental assistance. Borrower Obligations Non - Recourse None of the Borrower's directors, officers, employees or agents has or is intended to have any liabilities under or in respect of the Loan Agreement, the Indenture, the Note, the Deed of Trust, the Regulatory Agreement, or any of the other documents or transactions contemplated by any of them. See "RISK FACTORS." , Reserve Fund For a discussion of the Reserve Fund, see "THE INDENTURE - Series A Bonds Debt Service Reserve Fund." The Borrower may invest all or substantially all of the moneys held in the Series A Bonds Debt Service Reserve Fund in a guaranteed investment contract or other investment which satisfies the requirements of clause (j) or (k) of the definition "Qualified Investments" in the Indenture. See "APPENDIX B - Definitions." The initial investment agreement will be provided by FGIC Capital Market Services, Inc., a Delaware Corporation. BOND INSURANCE The following information has been furnished by ACA Financial Guaranty Corporation ( "ACA ") for use • in the Official Statement. Reference is made to Appendix G for a specimen of ACA's policy. All references to "Bonds" refer only to the Series A Bonds. Payment Pursuant to Bond Insurance Policy ACA has made a commitment to issue a bond insurance policy (the "Policy ") relating to the Series A Bonds effective as of the date of issuance of the Series A Bonds. Under the terms of the Policy, ACA unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Issuer to the trustee or paying agent (as designated in the documentation providing for the issuance of and securing the Series A Bonds) for the Series A Bonds, for the benefit of any owner, or, at the election of ACA, directly to such owner, that portion of the principal of and interest on the Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Policy). ACA will make such payments to or for the benefit of each owner on the later of the day on which such principal and interest becomes Due for Payment or within one Business Day following the Business Day on which ACA shall have received Notice of Nonpayment (as such terms are defined in the Policy). The Policy is non - cancellable for any reason. The Policy will insure an amount equal to (i) the principal of (either at the stated maturity or pursuant to a mandatory sinking fund payment) and interest on, the Series A Bonds as such payments shall become Due for Payment but shall not be so paid by reason of Nonpayment by the Issuer (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than pursuant to a mandatory sinkmg fund payment, the payments guaranteed by the Policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the Series A Bonds pursuant to a final non - appealable order of a court of competent • 13 jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference "). The Policy does not insure against loss of any redemption premium which may at any time be payable with • respect to any Series A Bond. The Policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Series A Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. The Policy also does not insure against nonpayment of principal of or interest on the Series A Bonds resulting from the insolvency, negligence or any other act or omission of the trustee or paying agent for the Series A Bonds. . Upon receipt of telephonic or electronic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by ACA from the trustee or paying agent or any owner of a Series A Bond the payment of an insured amount for which is then due, that such required payment has not been made, ACA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with the trustee or paying agent, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such Series A Bonds or presentment of such other proof of ownership of the Series A Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the Series A Bonds as are paid by ACA, and appropriate instruments to effect the appointment of ACA as agent for such owners of the Series A Bonds in any legal proceeding related to payment of insured amounts on the Series A Bonds, such instruments being in a form satisfactory to ACA, ACA shall disburse to such owners or the paying agent payment of the insured amounts due on such Series A Bonds, less any amount held by the paying agent for the payment of such insured amounts and legally available therefor. ACA's Rights Under the Financing Documents Under the financing documents, ACA has certain rights to consents, notices and to control certain III procedures, including, without' limitation, the right to control proceedings, without the consent of bondholders, following an event of default under the financing documents. Reference is made to the provisions of the financing documents for a more complete description of ACA's fights thereunder. In the event that ACA were to become insolvent, any claims arising under the Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. ACA Financial Guaranty Corporation ACA is domiciled in the State of Maryland and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands of the United States and the Territory of Guam. State laws regulate the amount of both the aggregate and - individual risks that may be insured, the payment of dividends by ACA, changes in control and transactions among affiliates. Additionally, ACA is required to maintain contingency reserves on its liabilities in certain amounts and for certain periods of time. As of September 30, 2000, ACA had, on an unaudited basis, admitted assets of $183,333,487, total liabilities of $100,238,842 and total capital and surplus of $83,094,645, as determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. • 14 Copies of ACA's year -end financial statements prepared in accordance with statutory accounting practices • are available without charge from ACA. The address of ACA is 140 Broadway, 47th Floor, New York, New York 10005. The telephone number of ACA is 888/427 -2833. Fitch and Standard & Poor's Ratings Service rate the financial strength of ACA "A." Each rating of ACA should be evaluated independently. The rating reflects the rating agency's current assessment ofthe creditworthiness of ACA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above rating may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the Series A Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the Series A Bonds. ACA does not guaranty the market price of the Series A Bonds nor does it guaranty that the ratings on the Series A Bonds will not be revised or withdrawn. OTHER THAN WITH RESPECT TO INFORMATION CONCERNING ACA FINANCING GUARANTY CORPORATION ( "ACA ") CONTAINED UNDER THE CAPTION "BOND INSURANCE" HEREIN AND THE SPECIMEN BOND INSURANCE POLICY IN APPENDIX G HERETO, NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY ACA AND ACA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) THE ACCURACY OR. COMPLETENESS OF SUCH INFORMATION; (II) THE VALIDITY OF THE SERIES A BONDS, OR (III) THE TAX EXEMPT STATUS OF THE INTEREST ON THE SERIES A BONDS. THE INDENTURE The following is a summary of certain provisions of the Indenture relevant to the Series A Bonds. The summary does not purport to be complete and is qualified in its entirety by reference to the Indenture which is available from the Trustee upon request, and to Appendix B for the definition of certain terms used herein. Any • capitalized terms not otherwise defined herein or in Appendix B are as defined in the Indenture. Project Fund The Issuer will establish and maintain a special fund designated as the Project Fund (the "Project Fund "), which shall be held by the Trustee. Amounts in the Project Fund will be expended and applied only to fund the Loan. See "Application of Bond Proceeds," above. On the Closing Date, the Trustee will pay out moneys in the Project Fund for the purpose of making the Loan, upon receipt by the Trustee of a written direction of the Issuer signed by an Authorized Officer. Cost of Issuance Fund The Trustee will establish, maintain and hold in trust a separate fund designated as the "Cost of Issuance Fund." Moneys in the Cost of Issuance Fund shall be applied to the payment of Cost of Issuance, upon receipt of an Officer's Certificate stating the person to whom and the purpose for which each payment is to be made, and the amount of such payment. Upon receipt of an Officer's Certificate stating that the Cost of Issuance have been fully paid and in any event within six months of the Closing Date, the Trustee shall transfer any remaining balance to the Project Fund or to the Revenue as directed by such Officer's Certificate, and such Fund shall be closed. Deposits Pursuant to the Loan Agreement, the Issuer is to cause the Borrower to collect and deposit or cause to be collected and deposited with the Trustee, not later than the thirteenth (13th) day of each month, commencing January 13, 2001, all Net Operating Revenues from the prior month and not otherwise remitted in the prior month, • and to forward promptly to the Trustee statements of each amount deposited. The Trustee will notify the Issuer and 15 the Oversight Agent in the event that Net Operating Revenues have not been deposited by the thirteenth (13th) day of each month. The Trustee will be accountable only for moneys actually so deposited or held. All Net Operating • Revenues will be deposited for credit to the Revenue Fund. All Prepayments and Net Proceeds with respect to the • Loan will be transferred to the Senes A Redemption Fund. Revenue Fund The Revenue Fund will be held by the Trustee for the benefit of the Series A Bonds. All interest and other income from time to time received from the deposit of moneys in the Revenue Fund will be retained m such fund and applied pursuant to the Indenture. On or before the third Business Day preceding the fifteenth day of each month, the Trustee is to provide written notice to the Issuer and the Oversight Agent as to the amount deposited in the Revenue Fund, the amount of the required deposits, and whether the deposited amount is insufficient to satisfy - the required deposit to the Series A Bonds Debt Service Fund. On or before the Business Day preceding the fifteenth day of each month (but only on the 15th day of the last calendar month of each fiscal year in the case of clauses (j) and (k) below), the Trustee will withdraw from the Revenue Fund and transfer to the following Funds the amounts indicated in the following tabulation, in the following order of priority, or so much thereof as remains after first making all prior transfers: (a) into the Series A Bonds Debt Service Fund, an amount equal to one -sixth of the interest due on the Series A Bonds on the next Interest Payment Date, an amount equal to one - twelfth of the principal or mandatory sinking fund payment due on the Series A Bonds on the next Principal Payment Date, and an amount due on the next redemption date on the Series A Bonds to be redeemed (other than pursuant to mandatory sinking fund redemption); (b) into the Series A Bonds Debt Service Reserve Fund, the amount, if any, needed to increase • the balance therein to the Series A Bonds Debt Service Reserve Fund Requirement; • (c) into the Rebate Fund, the amount, if any, required to be deposited therein pursuant to the Indenture; (d) into the General Account of the Administration Fund (i) the amount, if any, necessary to pay or provide for one - twelfth of the ordinary fees and expenses of the Fiduciaries, including expenses in connection with the purchase or redemption of any Bonds, all as provided and contemplated in the annual - budget filed by the Borrower pursuant to the Loan Agreement; and (ii) an amount equal to one - twelfth of the Oversight Agent Fee and Program Administrator Fee and other Fees and Charges, if any, all as provided and contemplated in the annual budget filed by the Borrower pursuant to the Loan Agreement (any fees and expenses of the Fiduciaries, Oversight Agent or Program Administrator above and beyond the amount contemplated in the annual budget filed by the Borrower pursuant to the Loan Agreement will be paid from the Surplus Fund); • (e) into the Borrower Administration Fee Account ofthe Administration Fund an amount equal to the Administration Fee as such amount is set forth in writing from the Borrower to the Trustee, which Administration Fee is authorized under the Indenture, less any amounts already paid to or retained by the Borrower in respect of the Administration Fee pursuant to the Indenture, and any such amounts so deposited to be paid to the Borrower on the first day of each month in increments equal to 176 of the amount then on deposit; (f) into the Repair and Replacement Fund, the amount necessary, if any, to bring the amount on deposit therein up to $78,125, plus any additional amount identified in the most recent physical needs assessment conducted with respect to the Project pursuant to the Loan Agreement less any amount spent • for items listed on said physical needs assessment; 16 (g) commencing January 15, 2001, into the General Account of the Administration Fund, an amount equal to one - twelfth of the Issuer Annual Fee plus any amount otherwise required to be deposited • under this clause (j) in any prior month but not so deposited; (h) only on the 15th day of the last calendar month of each Bond Year, after making all of the foregoing transfers into the Operating Reserve Fund, the amount necessary, if any, to bring the amount on deposit therein up to the then Operating Reserve Fund Requirement; provided that the amount to be transferred to the Operating Reserve Fund pursuant to this clause (h) in any month shall not exceed one- half (1/2) of any amounts remaining in the Revenue Fund following the transfers for such month pursuant to the preceding clauses (a) through and including (g) unless moneys have been withdrawn from the Operating Reserve Fund to make transfers to the Series A Bonds Debt Service Fund pursuant to the Indenture, in which event all moneys remaining in the Revenue Fund shall be transferred to the Operating Reserve Fund until such transfers equal the amount withdrawn and transferred to the Series A Bonds Debt Service Fund; and (i) only on the 15th day of the last calendar month of each Bond Year, after making all of the foregoing transfers, into the Surplus Fund, the amount remaining in the Revenue Fund, which is thereafter transferred to the Rental Assistance Fund, as provided in the Indenture. Notwithstanding the foregoing, so long as the Borrower has monthly Net Operating Revenues that are at least equal to said month's portion of items (a) through (g) and (i) above, then the Borrower may retain from Net Operating Income for such month the Administration Fee for such month. . _ In the event the deposit to the General Account of the Administration Fund required by subsection (i) above for the Issuer Annual Fee is not made in any month, the Issuer (after first making demand on the Borrower for payment of said amount) shall be entitled to give written direction to the Trustee to pay said amount so owing from • the next deposit or deposits to be made to the Borrower Administration Fee Account of the Administration Fund pursuant to subsection (g) above. Thereafter, at such time as deposits are again made to the General Account of the Administration Fund pursuant to subsection (i) above, the Borrower shall be reimbursed for any such fund so advanced from moneys remaining after the deposit required by subsection (i) above. Series A Bonds Debt Service Fund . The Series A Bonds Debt Service Fund will be held by the Trustee. The Trustee will withdraw from the Series A Bonds Debt Service Fund, on or prior to each Interest Payment Date, an amount equal to the unpaid interest due on the Series A Bonds on that date and shall cause it to be applied to the payment of such interest when due. If the withdrawals required in the previous sentence on the same and every prior Interest Payment Date have been made, the Trustee will withdraw from the Series A Bonds Debt Service Fund, on or prior to each Principal Payment Date, an amount equal to the Principal Amount of the Outstanding Series A Bonds, if any, maturing on that date and will cause it to be applied to the payment of the principal of the Series A Bonds when due. Each withdrawal from the Series A Bonds Debt Service Fund as described above will be made on or immediately prior to the Interest Payment Date or Principal Payment Date to which it relates, and the amount so withdrawn shall be deemed to be part of the Series A Bonds Debt Service Fund until such Interest Payment Date or Principal Payment Date. The Trustee shall apply money in the Series A Bonds Debt Service Fund to the purchase or the redemption of the Senes A Bonds in the manner provided in the Indenture, provided that no such Series A Bonds shall be so purchased in lieu of redemption during the period of 45 days next preceding each Sinking Fund Installment due date established for such Series A Term Bonds. The price paid by the Trustee (including any brokerage and other charges) for any Series A Term Bond purchased pursuant to this paragraph will not exceed the Redemption Price • applicable on the next date on which such Senes A Term Bond could be redeemed in accordance with its terms as 17 part of a Sinking Fund Installment. Subject to the limitations set forth and referred to in the Indenture, the Trustee shall purchase Series A Term Bonds at such times, for such prices, in such manner (whether after advertisement for tenders or otherwise) as the Trustee will be directed by a certificate of a Borrower Representative, with a copy • to the Issuer, and as may be possible with the amount of money available in the Series A Bonds Debt Service Fund therefor. As soon as practicable after the 45th day but not later than the 30th day prior to the due date of any Sinking Fund Installment, the Trustee will proceed pursuant to the Indenture to call for redemption on that date a Principal Amount of Series A Term Bonds subject to such Sinking Fund Installment in such amount as shall be necessary to complete the retirement of the Principal Amount of the Series A Bonds of such maturity specified for such Sinking Fund Installment. The Trustee will withdraw from the Series A Bonds Debt Service Fund, on or prior to the due date of the next Sinking Fund Installment, an amount equal to the Principal Amount of the Series A Term Bonds called for redemption on such date pursuant to this paragraph, and will cause it to be applied to the payment of the Redemption Pnce thereof to such date. If, by application of moneys in the Series A Bonds Debt Service Fund, the Trustee will purchase in any Bond Year Tenn Bonds subject to redemption from moneys in the Series A Bonds Debt Service Fund in excess of the aggregate Sinking Fund Installment in respect of such Term Bonds for such Bond Year, the Trustee shall file with the Issuer and the Borrower not later than the 20th day preceding the close of such Bond Year, a statement identifying such Term Bonds purchased and called for redemption during such Bond Year. The Borrower will thereafter cause a certificate of a Borrower Representative, with a copy to the Issuer, to be filed with the Trustee not later than the 10th day preceding the close of such Bond Year setting forth with respect to the amount of such excess the years in which Sinking Fund Installments are to be reduced and the respective amounts by which such Sinking Fund Installments are to be reduced; provided that such reduction shall be as nearly as practicable pro rata among remaining Sinking Fund Installments so as to be in increments of $5,000. All interest and other income from time to time received from the deposit and investment of moneys in the • Series A Bonds Debt Service Fund will be transferred upon receipt to the Revenue Fund. Series A Bonds Redemption Fund The Series A Bonds Redemption Fund shall be held by the Trustee. The Trustee shall deposit into the Series A Bonds Redemption Fund any Prepayments or Net Proceeds pursuant to the Indenture. Any moneys on deposit in the Series A Bonds Redemption Fund shall be used and applied, in order of maturity, as soon as practicable following the receipt thereof, but not later than twelve months after such receipt, for either or both of the following purposes: (a) to the redemption of Series A Bonds as may be designated in an Officer's Certificate; or (b) the purchase of Series A Bonds at a price specified by the Borrower, but only upon receipt of a certificate of a Borrower Representative, with a copy to the Issuer, stating the Principal Amounts and maturities of the Series A Bonds to be purchased, provided that no such purchase shall be made at a price in excess of the Redemption Price applicable on the next ensuing redemption date, and that no such purchase shall be made during the period of 45 days next preceding a redemption date from moneys to be applied pursuant to clause (a) above to the redemption of Series A Bonds on such date. All interest and other income from time to time received from the deposit and investment of moneys in the Series A Bonds Redemption Fund shall be transferred upon receipt to the Revenue Fund. Administration Fund The Trustee shall establish the Administration Fund and establish therein the General Account and the - Borrower Administration Fee Account. Moneys deposited in the Accounts of the Administration Fund shall be held therein in segregated Accounts until disbursed. • 18 Moneys deposited in the General Account of the Administration Fund shall be applied by the Trustee to the Issuer Annual Fee (payable on a monthly basis to the Issuer); and from time to time as directed by a certificate of • a Borrower Representative, with a copy to the Issuer, to the payment of ordinary fees and expenses of Fiduciaries, including expenses of purchase or redemption of Bonds. Any fees and expenses of the Fiduciaries and amounts payable to the Issuer above and beyond the amount contemplated in the final annual budget prepared by the Borrower shall be paid from the Surplus Fund, or if the Surplus Fund is insufficient, shall be paid by the Borrower. Moneys deposited in the Borrower Administration Fee Account of the Administration Fund shall be applied by the Trustee, on a monthly basis, to the payment of the Administration Fee. All interest and other income from time to time received from the deposit and investment of moneys in the Accounts of the Administration Fund shall be transferred upon receipt to the Revenue Fund. Repair and Replacement Fund The Trustee shall establish and hold the Repair and Replacement Fund for the financial benefit of the Project and shall deposit therein the amounts provided in the Indenture. Moneys deposited in the Repair and Replacement Fund shall be held therein segregated from other funds held by the Trustee until disbursed. Expenditures from the Repair and Replacement Fund which are not included in the annual budget and Exhibit C of the Loan Agreement shall be subject to the Oversight Agent's approval. Disbursements from the Repair and Replacement Fund shall be made upon the written request of the Borrower and approved in writing by the Oversight Agent for the purpose of funding initial improvements of the Project effecting the replacement of structural elements and mechanical equipment of the Project as set forth in Exhibit C to the Loan Agreement or for any other purpose for the benefit of the Project in accordance with the annual budget filed by the Borrower pursuant to the Loan Agreement or for such other similar purposes which the Oversight Agent shall reasonably direct. Disbursements from the Repair and Replacement Fund are also subject to Agency approval pursuant to the Grant Agreement. • Series A Bonds Debt Service Reserve Fund The Series A Bonds Debt Service Reserve Fund shall be held by the Trustee. If available moneys in the Series A Bonds Debt Service Fund shall be insufficient to pay in full the interest on and principal of any Series A Bonds becoming due on any Interest Payment Date, Principal Payment Date or any date on which Series A Bonds have been called for redemption, the Trustee shall transfer an amount equal to the deficiency the deficiency (following any transfer from the amounts in the Operating Reserve Fund required under the Indenture) from the Series A Bonds Debt Service Reserve Fund to the Series A Bonds Debt Service Fund for such purpose unless the Issuer shall, by an Officer's Certificate delivered to the Trustee prior to the Interest Payment Date, designate one or more Funds or Accounts from which an amount equal to the deficiency in the Series A Bonds Debt Service Fund is required to be transferred to the Series A Bonds Debt Service Fund. All interest and other income from time to time received from the deposit and investment of moneys in the Series A Bonds Debt Service Reserve Fund shall be transferred upon receipt to the Revenue Fund. If, at any time, the amount in the Series A Bonds Debt Service Reserve Fund exceeds the Series A Bonds Debt Service Reserve Fund Requirement, the Trustee shall withdraw the amount therein in excess of the Series A Bonds Debt Service Reserve Fund Requirement and transfer such amount in accordance with such certificate to the Revenue Fund. Whenever the Issuer shall receive a Prepayment or Net Proceeds and shall transfer the proceeds thereof to the Series A Bonds Redemption Fund, which in any such case would result in the reduction of the Series A Bonds Debt Service Reserve Fund Requirement upon application of the moneys so transferred to the purchase or redemption of Series A Bonds, the Trustee shall, immediately pnor to and in connection with each such purchase • or redemption, withdraw from the Series A Bonds Debt Service Reserve Fund and deposit in the Series A Bonds 19 Redemption Fund an amount of moneys equal to the reduction of the Series A Bonds Debt Service Reserve Fund Requirement which would result upon the purchase or redemption of such Series A Bonds (including the purchase or redemption of such Series A Bonds utilizing the moneys being transferred from the Series A Bonds Debt Service 41, Reserve Fund and deposited in the Series A Bonds Redemption Fund pursuant to the provisions of this paragraph), but only to the extent that any such withdrawal would not reduce the amount of the Series A Bonds Debt Service Reserve Fund below the Series A Bonds Debt Service Reserve Fund Requirement. The amount of moneys to be withdrawn from the Series A Bonds Debt Service Reserve Fund in each instance pursuant to the provisions of this paragraph shall be as determined by a certificate of a Borrower Representative, with a copy to the Issuer. Operating Reserve Fund The Operating Reserve Fund shall be held by the Trustee. Moneys in the Operating Reserve Fund shall be expended and used only (i) to make transfers to the Series A Bonds Debt Service Fund, prior to any transfer to such fund from the Series A Bonds Debt Service Reserve Fund, in the event that amounts on deposit in the Series A Bonds Debt Service Fund are insufficient to pay the debt service due on the Series A Bonds, and (ii) with the prior written consent of ACA, to pay extraordinary capital expenses or extraordinary operating expenses of the Project. Rebate Fund The Rebate Fund will be administered in accordance with the provisions of the Indenture. The Rebate Fund will not be subject to the lien or encumbrance of the Indenture and will be held in trust by the Trustee for the benefit of the United States of America. The amounts deposited in the Rebate Fund will be subject to the claim of no other person, including that of the Trustee and Bondowners. Moneys transferred to the Rebate Fund pursuant to the Indenture will be used for no other purpose than to make payments to the United States Treasury, at the time and manner and in the amount and as more fully provided in the Indenture. The Trustee will be deemed conclusively to have complied with the provisions of the Indenture related to • Rebatable Arbitrage if it follows the directions of the Borrower, and the Trustee will have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the Borrower or the Issuer with the provisions of the Indenture and the Tax Certificate with respect to Rebatable Arbitrage. Surplus Fund The Surplus Fund shall be held by the Trustee. Annually, following computation and deposit of the Rebatable Arbitrage for the preceding Bond Year in the Rebate Fund and provided there is no deficiency in the Series A Bonds Debt Service Fund, the Series A Bonds Debt Service Reserve Fund, the Rebate Fund, the Administration Fund, Operating Reserve Fund, any moneys in the Surplus Fund shall be released from the lien of the Indenture, not less frequently than annually, upon delivery to the Trustee and ACA of the Coverage Requirement Certificate and provided no Event of Default has been declared under the Indenture or the Loan Agreement, the amounts on deposit in the Surplus Fund as of the conclusion of the immediately preceding Bond Year shall be transferred, as directed by the Issuer, to (i) the Rental Assistance Fund, (ii) the Resident Services Fund or (iii) an Agency Loan Fund and applied as set forth in the Grant Agreement and the Agency Regulatory Agreement. If at any time there is a deficiency in the Series A Bonds Debt Service Fund, the Series A Bonds Debt Service Reserve Fund, the Rebate Fund, the Administration Fund or the Repair and Replacement Fund, the Trustee shall withdraw from the Surplus Fund and deposit in such Fund, in the order set forth for disposition of Revenues generally under the Indenture, the amount necessary to remedy such deficiency and shall give written notice to the Issuer of such withdrawal. All interest and other income from time to time received from the deposit and investment of moneys in the Surplus Fund shall be transferred upon receipt to the Revenue Fund. 411 20 • Rental Assistance Fund • The Agency, has provided financial assistance to the Borrower in connection with the acquisition of the Project. The Borrower and the Issuer have agreed that $273,358.00 of this assistance shall be paid to and held by the Trustee in a separate fund under the Indenture called the "Rental Assistance Fund." Under the terms of the Agency Grant Agreement, the Agency will deposit other amounts to the Rental Assistance Fund from time to time. Moneys in the Rental Assistance Fund may be withdrawn from time to time by the Borrower upon written request to the Trustee signed by the Borrower and containing the written consent of the Oversight Agent. The Agency and the Borrower have agreed that moneys in the Rental Assistance Fund may be used by the Borrower as provided in the Agency Grant Agreement and the Agency Regulatory Agreement. Moneys in the Rental Assistance Fund are not pledged to repayment of the Bonds and none of the Owners of the Bonds, the Trustee, the Issuer or ACA have any claim to such moneys. In the event of an Event of Default hereunder, moneys in the Rental Assistance Fund shall be applied as directed in writing by the Agency to the Trustee as provided in the Agency Grant Agreement and the Agency Regulatory Agreement. Resident Services Fund The Agency and the Borrower have agreed to establish a Resident Services Fund to be held by the Trustee in a separate fund under the Indenture. Moneys in the Resident Services Fund may be withdrawn from time to time by the Borrower upon written request to the Trustee signed by the Borrower and containing the written consent of the Oversight Agent and the Agency. The Agency and the Borrower have agreed that money in the Resident Services Fund may be used by the Borrower as provided in the Agency Grant Agreement. Moneys in the Resident Services Fund are not pledged to repayment of the Bonds and none of the Owners of the Bonds, the Trustee, the Issuer or ACA shall have any claim to such moneys. In the event of an Event of • Default hereunder, moneys in the Resident Services Fund shall be applied as directed in writing by the Agency to the Trustee as provided in the Agency Grant Agreement. Agency Loan Fund The Issuer and the Borrower have agreed to establish an Agency Loan Fund to be held by the Trustee in a separate fund under the Indenture called the Agency Loan Fund. Moneys in the Agency Loan Fund are not pledged to the repayment of the Bonds and will be used to repay the Borrower's obligations to the Issuer. Investment and Deposit of Funds The Trustee will keep all money held by it, as continuously as reasonably possible, invested and reinvested in Qualified Investments maturing at the times and in the amounts required by the Indenture, as instructed in writing by a Borrower Representative and subject to the specific requirements of the Indenture. In the event that written instructions of a Borrower Representative are not received by the Trustee in a timely manner, the Trustee shall invest the amounts deposited in the Funds and Accounts in those investments defined in clause (g) of the definition of "Qualified Investments." See "APPENDIX B - DEFINITIONS." Except for Investment Agreements described in clause (j) of the definition of "Qualified Investments" in the Indenture all investments made by the Trustee shall provide for payment of principal and interest which will be payable no later than the earlier to occur of six (6) months from the date of investment or the date on which it is estimated that such moneys will be required by the Trustee. Moneys in any Fund or Account created and established by, or maintained, pursuant to, the Indenture and held by a Fiduciary may be invested in common with moneys held in any other such Fund or Account; provided, 21 however, that the common investments with such other moneys constitute Qualified Investments and provided, further, that such investments are held by the same Fiduciary acting in the same capacity. Ill Obligations purchased as an investment of moneys in any Fund or Account held by a Fiduciary under the Indenture will be deemed at all times to be a part of such Fund or Account and the income or interest earned by, or incremented to, any such Fund or Account due to the investment and reinvestment thereof shall be retained in such Fund or Account as part thereof, except as otherwise provided in the Indenture and subject to the required transfer . thereof from such Fund or Account pursuant to the Indenture. A Fiduciary will sell m any commercially reasonable name, or present for redemption, any obligation purchased by it as an investment whenever it will be necessary' in order to provide moneys to meet any payment or transfer from the Fund or Account for which such investment was made; provided, however, that in lieu of liquidating any such investment obligations and transferring the proceeds thereof, the Trustee may transfer investment obligations which will mature and the proceeds of which will be available on or before the date such proceeds are required for the purposes of the Indenture. The Issuer and the Borrower acknowledge that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory agency grant the Issuer or the Borrower the right to receive brokerage confirmations of security transactions, the Issuer and the Borrower waive receipt of such confirmations. The Trustee will furnish to the Issuer and the Borrower periodic statements which include detail of all investment transactions made by the Trustee. Each Fiduciary will advise the Issuer and the Borrower in writing, on or before the fifteenth (15th) day of each calendar month, of the details of all investments held for the credit of each Account in its custody under the provisions of the Indenture as of the end of the preceding month. The Trustee or an affiliate may act as principal or agent in the acquisition or disposition of investments and purchase and sell investments through its investment department or that of its affiliates, each of which shall be entitled to its customary fee therefor. In computing the amount in any Fund or Account held by a Fiduciary or the Trustee under the provisions of the Indenture, the Trustee will value obligations purchased as an investment of moneys. therein as of the end of each month, calculated as follows: (a) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in the New York Times), the average of the bid and asked • prices for such investments so published on or most recently prior to such time of determination; (b) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street journal or The New York Times, the average bid price at such price at such time of determination for such investments by any two nationally recognized governmental securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; (c) as to certificates of deposit and bankers acceptances, the face amount thereof, plus accrued interest; and (d) as to any investment not specified above, the value thereof established by prior agreement among the Borrower, the Trustee _ and, so long as any Series A Bond is Outstanding, ACA. As an alternative to any of the foregoing, the value of any investment may be determined as of the end of each month by the manner currently employed by the Trustee or any other manner consistent with industry standard, including, without limitation, use of any computer pricing serve selected by the Trustee. Notwithstanding the foregoing, the Trustee shall determine the value of the Series A Bonds Debt Service Reserve Fund investments no less frequently than semiannually (and monthly from the date of any deficiency until such deficiency is cured). No Fiduciary shall be liable or responsible for making or failing to make any investment authorized by the provisions of the Indenture, in the manner provided in the Indenture, or for any loss resulting from any such investment so made or failure to so make, except for its own negligence. The Trustee may deem investments directed by a Borrower Representative as Qualified Investments without independent investigation thereof. III 22 • Covenants of the Issuer • Payment of Series A Bonds. The Issuer will duly and punctually pay or cause to be paid, solely from the Series A Bonds Trust Estate, the principal or Redemption Price, if any, of every Series A Bond and the interest thereon, at the dates and places and in the manner provided in the Series A Bonds according to the true intent and meaning thereof. Offices for Payment and Registration of Series A Bonds. The Issuer may designate an additional Paying Agent located within or out of the State where Series A Bonds may be presented for payment. Further Assurances. At any and all times the Issuer will, so far as it may be authorized or permitted by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolution, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning, confirming and effecting all and singular the proceeds, moneys, rights, interests and collections in the Indenture pledged or assigned or intended so to be, or which the Issuer may hereafter become bound to pledge or assign. Power to Issue Series A Bonds and Make Pledges. The Issuer is duly authorized pursuant to law to authorize and issue the Bonds and to adopt the Indenture and to pledge the Series A Bonds Trust Estate in the manner and to the extent provided in the Indenture. Except as provided in the Indenture, the Series A Bonds Trust Estate is and will remain free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge created by the Indenture. The Bonds and the provisions of the Indenture are and will be the valid and legally enforceable obligations• of the Issuer in accordance with the terms of the ' • Indenture. The Issuer will at all times, to the extent permitted by law, defend, preserve and protect said pledge of the Series A Bonds Trust Estate and all the rights of the Series A Bond Owners under the Indenture against all • claims and demands of all persons whomsoever. Use of Proceeds. The Issuer will use and apply the proceeds of Bonds, to the extent not otherwise required by the Indenture to make theLoan for the purposes specified in the Act and the Indenture, and will do all such acts • - and things necessary to receive and collect when due, all Revenues, and will diligently enforce, and take all steps, actions and proceedings reasonably necessary in the judgment of the Issuer for the enforcement of all terms, covenants and conditions of the Loan. The Loan will be made by the Issuer from the proceeds of the Bonds concurrently with the issuance of the Bonds and the Deed of Trust seciiring the Loan will have been executed and recorded either concurrently or prior to the issuance and delivery of the Bonds; provided that: (a) the Deed of Trust and related financing statements and other necessary documents will constitute and create a mortgage lien on the Project subject only to Permitted Encumbrances, which further provides a valid security interest in the personal property acquired with proceeds of the Loan and attached to or used or to be used in connection with the operation of the Project, and in all rents, revenues, receipts, income and other moneys received by or payable to the Borrower; and (b) the Borrower shall have marketable title in fee simple to the Property, free and clear of all liens and encumbrances, other than Permitted Encumbrances, which would materially affect the value or usefulness of such Property, as set forth in the policy of title insurance delivered in connection therewith and in a form which is satisfactory to the Issuer. • Fees and Charges. The Issuer shall review and approve such Fees and Charges as it shall deem appropriate to pay each Fiduciary acting in connection with the Indenture and the Bonds. Subject to prior review by the Issuer • or its Oversight Agent on the Issuer's behalf, the Borrower shall provide the Trustee with a schedule of the Fees and 23 Charges to be paid by the Borrower and of each revision of such schedule, and shall require the Borrower to make payment of such Fees and Charges directly to the Trustee. The Trustee shall promptly deposit all such Fees and • Charges so collected in the Administration Fund. The Tnistee shall promptly advise the Issuer of each and every • failure of the Borrower to make payment of Fees and Charges when due. _ Modification of Deed of Trust Terms. The Issuer will not consent to the modification of, or modify, the rate or rates of interest of, or the amount or time of payment of any installment of principal of or interest on the Loan • on the Project, or the amount or time of payment of any Fees and Charges payable with respect to such Loan, or the security for or any teens or provisions of the Loan on the Project or the Deed of Trust securing the same in a manner detrimental to the Trustee or the Bondowners. Prenavments. The Issuer shall not accept, nor permit the Trustee to accept a Prepayment from the Borrower, unless a Coverage Requirement Certificate is provided to the Trustee which, in addition to containing the requirements of the Loan Agreement, also shows that the proceeds of such prepayment received by the Issuer shall - be in an amount not less than the aggregate of (i) the amount to be prepaid; (ii) any interest and Fees and Charges on the Loan accrued through the date of receipt of the proceeds of the Prepayment remaining unpaid; (iii) to the extent not otherwise paid by the Borrower, the interest that would accrue on the Bonds of such maturity or matunties as are to be designated by the Issuer pursuant to the Indenture to be purchased or redeemed with the proceeds of such Prepayment from the date of receipt thereof by the Issuer until the applicable optional redemption date of the Bonds so to be purchased or redeemed; (iv) the redemption premium payable on the next applicable optional redemption date on the Bonds so to be purchased or redeemed, if any; and (v) the costs and expenses of the Issuer in effecting the purchase or redemption of such Bonds, less the sum of (A) the amount of applicable moneys available for withdrawal from the Series A Bonds Debt Service Reserve Fund and the Series A Bonds Debt Service Fund and application to the purchase or redemption of such Series A Bonds, as determined by the Issuer, and (B) the amount of any other legally available funds of the Issuer transferred or directed by the Issuer to be transferred to the applicable Redemption Fund in connection with such purchase or redemption. Disposition of Net Proceeds and Prenavments. Net Proceeds constituting proceeds of a condemnation 411 award, sale of land, or casualty insurance claim with respect to the Project shall be deposited in a special restoration account to be established and held by the Trustee for the Project and the Trustee upon receipt of Net Proceeds shall give written notice to the Issuer of such event. Such amounts shall either be applied to the redemption of Bonds or the repair, replacement, restoration or rebuilding of the Project or part thereof as determined in accordance with the Indenture and with the prior written consent of ACA. Prior to the receipt of Net Proceeds by the Trustee, the Trustee will first receive a written direction from the Borrower as to whether such proceeds shall be used to redeem the Bonds or to rebuild the Project as set forth in the Loan Agreement. Upon receipt of such written direction from the Borrower that such Net Proceeds will be used to redeem the Bonds, the Trustee will notify the Issuer and the Borrower shall cause the Net Proceeds to be paid to the Trustee no more than 30 days from the date that such Net Proceeds will be used to redeem the Bonds. Amounts in the special restoration account described above shall be applied to the repair, replacement, restoration or rebuilding of the Project if the Borrower will deliver or cause to be delivered to the Trustee within (90) days or such longer period as approved by the Issuer of the event giving rise to the Net Proceeds written notice of its determination that such proceeds may be applied to the repair, replacement, restoration or rebuilding of the Project or part thereof in an economical manner, and that such proceeds shall be sufficient, together with any other - moneys deposited into such special restoration account for such purpose together with (1) evidence of the Issuer's and ACA's written consents thereto, and (2) a report of a management consultant to the effect that following such repair or restoration, the tests set forth in the Loan Agreement with respect to coverage levels in the Coverage Requirement Certificate will be met. Upon compliance with these conditions, the Trustee shall disburse the moneys so deposited for such repair, replacement, restoration or rebuilding, but not in an aggregate amount exceeding the cost thereof, upon receipt of a certificate of a Borrower Representative approved by the Oversight Agent, with • a copy to the Issuer, stating (i) the amount to be paid, (ii) the name of the person to which payment is to be made, and • 24 , (iii) that such amount, together with all prior payments from such account, do not exceed the cost of such repair,, replacement, restoration or rebuilding; provided that prior to making any such payments, the Trustee shall first have • received a certificate of a Borrower Representative approved by the Oversight Agent, with copies to the Issuer, stating (i) the estimated cost of such repair, replacement, restoration or rebuilding, (ii) that such repair, replacement, restoration or rebuilding is, in the signer's opinion, economically practicable with the proceeds of such condemnation award, sale of land or hazard insurance claim, and other moneys, if any, deposited in such account, and (iii) that the plans and specifications, if any, prepared for such repair, replacement, restoration and rebuilding have been approved by the Issuer. All disbursements made by the Trustee pursuant to such Borrower's Certificates shall be presumed to be made properly, and the Trustee shall not be required to see to the application of any payments so made or inquire into the purposes for which such disbursements are made. Any amounts remaining in a special restoration account and not required for the repair, replacement, restoration or rebuilding of the Project for which such special restoration account was established, all other Net Proceeds and Prepayments, less the cost and expenses of the Issuer incurred in collecting the same and in effecting the purchase or redemption of the Bonds to be purchased or redeemed, shall be deposited in the Series A Bonds Redemption Fund, and shall be applied to the purchase, payment, retirement or redemption of Bonds in accordance with the provisions of the Indenture, provided, however, that any portion of such Net Proceeds or Prepayment which represents due and unpaid principal of, or interest on, or Fees and Charges with respect to, the Loan in each case as determined by the Issuer in an Officer's Certificate delivered to the Trustee, shall be deposited in the Revenue Fund in such amount, if any, as shall be set forth in such Certificate. Enforcement and Foreclosure of Deed of Trust. The Issuer will cooperate with the Trustee in connection with the enforcement of all terms, covenants and conditions of the Deed of Trust, including the prompt payment of Revenues. Whenever it shall be necessary in order to protect and enforce the rights of the Issuer under the Deed of • Trust securing the Loan and to protect and enforce the rights and interest of Bondowners under the Indenture, the Trustee shall continence foreclosure proceedings or pursue other appropriate remedies against the Borrower in default under the provisions of the Deed of Trust and, in protection and enforcement of its rights under the Deed of Trust, may bid for and purchase the Project at any foreclosure or other sale thereof and pursuant thereto or otherwise acquire and take possession of the Project. The' Issuer (and the Trustee, if acting in enforcing the Deed of Trust) shall be entitled to payment of all of its costs incurred in connection with enforcement of the Deed of Trust, including, but not limited to, legal fees and expenses, from Revenues prior to the use of Revenues for any other purpose under the Indenture. The covenants set forth in the preceding three paragraphs shall be for the benefit of the Series A Bonds so long as any Series A Bonds remain Outstanding. It is expressly understood and acknowledged that, since the Note and Deed of Trust (while in the Issuer's name as beneficiary) is assigned to the Trustee under the Indenture, it is not intended that the Issuer have any responsibility for foreclosure proceedings. Rather, foreclosure proceedings will be conducted by the Trustee. Any and all liability of the Issuer under the Indenture is expressly limited as set forth in the Indenture. Accounts and Reports. The Trustee will keep, or cause to be kept, proper books of record and account in which complete and correct entries shall be made of its transactions and all Funds and Accounts estabhshed by or maintained pursuant to the Indenture, which will at all times during normal business hours be subject to inspection by the Issuer, the Trustee, the Borrower and the Owners of an aggregate of not less than five percent (5 %) in Principal Amount of the Series A Bonds then Outstanding or their agents or representatives duly authorized in • writing. 25 The Issuer, or the Oversight Agent on behalf of the Issuer, shall, upon receipt from the Borrower of sufficient moneys to provide the same, furnish, without charge, upon written request of any Bondowner, to such Bondowner, (i) a report showing, for the Fiscal Year, with respect to the Bonds, outstanding balances by maturity, III redemption history including redemption dates, amount, source of funds, and distribution ofthe call to the maturities, (ii) a report showing the current status of insurance coverages with respect to the Project, and (iii) the most currently available annual report submitted by the Borrower. For the purposes of this paragraph, "Bondowner" shall mean, in addition to the registered owner of any Bond, any person or entity that claims in writing to the reasonable satisfaction of the Issuer to be a beneficial holder of Bonds and specifically requests that reports be sent to it. Creation of Liens. The Issuer will not issue any bonds or other evidences of indebtedness, other than the Bonds, secured by a pledge of the proceeds, moneys, rights, interests and collections pledged or held aside by the Issuer or by a Fiduciary under the Indenture and, except as may be otherwise provided in the Indenture or a Supplemental Indenture with respect to any supplemental security, shall not create or cause to be created any lien or charge on proceeds, moneys, rights, interests and collections or such moneys on a subordinate, parity or senior basis to the lien created by the Indenture for the benefit of the Series A Bonds; provided, however, that nothing in the Indenture will prevent the Issuer from issuing evidences of indebtedness secured by a pledge of such proceeds, moneys, rights, interests and collections to be derived on and after such date as the Series A Bonds Trust Estate shall be discharged and satisfied as provided in the Indenture or from issuing notes or bonds of the Issuer secured by assets and revenues of the Issuer other than the Trust Estate. - Tax Covenants. The Issuer covenants that it will at all times do and perform all acts and things permitted by law and necessary or desirable in order to assure that interest paid on the Bonds be and remain excluded from gross income for federal income tax purposes. The Issuer covenants and agrees that it will not make or permit any use of the proceeds of the Bonds or other funds of the Issuer which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) ofthe Code, and further covenants that it will observe and not violate the requirements of Sections 145 and 148 of III the Code. The Trustee will be entitled to receive and to rely upon a Counsel's Opinion as to the conformity of any use or proposed use of the proceeds of the Bonds with the requirements of said Sections 145 and 148 of the Code. Arbitrage Covenants; Rebate Fund. Moneys and' securities held by the Trustee in the Rebate Fund are not pledged or otherwise subject to any security interest in favor of the Trustee to secure the Bonds or any other payments required to be made under the Indenture or any other document executed and delivered in connection with the issuance of the Bonds. Moneys in the Rebate Fund shall be held separate and apart from all other Funds and Accounts established under the Indenture and shall be separately invested and reinvested by the Trustee, solely at the written direction of the Issuer, in Qualified Investments. The interest accruing thereon and any profit realized therefrom shall be credited to the Rebate Fund, and any loss resulting therefrom shall be charged to the Rebate Fund. The Trustee shall sell and reduce to cash a sufficient amount of such Qualified Investments whenever the cash balance in the Rebate Fund is insufficient for its purposes. Absent a Counsel's Opinion that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected, the Issuer shall cause the Borrower to deposit in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Indenture and the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to the United States Treasury. In order - to provide for the administration of the Arbitrage Covenants of the Indenture, the Borrower shall provide for the employment of independent attorneys, accountants and consultants (the "Rebate Analyst ") compensated on such reasonable basis as the Borrower may deem appropriate (or in the absence of such Rebate Analyst, the Trustee shall cause to be administered the requirements provided in the Indenture) and in addition and III 26 without limitation of the provisions of the Indenture, the Trustee and the Issuer may rely conclusively upon and be fully protected from all liability in relying upon the opinions, determinations, calculations and advice of such Rebate 411 Analyst employed under the Indenture. Rights of ACA Notwithstanding any other provision of the Indenture, the Loan Agreement, the Deed of Trust, or any other Loan Document, and so long as any Series A Bond is Outstanding: Amendments and Sum:dements. None of the Indenture or the Loan Documents may be amended, supplemented or otherwise modified without the prior written consent of ACA. Copies of any amendments or supplements to the Indenture or the Loan Documents which are consented to by ACA shall be sent to Standard & Poor's Ratings Services. ACA As Third Party Beneficiary. To the extent that the Indenture or the Loan Documents confers upon or gives or grants to ACA any right, remedy or claim under or by reason of the Indenture or such Loan Documents, ACA is explicitly recognized as being a third-party beneficiary under the Indenture or such Loan Documents and may enforce any such right, remedy or claim conferred, given or granted under the Indenture or such Loan Documents. Consent Rights of ACA (i) Wherever the Indenture or the Loan Documents require the consent of the Series A Bondholders, ACA's consent shall also be required. (ii) Any reorganization or liquidation plan with respect to the Issuer or the Borrower must be acceptable • to ACA. In the event of any reorganization or liquidation, ACA shall have the right to vote on behalf of all Series A Bondholders absent a default by ACA under the Policy. (iii) Notwithstanding any other provision in the Indenture to the contrary, upon the occurrence and continuance of an Event of Default under the Indenture or the Loan Agreement, ACA shall be entitled to control and direct the enforcement of all rights and remedies granted to the Bondholders or the Trustee for the benefit of the Bondholders under the Indenture or the Loan Agreement, including, without limitation: (A) the right to accelerate the principal of the Bonds as described in the Indenture, and (B) the right to annul any declaration of acceleration, and ACA shall be entitled to approve all waivers of events of default. ACA shall be entitled to give notice of default to the Trustee, the Borrower and the Issuer. (iv) Notwithstanding any, other provision in the Indenture to the contrary, upon the occurrence of an Event of Default, the Trustee shall, at the direction of ACA or at the direction of Owners in accordance with the Indenture with the written consent of ACA, by written notice to the Issuer, the Borrower and ACA, declare the principal of the Bonds to be immediately due and payable, whereupon that portion of the principal of the Bonds thereby coming due and the interest thereon accrued to the date of payment shall, without further action, become and be immediately due and payable, anything in the Indenture or in the Bonds to the contrary notwithstanding. Supplemental Indentures The Issuer may adopt, without the consent of or notice to Bondowners (but subject to the rights of ACA), at any time or from time to time Supplemental Indentures for any one or more of the following purposes, and any such Indenture or Supplemental Indenture will become effective in accordance with its terms upon the filing with the Trustee of a copy thereof certified by an Authorized Officer: (1) to add additional covenants and agreements of • the Issuer for the purpose of further securing the payment of the Bonds, provided such additional covenants and 27 agreements are not contrary to or inconsistent with the covenants and agreements of the Issuer contained in the Indenture; (2) to prescribe further limitations and restrictions upon the issuance of Bonds and the incurring of indebtedness by the Issuer; (3) to surrender any right, power or privilege reserved to or conferred upon the Issuer III by the terms of the Indenture, provided that no such surrender is contrary to or inconsistent with the covenants and agreements of the Issuer contained in the Indenture; (4) to confirm as further assurance any pledge under, and the subjection to any lien, claim or pledge created or to be created by, the provisions ofthe Indenture; (5) to modify any of the provisions ofthe Indenture or any previously adopted Supplemental Indenture in any other respects, provided that such modifications shall not be effective until after all Bonds Outstanding as of the date of adoption of such - - Indenture or Supplemental Indenture shall cease to be Outstanding, and all Bonds issued after the date of adoption of such Indenture shall contain a specific reference to the modifications contained in such Indenture; (6) to amend the Indenture to add such provisions as may be necessary or advisable in connection with the substitution of any additional security; provided that any such modification does not materially adversely affect interests of any Bondholders; (7) to amend the Indenture in any and all respects as may be necessary or advisable to implement any amendment ofthe Code or the provision of any tax legislation enacted in place thereof; (8) to make such amendments to add such other provisions in regard to matters or questions arising out of the Indenture which shall not materially adversely affect the interests of the Owners of the Bonds affected thereby; or (9) to cure any ambiguity or defect or inconsistent provision in the Indenture or to insert such provisions clarifying matters or questions arising under the Indenture as are necessary or desirable; provided that any such modifications do not materially adversely affect the interests of any Bondowners. Powers of Amendment _ Any modification or amendments of the Indenture and of the rights and obligations of the Issuer and of the Owners ofthe Bonds in any particular may be made by a Supplemental Indenture, subject to the rights of ACA and with, except as set forth in the preceding section entitled "Supplemental Indentures ", the written consent required by the Indenture, of the Owners of (i) at least two - thirds in Principal Amount of the Bonds Outstanding at the time such consent is given; and (ii) at least two-thirds in Principal Amount ofthe Series A Bonds Outstanding at the time III such consent is given; provided, however, that if any such modification or amendment will, by its terms, not take effect so long as any series of Bonds of any maturity remain Outstanding, the consent of the Owners of such series of the Bonds and maturity shall not be required and such series of Bonds shall not be deemed to be Outstanding for the purpose of any calculation of the Principal Amount of Outstanding Bonds under the Indenture. In the event that the Supplemental Indenture shall contain provisions which affect the rights and interest of one series of Bonds (but not the others), then the Owners of not less than two-thirds of the Principal Amount of the series of Bonds which are affected by such changes shall have the right from time to time to consent to and approve the execution by the Issuer of any Supplemental Indenture deemed necessary or desirable by the Issuer for the purposes of modifying,' altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in the Indenture and affecting only the Bonds of such series; provided, however, unless approved by the Owners of all of the Bonds of all affected series then Outstanding, nothing therein shall permit or be construed as permitting such items as further provided in the Indenture. No such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any Outstanding Bond or of any installment of interest thereon or a reduction in the Principal Amount or the Redemption Price thereof or in the rate of interest thereon without the • consent of the Owner of such Bond, or shall reduce the percentages of Bonds the consent of the Owners of which is required to effect any such modification or amendment. The Trustee may in its discretion determine whether or not in accordance with the foregoing provisions Bonds of any particular maturity would be affected by any modification or amendment of the Indenture and any such determination shall be binding and conclusive on the Issuer and all Owners of Bonds. The Trustee may receive an opinion of counsel, including a Counsel's Opinion, as conclusive evidence as to whether Bonds of any particular maturity would be so affected by any such modification or amendment of the Indenture. _ III 28 Series A Bonds Events of Default • Each of the following events is declared under the Indenture to be a "Series A Bonds Event of Default," that is to say; if (a) the Issuer shall fail to make payment of the principal or Redemption Price of, or Sinking Fund Installment on, any Series A Bond from the Series A Bond Trust Estate after the same shall become due, whether at maturity or upon call for redemption, or otherwise; or (b) the Issuer shall fail to make payment of interest on any Series A Bond from the Series A Bond Trust Estate when and as the same will become due; or (c) the Issuer shall default in the performance or observance of any other of the covenants, agreements or conditions on its part in the Indenture, any Supplemental Indenture, or in the Series A Bonds contained, and such default shall continue for a period of ninety (90) days after written notice thereof by the Trustee, ACA or the Owners of not less than five percent (5 %) in Principal Amount of the Outstanding Series A Bonds. Remedies Upon the happening and continuance of any Series A Bonds Event of Default, then, subject to the rights of ACA in the Indenture, the Trustee may proceed, and upon the written request of the Owners of not less than twenty -five percent (25 %) in Principal Amount of the Outstanding Series A Bonds in the case of a Series A Bonds Event of Default, subject to the Indenture, proceed in its own name, to protect and enforce its rights and the rights of the Bondowners by such of the following remedies as the Trustee shall deem most effectual to protect and enforce • such rights: (a) by suit, action or proceeding, enforce all rights of the Bondowners, including the right to require the Borrower to receive and collect Pledged Revenues adequate to carry out the covenants and agreements as to, and pledge of, such Pledged Revenues, and to require the Borrower to carry out any other covenant or agreement with Bondowners and to perform its duties under the Loan Agreement; (b) by bringing suit upon the Bonds; (c) by action or suit, require the Borrower to account as if the Borrower were the trustee of an express trust for the Owners of the Bonds; or (d) by action or suit, enjoin any acts or things which may be unlawful or in violation of the rights of the Owners of the Bonds; provided, however, so long as the Series A Bonds are Outstanding, the Trustee in so acting shall act solely for the benefit of the Series A Bondholders. Upon the happening and continuance of any Series A Bonds Event of Default specified in clause (a) or (b) under the heading "Series A Bonds Events of Default" above, then, and in each such case, subject to the rights of ACA set forth in the Indenture, the Trustee may, and upon the written request of the Owners of not less than twenty - five percent (25 %) in Principal Amount of the Outstanding Series A Bonds, shall declare all Series A Bonds due and payable, and if all defaults shall be made good, then, with the written mi consent of the Owners of not less than twenty -five percent (25 %) in Principal Amount of the Outstanding Series A Bonds, annul such declaration and its consequences. In the enforcement of any remedy under the Indenture, the Trustee will be entitled to sue for, enforce payment on and receive any and all amounts then or during any default becoming, and any time remaining, due from the Borrower for principal, Redemption Price, interest or otherwise, under any provision of the Indenture, the Loan Agreement or of Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in the Bonds, together with any and all costs and expenses of collection and of all proceedings thereunder and under the Bonds, including reasonable attorneys' fees. • 29 Priority of Payments After Series A Bonds Event of Default In the event that the funds held by the Trustee and Paying Agents will be insufficient for the payment of III principal or Redemption Price of and interest then due on the Series A Bonds, such funds (other than funds held for the payment or redemption of particular Series A Bonds which have theretofore become due at maturity or by call for redemption) and any other moneys received or collected by the Trustee acting pursuant to the Indenture, after making provision for the payment of any expenses necessary in the opinion of the Trustee or the Issuer to protect the interests of the Owners of the Series A Bonds, and for the payment of the fees, charges and expenses and liabilities incurred and advances made by the Trustee or the Issuer in the performance• of their duties under the Indenture, including reasonable attorneys' fees, will be applied as follows: (a) Unless the principal of all the Series A Bonds shall not have become or have been declared due and payable, First: To the payment to the persons entitled thereto of all mstallments of interest then due on the Series A Bonds in the order of the maturity of such installments; and, if the amount available shall not be sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid Principal Amounts or Redemption Price of any Series A Bonds which shall have become due, whether at maturity or by call for redemption, in the order of their due dates and, if the amounts available shall not be sufficient to pay in full all the Series A Bonds due on any date, then to the payment thereof ratably, according to the amounts of Principal Amounts or Redemption Price due on such date, to the persons entitled thereto, without any discrimination or preference; and (b) If the principal of all of the Series A Bonds shall have become or have been declared due 1111 and payable, to the payment of the principal of and interest then due and unpaid upon the Series A Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Series A Bond over any other Series A Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto - without any discrimination or preference except as to any difference in the respective rates of interest specified in the Series A Bonds. Money to be applied by the Trustee as set forth above shall be applied at such times as the Trustee shall determine. Limitations of Rights of Bondowners No Owner of any Bond will have any right to institute any suit, action or other proceedings hereunder, or for the protection or enforcement of any right under the Indenture or any right under law, unless such Owner will have given to the Trustee written notice of the Event of Default or breach of duty on account of which suit, action or proceeding is to be taken, and unless the Owners of not less than twenty -five percent (25 %) in Principal Amount of the Bonds of the series affected then Outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, will have accrued, and will have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers in the Indenture granted or granted under law or to institute such action, suit or proceeding m its name and unless, also, there shall have been offered to the Trustee reasonable security and mdemnity against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused or neglected to comply with such request within a reasonable time; and such • 30 notification, request and offer of indemnity are in every such case at the option of the Trustee conditions precedent • to the execution of the powers under the Indenture or for any other remedy hereunder or under law. It is understood and intended that no one or more Owners of the Bonds secured under the Indenture shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Indenture, or to enforce any right hereunder or under law with respect to the Bonds or the Indenture, except in the manner therein provided, and that all proceedings shall be instituted, had and maintained in the manner herein provided and for the benefit of all Owners of the Outstanding Bonds. The obligation of the Issuer shall be absolute and unconditional to pay the principal and Redemption Price of and interest on the Bonds to the respective Owners thereof at the respective due dates thereof, and nothing in the Indenture will affect or impair the right of action, which is absolute and unconditional, of such Owners to enforce such payment. Remedies Not Exclusive No remedy conferred upon or reserved to the Trustee or to the Owners of the Bonds under the Indenture is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or by statute. Limited Liability of the Issuer The obligations of the Issuer with respect to the Bonds and under the Indenture, the Loan Agreement and the Regulatory Agreement are not general obligations of the Issuer but are special, limited obligations of the Issuer payable by the Issuer solely from the Trust Estate and are not a debt, nor a loan of the credit, of the State or any of its political subdivisions, and the Bonds shall not be construed to create any moral obligation on the part of the Issuer, the City, the State or any political subdivision thereof with respect to the payment thereof. The Bonds do not • constitute an indebtedness within the meaning of any constitutional or statutory debt limitation, and the issuance of the Bonds shall not directly or indirectly or contingently obligate the Issuer, the City, the State or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment, and no Bondholder has the right to compel any exercise of any taxing power of the Issuer, the City or the State. Nothing contained in the Bonds or in the Indenture shall be considered as assigning or- pledging any funds or assets of the Issuer other than the Trust Estate; and neither the faith and credit of the Issuer, the State nor of any other political subdivision of the State are pledged to the payment of the principal or of interest on the Bonds. No failure of the Issuer to comply with any term, condition, covenant or agreement in the Indenture or in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall subject the Issuer to liability for any claim for damages, costs or other charge except to the extent that the same can be paid or recovered from the Trust Estate. The Issuer shall not be required to advance any moneys derived from any source other than the Trust Estate for any of the purposes of the Indenture, the Loan Agreement or the Regulatory Agreement, whether for the payment of the principal or redemption price of, or interest on, the Bonds, the payment of any fees or administrative expenses or otherwise. Neither the Borrower, the Trustee nor any Bondholder shall look to the Issuer or the City for damages as a result of the failure of the Issuer to perform any covenant, undertaking or obligation under the Indenture, the Loan Agreement, the Regulatory Agreement, the Bonds or any of the other documents, or as a result of the incorrectness of any representation made by the Issuer in any of such documents, nor for any other reason. Although such documents shall not give rise to any pecuniary liability of the Issuer, an action or proceeding (other than a claim for monetary damages) may be brought against the Issuer or any of its officers or employees to enforce the provisions • of any such documents which the Issuer is obligated to perform and the performance of which the Issuer has not 31 assigned to the Trustee or another person. As a condition precedent to the Issuer proceeding pursuant to the Indenture, the Issuer shall have received satisfactory indemnification. • No Recourse Under the Indenture or on the Bonds. All covenants, stipulations, promises, agreements and obligations of the Issuer contained in the Indenture shall be deemed to be those of the Issuer and not of any Council member, officer or employee of the Issuer in his or her individual capacity, and no recourse shall be had for the payment of the principal or Redemption Price of or interest on the Bonds or for any claim based thereon or on the Indenture by any Council member, officer or employee of the Issuer or any person executing the Bonds. THE LOAN AGREEMENT The following is a summary of the Loan Agreement relating to the Loan. This summary does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement, which is available from the Trustee upon request, and to Appendix B for the definition of certain terms used herein. Any capitalized terms not otherwise defined herein or in Appendix B are as defined in the Indenture, the Loan Agreement or the Regulatory Agreement, as applicable. Amount and Source of Loan- The Issuer makes to the Borrower and agrees to fund, and the Borrower accepts from the Issuer, upon the terms and conditions set forth in the Loan Agreement and in the Indenture, the Loan in an amount equal to the principal amount of the Bonds and agrees that the proceeds of the Loan will be applied and disbursed in accordance with - the Indenture and written instructions of the Issuer provided to the Trustee on the Closing Date and when the Trustee acknowledges receipt of the proceeds of the Bonds and the conditions specified in the Loan Agreement and , in the Indenture have been satisfied. Loan Repayment • • The Loan will be evidenced by the Note which shall be executed by the Borrower in the form attached to the Loan Agreement. The Borrower agrees to pay to the Trustee, on behalf of the Issuer, the principal of, premium (if any) and interest on the Loan at the times, in the manner, in the amount and at the rates of interest provided in the Note and the Loan Agreement. To secure its obligations to repay the Loan, the Borrower will grant the Issuer a security interest in the Project pursuant to the terms of the Deed of Trust and will take all actions necessary to perfect such security interest. In order to satisfy its obligations under the Loan Agreement, the Borrower agrees to pay the Trustee not later than the thirteenth day of each month, commencing December 13, 2000, all Net Operating Revenues from the prior month, and not otherwise remitted from the prior month. Any Net Operating Revenues received by the Borrower after the 13th day of each month shall be transferred to the Trustee on the 13th day of the immediately following calendar month. Notwithstanding the foregoing, so long as Borrower's monthly Net Operating Revenues are at least equal to said month's portion of items (a) through (g) of Section 5.7 of the Indenture, then the Borrower may retain from Net Operating Income for such month the Administration Fee for such month. The Borrower agrees to pay, in repayment of the Loan, all Net Operating Revenues for the immediately • preceding calendar month to the Trustee for the account of the Issuer until the principal of, premium (if any) and interest on the Bonds shall have been paid or provision for payment shall have been made in accordance with the Indenture, in federal or other immediately available funds at the corporate trust office designated by the Trustee, on the fifteenth day of each month an amount equal to (i) the interest on the Bonds which will become due on each Interest Payment Date and (ii) the principal of and redemption premium, if any, on the Bonds which will become due (whether at maturity, by prior redemption or otherwise) on each Interest Payment Date. In addition, the Borrower agrees to repay the principal of the Loan, plus interest accrued thereon until the date fixed for redemption of the Bonds to be redeemed with such repayment, in the amounts and at the times specified in the Loan Agreement. • 32 • In the event the Net Operating Revenues deposited with the Trustee in any two consecutive months are less than 90% of the amount set forth in the annual budget as described in the Loan Agreement, the Borrower shall, • concurrently with its transfer of the amount to the Trustee, provide notice of a written explanation for the variance - to the Issuer, the City and the Oversight Agent and, upon written request of the Oversight Agent, the Borrower shall submit a written report within 30 days with recommendations to the Issuer, the City and the Oversight Agent with respect to the ability of the Borrower and its recommendations as to how to stay within the amounts contemplated in the final annual budget. The Oversight Agent shall review the Borrower's written recommendations and submit any comments to the Borrower. The Oversight Agent shall notify the Issuer and the City in the event the Borrower shall not comply substantially with the recommendations submitted by the Borrower (and as commented on by the Oversight Agent). In such event and subject to the rights of ACA described in the Loan Agreement, the Issuer, based on such advice as it may deem appropriate, may, and with the consent or at the direction of ACA (so long as the Series A Bonds are Outstanding), shall direct the Borrower to remove the manager of the Project (the "Project Manager ") and approve a new Project Manager acceptable to the Issuer and ACA. In the event the Net Operating Revenues deposited in the succeeding month are less than 90% of the amount set forth in the annual budget, then the Oversight Agent shall notify the Issuer, the City and the Trustee and, thereafter: (a) upon written order of the Issuer determined in its discretion based on the advice of the Oversight Agent and such other information as the Issuer may determine to be appropriate, all Operating Revenues of the Project shall be deposited and held by the Trustee and the Trustee shall deposit the budgeted Operation and Ma Costs, as contemplated in the annual budget, as directed in writing by the Issuer or the Oversight Agent on behalf of the Issuer, in a depository account to be established by the Trustee for the benefit of the Borrower's operation and maintenance of the Project; and (b) the Issuer, based on such advice of the Oversight Agent as it may deem appropriate, or based on a request of ACA (so long as the Series A Bonds are Outstanding), shall have the right to direct the Borrower to remove the Project Manager and approve a new Project Manager acceptable to the Issuer and ACA. Upon receipt by the Trustee of a certificate from the Oversight Agent which certifies that Net Operating Revenues in a subsequent month are either (i) at least equal to 90% or more of the amount set forth in the annual budget described in the Loan Agreement or (ii) equal or greater than the amount needed to make all payments on the Bonds for the immediately preceding • month, the Trustee shall no longer be required to hold the Operating Revenues as set forth above and shall take all necessary action to transfer the receipt of Operating Revenues to another financial institution as directed by the Borrower. The Borrower further agrees to pay or cause to be paid all taxes and assessments, general or special, including, without limitation, all ad valorem taxes, concerning or in any way related to the Project, or any part thereof, and any other governmental charges and impositions whatsoever, foreseen or unforeseen, and all utility and other charges and assessments; provided, however, that the Borrower reserves the right to contest in good faith the legality of any tax or governmental charge concerning or in any way related to the Project. The Borrower agrees to timely pay the premiums or other amounts required to maintain the insurance specified in the Loan Agreement. The Borrower further agrees to pay, until the principal of and interest on all Outstanding Bonds shall have been fully paid, to the Trustee for deposit in the Accounts of the Administration Fund established by the Indenture such amounts as the Trustee may from time to time request for the fees and ordinary expenses of the Trustee and the Paying Agent, the annual fees and expenses ofthe Oversight Agent as provided in the Administration Agreement, and into the Borrower Administration Fee Account of the Administration Fund the Administration Fee, pursuant to the Indenture; provided that the Trustee fees and expenses incurred in connection with the enforcement of the Regulatory Agreement and reasonable compensation or reimbursement for extraordinary services, indemnification and expenses of the Trustee, as required by the Indenture, shall be paid upon demand of the Trustee. The Borrower agrees to pay the cost of any Rebate Analyst in connection with the calculation of rebate (within the meaning of Section 148(f) of the Code) and to pay to the Trustee all amounts required to be remitted to the United States. • 33 The Borrower agrees to the establishment of the Operating Reserve Fund and the Repair and Replacement Fund, as well as the Surplus Fund. Amounts deposited in the Surplus Fund shall be used (i) to make the deposits to remedy deficiencies in the Series A Bonds Debt Service Fund, the Series A Bonds Debt Service Reserve Fund, • the Rebate Fund, the Adnunistration Fund or the Repair and Replacement Fund; (ii) subsequently to be deposited to the Rental Assistance Fund and/or the Resident Services Fund as directed by the Issuer, and used as provided in the Grant Agreement and the Agency Regulatory Agreement; or (iii) applied to make payments on the MPROP Loan and the Borrower's obligations to the Issuer. Nature of the Borrower's Obligations The Borrower shall repay the Loan pursuant to the terms of the Note irrespective of any rights of set -off, recoupment or counterclaim the Borrower might otherwise have against the Issuer, the Trustee or any other person. The Borrower will not suspend, discontinue or reduce any such payment or (except as expressly provided in the Loan Agreement) terminate the Loan Agreement for any cause, including, without limiting the generality of the foregoing, (i) any delay or interruption in the operation of the Project; (ii) the failure to obtain any permit, order or action of any kind from any governmental agency relating to the Loan or the Project; (iii) any event constituting force majeure; (iv) any acts or circumstances that may constitute commercial frustration of purpose; (v) the termination of the Loan Agreement; (vi) any change in the laws of the United States of America, the State or any political subdivision thereof; or (vii) any failure of the Issuer to perform or observe any covenant whether expressed or implied, or to discharge any duty, liability or obligation arising out of or connected with the Note, the Loan Agreement, the Regulatory Agreement or any other contract with the Borrower; it being the intention ofthe parties that, as long as the Note or any portion thereof remains outstanding and unpaid, the obligation of the Borrower to repay the Loan and provide such moneys shall continue in all events. The provisions of Loan Agreement summarized in this paragraph shall not be construed to release the Issuer from any of its obligations under the Loan Agreement, the Trustee from any of its obligations under the Indenture, or, except as provided in the Loan Agreement, to prevent or restrict the Issuer from asserting any rights which it may have against the Borrower under the Note or the Indenture or under any provision of law or to prevent or restrict the Borrower, at its own cost and • expense, from prosecuting or defending any action or proceeding by or against the Issuer or the Trustee or taking any other action to protect or secure its rights. • Borrower Not to Dispose of Assets; Conditions Under Which Exceptions Permitted Except as otherwise permitted in the Loan Agreement, the Borrower agrees that during the term of the Loan Agreement it will not dispose of all or substantially all of its assets consolidate with nor merge into any entity unless: (i) the acquirer of its assets or the entity with which it shall consolidate or into which it shall merge shall be an organization described in Section 501(c)(3) ofthe Code that agrees to operate the Project in a manner that does not constitute an unrelated trade or business of such organization or a governmental unit (as described in Section 145 of the Code); (ii) such acquiring or remaining entity shall assume in writing all of the obligations of the Borrower under the Loan Agreement, the Regulatory Agreement, the Continuing Disclosure Agreement, the Note and the Deed of Trust; (iii) the Issuer, after having consulted with such counsel or advisor as deemed by the Issuer to be necessary, cha11 have consented in writing to such transfer, such consent not to be unreasonably withheld; (iv) the written instrument or instruments evidencing such assumption are promptly provided to the Trustee, the Issuer and the City; (v) the written consent of the City to such transfer, and (vi) so long as any Series A Bonds are Outstanding, ACA consents in writing. • 34 Cooperation in Enforcement of Regulatory Agreement • The Borrower covenants and agrees as follows: (a) to comply with all provisions of the Regulatory Agreement; (b) to advise the City, the Issuer, the Trustee and the Program Administrator in writing promptly upon learning of any default with respect to the covenants, obligations and agreements of the Borrower set forth in the Regulatory Agreement; (c) upon written direction by the Issuer, the City, the Program Administrator or the Trustee, to cooperate fully and promptly with the Issuer, the City, the Program Administrator and the Trustee in enforcing the terms and provisions of the Regulatory Agreement; and (d) to file in accordance with the time limits established by the Regulatory Agreement all reports and certificates required thereunder. Neither the Trustee nor the Issuer or the City shall incur any liability in the event of any breach or violation of the Regulatory Agreement by the Borrower, and the Borrower agrees to indemnify and hold harmless the Issuer, the City, and the Trustee from any claim or liability, joint or several, for such breach pursuant to the Loan Agreement. Additional Instruments The Borrower covenants to execute and deliver such additional instruments and to perform such additional acts as may be necessary, in the opinion of the Issuer or the Trustee, to carry out the intent of the Loan and the Note or to perfect or give further assurances of any of the rights granted or provided for in the Loan and the Note. Books and Records; Annual Reports The Borrower covenants to permit the Issuer, the Oversight Agent, ACA, the Program Administrator and the Trustee, or their duly authorized representatives, access to the books and records of the Borrower pertaining to the Loan and the Project during normal business hours and upon prior notice, and to make such books and records • available for audit (by an accounting firm acceptable to the Issuer, the Borrower, the Oversight Agent, ACA, the Program Administrator and the Trustee) and inspection to the Issuer, the City, the Oversight Agent, ACA, the Program Administrator, the Trustee and their duly authorized representatives at reasonable times and under reasonable conditions. At least 60 days prior to the beginning of each fiscal year of the Borrower, the Borrower agrees to prepare an annual budget (either on a fiscal year or calendar year basis) and to submit such budget for approval by the Issuer and the Oversight Agent, with a copy to the City. Such annual budget shall provide for Net Operating Revenues, at least equal to (i) 1.35 times scheduled debt service on the Series A Bonds in such fiscal year, (ii) 1.00 times scheduled debt service on the Series A Bonds, the Issuer Bridge Loan and the Issuer Loan, (iii) amounts necessary to replenish the amount on deposit in the Repair and Replacement Fund to the amount required by the Indenture, (iv) amounts necessary to replenish any withdrawal from the Operating Reserve Fund, and (v) an amount sufficient to pay the Issuer Annual Fee and the fees and expenses of the Fiduciaries. Within 20 days of receiving such annual budget, the Issuer, the City and the Oversight Agent shall provide comments (not inconsistent with the requirements of the Loan Agreement and the Regulatory Agreement), if any (including any suggested changes acceptable to the Oversight Agent), in writing to the Borrower. The Borrower shall attempt in good faith to address comments or concerns of the Issuer and the City in its final budget. The Borrower shall prepare a revised annual budget and provide such revised budget to the Issuer, the City and the Oversight Agent for their review and comment. The Borrower shall provide a copy of the final annual budget to the Trustee, the Issuer, the City, ACA and the Oversight Agent prior to the beginning of the Borrower's fiscal year. In the event the annual budget as adopted does not provide for the coverage set forth in the second sentence of this paragraph, then in the case of a failure to meet the coverage requirement set forth in subsection (i) of said sentence, ACA and the Owners of a majority in Outstanding Principal Amount of the Series A Bonds each shall have the right, in addition to all other rights provided under the Loan Agreement and the Indenture, to direct the Borrower to remove the Project Manager • and appoint a Project Manager acceptable to ACA. 35 Within 20 days after the last day of each quarter, the Borrower shall prepare a statement for the immediately preceding quarter for review by the Issuer, ACA and the Oversight Agent, with a copy to the City, which shall include statement of income, balance sheet, cashflow, budget variances, occupancy rates, rental activity and rental • rates for the Project. Within 60 days after the last day of each fiscal year of the Borrower, the Borrower shall provide a certificate to the Issuer, the City, ACA and the Oversight Agent that the Borrower has made a review of its activities during the preceding fiscal year for the purpose of determining whether or not the Borrower has complied with all of the terms, provisions and conditions of this Agreement, the Regulatory Agreement and the Deed of Trust and shall certify that the Borrower has kept, observed, performed and fulfilled each and every covenant, provision and condition of the Loan Agreement, the Regulatory Agreement and the Deed of Trust on its part to be performed and is not in default in the performance or observance of any of the terms, covenants, provisions or conditions thereof, or if the Borrower shall be in default then such certificate shall specify all such defaults and the nature thereof. All affordability restrictions required under the Regulatory Agreement shall be subject to review by the Oversight Agent, the Program Administrator, the City and the Issuer. Notice of Certain Events The Borrower covenants to advise the Issuer, the City, ACA and the Trustee promptly in writing of the occurrence of any Event of Default under the Loan Agreement or Regulatory Agreement or any event which, with the passage of time or service of notice, or both, would constitute an Event of Default under the Loan Agreement, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. In addition, the Borrower covenants to advise the Issuer, the City, the Oversight Agent, ACA and the Trustee promptly in writing of the occurrence of any default under the Loan Agreement or of the occurrence of an Act of Bankruptcy. Consent to Assignment • The Issuer has made an assignment to the Trustee under the Indenture for the benefit of the owners of the Bonds of all rights and interest of the Issuer in and to the Loan Agreement (except its rights under the Loan Agreement to be indemnified and to be paid its fees and expenses), the Note, and the Deed of Trust; and the Borrower consents to all such assignments. Title to the Project The Borrower has fee title to the Project free and clear of any lien or encumbrance except for (i) liens for non - delinquent assessments and taxes not yet due or which are being contested in good faith by appropriate proceedings; (ii) recorded tenant leases and other encumbrances of record as of the date of acquisition that will not materially impair Bondholders' rights in the Project as shown on the proforma title policy provided at closing; (iii) the Regulatory Agreement; (iv) the Deed of Trust; (v) the Agency Regulatory Agreement; and (vi) the Agency Deed of Trust. On or prior to the Closing Date as required by the Loan Agreement, the Borrower shall cause to be delivered to the Trustee, ACA and the Issuer one or more ALTA title policies, insuring the first lien interests of the Issuer, ACA and the Trustee as the insureds, as their respective interests may appear under the Deed of Trust. • 36 Operation of the Project • The operation of the Project in the manner contemplated on the Closing Date and as described in the Loan Agreement do not conflict with any zoning, water or air pollution or other ordinance, order, law or regulation applicable thereto; the Borrower will cause the Project to be operated in accordance with all applicable federal, state and local law or ordinances (including rules and regulations) relating to zoning, building, safety, and environmental quality and will obtain and maintain in effect any licenses, permits, franchises or other governmental authorizations necessary for the operation of the Project. - Continuing Disclosure The Borrower covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Loan Agreement, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default under the Indenture or the Loan Agreement; however, the Trustee may (and, at the request of any pig Underwriter (as defined in the Continuing Disclosure Agreement), or the holders of at least 25% in aggregate principal amount of Outstanding Bonds, subject to the payment of its fees and expenses, including reasonable attorneys' fees, shall, or any Bondholder may, take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Borrower to comply with its continuing disclosure obligations under the Continuing Disclosure Agreement. Minimum Rents; Coverage Requirement Certificate The Borrower will, at all times while any of the Series A Bonds remain Outstanding, fix, prescribe and collect rents, fees and charges in connection with the Project so as to yield (i) Net Operating Revenues including any earnings on the Series A Bonds Debt Service Reserve Fund for the immediately preceding 12 -month period that will • result in a Coverage Ratio at least equal to 1.35 (rounded up to the nearest hundredth) with respect to the Series A Bonds debt service, and (u) Net Operating Revenues which will result in a Coverage Ratio of at least 1.00 (rounded up to the nearest hundredth) with respect to the aggregate of the Series A Bonds and the Issuer Bridge Loan and the Issuer Loan. The Borrower shall file with the Issuer, the City, ACA and the Trustee on or prior to the Closing Date and at the other times specified in the Loan Agreement, a Coverage Requirement Certificate demonstrating compliance with this requirement. In the event such coverage requirements are not satisfied, then the Issuer and ACA each shall have the right to direct the Borrower to remove and replace the Project Manager. Public Liability and Workers' Compensation Insurance Public Liability Insurance. The Borrower shall maintain or cause to be maintained so long as Bonds are Outstanding under the Indenture, a commercial general liability coverage, including products, completed operations, contractual, bodily injury, personal injury, and property damage in the amount of at least Five Million Dollars ($5,000,000) combined single limits, naming the Issuer and its officers, officials, employees, volunteers, agents, and representatives as additional insureds. All such insurance (i) shall be primary insurance and not contributory with any other insurance which the Issuer or its officers, officials, employees, volunteers, agents, or representatives may have; (ii) shall contain no special limitations on the scope of protection afforded to the Issuer and its officers, officials, employees, volunteers, agents, and representatives; (iii) shall be "per occurrence" rather than "claims made" insurance (in the event the Borrower is unable to obtain such policy, or believes that such policy's premium is not reasonable, the Borrower shall submit proof of such contention to the Issuer, upon which event the Issuer may, after review of such information, authorize a "claims made" policy for the Project); (iv) shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability; (v) shall provide that the policy will not be canceled or limited in scope by the insurer or the Borrower's contractor unless there is a minimum of thirty (30) days prior written notice by certified mail, return receipt • requested to the Issuer and the Oversight Agent; (vi) shall be written by a Cahfornia licensed insurer with a Best 37 rating of not less than B +, Class X; and (vii) shall. be endorsed to state that any failure to comply with the reporting provisions of the policies shall not affect coverage provided to the Issuer and its officers, officials, employees, volunteers, agents and representatives. • None ofthe above - described policies shall include a deductible or self-insured retention amount ofmore than Ten Thousand Dollars ($10,000) unless approved in writing by an authorized representative of the Issuer upon the advice of the Oversight Agent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the Borrower. The Net Proceeds of such liability insurance shall be applied by the Borrower toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. Workers' Compensation Insurance. The Borrower shall maintain or cause to be maintained to the extent required by law so long as Bonds are Outstanding under this Indenture, workers' compensation insurance, including Employer's Liability Coverage, with limits not less than $1,000,000 per accident, issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the Labor Code of the State, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers' compensation insurance to cover all persons (if any) employed by the Borrower in connection with Project and to cover full liability for compensation under such act. Such insurance shall be endorsed to include a waiver of subrogation rights against the Issuer and its officers, officials, employees, volunteers, agents and representatives. Such insurance shall be underwritten by California licensed insurers with Best ratings of not Less than B +, Class X. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by Borrower. Casualty Insurance The Borrower will procure and maintain, or cause to be procured and maintained, so long as Bonds are • Outstanding under the Indenture, all risk casualty insurance against loss or damage to the Improvements located on the Project, in an amount at least equal to one hundred percent (100°/x) of the replacement value of the Improvements. Such insurance will, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke, fire and such other hazards (including earthquake, to the extent earthquake coverage is available at commercially reasonable rates as determined by an independent insurance consultant, and flood coverage) as are normally covered by such insurance. Such insurance will be subject to such deductibles as are customarily maintained by municipalities with respect to works and properties of a like character, but in any case will not exceed $100,000. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the Borrower. Any insurer providing such insurance must be rated at least "A" by A.M. Best or Standard & Poor's Ratuigs Services. Such insurance shall be reviewed by an independent insurance consultant retained by the Borrower at least once every other year, and shall be maintained as recommended by the consultant as customarily obtained by similarly situated entities. The Net Proceeds of such insurance will be applied as provided in the Indenture. Rental Interruption Insurance The Borrower will procure and maintain, or cause to be procured and maintained, so long as Bonds are Outstanding under the Indenture, rental interruption or use and occupancy insurance to cover the Borrower's loss, total or partial, of payments for the Loan resulting from the loss, total or partial, of the use of the Improvements located on the Project as a result of any of the hazards covered in the insurance required by the Indenture, in an amount at least equal to the sums of (i) Maximum Annual Debt Service and (ii) budgeted Operation and Maintenance Costs coming due and payable during the current Fiscal Year; provided, however, that with respect to budgeted Operation and Maintenance Costs, in the first Fiscal Year such amount will be as agreed to by the 411 38 r Borrower and the Oversight Agent and that in any future Fiscal Year such amount will be the greater of the budgeted Operation and Maintenance Costs or the prior Fiscal Year's actual Operation and Maintenance Costs. Such III insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the Borrower. The Net Proceeds of such insurance, if any, will be paid to the Trustee and deposited in the Series A Bonds Debt Service Fund under the Indenture, and will be credited towards the payment of the Bonds as the same become due and payable in accordance with the Indenture. Repair and Replacement . The Borrower agrees to cause to be performed a preliminary inspection by a consultant experienced in mobilehome parks, selected by the Borrower and approved by the Issuer, of the,Project at such time or times as the Oversight Agent (but in any event at least once every five years) may reasonably determine to be necessary based on information with respect to the Project available to the Oversight Agent, and, if it is determined that further inspection is needed after a preliminary inspection, such further inspection, providing a report of a licensed contractor qualified to do the type of work proposed to be performed to identify any repairs, replacements or capital improvements required to maintain the Project as a safe and sanitary mobile home park in accordance with the Loan Agreement, the Regulatory Agreement and all associated agreements. Any such inspections shall be at the expense of the Borrower. All such repairs, replacements or capital improvements and costs of inspections will be paid for from moneys on deposit in the Repair and Replacement Fund to the extent of the monies deposited in such Fund. , In the event that expenses are incurred, or in the opinion of the Borrower ought properly be incurred for replacement or additional improvements on the Project, for other capital facilities which may be of direct or indirect benefit to the Project which are not identified in a report of a licensed contractor qualified to do the type of work proposed to be performed (pursuant to the Loan Agreement), beyond ordinary and necessary maintenance and repairs which are paid as part of the Operation and Maintenance Expenses, the Borrower shall submit to the Oversight Agent a request for payment or reimbursement of such costs. The request shall (a) identify the total III amount of such costs to be paid pursuant to such requisition, including all items of cost in such detail as may be -- available to the Borrower, (b) state with respect to such disbursement (i) the amount to be disbursed for payment of such costs, and (ii) that each item of costs identified therein has been properly incurred and has not been the basis of any previous disbursement; and (c) be accompanied by an invoice, if any. Upon approval by the Oversight Agent of such a request from the Borrower, the Oversight Agent shall submit or cause to be submitted the request to the Trustee pursuant to the Indenture for payment of such costs from the Repair and Replacement Fund. Moneys deposited in the Repair and Replacement Fund on the Closing Date shall be applied to pay for or reimburse the Borrower for initial improvements to the Project or expected replacements to the Project as set forth in Exhibit C for the Loan Agreement, as said Exhibit C may be amended from time to time with the approval of the Borrower and the Oversight Agent or for an expense described in the preceding paragraph. Moneys deposited in the Repair and Replacement Fund pursuant to the Indenture may be used for an expense described in the preceding paragraph. With respect to each expenditure from the Repair and Replacement Fund, the Borrower will file with the . Oversight Agent a request, with a copy to the City. The request shall (a) identify the total amount of such costs to be paid pursuant to such requisition, including all items of cost in such detail as may be available to the Borrower, (b) state with respect to such disbursement (i) the amount to be disbursed for payment of such costs, and (ii) that each item of costs identified therein has been properly incurred and has not been the basis of any previous disbursement, and (c) be accompanied by an invoice, if any. Upon approval by the Oversight Agent of such a request from the Borrower, the Oversight Agent shall submit or cause to be submitted the request to the Trustee pursuant to the Indenture for payment of such costs from the Repair and Replacement Fund, with a copy to the City. On or about the fifth anniversary of the Closing Date and on or about each fifth year thereafter, the • Borrower shall cause an updated report with respect to the physical needs of the Project (the "Updated Physical 39 - Assessment Report") to be prepared by a qualified professional approval by the Oversight Agent and a copy of said Updated Physical Assessment Report shall be filed with the Oversight Agent, the Issuer, the City and ACA. • Thereafter, to the extent specified in the Updated Physical Assessment Report, the Borrower shall cause to be deposited into the Repair and Replacement Fund pursuant to the Indenture the amount specified in said Updated Physical Assessment Report. Other Debt, No Recourse Debt The Borrower represents, covenants and warrants that: (a) other than the Loan, the Issuer Bridge Loan and the Issuer Loan, there are no other debt obligations of the Borrower with a maturity of greater than one year; (b) the Borrower is not a debtor, guarantor or otherwise an obligor under any loan arrangement, promissory note or other evidence of indebtedness that is a recourse obligation against the Borrower; (c) the Borrower shall not incur any recourse debt nor shall the Borrower act as guarantor or enter into any other arrangement if by doing so would subject the Borrower to recourse liability; (d) the Borrower shall not incur any long -term debt payable from Operating Revenues (other than the Loan and the Seller Note) unless it has received written consent from ACA and the actual Net Operating Revenues for each of the two most recent fiscal years are at least equal to (i) 1.35 times the maximum annual debt service on the Series A Bonds, plus the proposed additional long-term debt, and (ii) 1.00 times the maximum annual debt service on the Series A Bonds, the Issuer Bridge Loan, the Issuer Loan and the proposed additional long -term debt. Payments to ACA The Borrower hereby agrees to pay or reimburse ACA any and all charges, fees, costs and expenses which ACA may reasonably pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, in connection with (a) any accounts established to facilitate payments under the Policy, (b) the administration, enforcement, defense or preservation of any rights in • respect of the Indenture or any Loan Document including defending, monitoring or participation in any litigation or proceeding (including any bankruptcy proceeding in respect of the Issuer or the Borrower or any affiliate thereof) relating to any Loan Documents, any party to any Loan Document or the transaction contemplated by the Loan Documents (the "Transaction "), (c) the foreclosure against, sale or other disposition of any collateral securing any obligations under any Loan Document, or the pursuit of any remedies under any Loan Document, to the extent such costs and expenses are not recovered from such foreclosure, sale or other disposition, or (d) any amendment, waiver or other action with respect to or related to, any Loan Document or the Borrower's governing provisions whether or not executed or completed; costs and expenses shall include a reasonable allocation of compensation and overhead attributable to time of employees of ACA spent in connection with the actions described in clauses (b) - (d) above; and ACA reserve the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of any Loan Document. In addition to any and all rights of reimbursement, subrogation and any other rights pursuant hereto or under law or in equity, the Borrower agrees to pay or reimburse ACA any and all charges, fees, costs, claims, losses, liabilities (including penalties), judgments, demands, damages, and expenses which ACA or its officers, directors, shareholders, employees, agents and each person, if any, who controls ACA within the meaning of either Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 may reasonably pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, of any nature in connection with, in respect of or relating to the transactions contemplated by any Loan Document by reason of: (a) any omission or action (other than of or by ACA) in connection with the offering, issuance, sale, remarketing or delivery of the Bonds; • 40 (b) the negligence, bad faith, willful misconduct, misfeasance, malfeasance or theft committed by any director, officer, employee or agent of the Issuer or the Borrower or any affiliate thereof in • connection with any transaction arising from or relating to any Loan Document or the Borrower's governing provisions; (c) the violation by the Issuer or the Borrower of any law, rule or regulation, or any judgment, order or decree applicable to it; (d) the breach by the Issuer or the Borrower of any representation, warranty or covenant under - any Loan Document or the occurrence, in respect of the Issuer or the Borrower, under any Loan Document of any event of default or any event which, with the giving of notice or lapse of time or both, would constitute any event of default; or (e) any untrue statement or alleged untrue statement of a material fact contained in any official statement or other disclosure document or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such claims arise out of or are based upon any untrue statement or omission in information included in an official statement or other disclosure document and furnished by ACA in writing expressly for use therein. Replenishment of Series A Bonds Debt Service Reserve Fund Subject to such shorter time as may be directed by ACA, the Borrower agrees to make payments sufficient to restore the Series A Bonds Debt Service Reserve Fund to the Series A Bonds Debt Service Reserve Fund Requirement (a) in 12 consecutive equal monthly installments beginning in the month following any withdrawal from the Series A Bonds Debt Service Reserve Fund which causes the amount therein to be less than the Series A Bonds Debt Service Reserve Fund Requirement, or (b) in four consecutive equal monthly installments beginning in the • month following any calculation of the value of the Series A Bonds Debt Service Reserve Fund at an amount less than the Series A Bonds Debt Service Reserve Fund Requirement. Project Transfer Restrictions The Borrower shall not enter into any agreement to purchase (which shall not include an option to purchase which is non - binding on the Borrower) any interest in any other project unless (i) (A) the pro forma net operating revenues of the new project (as reasonably determined by an independent consultant acceptable to ACA) based on an analysis of the historical performance of the new project are equal to at least (x) 1.25 times maximum annual debt service on all existing senior long -term debt ofthe Borrower related to the new project plus any additional long- . term'debt associated with the new project, and (y) 1.15 times maximum annual debt service on all existing long-term debt of the Borrower related to the new project (other than subordinate debt similar in payment priority, or lower, plus the additional long -term debt associated with the new project, (B) the legal documentation with respect to the new project includes an additional debt test of (x) 1.25 times maximum annual debt service on all existing senior long term debt plus any additional senior long term debt, and (y) 1.15 times maximum aimual debt service on all existing long term debt plus the additional long term debt, and (C) (x) the operating cash balance of the new project is equal to at least 15 days of annual budgeted operating expense, or (y) ACA consents in writing to the Obligor's purchase of the new project. Any such acquisition by the Borrower of any project with less than two years of operations shall in any event be subject to the prior written consent of ACA. Project Management Agreements So long as any Series A Bonds remain Outstanding, ACA shall have the nght to review and approve any and all Project management agreements and the arrangements for management of cash and other receipts with • respect to the Property. All such Project management agreements and arrangements shall be in form and substance 41 satisfactory to ACA. Any Project management agreement shall permit the Borrower to remove the Project Manager (without penalty) for nonperformance or if the Borrower fails to meet the rate covenant in the Loan Agreement (unless it could be established that causes outside the operator's control were causing the rate covenant violation), • and ACA shall have the right to direct the Borrower to remove the Project Manager. ACA's consent shall be required for any amendment to or replacement of any Project management agreement. Operating Account The Borrower shall have an operating cash balance for the Project equal to at least 15 days of annual budgeted Operation and Maintenance Costs as of the Closing Date and as of the last day of each fiscal year (such cash balance shall be exclusive of any amounts in the funds and accounts held by the Trustee or funds representing resident security deposits). Transfer to Single Purpose Entity The Borrower will use its best efforts to transfer the Project to a single purpose entity described in Section 501(c)(3) of the Internal Revenue Code. The following conditions must be satisfied prior to such transfer of the Project to such entity: (i) the entity shall be an organization described in Section 501(c)(3) of the Internal Revenue Code that agrees to operate the Project in a manner that does not constitute an unrelated trade or business of such organization; (ii) the entity shall assume in writing all ofthe obligations ofthe Borrower under the Loan Agreement the Regulatory Agreement, the Continuing Disclosure Agreement, the Note and the Deed of Trust, the Land and Grant Agreement and the Bridge Loan Agreement; (iii) the Issuer shall receive the written instruments evidencing such assumption in form and substance satisfactory to the Issuer; (iv) the Issuer shall receive an opinion of counsel to such entity that the entity's obligations under such financing documents are legal, valid and binding in form and substance satisfactory to the Issuer; (v) the Issuer shall receive an opinion of Bond Counsel that such transfer will not adversely affect the tax - exempt status of the Bonds in form and substance satisfactory to the Issuer; and (vi) the Issuer consents in writing to such transfer. The Borrower shall provide the Issuer with at least 30 days prior 411 written notice of such transfer of the Project. Events of Default Each of the following is an "Event of Default" under the Loan Agreement. (a) The Borrower shall fail to pay when due the amounts required to be paid under the Loan Agreement or the Note when the same shall become due and payable in accordance with the terms of the Loan Agreement or the Note, including a failure to repay any amounts which have been previously paid but are recovered, attached or enjoined pursuant to any insolvency, receivership, liquidation or similar proceedings; or (b) The Borrower shall fail to perform or observe any of its covenants or agreements contained in the Loan Agreement, the Regulatory Agreement, the Indenture, the Note or the Deed of Trust, other than as specified in paragraph (a) above, and such failure shall continue during and after the period specified below; or (c) Any representation or warranty of the Borrower shall be determined by the Trustee or the Issuer to have been false in any material respect when made; or (d) The Borrower shall generally not pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors or shall institute any proceeding or voluntary case seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or • 42 • its debts under any law relating to bankruptcy, insolvency or reorganization or relief or protection of • debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property; or the Borrower shall take any action to authorize any of the actions described above in this paragraph (d), or any proceeding shall be instituted against the Borrower seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief or protection of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, and, if such proceeding is being contested by the Borrower in good faith, such proceeding shall remain undismissed or unstayed for a period of 60 days; or (e) An event of default shall have occurred under the Indenture and the Series A Bonds have been declared due and payable pursuant to the Indenture. No default under paragraph (b) above shall constitute an Event of Default until: . (i) The Trustee or ACA, by registered or certified mail, shall give notice to the Borrower of such default specifying the same and stating that such notice is a "Notice of Default"; and (ii) The Borrower shall have 60 days after receipt of such notice to correct the default and shall not have corrected it; provided, however, that if the default stated in the notice is of such a nature that it cannot be corrected within 60 days, such default shall not constitute an Event of Default under the Loan Agreement so long as (a) the Borrower institutes corrective action within said 60 days and diligently pursues • such action until the default is corrected, and (b) in the opinion of Bond Counsel, the failure to cure said default within 60 days will not adversely affect, the exclusion from gross income for federal income tax • purposes of interest on the Bonds. Remedies Whenever any Event of Default under the Loan Agreement shall have happened and be continuing, the following remedial steps shall be taken, subject to the rights of ACA under the Indenture: (a) ' Immediately upon the occurrence of any Event of Default under the Loan Agreement the Trustee shall declare all amounts due under the Loan Agreement and the Note to be immediately due and payable; provided, however, that in the case of an Event of Default described in (b), (c) or (d) above, the amounts due under the Loan Agreement and the Note shall not be accelerated unless the Trustee receives either (i) written notice from the Issuer to accelerate the Loan and declare all amounts due under the Loan Agreement and the Note or (ii) an opinion of Bond Counsel that the failure to accelerate the Loan under such circumstances will adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds; provided, however, as is set forth in the Indenture, if the Series A Bonds are Outstanding and there has been no default with respect to the Series A Bonds under the Indenture; (b) Subject to the provisions of the Indenture, the Trustee shall take whatever action at law or in equity may appear necessary or desirable to collect the payments required to be made by the Borrower under the Loan Agreement, the Deed of Trust, and the Note, or to enforce performance and observance of any obligation or agreement of the Borrower under the Loan Agreement, the Note, the Deed of Trust or the Regulatory Agreement, but in no event shall the Trustee be obligated to take any such action which in its opinion will or might cause it to expend time or money or otherwise incur liability unless and until an indemnity bond satisfactory to it has been furnished to it; • 43 (c) The Issuer may, upon consultation with the Oversight Agent, terminate the Project Manager and shall upon the recommendation of the Oversight Agent or such other advice as the Issuer • deems appropriate, select a new Project Manager; (d) Upon an Event of Default under the Loan Agreement, either the Issuer may operate and administer, or cause to be operated and administered, the Project in the place and stead of the Borrower and in the manner required by the terms and provisions of the Regulatory Agreement. In so doing, the Issuer or such party as it may appoint to operate and administer the Project, to the extent it may have moneys available under the Loan Agreement for such purposes, shall complete the rehabilitation and equipping of any incomplete component of the Project to be funded with proceeds of the Bonds, and shall pay from the Operating Revenues received with respect to such Project (to the extent available) the Loan Repayments and Fees and Charges, if any, which the Borrower was obligated to pay pursuant to the terms and provisions of the Loan Agreement and the Deed of Trust. The Trustee or other depository shall be authorized to pay the Issuer or its designee as directed by an Officer's Certificate any moneys on deposit in the Project Fund to the extent that the Issuer shall certify in writing that such moneys are required by the Issuer or its designee to pay any items that would have been included in the Cost of Project had the Issuer or its designee not acquired the same; (e) The Issuer may; upon the recommendation of the Oversight Agent or such other advice as it may deem appropriate, commence foreclosure proceedings as set forth in the Indenture; and (f) Upon an Event of Default and continuing until at least one year after all Events of Default have been cured, all Operating Revenues then on hand and thereafter received by the Borrower or otherwise shall be delivered to the Trustee, for deposit to a depository account for the benefit of the Bond Owners to be applied by the Trustee first to the payment of debt service on the Series A Bonds and then to the payment of reasonable and necessary Operation and Maintenance Costs, with any remaining amounts used as provided in the Indenture. • Any amounts collected as payments made on the Note, or applicable to such payments, and any other amounts which would be applicable to payment of principal of, premium, if any, and interest on the Bonds collected pursuant to action taken under the foregoing provisions of the Loan Agreement shall be applied in accordance with the provisions of the Indenture. Upon payment in full of all amounts owing under the Indenture, including all fees and expenses of the Trustee, the Oversight Agent and the Issuer, the Issuer and the Trustee shall transfer any remaining right, title or interest that each has in the Indenture, the Loan Agreement, the Note and the Deed of Trust to the Borrower, except any rights to receive payment of fees and expenses and to be indemnified, as provided for in the Loan Agreement and the Indenture. Beneficiaries So long as any of the Series A Bonds are Outstanding, ACA, the City and the Agency, shall be intended third party beneficiaries of the Loan Agreement. • 44 THE REGULATORY AGREEMENT • The following is a summary of certain provisions of the Regulatory Agreement and does not purport to be complete. Reference is hereby made to the Regulatory Agreement which is available from the Trustee upon request, and to Appendix B for the definition of certain terms used herein. Any capitalized terms not otherwise defined herein or in Appendix B are as defined in the Regulatory Agreement. Residential Rental Property; Qualified Residents The Borrower represents, as of the date of the Regulatory Agreement, and warrants, covenants and agrees as follows: (a) The Project is being owned and operated for the purpose of providing residential rental housing, consisting of one mobile home Space for each household, together with related facilities. (b) All of the mobile homes in the Project will contain separate facilities for living, sleeping, eating, cooking and sanitation, including a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink. (c) Substantially all ofthe Spaces will be available for rental on a continuous basis to members of the general public, and the Borrower will not give preference to any particular class or group in renting the Spaces in the Project, except to the extent that Spaces are to be leased or rented to Qualified Residents. (d) The Project comprises a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership, management, accounting and operation of the • Project. • (e) No part of the Project will at any time -be owned or used as a condominium or by a cooperative housing corporation, and the Borrower shall not take any steps toward such conversion without . an opinion of Bond Counsel that interest on the Bonds will not thereby become includable in gross income for federal income tax purposes. (f) Should involuntary noncompliance with the provisions of the Regulatory Agreement be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar event, the Borrower covenants that, within a "reasonable period" determined in accordance with the Regulations, it will either prepay the Note or apply any proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements hereof. (g) There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry, national origin, source of income (e.g. AFDC (or its successor program, if any) or SSI) or disability in the sale, lease, sublease, transfer, use occupancy tenure or enjoyment of the Project nor shall the transferee or any person claiming under or through the transferee, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Project. (h) The Very Low Income Spaces shall be intermingled with, and shall be of comparable quality to, all other Spaces in the Project. Tenants in all Spaces shall have equal access to and enjoyment • of all common facilities of the Project. 45 (i) In the aggregate, no more than two persons per bedroom, plus one person shall occupy any Space in the Project, not including children born after the date of initial occupancy by a household. For • example, with respect to a two bedroom mobilehome, maximum occupancy shall be 5 persons (exclusive of post - occupancy children described above). (j) The Borrower will accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act, or its successor. The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that is more burdensome than criteria applied to all other prospective tenants, nor shall the Borrower apply or permit the application of management policies or lease provisions with respect to the Project which have the effect of precluding occupancy of Spaces by such prospective tenants. Issuer Requirements The following provisions shall apply during the term of the Regulatory Agreement, irrespective of whether any Bonds are outstanding. (a) Any proposed sale of the Project by the Borrower shall be noticed to the Issuer and the City no less than 90 days prior to the proposed date of the sale. The Issuer's consent to any transfer of the Project shall be subject to the provisions of the Regulatory Agreement. (b) The Borrower shall notify the Issuer and the Program Administrator of the operations/ management company it will employ for the Project no less than 30 days prior to the signing of a contract with any such entity. Qualifications of the firm(s) shall also be provided at that time and the Issuer shall have the right to submit comments on the qualifications of the firm, which shall be considered by Borrower prior to execution of a contract. • (c) With the exception of pre - existing uses of property not owned by the Borrower, the Borrower is responsible for all management functions with respect to the Project including the selection of tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The Issuer shall not have responsibility over management of the Project. In no instance shall the Borrower delegate or forego its responsibility to operate the Project in the manner set forth in the Regulatory Agreement and the Loan Agreement. (d) The Issuer, through its Authorized Officer, reserves the right to conduct on or about December 15 of each year, commencing December 15, 2001, an annual (or more frequently, if deemed necessary by the Issuer) review of the management practices and financial status of the Project. The • purpose of each periodic review will be to enable the Issuer to determine if the Project is being operated and managed in accordance with the requirements and standards of the Regulatory Agreement. The Borrower shall cooperate with the Issuer in such reviews, including but not limited to making its books and records regarding the Project available for inspection by the Issuer and the City. (e) With the exception of pre - existing uses of property not owned by the Borrower, the Borrower agrees, for the entire term of the Regulatory Agreement, to maintain all common area interior and exterior improvements and common buildings on the Project (exclusive of the mobile homes and tenant spaces), including landscaping and common buildings on the Project in good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having • or claiming jurisdiction and all their respective departments, bureaus, and officials. 46 The Issuer places prime importance on quality maintenance to ensure that all Issuer - assisted affordable housing projects are not allowed to deteriorate due to below - average maintenance. Normal wear and tear of the • Project will be acceptable to the Issuer assuming the Borrower agrees to provide all necessary improvements to assure the Project is maintained in good condition. The Borrower shall make all repairs and replacements necessary to keep the Project in good condition and repair. In the event that the Borrower breaches any of the covenants contained in the Regulatory Agreement and such default continues for a period of 10 days after written notice from the Issuer with respect to graffiti, debris, waste material, and general maintenance or 30 days after written notice from the Issuer with respect to landscaping and building improvements, then the Issuer may enter upon the Project and perform or cause to be performed all work necessary to cure the default. Pursuant to such right of entry, the Issuer shall be permitted (but is not required) to enter upon the Project and perform all work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Project, and to attach a lien on the Project, or to assess the Project, in the amount of its expenditures, including a 15% administrative charge. Qualified Residents Pursuant to the requirements of the Code and the Act, the Borrower covenants and agrees as follows: (a) During the Qualified Project Period: not less than 20% of the Spaces in the Project shall be designated as Very Low Income Spaces and shall be continuously occupied by Very Low Income Residents. The monthly rent charged for half of the Very Low Income Spaces (i.e., 10% of the Spaces) shall not be greater than as follows: (A) where a Very Low Income Resident is both the registered and legal owner of the mobile home and is not making mortgage payments for the purchase of that mobile home, the total • rental charge for occupancy of the Space (excluding a reasonable allowance for other related housing costs determined at the time of acquisition of the Project by the Borrower and excluding any supplemental rental assistance from the State, the federal government, or any other public agency to the Very Low Income Resident or on behalf of the Space and the mobile home) shall not for exceed one - twelfth of 30 percent of 50 percent of Median Income for the Area, adjusted size in the manner set forth in the definition of Very Low Income Resident in the Regulatory Agreement. (B) where a Very Low Income Resident is the registered owner of the mobile home and is making mortgage payments for the purchase of that mobile home, the total rental- charge for occupancy of the Space (excluding any charges for utilities and storage and excluding any supplemental rental assistance from the State, the federal government, or any other public agency to the Very Low Income Resident or on behalf of the Space and mobile home), shall not exceed one - twelfth of 15 percent of 50 percent of Median Income for the Area, as adjusted for household size in the manner set forth in the definition of Very Low Income Resident in the Regulatory Agreement. (C) where a Very Low Income Resident rents both the mobile home and the Space occupied by the mobile home, the total rental payments paid by the Very Low Income Resident on the mobile home and the Space occupied by the mobile home (excluding any supplemental rental assistance from the State, the federal government, or any other public agency to that Very Low Resident or on behalf of that Space and mobile home) shall not exceed one - twelfth of 30 percent of 50% of Median Income for the Area adjusted for household size in the manner, set forth in the • definition of Very Low Income Resident in the Regulatory Agreement. 47 (b) In the event a recertification of such tenant's income in accordance with paragraph (d) below demonstrates that such tenant no longer qualifies as a Qualified Resident the Space occupied by such Resident shall- continue to be treated as a Qualified Space unless and until any Space in the Project • thereafter is occupied by a new tenant that is a Qualified Resident. Moreover, a Space previously occupied by a Qualified Resident and then vacated shall be considered occupied by a Qualified Resident until reoccupied, other than for a temporary period, at which time the character of the Space shall be redetermined. In no event shall such temporary period exceed 31 days. Notwithstanding anything in the Regulatory Agreement to the contrary, if at any time the number of Qualified Residents falls below the number required by the Regulatory Agreement, the next available vacant Space shall be rented to a Qualified Resident. (c) Immediately prior to a Qualified Resident's occupancy of a Qualified Space (or prior to the Closing Date with respect to Very Low Income Spaces previously occupied), the Borrower will obtain and maintain on file an Income Certification form from each Qualified Resident occupying a Qualified Space, dated immediately prior to the initial occupancy of such Qualified Resident in the Project (or prior to the Closing Date in the case of existing Very Low Income Residents). In addition, the Borrower will .provide such further information as may be required in the future by the State of California, and by the Act, as the same may be amended from time to time as requested by the Issuer or the Program Administrator. The Borrower shall verify the income provided by an applicant with respect to a Space to be occupied after the Closing Date in the manner described by the Regulatory Agreement. (d) On the first anniversary date of the issuance of the Bonds, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of such Qualified Spaces by obtaining a completed Income Certification based upon the current income of each occupant of the Space. In the event the recertification demonstrates that such household's income exceeds 140% of the income at which such household would qualify as Qualified Residents, such household will no longer qualify as a Qualified Resident, and the Borrower will either (i) designate another qualifying Tenant and Space in the Project as • a Qualified Resident and a Qualified Space, respectively, or (ii) rent the next available vacant Space to one or more Qualified Residents. (e) The Borrower agrees to provide to the Program Administrator and the Issuer, a copy of the form of application and lease to be provided to prospective Qualified Residents and any amendments thereto. (f) In the event, despite Borrower's exercise of best efforts to comply with the provisions of Section 4 of the Regulatory Agreement, the Borrower shall have been out of compliance with any of the restrictions of Section 4 of the Regulatory Agreement relative to Qualified Residents for a period in excess of six months, then at the sole -option of the Issuer the term of the Regulatory Agreement shall be automatically extended for the period of non - compliance upon written notice to the Borrower, the Trustee and the Oversight Agent from the Issuer, such extension to relate to the Qualified Spaces and Qualified Residents as to which such noncompliance relate. Sale or Transfer of the Project The Borrower intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise dispose of the Project, and covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated under the Regulatory Agreement), without obtaining the prior consent of the Issuer and the City and satisfaction of the other requirements of the Regulatory Agreement. • 48 • Term The Regulatory Agreement and all and several of the terms will become effective upon its execution and delivery and will remain in full force and effect during the Qualified Project Period, it being expressly agreed and understood that the provisions are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement and the Note. Enforcement If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in the Regulatory Agreement, and if such default remains uncured for a period of 60 days after notice thereof shall have been given by the Issuer or the Trustee to the Borrower (provided, however, that the Issuer and the City may at their sole option extend such period if the Borrower provides the Issuer with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds, and provided further, in the event any default relates to Section 4 of the Regulatory Agreement and the Borrower is exercising best efforts to comply with such restrictions as determined by the Issuer in its their sole discretion, then the cure period described above shall be 6 months and shall be subject to the extension of the Qualified Project Period as provided in the Regulatory Agreement). If the Borrower fails to cure within the specified period then the Trustee, subject to the provisions of the Regulatory Agreement and acting on its own behalf or on behalf of the Issuer, shall declare an "Event of Default" to have occurred, and, at its option, may take any one or more of the following steps: (i) by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants under the Regulatory Agreement or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee under the Regulatory Agreement • (ii) have access to and inspect, examine and make copies of all of the books and records of the Borrower pertaining to the Project; and (iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower under the Regulatory Agreement. In addition to the enforcement remedies set forth above, upon the Borrower's default under the Regulatory Agreement, the Issuer will each have the right (but not the obligation) to lease up to 20% of the Spaces in the Project for a rental of 51 per Space per year. The Issuer shall sublease such units to Very Low Income Residents to the extent necessary to comply with the provisions of the Regulatory Agreement. Any rent paid under such a sublease shall be paid to the Borrower after the Issuer have been reimbursed for any expenses incurred by them in connection with the sublease; provided that, if the Borrower is in default under the Loan, such rent shall be used to make payments under the Loan. The Trustee shall have the right, in accordance with the Regulatory Agreement and the provisions of the Indenture, without the consent or approval of the Issuer, to exercise any or all of the rights or remedies of the Issuer under the Regulatory Agreement; provided that prior to taking any such act the Trustee shall give the Issuer written notice of its intended action. All fees, costs and expenses of the Trustee, the Issuer and the Oversight Agent (including, without limitation, reasonable attorneys' fees) reasonably incurred in taking any action pursuant to the Regulatory Agreement shall be the sole responsibility of the Borrower; provided the Trustee will not be obligated to take any action under the Regulatory Agreement that results in expenses or liability to the Trustee unless it is compensated and reimbursed for its expenses, including reasonable attorneys' fees, and indemnified to its satisfaction against liability. • 49 After the Indenture has been discharged, or if the Trustee fails to act under the Regulatory Agreement, either the Issuer or the City may act in its own behalf to declare an "Event of Default" to have occurred and to take any one or more of the steps specified above to the same extent and with the same effect as if taken by the Trustee. • THE BORROWER The following information regarding the Borrower, its Officers and Board Members and its activities has been provided by the Borrower, and the Issuer has not independently verified any of such information, nor does it accept any responsibility therefor. Organization The Borrower is a regional, 501(c)(3) nonprofit affordable housing development corporation established in 1997 under the name ZINC - La Quinta Seniors, Inc., as an affiliate of the Corporate Fund for Housing (CFH), a nonprofit organization formed by the Southern California Association of Governments in 1984. The name of the corporation was subsequently changed to LINC Community Development Corporation. The Borrower promotes affordable housing development throughout California by working • with local governments, the for -profit development community, lenders, and select corporate investors. The Borrower received a determination letter from the Internal Revenue Service as to its status as an organization described in Section 501(c)(3) of the Code on . August 4, 1997, and a letter from the State of California Franchise Tax Board confirming its exemption from State franchise or income tax on January 16, 1997. The Borrower is governed by LINC Housing Corporation and a Board of Directors, composed of individuals which are officers and directors of LINC Housing Corporation who are from both the private and public sectors, who volunteer their time to support and direct the goal of promoting affordable housing. The Board members are experienced in areas related to low- income housing development and are available to provide expertise and assistance to move projects to completion. The Borrower is managed by the President/CEO and Vice President • who oversee strategic planning, acquisitions, development, property management and asset management operations. The current operating officers of LINC Community Development Corporation are as follows: Hunter L Johnson, President and Chief Executive Officer Hunter L. Johnson, President and CEO of LINC Housing, has over 30 years experience in development, affordable housing, and structuring public/private partnerships. During his career he has had a hand in developing over 10,000 units throughout California. Mr. Johnson has led the 17- year -old nonprofit in its growth from 1,045 to 3,065 affordable units throughout Southern California. LINC builds, owns and provides asset management for family and senior rentals and three mobile home parks. Financing programs have included 4% and 9% tax credits, taxable and tax- exempt bonds, CDBG, Home and AHP grants as well as local redevelopment funds. Prior to joining LINC, Mr. Johnson was Director of Development for American Development Consultants in Palm Springs (ADC), a fine specializing in facilitating development projects. With a balance of for -profit developers, nonprofit housing sponsors, cities, redevelopment agencies and Indian Tribes as clients, he is well versed in working with those involved in the development of affordable housing. While with ADC, he worked with LINC on the acquisition and rehabilitation of Tahquitz Courts, an affordable family apartment complex in Palm Springs, and the development of SEASONS at Gateway Plaza in Ontario. Previously, Mr. Johnson served as Executive Director ofthe Emeryville Redevelopment Agency, where residential development included the financing and adaptive re -use of 80 units of affordable live -work space for artists. As Chief of Rehabilitation for the San Francisco Redevelopment Agency, he was responsible for rehabbing over 400 units each year, balancing the development mix to promote an economically balanced neighborhood. He also planned for large -scale relocation of residents and marketing land for development throughout the city. Mr Johnson's education includes a Bachelors Degree in Urban Sociology from the University of Tulsa and a graduate degree in Architecture from UC Berkeley. He has been an invited speaker 411 50 at the Urban Land Institute, the National Association of Housing and Redevelopment officials, the California Redevelopment Association, the American Planning Association, and the National Association of Home Builders. • In addition to leadership roles in local and state professional groups, he has served as Chairman of the Palm Springs Art Commission and as a Board Member of the Riverside Arts Commission. Scott Darrell, Vice President As Vice President of LINC Housing Corporation, Scott Darrell supports all real estate development, property management and asset management activities. Mr. Darrell oversees the operations of LINC's portfolio of over 3,000 dwelling units and the formation of LINC's strategic alliance with Community Housing Management Services. Mr. Darrell has a wide range of experience in the affordable housing field. Prior to joining LINC, Mr. Darrell was the Asset Manager of the Los Angeles Community Design Center's diverse portfolio of over 850 units of affordable housing. He also oversaw the Design Center's formation of a property management subsidiary. While working for the Housing Authority of the City of Los Angeles, he was instrumental in the acquisition of over 1,000 affordable dwellings subsidized under various federal, State and local programs. In Washington, D.C., Mr. Darrell served as the Administrator of the Housing and Development Law Institute, a national nonprofit organization the provides technical assistance and training to low- income housing professionals, and as a market analyst and appraiser for a real estate consulting firm specializing in multifamily housing development. Mr. Darrell received his Master of Arts degree in Community Planning as well as his Bachelor of Arts in Urban Studies from the University of Maryland. He serves on the Board of Directors of Community Housing Management Services (a nonprofit corporation that manages affordable housing properties), St. Barnabas Senior Services (a nonprofit provider of social services to senior citizens living in the central city area of Los Angeles), and the Southern California Chapter of the National Association of Housing and Redevelopment Officials. Grace Q. Quack, Senior Accountant • Grace Quack is responsible for preparation of financial reports, analysis of operations, monitoring cash flows and other financial reporting compliance of LINC's current portfolio of over 3,065 units: Prior accounts LINC, Ms. Quach worked as a staff accountant for PM Realty Group where she was in charg e of ounts receivable and payable, monthly reports, collection, processing and overseeing leases for a multi- million dollar • portfolio which included apartment complexes, shopping centers, and marinas. Ms. Quach also worked for a Re/max Real Estate Sales agent where she assisted the agent in open house, sales negotiations, obtaining loans for buyers, advertising and research. Ms. Quach received her Bachelors Degree in Accounting from California State University, Long Beach. She currently holds a California Real Estate Sales License. Julia Moore, Compliance Manager Julia Moore is responsible for managing the program compliance for all the LINC properties. She works with the management companies, our site staffs and the various monitoring agencies to ensure that all program requirements are being met. She holds both the National Compliance Professional designation from Elizabeth Moreland Consulting's Housing Credit College and the Housing Credit Certified Professional designation from National Association of Home Builders and NAHMA. Ms. Moore has a California Real Estate Sales License and is a Notary Public. Prior to joining LINC, Ms. Moore was the Regional Administrative Assistant/Office Manager for the Los Angeles Regional office of Insignia Residential Group. She worked with the Regional Vice Presidents for both affordable and conventional housing sites. Ms. Moore supervised the other . • • o •strative staff members in the office and provided support wherever needed. She worked with the Los Angeles HUD office, filing and obtaining approvals for Reserve for Replacement Requests, obtaining bids and submitting capital improvement contracts and providing any other information requested. Ms. Moore was responsible for compliance reporting on several sites and assisted with site audits. She was active in the annual budget process at both the property and corporate levels. She also worked for a full service management company with over two hundred smaller, under • 16 unit, properties and single family dwellings and seven condominium associations. There she was involved with 51 the bookkeeping, leasing, scheduling of rehab work after move -outs, meeting with prospective new business, advertising, acquiring bids, scheduling maintenance, and real estate sales. _ Board Members 11111 The current Board Members of LINC Housing Corporation are as follows: Mark Pisano, Chairman, Executive Director, Southern California Association of Governments Betty Tom Chu, Vice Chairman, Chairman Emeritus, Trust Savings Bank, F.S.B. James R. Walther, Secretary, Partner, Mayer, Brown & Platt - Eileen Pollack Erickson, Treasurer, Principal, The Pollack Companies Dean V Ambrose, Attorney Yvonne Brathwalte Burke, Los Angeles Board of Supervisors Alta Duke, Manager of Social Services, City of Downey, Councilmember, City of La Palma David R Eshleman, Councilmember, City of Fontana James Heimler, Architect, James Helmler Architect, Inc. Fred Kahane, Marriage and Family Counsel Barry J Kamel, President, Sares -Regis Group Multifamily Housing Development _ Cohn Lennard, Partner, Fulbright & Jaworski Diane V McNeel, Housing Services Bureau Manager, City of Long Beach (retired) Barbara Messina, Councilmember, City of Alhambra Susan C. Price, Vice President, Century Housing/LIFT Ronald H. Roberts, Councilmember, City of Temecula John J. Turte, Director of Economic Development, City of Palm Springs (retired) Mark Pisano, Chairman. Mark Pisano is Executive Director ofthe Southern California Association of Governments (SCAG), the nation's largest regional planning agency. The purpose of this voluntary association of local govern- • ments is to provide an open forum for dealing with air and water quality, transportation, regional growth and development, housing and other critical area -wide issues. Prior to joining SCAG, Mr. Pisano was Director of the Environmental Protection Agency's Water Quality Planning Division. Betty Tom Chu, Vice Chairman. Betty Tom Chu was the founding chairman of the Board and Chief Executive Officer of Trust Savings Bank in Arcadia, California. She is the first female founder, chairman, president and chief executive officer of a savings and loan company. She has also been a member of the Los Angeles Sheriffs Organization (LASO), Board of Regents (LMU), and Board of Directors CORO Foundation. Ms. Chu is currently a member of the Board of Directors of KCET, a public television station in Los Angeles. On a nationwide basis, Ms. Chu represented the financial industry on the Federal Home Loan Bank Board Advisory Council and the Federal Reserve Board Consumer Advisory Council. Ms. Chu is an attorney and previously served as Principal Deputy County Counsel for Los Angeles County. James R. Walther, Secretary. James Walther is a partner and National Practice Area Administrator, Corporate and Securities Law Department at Mayer, Brown & Platt, Los Angeles. He is involved in corporate practice for public and privately held financial institutions and other types of companies, including mergers and acquisitions, anti- takeover and proxy contest advice, public offerings and private placements of debt and equity securities, and executive compensation arrangements. He has served as counsel for Glendale Federal Bank, Coast Savings Financial Inc., and CENFED Financial Corporation. Mr. Walther also serves on the Board of Trustees, Children's Bureau of Southern California. Eileen Pollack Eriskcon, Treasurer. Eileen Pollack Erickson is a principal of the Pollack Companies, a major commercial, industrial, multifamily housing contractor, developer and project manager. She is the President of SLP Management and Vice President of Pollack Construction Company, Sheldon L. Pollack Corporation, and SLP III 52 International Design and has been active with the company since 1979. Previous to that, Ms. Erickson was a Senior • Management Consultant with Ernst & Young. She is also a licensed real estate agent and a former member of the Board of Directors of Church and Synagogue Associates, a nonprofit entity committed to low income housing. MEMBERS Dean V. Ambrose. Dean V. Ambrose has been engaged in the practice of law for over 35 years. He has represented numerous public and privately held companies with a major emphasis in partnership law and real estate finance. Since 1988, Mr. Ambrose has practiced law as a sole practitioner and for the -last eight years, has served as the Chief Executive Officer of four real estate companies owning and operating commercial, industrial and retail real property. He also devotes a substantial amount of his time to charitable organizations including serving on Board of Directors of the City of Hope, Jewish Home for the Aging, National Public Radio and Young Mens Christian Association in addition to LINC Housing. Yvonne Brathwaite Burke. Yvonne Brathwaite Burke represents the Second District as a Supervisor of the County of Los Angeles. Her commitments are many. as Supervisor, she chairs the following County Departments - Affirmative Action, Community Development Commission, Human Resources, Museum ofNatural History, Parks & Recreation, Superintendent of Schools, and the Public Library. She is a member of the L.A. Coliseum Commission and the Metropolitan Transportation Agency (MTA). Alta Duke. Alta Duke has been the Social Services Manager for the City of Downey for over 34 years and is the liaison to semor citizen organizations throughout the City. Her duties include Community /Senior Center Operations Manager, Transportation Coordinator for the City Public Transit System and Dial -A -Ride Service for senior and handicapped citizens along with heading many other citywide programs. Ms. Duke is a thirty-two year resident of the City of La Palma and is now in her 4 year as Mayor. She is a member of the La Palma Kiwanis Club, • represents the City to the Orange County Library Board of Directors and is a member of Youth 20/20 Family Activities Committee. Ms. Duke is a member of several professional organizations such as the California Park and Recreation Society and the California Association of Coordinated Transportation. In 1992 she received the Cypress College Americana Award. David R. Eshleman. David Eshleman represents the City of Fontana. He has been a member of the Council since 1990, serving as Mayor from 1994 -1998. The life -long resident of Fontana is a Regional Council Member of SCAG, Vice -Chair of SCAG Administrative Committee, and serves on the Board of Directors of the League of California Cities. Mr. Eshleman is also a member of the San Bernardino County Solid Waste Task Force, the Chino Basin Municipal Water District, the San Bernardino County Flood Control District, and the Fontana Chamber of Commerce. He is the owner of Eshleman Meat Company. James Heimler. James Heimler has been involved in architecture for over 24 years and has had his own company since 1985. His experience and expertise extends over the full spectrum of architecture including residential, commercial, institutional, industrial and landscape design. Jim states that he strives to create architecture that is sensitive to the environment with timeless and enduring quality. In addition to his continue concern with environmental issues, his commitments to community issues continue to be a major activity of his professional and personal - Fred Kahane. Fred Kahane is a Marriage and Family Counselor. He is a founder, past president and Board member of the Southern California Association of Non -Profit Housing (SCANPH). Previously, he served as President of the Corporate Fund for Housing for 11/2 years. As the Regional Housing Program Manager at the Southern California Association of Governments (SCAG), Mr. Kahane pioneered the onginal grant and helped assemble the Board of Directors and stricture the Corporate Fund for Housing. A housing economist and urban planner, Mr. Kahane has served the non-profit and local government housing sectors in a variety of positions. • 53 Barry J 'Camel. Barry Kamel is the former President/Chief Executive Officer and founder of LINC Housing Corporation responsible for corporate strategic planning, portfolio asset management, property acquisition and project development operations. Prior to his appointment to LINC /CFH, he was an Operating Partner and Vice • President of Lincoln Property Company's Southern California Multifamily Residential division. Currently, he is President of the Sares -Regis Group's Multifamily Housing Development division directing their apartment development activities throughout the southwest United States. Colin Leonard. Colin Lennard is a partner and Chair of the Environmental Law Department at Fulbright & Jaworski, Los Angeles, California. Specializing in the practice of environmental law for over twenty years, Mr. Leonard has litigated a number of significant environmental cases including Superfund cost recovery actions, Clean Air Act issues and groundwater contamination cases. Mr. Lennard regularly writes and lectures on environmental topics and is a founding member and past co -chair of the Los Angeles County Bar Association Environmental Law Section. Diane V. McNeel. Diane V. McNeel has over 40 years of public sector experience. In 1960 she began her career with the Los Angeles County Departments ofHealth and Public Services and transferred to the Los Angeles County Community Development Commission/Housing Authority in 1977 as Director ofHousing where she was responsible for the fourth largest subsidized housing program in the United States. Diane recently retired as the Housing Services Bureau Manager for the City of Long Beach and Vice President of the Long Beach Housing Development 'Company. As Vice President, she was responsible for all of the City's affordable housing programs. Under her direction, various types of affordable rental home ownership and special need housinghas been provided to serve her community. Barbara A Messina. Councilwoman Barbara Messina represents the City of Alhambra. She has been a member of the Council since 1986, serving as Mayor in 1989 and 1993 and again in 1997. She also serves as a member of the Alhambra Redevelopment Agency, serving as Chairman in 1987, 1991 and 1995. Ms. Messina is past president of the Independent Cities Association. In addition, she is the Regional Councilmember on the Southern California • Association of Governments Board of Directors representing 200,000 people and chairs the Regional Housing Needs Assessment Committee. Ronald H. Roberts. Ronald Roberts represents the City of Temecula. He has-been a council member since 1992, serving as Mayor in 1994 and 1998. The retired CHP Sergeant has been Chairman of the Temecula Balloon and Wine Festival, the City of Temecula Traffic and Transportation Commission, the Western Riverside Council of Governments Executive Committee. He also serves as a member of the League of California Cities Public Safety Committee, the Southern California Association of Governments Regional Council, the Temecula Valley Economic Development Corporation and is past president of the Temecula Valley Vintners Association. Susan C. Price. Susan Price is the Executive Vice President of Century/Learning Initiatives for Today, Inc., a 401(c)(3) nonprofit organization dedicated to tutoring at -risk children living in affordable housing developments in the greater Los Angeles area. Ms. Price is also Vice President of Century Housing Corporation, a $200 million nonprofit corporation that finances and develops affordable housing with More Than Shelter in the Los Angeles area. Prior to Century Housing, Ms. Price worked for the State Department of Health Services. She has over 20 years in responsible positions with State Service. Ms. Price is a graduate of Pitzer College and has a Masters in Public Health from UCLA. She has also served as a member of the Pitzer Board of Trustees. John J Tuite. John Tuite has been a nationally recognized specialist in economic and community development for over 25 years. Prior to coming to the City of Palm Springs in 1993, John managed the largest development program in the nation in the City of Los Angeles and administered HUD's Community Development Block Grant Program for the first six years of its existence with programs in every large city in the U.S. He has launched and operated his own consulting company and been a Vice - President of the Council on Urban Economic Development. He has lectured extensively in universities and colleges and to numerous specialized audiences. He not only oversees the 1111 54 Economic Development Program in Palm Springs, but, as Director of the Economic Development Department, d also oversees the Public Arts Program, Recycling Program, Housing Programs, the Redevelopment Agency the • Community Development Block Grant Program. Operations The Project will be managed by LINCommunity Management Services ( "LINC/MS "), with asset management services provided by LINC Housing Corporation. LINC/MS is a Subchapter -S Corporation formed as a partnership between LINC Housing Corporation and Community Housing Management Services ( "CHMS "), each a non -profit corporation. CHMS is a nonprofit property management company formed in 1986 that exclusively manages affordable housing properties owned by nonprofit community development corporations. LINC/MS and CHMS currently manage approximately 3,000 units of affordable housing, including 787 mobile home spaces that are owned by LINC Housing Corporation. .LINC Housing Corporation and LINC/MS share centralized corporate offices in the City of Long Beach, California. These corporate offices are located less than ten miles from the Project. LINC Housing and LINC/MS have entered into a Management Agreement (the "Management Agreement ") ncing dated as of September 1, 2000, with respect to the Project. The term of the nt is for five e ye s re d for January 1, 2001 and ending December 31, 2005. The Management Agreement an additional one year term unless otherwise terminated by either party. Property management services will be provided by LINC/MS staff, including a full-time on -site manager whose sole responsibility will be the management of the Project. The manager is responsible for collecting and recording rent payments, scheduling repairs and maintenance, performing light maintenance, recording invoices for payment (transmittal to central office) and interfacing with Project residents. The on -site manager will be supervised by a regional supervisor who is responsible for supervising the operations of LINC Housing Corporation's mobile • home communities. The regional supervisor in turn reports directly to the Executive Director of LINC/MS. LINC/MS will be compensated for its management services as follows: five percent of all residential, vending and laundry income and additional fees to be agreed upon by the parties upon L1NC/MS acting as agent for the Borrower with respect to leasing spaces and managing other contracts of the Borrower. The Management Agreement may be terminated at any time by either party with 30 days' written notice. Additional property manag ement services will be provided by the LINC/MS corporate office staff including: financial accounting, financial reporting to lenders, payment of invoices, human resources, maintenance scheduling, emergency response and other services as needed. Asset management services, including affordable housing restriction compliance and financial monitoring, will be performed by 'INC Housing Corporation's staff. LINC Housing Corporation and LINC/MS use state -of- the -art computer hardware and software for all financial accounting, property management and asset management services. Software packages include Windows 98 Office (including Word and Excel), Rent Roll and Skyline. The Project management office will have a computer . with these software packages and e- mail/intemet access. The ultimate nonprofit owner of the Project will have two directors appointed by the resident association. These resident representatives will be the primary conduit of information between residents and the resident association's owners and managers. LINC Housing Corporation encourages homeowner associations to play an active role in the management of its mobile home parks. LINC Housing Corporation also assists the resident association in planning social functions that help to foster a sense of community among the Project residents. LINC Housing Corporation's staff will meet regularly with the Project resident association to assess their needs and • concerns. 55 THE PROJECT Neither the Issuer nor the Underwriters have made any independent investigation of the information • presented herein as to the Project. Such information has been provided solely by the Borrower and certain professionals as specifically noted, and neither the Issuer nor the Underwriters have verified the accuracy or completeness of such information, nor do they assume any responsibility or liability therefor. Mobile Home Park Overview General. Mobile homes are sometimes referred to as an intermediate step between apartments and owner occupied housing (condominiums and detached homes). Mobile homes are generally considered more desirable than apartments because they afford greater privacy. At the same time, those with sufficient income and cash for down payments typically prefer to buy a traditional home, rather than rent space in a mobile home park. Thus, the space rent plus the mobile home (coach) mortgage payment must generally be less than the mortgage payment on traditional housing in the area. Increasing land values near urban areas (especially during the 1980's) significantly curtailed the development of new parks. Also affecting new park construction was the advent of rent control during the 1980's. Many cities throughout the State have enacted rent control ordinances as a result of previous rent increases. Because of the lack of supply and a growing demand for affordable housing in urban areas, mobile home parks were able to steadily increase space rents eve during the recession years of the early 1990's. While rents for most types of real estate in California dropped during the recession, mobile home park rents have continued to rise, although not at their historic rates. No assurance can be given that such trends will continue. Stable Resident Base. Residents of mobile home parks are homeowners and make significant investments in their homes and in on -site improvements. Moving a mobile home from one community to another requires • substantial cost and effort and often requires abandonment of on -site improvements such as landscaping, decks and carports. Because of the loss of equity in site improvements, the high cost of moving and the limited availability of vacant mobile home park spaces, mobile homes are seldom moved from their original locations. Instead, mobile homes are usually sold in place when the homeowner wants to move. The high cost associated with moving a mobile home also serve to reduce rent delinquencies and collection , losses. Pursuant to Section 798 et seq. of the California Civil Code (the "Mobile Home Residency Law "), a mobile home park owner (after complying with the notice, cure period and other procedural requirements of the Mobile Home Residency Law) has the right to cause the removal of a mobile home if a resident fails to pay rent. Since the loss in value caused by the removal of the mobile home would usually far exceed the amount of the rent delinquency, the mobile home owner, or the holder of a lien on the mobile home, has a strong incentive to cure the rent default. Vicinity Description The Project is located in the City of Seal Beach. Seal Beach is located in the western portion of Orange County. The Project is located in the northwestern portion of the City. The Seal Beach community is heavily influenced by its location proximate to the beach and to Long Beach Marina. Neighborhood boundaries cross city boundaries into geographically similar locales in the adjacent cities of Long Beach and Huntington Beach. The Project is located in a small pocket neighborhood bounded by the San Gabriel River, Pacific Coast Highway, Marina Drive, and First Street. This neighborhood is characterized by several multifamily developments that are located in the City of Seal Beach. • 56 The Project • The Project is located in the City at 99 Welcome Lane and consists of a parcel of approximately 6.6 acres, a portion of the site along the San Gabriel River is located within the County of Los Angeles. The Project contains e mobile home 6, spaces, 0 a clubhouse f the Project was 100 %. Monthly facilities parking spaces as rental for spaces generally well. As of October 2000, ranges from $181 to $545. The site is improved with a 125 -space mobile home park, containing spaces primarily for doublewide manufactured homes. All utilities (water, sewer, gas and electric) are available to the site. Electric, gas and water service are provided directly to the sites. The park, according to an appraisal dated October 6, 2000 (the "Appraisal") performed by John P. Neet, MAI, Lake Elsinore, California (the "Appraiser "), had a value as of October 6, 2000 of $7,750,000, assuming use by a nonprofit corporation, determined by the income approach, with additional support from the sales comparison approach. See APPENDIX E hereto for the complete text of the Appraisal. The Issuer makes no representation as to the accuracy of the Appraisal. Environmental Site Assessment According to Phase I Site Assessment of the Project dated November 15, 2000 prepared for the City of Seal Beach by Terracon, Costa Mesa, California, the Project site does not appear to have been significantly impacted by the presence or use of hazardous materials on the site or in the surrounding area, with the possible exception of asbestos and lead- containing building materials used in certain site buildings. • Flood and Earthquake Hazard The Project is not located within the Alquist -Priolo Earthquake F located in a Special Flood included Hazard Area. Alquist -Priolo Earthquake Fault Zone Map. Additionally, the Project • 57 Physical Needs Assessment According to a Physical Needs Assessment Report prepared for the City of Seal Beach by Metennan, Inc. • dated November 2000 (the "Needs Assessment "), the Project will need $100,900 of repairs within one year from the date of the Needs Assessment, and some additional repairs within a longer time frame, as summarized in the following table: ESTIMATED COST SUMMARY Description Immediate Year (1) Long Term Years (2 to 10) Sites: 1. Asphalt double slurry sealing $9,700 2. Improve street lighting (12 locations) - $9,500 $1,500 3. - Asphalt re- surfacing & petromet (pump hoe) $47,000 4. Electrical preventative maintenance 58,000 5. Playground re- mediations $3,500 6. Repair trash gates (woodwork) $2,300 - $1,150 7. Vehicular barricade protection (hydrants) $2,200 8. Water system maintenance (valves, backflows) $1,200 9. Hydroflushmg sewer system (maintenance) $2,000 Buildings: 10. Wood fences, property walls $8,000 11. Clubhouse french doors, sash (plexiglass) 55,750 • 12. Shake roofing re- mediations $7,000 13. Spa equipment, decks plumbing & heating $5,800 14. Restroom interior improvements $6,150 15. Repainting all interiors (clubhouse, office) $5,000 16. Laundry bldg. water heater repairs $1,200 17. Repainting both exterior buildings $4.500 TOTAL ESTIMATED COST (YEAR 1): $100,900.00 TOTAL ESTIMATED COST (YEAR 2 -10): $30,650.00 • 58 An amount equal to $131,450 will be deposited from the proceeds of the Series A Bonds on the Closing Date into the Repair and Replacement Fund, to be used to make some of the repairs identified in the Needs • Assessment. See "THE INDENTURE - Repair and Replacement Fund." The Borrower does not intend to immediately re- roofthe clubhouse or install water submeters, but plans to undertake such improvements over a more extended time period. Historical Operating Results Appendix C includes a report of historical and projected operating results of the Project. Historical information is provided for the year ending December 31, 1999. The analysis is conducted in conformance with the definitions of Operating Revenues, Operation and Maintenance Costs and Operating Revenues contained in the Indenture. The accountant's report show that for calendar year 1999, there was $400,801 in income receipts and total disbursements were $177,652. Please review Appendix C in its entirety for a full description of the accountant's report and any qualifications contained therein. The financial statements of the Project in Appendix C have not been audited and were not prepared in accordance with generally accepted accounting principles. The operating results therein could differ significantly from those that would have been obtained if audits had been performed and if such statements had been prepared in accordance with such principles. Competing Mobile Home Parks The following table prepared by the Appraiser compares certain characteristics of the Project and several other local mobile home parks. - • • . 59 C u W , ° a 4"> g F5 u m y a •. ' 7 w u== r 1 O C a m Y g_ O 2 0.�'o m =--,88,00 00000v,v, s m) ,° ). 0 e N = 0a o°o a �eae m9 u `o oo . IN au, a- E v r 8 III • m _ , u 4 O .•. v, , N N m p= T 69 4� a °° c o¢ sy w �o ,o � o n o ° oo n oo r o 00° a '^ o = ma W � Q .7 8) � y = •p 0 ,I1 " r ° 0 e b b2.01 b2.01 Y 8" g z p, ell 'm aE. A. r o 8 a >, d u = t I o 0 0 o m u m �° t °= Q ..oats a, m ° < ° �v0ivv- TN' =3 i • 5-. 22N $ a7 O m Y m ..7 1.1 g 0 0. 8 s... 3 _ p =Y= 6 . L a * uY a 0 7 0W. m 0 0 Z, T Y Jew m m � 0000000 h � a oz. ° 08 ° e m m e \ u= 0000000 T E � u V9 a.°. u T n O .." NO ;r m I m C C � e' v 1 „ • 00 N � • 117` .. M120 O .• OOO . S n ri N v 0OO i 0 0 m . 0 71 E-- '4 O° ly 8 e > Ca N p '� .j m � z ^ �•� .. x L , u m�0 m$ i0 4 r O gz ° FF I. ar N C ¢ u o o v u a Z v w s _ E 2. 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Q = ; e Z' O 0 0 0 0 0 en e W43 w ,., c a e `�° , ° o wao Ua i 0 en 8 h 0io0 m 000 ---- a, c ° •O es u S o '° c m z E '. oo z go a.) o F U 10 V > v 6 a 0 c < d ° 1 0 W a - u m .,, U e* O V> ° o° 00 . 0 .<< Y Y N 0 = n m e a ' ° z x �x `= W 2 N 8.1 z 0 Y a O a c O N Ts m m UE d 0000000 o e U's' �O 6. m E m v, • 2 tee = � m� 0000000 m �' it = s ° - N VQ,T° C �m TZ mooRnm 2 O 3m O v A u m y ` C9 0,N - v,P7n E - VII u ... m 3 h .7 V a O m C y 0 clz p., R �' U y y R w a F — a ,g _ ¢ ° o u t m b a5 Z 11_ v L. 3 0 a=22 0 = n 3' 0 .. � 2.0 `° m ::�� c O i N III m m o0 ` m m T .°_ = O d e, m> y A y u m O E"' e n Q E. 7272 C a = i y .` c � e< m z o 0 e Q d p 0 Z d v a t QC 8 m ai c v � u m = -E g% p H °' m I U hi . mm; �� s s ca m 33 e 6. ° a u m 7 d a m,E ,= 1 m u m ai a o m = a < Z << 0 a m > °:C5<i -FZZ U a C 0 M Vacancy Rates • At the present time, there is no physical vacancy in the Project, which is consistent with the approximated vacancy rate for the Project over the last 10 years. Agency Assistance and Restrictions The Issuer will enter into two separate loan arrangements with the Borrower. The first is the Bridge Loan Agreement pursuant to which the Issuer will make the Issuer Bridge Loan to the Borrower in the amount of $1,000,000. This loan is payable subordinate to the Series A Bonds and it is due one year from the date of delivery of the Bonds. The Borrower expects the Issuer Bridge Loan to be substituted with an MPROP Loan in the amount of $1,000,000 which is currently under application. The Borrower expects to hear from the State in early December 2000 whether the MPROP Loan will be approved and the MPROP Loan could be funded in mid -2001. In the event that the MPROP Loan. is not funded, then the Issuer Bridge Loan will convert to a subordinate long-term loan payable in 25 years at an interest rate of 3% per annum which will have interest payments deferred for 5 years. The Issuer is providing the Issuer Loan in the amount of $985,000 pursuant to a Loan and Grant Agreement for the purposes of paying a portion of the acquisition price of the Project, and to make a deposit to the Rental Assistance Fund. In consideration of the Grant Agreement, the Borrower will enter into the Agency Regulatory Agreement with the Issuer, which will require that, among other restrictions, for the 25 -year term of the Agency Regulatory Agreement, 20% ofthe resident households in the Project be Very Low Income Households and an additional 60% of the resident households in the Project be Moderate Income Households, all as more fully set forth in such agreement. The Agency Regulatory Agreement contains additional restrictions on rents that may be charged for spaces in the Project and requires the Borrower to establish and maintain the Rental Assistance Fund. The obligation of the Borrower to repay the Issuer Loan under certain circumstances (such as following a violation by the Borrower of the terms of the Issuer Loan Agreement or the Agency Regulatory Agreement), will be secured by • the Agency Deed of Trust. The Issuer and the Borrower will, however, enter into a Subordination Agreement with the Trustee, whereby the Issuer will subordinate the Agency Deed of Trust and the Agency Regulatory Agreement to the Deed of Trust securing the repayment of the Loan and the Regulatory Agreement, and the Issuer will be granted various cure rights in the event of a default under the Bond Loan Documents, as defined therein. The Issuer and the City have no obligation whatsoever with respect to the repayment of the Bonds or the Loan. The Grant Agreement also provides a subsidy to be given the Borrower by the Issuer. Approximately $273,358 will be initially deposited into the Rental Assistance Fund and will be available to bridge the initial rent increase within the Project for the first three years of operation, the Issuer will also provide an annual rental subsidy beginning in the second year up to approximately $120,000 for the next twelve years thereafter. Amounts offered under the Grant Agreement as rental subsidy are not pledged to the repayment of the Series A Bonds, however, it is possible that without the rental assistance ofthe Issuer, rental income would not be sufficient to cover debt service on the Series A Bonds without raising rental rates beyond the expectation of the current residents. • 61 Projected Operating Results Set forth below is a table which projects income and expenses for the Project, and provides estimated Series A Bonds debt service coverage, for the Bond Years ending December 15, 2001 through December 15, 2005: Projected Operating Results III (Bond Years Ending December 15, 2001 -2005) 2001 2002 2003 2004 2005 Income . Space Rent 5545,640 5667,620 $789,600 5805,392 5821,500 Extra Parking ' 4,590 4,682 4,775 4,871 4,968 Laundry Income 3,006 3,066 3,127 3,190 3,254 RDA Project Subsidy 195,296 78,062 0 0 0 Total Gross Income 748,532 753,430 797,503 813,453 829,722 Less Vacancy 2% Total Gross 11.065 13.507 15.950 16.269 16.594 Total Scheduled Income 5737,467 $739,923 5781,553 5797,184 5813,128 Expenses Accounting • 55,500 55,610 $5,722 $5,837 55,953 Landscape 5,820 5,936 6,055 6,176 6,300 Legal and Professional Fees 5,000 5,100 5,202 5,306 5,412 License, Fees, Permits " 3,348 3,415 3,483 3,553 3,624 Management Fees 5 % 21,604 22,036 39,875 40,673 41,486 Marketing 0 0 0 0 0 Miscellaneous 5,499 5,609 5,721 5,836 5,952 Office, general & administrative 6,605 6,737 6,872 7,009 7,149 On Site Management 23,717 24,191 24,675 25,169 25,672 Property Insurance 6,500 6,630 6,763 6;898 7,036 Property Taxes 20,000 20,400 20,808 21,224 21,649 Repairs & Maint. 10,000 10,200 10,404 10,612 10,824 Utilities 37.407 38.155 38.918 39.697 40.491 Total 5151,000 5154,020 $174,499 5177,989 $181,548 • Net Operating Income 5586,467 $585,903 5607,054 $619,195 5631,579 III Series A DSR Earnings 25.988 26.435 26.435 26.435 26.435 Total Income 5612,455 5612,338 5633,489 5645,630 5658,014 Series A Debt Service 5 448, 051 5 446,090 $447,940 $444,500 $445,980 Coverage Factor 1.37x 1.37x 1.41x 1.45x 1.48x Trustee 55,000 55,000 $5,000 $5,000 55,000 Program Administrator /Oversight 7,500 7,500 7,500 7,500 7,500 MPROP Loan 0 0 0 0 0 Coverage Factor 1.33x 1.34x 1.38x 1.41x 1.44x RDA Loan 0 0 0 0 0 Coverage Factor 1.33x 1.34x 1.38x 1.41x 1.44x Cashflow after Debt Service $151,904 5153,748 5173,049 5188,630 5199,534 Asset Management Fee 11,065 13,507 15,950 16,269 16,594 Surplus Cashflow 140,839 140,240 157,099 172,361 182,940 Beg. Balance of Repair & Replacement 131,450 88,075 78,125 78,125 78,125 Estimated R &R Expenditures 43,375 43,375 43,375 25,000 25,000 Balance of R & R after Expenditures 88,075 44,700 34,750 53,125 53,125 Replenish R & R to $78,125 0 33,425 43,375 25,000 ' 25,000 Cashflow after R & R Replenishment 140,839 106,815 113,724 147,361 157,940 Excess Management Fee 5,880 11,732 0 0 0 Cashflow after Excess Management Fee 134,960 95,083 113,724 147,361 157,940 Beg. Balance of Operating Reserve 0 67,480 115,021 171,883 224,025 Replenish Operating Reserve Fund to 5224,025 67,480 47,541 56,862 52,142 0 Cashflow After Deposit to Operating Reserve 67,480 47,541 56,862 95,219 157,940 Max. Estimated Rental Assistance 63,200 95,100 140,600 140,600 140,600 . Deposit to Rent Subsidy Fund from Surplus 63,200 47,541 56,862 95,219 140,600 Estimated RDA Assistance 0 47.559 83.738 45.381 0 III Net Cashflow . 5 4.280 $ 0 $ 0 $ 0 $ 17.340 co In first two years of operation, a portion of the management fee will be payable after debt service. 62 Appendix C contains the Historical and Forecasted Statements of Cash Receipts and Disbursements and III Accountants' Compilation Report (the "Report") prepared by Haynie & Company, Certified Public Accountants and Management Consultants, Costa Mesa, California, which provided the basis for the foregoing table. The Statements are compilations and the historical information has not been audited. See the Report for other limiting conditions and assumptions. Neither the Issuer nor the Underwriters have verified the information or assumptions in the Report and no assurance can be given as to the accuracy of the information set forth herein or as to the ability of the Project to achieve the projected operating levels assumed thereby. Fifteen of the tenants have entered into long-term lease (more yeyears) o the conditions of the spaces. These se long-term t erm leases may limit the ability of the Borrower to increase pursuant leases. For purposes of projecting operating results, the Underwriter has assumed that total rental for all spaces, including spaces subject to a long tern lease, will average $527 per space. Oversight Agent/Program Administrator The Issuer has engaged Rosenow Spevacek Group, Inc. ( "RSG ") t� serve as the initial Oversight Agent under the Indenture, the Loan Agreement and the Regulatory Agreement. RSG has provided redevelopment and community development consulting services since 1979. For the last 20 years, they have assisted communities in creating redevelopment Project areas, implementing specific redevelopment programs, overseeing and monitoring program requirements including revenue verification and eligibility monitoring. RSG has assisted in the conversion of five mobile home parks to resident or nonprofit ownership over the last five years. RSG's familiarity with redevelopment law, low and moderate income housing requirements, as well as mobile home park operations, qualify them to serve as Oversight Agent. • THE ISSUER . III The Issuer was established in 1967 by the City Council of the City of Seal Beach. The five members of the City Council serve as the governing body of the Issuer, and exercise all the rights, powers, duties and privileges of the Issuer. The Mayor serves as Chairperson of the Issuer. • The Issuer has two redevelopment project areas, the Riverfront Redevelopment Project and the Surfside Redevelopment Project. The Issuer's primary source of revenue comes from property taxes (referred to as "tax increment ") allocated to the Issuer. The Issuer has no authority to levy and collect taxes and the Issuer has not pledged any of its money, revenue or assets to the repayment of the Bonds. The Issuer is required to set aside 20% of tax increment into a low and moderate income housing fund to increase or replace the supply of low and moderate income housing limits in the City. The Issuer currently has a total of $2,600,000 in its low and moderate income housing fund between its two redevelopment projects. . All powers of the Issuer are vested in its governing body. Pursuant to the Law, the Issuer may exercise broad governmental functions and authority to accomplish its purposes, including, but not limited to, the right of eminent domam, the right to issue bonds and expend their proceeds and the right to acquire, sell, develop, administer or lease property. RISK FACTORS The following factors, which represent major risk factors that have been identified at this time, should be considered along with all other information in this Official Statement by potential investors in evaluating the Series A Bonds. There can be no assurance made that other major risk factors will not become evidence at any future time. Potential investors are advised to consider the following factors along with all other information in this Official • Statement in evaluating the investment quality of the Series A Bonds. 63 Series A Bonds Are Limited Obligations of the Issuer The Series A Bonds are special limited obligations of the Issuer, payable solely from and secured as to the • payment of the interest on, and the principal of, and the redemption premiums, if any, in accordance with their tenses and the terms of the Indenture, from Pledged Revenues and other funds as provided therefor in the Indenture. The Series A Bonds are not a debt of the Issuer, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation, nor in any event shall the Series A Bonds be payable out of funds or properties other than as described in the preceding sentence. Pledged Revenues consist primarily of payments to be made by the Borrower under the Loan Agreement and Note. The obligations of the Borrower (or any future owner of the Project) under the Loan Agreement and Note are not enforceable personally against the Borrower and such obligations are secured only by the properties and liens specifically conveyed or encumbered as security therefor, consisting ofthe Project. No representation or assurance can be given that the Project will generate sufficient revenues to enable the Borrower to meet its payment obligations under the Loan Agreement and Note. In the event that the Borrower defaults in its obligations, payment of the principal of and interest on the Series A Bonds will be payable from amounts on deposit in the Series A Bonds Debt Service Reserve Fund and from amounts, if any, available in certain other funds held by the Trustee. See "THE , INDENTURE" herein. Loan Payments Non - Recourse The Borrower agrees to repay the Loan from Net Operating Revenues. The Loan is secured by a pledge of Operating Revenues and a security interest in the Project pursuant to the terms of the Deed of Trust. Neither the Borrower's directors, officers, employees and agents, nor any of its other affiliates, has or is intended to have any liabilities under or in respect of the Loan Agreement, the Indenture, the Note, the Deed of Trust, the Regulatory Agreement, or any of the other documents or transactions contemplated by any of them. • Loan Payments Not Preference Proof Payments by the Borrower on the Loan are not subject to aging requirements for purposes of satisfying the preference- proofing requirements of federal bankruptcy laws. In the event of bankruptcy ofthe Borrower, payments to Bondholders within 123 days (one year in certain cases) prior to the date of such bankruptcy may be subject to disgorgement and other preference restrictions. Rent Restrictions, the Regulatory Agreement and the Agency Regulatory Agreement Rent increases for all ofthe spaces in the Project are subject to certain restrictions recorded against the Project. Under the Regulatory Agreement, the Borrower is to rent not less than 20% of the Spaces in the Project to Very Low Income Residents (all as defined in the Regulatory Agreement). The monthly rental rate which the Borrower may charge Very Low Income Residents is also restricted in some cases by the Regulatory Agreement, as is the rate at which rental rates for Very Low Income Residents may be increased. See "THE REGULATORY AGREEMENT" herein. The Agency Regulatory Agreement contains additional restrictions upon the occupancy and rental rate increases for the Project. See "THE PROJECT — Agency Assistance and Restrictions" herein. These provisions place a limit on the rental rates for the Spaces, and thus may limit the Net Operating Revenues available to pay debt service on the Bonds. See "THE REGULATORY AGREEMENT" and "THE PROJECT — Agency Assistance and Restrictions" herein. These restrictions have the effect of limiting the market for restricted Spaces in the Project in - that certain otherwise eligible tenants are excluded on the basis of the restrictions, and also limit the monthly rental and rental increases which may be charged for restricted Spaces. In the event of an economic downturn, the "Median Income for the Area," on the basis of which certain rent ceilings are to be calculated, is likely to decline, causing a decline in the monthly rental which the Project is able to realize for certain restricted Spaces, although the Borrower may utilize Rental Assistance Funds to offset the difference between certain restricted rents and the • 64 maximum rents permitted to be charged throughout the Project. See "THE REGULATORY AGREEMENT" and • "THE PROJECT" herein. • Litigation Currently, there exists a lawsuit against the Issuer, Seal Beach Associates. LLC v. Redevelopment Agency of the City of Seal Beach, Case No. 00CC07866 of Orange County Superior Court (the "Seal Beach Associates Case "), claiming inverse condemnation and breach of contract and asking for declaratory relief and quiet title. It is alleged in the complaint that current contractual restrictions against the Project prevent the spaces from begin leased at market rates and that existing restrictions encourage low income qualifying tenants to sublet the spaces for higher rental than the current owner is entitled to charge. In connection with the acquisition of the Project by Borrower with the proceeds of the Series A Bonds, the Seller and the Issuer have entered into a settlement agreement, dated November 22, 2000, which dismisses the lawsuit conditioned upon the completion of the sale of the Project to the Borrower. In addition to the Seal Beach Associates Case, Sonia Sonju, a resident within the Project, has filed a judgment she obtained against her former husband (and former owner of the Project) William T. Dawson. The amount of this claim is less than $180,000 and this judgment will not be an exception to clear title when title to the Project is transferred to Borrower. In addition, Ms. Sonju has claimed, although she has not filed suit, an ownership interest in the Project. Fidelity National Title Company has committed to provide an endorsement with its title policy insuring the Borrower against any potential loss arising from Ms. Sonju's ownership claims. Risk of Taxability The failure of the Borrower or the Management Agent to abide by the covenants and conditions of either the • Regulatory Agreement or the Loan Agreement may cause the interest on the Series A Bonds to become includable for federal income tax purposes in the gross income of holders of such Bonds, in some cases retroactive to the date of issuance of the Series A Bonds. There is no provision in the Series A Bonds or the Indenture for an acceleration ofthe Series A Bonds or the payment of additional interest in the event interest becomes so includable, and the Issuer is not liable for any claims or damages resulting from any such includability in gross income. While failure to comply with the tax covenants of the Loan Agreement and the Regulatory Agreement is an event of default which will entitle the Issuer to accelerate the Borrower's indebtedness and commence foreclosure proceedings, pursuit of such remedies is subject to delays as a result of bankruptcy, limits on creditor's remedies and other practical considerations. There can be no assurance that such remedies will be achieved or proceeds of such• remedies will be adequate to fund a redemption of all or part of the Series A Bonds following the Borrower's noncompliance with such tax covenants, or that the Issuer will be able to compel compliance in a timely manner to avoid an event of taxability described above. See "THE REGULATORY AGREEMENT" and "TAX MATTERS" herein. In the event of foreclosure and sale of the Project, there can be no assurance that the purchaser thereof will not render the Series A Bonds ineligible for tax - exempt status. Conditions Which May Affect Borrower's Ability to Pay Numerous conditions, which are not accurately predictable, could have an impact upon the revenues and expenses of the Borrower and, as a result, upon its ability to make timely payment under the Loan Agreement and the Note. In particular, the ability of the Project to generate revenues and sufficient rental income to pay all interest on and principal of the Series A Bonds as due will depend on mamtaining a high occupancy rate, and sustaining the rental rates, in the Project. Factors that may affect the ability of the Borrower to lease the mobile home sites of the Project and thus generate sufficient income include the demand for mobile home facilities in the market area, the • availability and costs of other competing housing facilities and the ability of potential residents to meet payments. 65 The ability of the Borrower to generate sufficient income in the future will also depend upon other factors which cannot be predicted with any assurance. Such factors include general and local economic conditions which may affect demand-for mobile home units. Units such as those which form the Project are subject to rising operating • costs, fluctuating occupancy levels, adverse economic conditions and changes in neighborhood preferences. The ability of the Borrower to generate sufficient income will depend on its ability to lease the Project units promptly and maintain occupancy. The Borrower's ability to meet its obligations could also be affected by its other corporate activities unrelated to the Project. The Appraisal. The Appraisal is based upon certain assumptions, limiting conditions, certifications and definitions set forth therein. An appraisal is only an estimate as to value as of the specific date stated therein. As an estimate, an appraisal is not a measure of realizable value and may not reflect the amount which would be received if the property which is the subject of the appraisal is sold. The Appraisal should be read in its entirety for an understanding of the assumptions and rationale which underlie its conclusions. See "THE PROJECT" herein for a description of certain other appraisals of the Project that concluded differing appraised valuations for the Project. Leasing and Income Risks. The availability of sufficient operating income to pay the obligation of the Borrower with respect to the Loan Agreement is subject to the ability of the Borrower to establish appropriate rental rates for, and the continuing ability to rent units in, the Project, subject to the limitations of the Regulatory Agreement and the Agency Regulatory Agreement. Any constraint on rental increases due to regulatory (including, but not limited to, rent control) or market demand factors that inhibit annual rent increases may adversely affect the Borrower's ability to cover expenses and financing costs of the Project. Projected Operating Results of the Project. The cash flow projections of the Project (see APPENDIX C- HISTORICAL AND FORECASTED PROJECT RECEIPTS AND DISBURSEMENTS) are based upon certain • . assumptions, limiting conditions, certifications and definitions as set forth under such captions. There can be no assurance that the projected results contained therein will approximate actual results or that any projected results will continue beyond the projection period. Operation of the Project. The primary source of payment of the Loan are the Project revenues available after payment of operating expenses of the Project. Accordingly, the Bondholders are exposed to the risk that, if the expected operating cash flow is not achieved, actual payments of the Borrower pursuant to the Loan Agreement may be insufficient to timely pay all amounts due on the Loan. In the event that interest and principal are not paid with respect to the Loan Agreement, or only partially paid, there will be insufficient Revenues to make scheduled principal and interest payments to Bondholders and the Trustee may be required to draw on amounts in the Series A Bonds Debt Service Fund to make up such deficiencies. Once amounts in the Series A Bonds Debt Service Fund have been depleted, estimated payments of principal and interest on the Bonds may be delayed or unpaid. The availability of revenues of the Project to make payments under the Loan could be adversely affected by a failure or inability to (i) continue to rent or lease the Project at the rental rates expected by the Borrower, and (ii) to maintain the operating expenses and capital expenses at or below the level expected by the Borrower. Risks Associated with Operating Expenses. An extended period of inflation may cause the rate of increases in operating expenses to outpace the ability to raise rents. In addition, any underestimation by the Borrower in the operating expenses of the Project may materially affect its projections of the operating income of the Project. The consequences of this risk are similar to a deterioration in the base rental income and would adversely affect Project revenues. The Borrower has committed no other resources outside of the revenues generated from the Project to repay the Loan and to pay increased operating expenses. .66 Property reserves are an important consideration for long -term borrowers who will have to replace major III capital items to maintain the quality of the property over time. See "THE INDENTURE-Revenue Fund" and "THE LOAN AGREEMENT - Repair and Replacement" herein. The deterioration and replacement of capital items is not , predictable with certainty, and real estate properties such as the Project may encounter a_periodic need for capital for replacement and repair of capital items in excess of budgeted amounts. In the event that additional capital is needed for the replacement of capital items, it is likely that the Borrower will either have to seek additional debt capital from third party lenders or pay for such capital replacement and improvement out of residual cash flow from the Project, if any. None of the Issuer, the City or the Agency have any obligation with respect to any operating, reserve or capital expenses of the Project and no assurance can be given that such moneys will be obtained. If not, the viability of the Project may be adversely affected over time. Risks Associated with Other Expenses. To the extent there are any expenditures required to maintain the Project that are not foreseen by the Borrower, any uninsured losses, or additional property taxes due on the Project as a result of a change in the law, regulation or interpretation of a court of competent jurisdiction, the only source of moneys to pay such expenses would be additional resources available to the Borrower. The Borrower has pledged no assets, other than the Project revenues, to make debt service payments and to pay for operating expenses. Accordingly, the Borrower may be unwilling or unable to pay for such additional expenditures. Risks Associated with the Management of the Project. A disruption in management continuity may temporarily impact the operations of the Project. In addition, a new manager of the Project may not have the same ability to realize rental increases or to contain operating expenses as the current manager. If authorized compensation to the management agent proves to be inadequate, the Borrower may have difficulty securing quality management. If no other money than approved amounts are available to pay such increased costs, the quality and revenues of the Project could be adversely affected. III The Deed of Trust. The Borrower has executed the Deed of Trust on the Project in favor of the Issuer and the Trustee to secure the Borrower's obligations under the Loan Agreement. Because the Borrower may have limited financial assets, and because the Borrower is not personally liable for the amounts owing under the Loan Agreement (other than the indemnity and for certain fees as provided thereunder), if there is a default under the Loan Agreement, the primary remedy of the Trustee and the Issuer is to foreclose on the real and personal property security granted pursuant to the Deed of Trust and related documents. All amounts collected upon foreclosure of the Project pursuant to any of the Deed of Trust will be used to pay amounts owing under the Loan Agreement pursuant to the provisions of such Deed of Trust. Value of Project; Economic Feasibility The economic feasibility of the Project depends in large part upon its being substantially occupied. The Borrower is required by the Regulatory Agreement, among other things, to have at least 20% of the Spaces in the Project occupied (or treated as occupied) by persons whose income for federal tax law purposes does not exceed 50% of area median gross income adjusted for family size, as published by HUD. In addition, other income and rental rate restrictions apply under the terms of the City Law and the Agency Regulatory Agreement. See "THE REGULATORY AGREEMENT," "THE PROJECT — Agency Assistance and Restrictions" and "RISK FACTORS - Restrictions Under City Law, the Regulatory Agreement and the Agency Regulatory Agreement" herein. There can be no assurance that the Borrower will be able to rent units to comply with these requirements or at rentals which will enable it to make timely payments under the Loan Agreement and the Note. There can be no assurance that the appraised value would be realized upon sale of the Project. In the event of a forced sale of the Project due to economic distress, the amount realized upon such distress sale would likely be III less than the fair market value. Furthermore, there can be no assurance that funds sufficient to pay the principal 67 amount of the Series A Bonds at maturity or earlier redemption could be obtained through the sale or refinancing of the Project. The Borrower believes that proceeds from the foreclosure of the Project would be sufficient to pay the • principal of and interest on the Series A Bonds. Such payments will, however, be additionally secured by the Series A Bonds Debt Service Reserve Fund and by certain other funds held by the Trustee, if available. Competing Facilities The City may finance, own and operate other facilities and other facilities may be financed, developed, constructed and operated by any party that could compete with the Project for tenants. The existence of competing facilities could adversely affect occupancy and revenues of the Project. Risks of Ownership of Real Property The Bondholders will be subject to the risks generally incident to an investment in real estate, including, without limitation: (i) the uncertainty that the Project will produce sufficient revenues to enable the Borrower to make timely payments pursuant to the terms of the Loan Agreement; (ii) adverse changes in local market conditions, such as changes m the market value of real property in the vicinity of the Project, the supply of or demand for competitive properties in such area, and the market value of the Project in the event of sale or foreclosure; (iii) changes in interest rates and the availability of financing moneys that may render any refinancing or sale of the Project difficult, unattractive, or impossible; (iv) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws) and fiscal policies; and (v) natural disasters ( including, without limitations, earthquakes and floods), which may result in uninsured losses. The Bondholders will be subject to the risk that the Project will be unable to attract and retain tenants as a result of adverse changes affecting the Project, the local real estate market or other factors, including the restrictions • on the Project imposed under the Regulatory Agreement. Such inability to attract and retain tenants would result in a decline in rental income and may affect the ability and willingness of the Borrower to make timely payments due with respect to the Loan Agreement. There can be no assurance that the Project will generate sufficient revenue to cover operating expenses and meet required payments due under the Loan Agreement. Residential real estate, including the Project, can be subject to adverse housing pattern changes and uses, vandalism (resulting in extra security costs), vacancies, rent controls, rising operating costs, and adverse changes in local market conditions, such as a decrease in demand for residential housing due to a decline of the local economy and a decrease in employment. Rationing or other restrictions with respect to the availability or use of utilities could significantly affect the profitability of operating the Project. Similarly, governmental or administrative entities may impose restrictions requiring structural alterations of or capital improvements to residential buildings, resulting in significant additional costs to the Borrower that the Borrower may be unwilling or unable to finance, and which would significantly impact the Project's cash flows. If the local regulatory bodies having jurisdiction over the Project restrict or limit rent increases imposed by the Borrower to offset increased costs, the Project's cash flows may be reduced. Any future organization of the tenants of the Project could also result in resistance against rent increases, in the form of rent strikes, litigation or other action. If rental receipts after operating expenses (other than debt service) are insufficient to service the debt with respect to the Loan, foreclosure and sale of the Project is possible. Some of the risks mentioned in this subsection are more particularly described in the following subsections. • 68 Environmental Risks • • The Borrower knows of no environmental problems or liabilities in or on the real property or on adjacent properties which would adversely affect the value of the Project as security. Since certain environmental problems are hidden by time, nature, or both, it is possible that there could exist soil or groundwater contamination on site, which at some point in time might require remediation. However, the Environmental Site Assessment did not reveal - any evidence of significant soil or groundwater contamination. In the event the Project is determined at some future time to require environmental remediation, the result could be a substantial or total loss of market value. Further, under the Comprehensive Environmental Response, Compensation and Liability Act ( "CERCLA "), the owner or operator of property is potentially liable for the full amount of the costs of cleanup of ha 7n rdous substances, and, in certain cases, secured creditors can incur liability as an operator by participating or having the capacity to participate in the management of a facility prior to foreclosure, and after foreclosure may have absolute liability as an owner. Insufficient Insurance and Land Sale Proceeds The Indenture requires that in the event of damage to, destruction of or a title defect relating to the Project and the Improvements which the Borrower determines not to repair or replace, the Borrower will notify the Trustee of such events and the Trustee shall promptly exercise its remedies under the Deed of Trust and as soon as practicable, sell the real and personal property acquired through or in lieu of such exercise. The proceeds together with any Net Proceeds are to be used to redeem all or a pro rata share of the Series A Bonds, as described in the Indenture. The Borrower is required to maintain casualty insurance only in the amount equal to the replacement value of the Improvements (see the discussion under the heading "THE LOAN AGREEMENT"). In addition, the Borrower could violate its covenant to maintain insurance by allowing the insurance on the Project to lapse, or an insurance company providing such insurance could become insolvent or otherwise not honor claims on policies. In such event, • if such a loss occurs, a default in payment of the Bonds would almost certainly result and, if such loss is substantial, a non - payment of all or a portion of the Bonds could occur. Based on current value of the real property comprising the Project, the Borrower expects that there would be sufficient revenues available from the sale of the real and personal property and Net Proceeds to redeem the Series A Bonds; however, if real property values decline, or the Project can not be sold at an adequate price, the Net Proceeds may not be sufficient to redeem Series A Bonds in a principal amount sufficient to reduce debt service to a level that can be supported by the Revenues from the remaining Project and Improvements. • Enforceability and Bankruptcy - The remedies available upon a default are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing laws and judicial decisions, the remedies provided under the financing documents described herein may not readily be available or may be limited. Recent revisions of the federal bankruptcy laws may have an adverse effect on the ability of the Trustee to enforce its claim to the security granted by the Deed of Trust. The bankruptcy court may also have the p ewe to invalidate b ce certain provisions of the Loan Agreement and the Deed of Trust that make bankruptcy proceedings Borrower an event of default thereunder. The various legal opinions to be delivered concurrently with the delivery of the Series A Bonds and the aforesaid documents will be qualified to the extent that the enforceability of certain rights related to the Series A Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. • 69 Anti- Deficiency Laws of the State of California Section 726 of the California Code of Civil Procedure provides (among other matters) essentially that any suit • to recover a debt or to assert other rights secured by a deed of trust on real property must be an action to foreclose that deed of trust, thus prohibiting a direct action on the debt or the exercise of other rights by the holder of that deed of trust (commonly called the "one form of action rule "). This Section has been interpreted by the California courts to require a lender to exhaust all collateral security on a debt in a single action and to limit a lender's right to set -off. This Section also specifies the procedures for the sale of the encumbered property, the application of proceeds, the . availability in certain cases of a deficiency judgment, the limitation on the amount thereof, and other related matters. In the event of an action in violation of the one form of action rule, it is virtually certain that the benefit of the real property security would be lost. Further, in the event that an action were taken by the Trustee with regard to funds or other security other than with regard to the application of funds pursuant to the Indenture other than the real property security prior to a "trustee's sale" of the real property security (as discussed below) it is possible that the sanctions contained in the one form of action rule would thereby be incurred. Sections 2924 and 2924(c) of the California Civil Code require the following of certain procedures by the holder of a deed of trust or mortgage before exercising a power of sale included under a deed of trust or mortgage, ti which procedures are designed to protect the rights of the borrower and certain other persons and under certain circumstances to reinstate the obligations secured by such deed of trust. Section 2924(c) of the California Civil Code provides that whenever the maturity of an obligation secured by a deed of trust is accelerated by reason of a default in the payment of interest or of any installment of principal or other sum secured thereby, the trustor and certain other entitled persons have the right, at any time within the period remaining with the date of recordation of the notice of default until five business days prior to the date of sale set forth in the notice of default if the power of sale under such deed of trust is to be exercised or, otherwise, at any time prior to the entry of the decree of foreclosure, to cure such default by paying the entire amount then due (including certain reasonable costs and expenses incurred in enforcing such obligations, but excluding any amount that would not otherwise be due but for • such acceleration) and thereby reinstate such deed of trust and the obligations secured thereby to the same effect as if no such acceleration had occurred. California Code of Civil Procedure Section 580(d) prohibits the rendering of any deficiency judgment after a trustee's sale. Paradoxically, California Civil Procedure Section 580(a) essentially limits the amount of a deficiency judgment after a trustee's sale to the difference between the appraised value of the secured property sold and the sales price at the trustee's sale. Although on their face these Code Sections do not limit the Trustee's rights to recover a deficiency under the Note, at least with respect to the Borrower, since the Loan is non - recourse, these Code Sections could limit or hamper the enforcement of certain rights of the Bondholders since the combined effect of these Code Sections has been held to cut off the subrogation rights of guarantors. Therefore, in effect, California courts have refused to enforce guarantees where guarantors have lost their rights of subrogation through the secured party's conduct of a trustee's sale. Under California law, guarantees by corporate shareholders may not be given effect if the corporation is found to be a mere instrumentality or "alter ego ". However, the mere fact that guarantors are shareholders, officers or directors will not be grounds for applying anti- deficiency protections absent a showing that adherence to a separate existence would promote an injustice or fraud. Section 9501 of the Uniform Commercial Code as adopted in California is intended to facilitate the employment of remedies permitted under the Uniform Commercial Code with regard to personal property used as security for a debt also secured by real property. Such remedies would include a deficiency judgment after the sale of personal property security and multiple, as opposed to unitary sales of security. 70 It is the opinion of leading California legal scholars that the employment of Code Section 9501 is subject to a commercial reasonableness test which could impair a creditor's right to proceed against real property security after • a sale or other action under the Uniform Commercial Code. Therefore, prudence dictates that all collateral be sold in a single sale when a debt is secured by mixed collateral. Any other course of action, such as a sale of personal property or seizure of funds or the use of an offset of funds, might invoke the sanctions of Civil Code Section 726. .The Deed of Trust provides for an absolute assignment of rents to the Trustee as the assignee thereunder. Although these provisions are absolute in form, until the assignee perfects its assignment by taking possession pursuant to the Indenture or by receivership, it may have no claim to the rents as against either the Borrower or a junior lien or with a similar assignment of rents clause who earlier perfected its own lien through possession or receivership. Further, it is probable that a judgment appointing a receiver to enforce a rents and profits clause or the use of such proceeds to service or satisfy a debt would invoke the sanctions of the one form of action rule. The provisions for penalties, late charges or additional interest in the event of a default by the Borrower under the Loan Documents will be subject to factual determinations required under California law in the evaluation of late payments and liquidated damages provisions. Forward Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute "forward- looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" or other similar words. Such forward - looking statements include, but are not limited to, certain statements contained in the information under the caption "THE PROJECT — Projected • Operating Results." The achievement of certain results or other expectations contained in such forward - looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. The Issuer does not plan to issue any updates or revisions to those forward - looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur, other than as described under "CONTINUING DISCLOSURE" herein. TAX MATTERS The tax - exempt status of the interest on the Bonds is based on the continued compliance by the Borrower and the Issuer with certain covenants contained in the Tax Certificate of the Issuer and the Borrower and Regulatory Agreement and the reporting of certain information to the Department of the Treasury. These covenants relate generally to use and operation of the Project, maintenance of use of the Project by tax- exempt users, compliance with the requirements of Section 501(c)(3) of the Code, arbitrage limitations, rebate of certain excess investment earnings to the federal government, restrictions on the amount of issuance costs which can be financed with the proceeds of the Bonds and requirements regarding the timely and proper use of proceeds of the Bonds. Failure to comply with any of these covenants may result in the treatment of interest on the Bonds as taxable retroactive to the date of issuance. In order to assist compliance with the Code, the Issuer will require, among other things, that the Borrower enter into the Regulatory Agreement. The Borrower will enter into the Regulatory Agreement containing provisions designed to ensure compliance with certain restrictions under the Code. In addition, the Issuer and the Borrower have covenanted in the Indenture and the Loan Agreement, as applicable, to comply with all applicable requirements • of the Code. In the event of noncompliance with such requirements, remedies available to the Issuer and/or the 71 Bondholders may be limited by applicable provisions of law and may, therefore, be inadequate to prevent the loss of the tax-exempt status of interest on the Bonds. • The Borrower has been determined by the Internal Revenue Service to be a tax- exempt organization described in Section 501(c)(3) of the Code. The tax - exempt status of the Bonds depends upon the Borrower's maintenance of its status as an organization described in Section 501(c)(3) of the Code. To maintain such status, the Borrower must conduct its operations in a manner consistent with representations previously made to the IRS and with current and future IRS regulations and rulings governing its tax - exempt status. In order to maintain its tax - exempt status under federal law, the Borrower must not be operated to any substantial degree for the benefit of private individuals or allow its earnings or assets to inure to the benefit of private persons. If the Borrower should lose its status as an exempt organization, a reduced amount of after -tax revenue would remain available to pay debt service on the • Bonds, and the interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Developments affecting the federal or state tax - exempt status of nonprofit organizations such as the Borrower may impose financial or other burdens on the operations of the Borrower. For example, taxing authorities in certain jurisdictions have sought to impose or increase taxes related to the property and operations of nonprofit organizations. In addition, compliance with current and future regulations and rulings of the IRS, could adversely affect the ability of the Borrower to charge and collect revenues, finance or refinance indebtedness on a tax- exempt basis, or otherwise generate revenues necessary to provide for payment of the Series A Bonds. In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, under existing law and assuming continuing compliance by the Issuer and the Borrower with certain covenants in the documents relating to the Bonds and requirements of the Internal Revenue Code of 1986, as amended (the "Code ") regarding the use, expenditure and investment of the Bond proceeds and the timely payment of certain investment earnings to the United States Treasury, interest on the Bonds is not includable in the gross income of the owners of the Bonds for the purposes of federal income taxation. Failure to comply with such covenants in the documents relating to the • Bonds and requirements of the Code may cause interest on the Bonds to be includable in gross income retroactively to the date of issue. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may affect the tax status of interest on the Bonds. The proposed form of opinion of Bond Counsel is set forth in Appendix D. Interest on the Bonds will not be treated as an item of tax preference in calculating the alternative minimum taxable income of individuals or corporations; however, interest on the Bonds will be included as an adjustment in the calculation of a corporation's alternative minimum taxable income and may therefore affect such corporation's alternative minimum tax liabilities. The difference between the initial offering prices to the public (excluding bond houses and brokers) at which the Series A Bonds are sold and the amount payable at maturity thereof constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. Such discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the paragraphs above. The original issue discount accrues over the term to maturity of each such maturity of each Series A Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straightline interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Series A Bonds to determine taxable gain upon disposition (including sale, redemption, or payment at maturity) of such Series A Bonds. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Series A Bonds who purchase the Series A Bonds after the initial offering of a substantial amount of such maturity. Owners of such Series A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series A Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for • 72 any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Series A Bonds 411 under federal individual and corporate alternative minimum taxes. Bond Counsel expresses no opinion regarding other income tax consequences caused by ownership of, or receipt of interest on, the Bonds. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State personal income tax. Ownership of tax- exempt obligations may result in collateral income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S Corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits and taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax- exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to applicability of any such collateral consequences. LEGAL OPINIONS The opinion of the Bond Counsel firm of Best Best & Krieger LLP, Riverside, California, approving the validity of the Series A Bonds and stating that interest on the Series A Bonds is excludable from gross income under Section 103 of the Code and such interest is also exempt from personal income taxes of the State of California, will be rendered simultaneously with the issuance of the Series A Bonds, in substantially the form shown in Appendix D hereto. The legal opinion is only as to legality and tax - exemption, and is not intended to be nor is it to be interpreted or relied upon as a disclosure document or an express or implied recommendation as to the investment quality of the Series A Bonds. Certain matters will be passed upon for the Issuer by its counsel, Richards, Watson & Gershon, a professional • corporation, Los Angeles, California, and for the Borrower by Procopio Cory Hargreaves & Savitch LLP, San Diego, California. Best Best & Krieger LLP will also render an opinion in its role as Disclosure Counsel. Compensation for the services of Bond Counsel and Underwriters' Counsel is contingent upon the sale and delivery of the Bonds. CONTINUING DISCLOSURE Pursuant to a Continuing Disclosure Agreement between the Borrower and the Trustee, acting as dissemination agent thereunder (the "Disclosure Agreement "), the Borrower, as an "obligated person" under - paragraph (f)(10) of SEC Rule 15c2 -12 (the "Rule "), has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of the Rule (each, a "Repository") certain annual financial information and operating data, including its audited financial statements and for annual reports following the initial annual report information of the type set forth in this Official Statement under the heading "THE PROJECT - Projected Operating Results." In addition, the Borrower has agreed to provide, or cause to be provided, to each Repository in a timely manner notice ofthe following "Listed Events" if material: (1) principal and interest payment delinquencies; (2) non - payment related defaults; (3) modifications to rights of Owners of Bonds; (4) Bond calls; (5) defeasances; (6) rating changes; (7) adverse tax opinions or events adversely affecting the tax - exempt status of the Series A Bonds; (8) unscheduled draws on the Series A Bonds Debt Service Reserve Fund reflecting financial difficulties; (9) unscheduled draws on credit enhancements reflecting financial difficulties; (10) substitution of credit or liquidity providers, or their failure to perform, and (11) release, substitution or sale of property securing repayment of the Bonds. These covenants have been made in order to assist the Underwriters in complymg with • paragraph (b)(5) of the Rule. 73 The Borrower may amend the Disclosure Agreement, and•waive any provision thereof, by written agreement of the parties, subject to the provisions of Section 8 of the Disclosure Agreement. In addition, the Borrower's 411 obligations under the Disclosure Agreement will terminate upon the defeasance or payment in full of all of the Bonds. The provisions of the Disclosure Agreement are intended to be for the benefit of the Owners and are - enforceable by the Trustee on behalf of the Owners, provided that any enforcement action by any such person shall be limited to a right to obtain specific enforcement of the Borrower's obligations under the Disclosure Agreement and any failure by the Borrower to comply with the provisions thereof shall not be an event of default under the Indenture or the Loan Agreement. The form of the Disclosure Agreement is attached hereto as Appendix F. The Borrower has not ever failed to comply in all material respects with any previous undertakings with regard to the Rule. LITIGATION The Issuer Currently, there exists a lawsuit against the Issuer, Seal Beach Associates. LLC v. Redevelopment Agency of the City of Seal Beach, Case No. 00CC07866 of Orange County Superior Court (the "Seal Beach Associates Case "), claiming inverse condemnation and breach of contract and asking for declaratory relief and quiet title. It is alleged in the complaint that current contractual restrictions against the Project prevent the spaces from being leased at market rates and that existing restrictions encourage low income qualifying tenants to sublet the spaces for higher rental than the current owner is entitled to charge. In connection with the acquisition of the Project by Borrower with the proceeds of the Series A Bonds, the Seller and the Issuer have entered into a settlement agreement dated November 22, 2000, which dismisses the lawsuit conditioned upon the completion of the sale of the Project to the Borrower. • In addition to the Seal Beach Associates Case, Sonia Sonju, a resident within the Project, has filed a judgment she obtained against her former husband (and former owner of the Project) William T. Dawson. The amount of this claim is less than $180,000 and this judgment will not be an exception to clear title when title to the Project is transferred to Borrower. In addition, Ms. Sonju has claimed, although she has not filed suit, an ownership interest in the Project. Fidelity National Title Company has committed to provide an endorsement with its title policy insuring the Borrower against any potential loss arising from Ms. Sonju's ownership claims. Other than as stated 'above, and to the knowledge of the Issuer, there is not now pending or threatened any proceeding or litigation against the Issuer seeking to restrain or enjoin the issuance or delivery of the Bonds or questioning or affecting the validity ofthe Bonds or the proceedings and authority under which they are to be issued. Neither the creation, organization or existence of the Issuer, nor the title of the present boardmembers or other officers of the Issuer to their respective offices is being contested. The Borrower To the knowledge of the Borrower, there is not now pending or threatened any proceeding or litigation against the Borrower affecting the ability of the Borrower to enter into or deliver the Loan Agreement, the Note, the Deed of Trust or the Regulatory Agreement, or contesting the existence or powers of the Borrower with respect to the transactions described m this Official Statement. • 74 RATING 411 Based on the support for payment of principal and interest provided by the Policy issued by ACA, the Series A Bonds have been rated "A" by Standard & Poor's Ratings Services ( "S &P "). An explanation ofthe significance of the rating may be obtained from S &P at 55 Water Street, New York, New York 10041. The rating expresses only the view of the rating agency, and the Issuer makes no representation as to the appropriateness of the rating. There can be no assurance that the rating will continue for any period of time or that it will not be revised or withdrawn entirely if, in the judgment of the rating agency, circumstances so warrant. A revision or withdrawal of the rating may have an effect on the market price of the Series A Bonds. UNDERWRITING The Series A Bonds are to be purchased by Kinsell, Newcomb & De Dios, Inc. and Girard Securities, Inc. (collectively, the "Underwriters ') at an original issue discount of $85,331.50 and an Underwriters' discount of $133,293.37, plus an underwriting fee of $1,706.63. The purchase agreement pursuant to which the Series A Bonds are being purchased provides that the Underwriters will purchase all of the Series A Bonds if any are purchased, the obligation to make such purchase being subject to certain and to o counsel certain other and conditions set forth in _the purchase agreement, to the approval of certain legal matters by The Underwriters may offer and sell Series A Bonds to certain dealers, banks and others at a price lower than be changed from time to time by the the offering price stated on the cover age hereof. The offering prices Underwriters. FINANCIAL ADVISOR • The City has entered into an agreement with PMG Financial Consulting (the "Financial Advisor ") under which the Financial Advisor agrees to provide financial recommendations and guidance to the City with respect to preparation for sale of the Bonds, timing of sale, tax- exempt bond market conditions, costs of issuance, and other factors related to the sale of the Bonds. The Financial Advisor has read and participated in the drafting of certain portions of this Official Statement. The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in the Official Statement, or any other related information available to the City, with respect to accuracy and completeness of disclosure of such information, and the Financial Advisor makes no guaranty, warranty or other representation respecting accuracy and completeness ofthe Official Statement or any other matter related to the Official Statement. The Financial Advisor's fees is contingent upon the sale and delivery of the Bonds. • MISCELLANEOUS All of the summaries of the Indenture and other agreements and documents contained herein are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all such provisions. Reference is hereby made to such documents on file with the Trustee for further information in connection therewith. Any statements made in the Official Statement 'involving matters of opinion or estimates, whether or not expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. • 75 The preparation and distribution of this Official Statement have been authorized by the Issuer. REDEVELOPMENT AGENCY OF THE CITY OF SEAL • BEACH By: /s/ Donald McIntyre Executive Director III 76 APPENDIX A III GENERAL INFORMATION THE CITY OF SEAL BEACH The financial and economic information regarding the City set forth on the following pages is included in this Official Statement for information purposes only. The obligation of the City to pay Pledged Revenues pursuant to the Indenture will not be secured by any pledge of ad valorem taxes or General Fund revenues but will be payable solely from the fund payable under the loan and the Indenture. • General The City, incorporated on October 27, 1915, is a municipal corporation duly organized and existing under California law and, since 1965, under its City Charter. The City operates under a council- manager form of government. the City is located in northern Orange County, approximately 27 miles southeast of Los Angeles. It has a population of approximately 27,200. Population The following table summarizes the City's population since 1980. CITY OF SEAL BEACH Population III Year Population 1980 25,972 • 1990 25,098 1995 s 26,350 1996 26,450 1997 • 26,550 1998 26,850 1999 27,200 Source: The 1980 and 1990 totals are U.S. Census figures. The figures for the years 1995 through 1999 are based upon adjusted January 1 estimates provided by the State. _ ' Land and Land Use The City encompasses an area of approximately 11,970 acres. The U.S. Naval Weapons Station accounts for 5,000 acres of this total. Excluding the U.S. Naval Weapons Station, the City is 98% developed. The City's sewer service area is approximately 6,373 acres including the U.S. Naval Weapons Station. Excluding the U.S. Naval Weapons Station, land use is 94% residential and 6% commercial. City Services There are currently 92 full-time and 55 part-time employees of the City. The City provides water and sewer III services to its residents with average daily consumption of water at 35 million gallons. A -1 Police protection services are provided by the City which employs 33 policemen and maintains 3 police stations. Fire protection services are provided by the County of Orange. The City maintains 22 public parks and has 4 miles of shoreline to the Pacific Ocean. There are two o public • libraries within the City. Construction and Property Valuation The following table shows the number of building permits given and the assessed valuation of real property in the City for the last ten years for which information is available. , CITY OF SEAL BEACH CONSTRUCTION, PROPERTY VALUE AND BANK DEPOSITS LAST TEN FISCAL YEARS Total ' Total Number of Number of Total Total Fiscal Residential Commercial Number Total Assessed Year Permits Permits of Permits Valuation Valuation 1989 1,321 119 1,440 $42,256,911 $1,371,332,888 1990 1,445 85 1,530 22,258,015 1,528,375,586 1991 1,400 90 1,490 26,168,632 1,661,832,131 1992 1,595 40 1,635 14,116,401 1,777,238,241 1993 1,465 79 1,544 12,699,559 1,840,032,442 1994 1,061 75 1,136 17,071,542 1,874,761,959 1995 968 72 1,040 11,135,300 1,865,791,748 III 1996 792 65 857 9,630,402 1,858,112,574 1997 754 67 821 9,327,990 1,783,466,899 1998 847 61 908 13,600,293 1,804,395,475 1999 744 77 821 13,638,390 1,868,245,169 III A -2 Sales Tax • The following table shows the top twenty -five sales tax producers within the City. These twenty -five business account for approximately 54% of the sales tax generated within the City. CITY OF SEAL BEACH TOP 25 SALES TAX PRODUCERS June 30, 1999 Business Name Business Category AM &PM Mini Marts Service Stations Bay Hardware Hardware Stores Bixby Management Corp. Clubs/Amusement -No Liquor Chevron Service Service Stations Conkle Union Service Service Stations G&M Oil Co. Service Stations Hennesseys Tavern Restaurants/Liquor Inflight Surf & Sail Sporting Goods/Bike Stores Jim Holechek Chevron Service Service Stations Leisure World Union 76 Service Stations Lucky Store Grocery Stores Liquor Marie Calendar Pie Shop Fast Food Precet Business Products Inc. StationeryBook •Stores • Red Lobster Restaurants/Liquor Roger Dunn Golf Shops Sporting Goods/Bike Stores • Sav- On/Osco Drug Stores Drug Stores Seal Beach Chevron Service Stations Seal Beach Mobil Mart Service Stations Seal Beach Union - Service Stations Shore Shop Inc. Family Apparel Spaghetdni Restaurants/Liquor Stats Floral Supplies Art/Gift/Novelty Stores Thrifty Drug Stores Drug Stores Vons Grocery Stores/Liquor Waits Wharf Restaurants/Liquor • • • A -3 • [THIS PAGE INTENTIONALLY LEFT BLANK] • • APPENDIX B III DEFINITIONS The following are definitions of certain terms contained in the Indenture, the Loan Agreement and the Regulatory Agreement and used in this Official Statement. "ACA" means ACA Financial Guaranty Corporation, issuer of the Policy. "Account" shall mean an Account created and established by the Indenture. "Accountant's Certificate" shall mean a certificate or opinion signed by an independent certified public accountant of recognized national standing or a firm of accountants of recognized national standing, selected by the Issuer upon consultation with the Borrower, who may be the accountant or firm of accountants who regularly audit the books of the Issuer. "Act" shall mean Chapter 8 of Part 5 of Division 31 of the Health and Safety Code of the State of California (commencing with Section 52100), as amended and supplemented from time to time. • "Act of Bankruptcy" means any proceeding instituted under Title 11 of the United States Code, entitled "Bankruptcy" as in effect now and in the future, or any successor statute, or other applicable insolvency law by or against the Borrower. - "Adjusted Income" means the adjusted income of all persons who intend to oc upy a Space, calculated in the manner determined by the Secretary of the Treasury pursuant to Section 142 d 2 (B) of the Code. III "Administration Agreement" means the Administration and Oversight Agreement, dated as of December 1, 2000, among the Issuer, the Borrower and the Oversight Agent. "Administration Fee" means an amount equal to $625.00 per month, such amount to be increased annually on December 15, commencing December 15, 2001, to reflect 90% of any increase in the Consumer Price Index [All Urban Consumers] for the California CMSA in which the City of Seal Beach is located (base year 1982 -1984 = 100), published by the United States Department of Labor, Bureau of Labor Statistics ( "BLS "). If the base is changed, the CPI used shall be converted according to the conversion factor provided by the BLS. "Administration Fund" shall mean the Administration Fund created and established by the Indenture. "Agency" means the Redevelopment Agency of the City of Seal Beach. "Agency Deed of Trust" means that certain Deed of Trust with Assignment of Rents and Security Agreement, dated as of December 1, 2000, made by the Borrower, as Trustor, in favor of the Agency, as beneficiary, which Agency Deed of Trust is subordinate to the Deed of Trust. "Agency Regulatory Agreement" means that certain Regulatory Agreement and Declaration of Restrictive Covenants, dated as of December 1, 2000 and between the Borrower and the Agency, which Agency Regulatory Agreement is recorded subordinate to the Regulatory Agreement. "Area" means the Primary Metropolitan Statistical Area in which the Project is located. "Authorized Denominations" shall mean $5,000 or any integral multiple thereof with respect to the Series III A Bond • B -1 • "Authorized Officer" shall mean the Executive Director, any Assistant Executive Director of the Issuer or any person designated in writing by the Executive Director or the Assistant Executive Director of the Issuer to act as an Authorized Officer under the Indenture. III "Bond" or "Bonds" shall mean any bond or bonds, including the Series A Bonds, authorized and issued pursuant to the Indenture. "Bond Counsel" shall mean (i) Best Best & Krieger LLP, or (ii) any nationally recognized law firm specializing in the area of tax- exempt municipal finance acceptable to the Issuer. _ "Bondowner" or "Owner" or "Owner of Bonds" or any similar term (when used with respect to Bonds) shall mean the registered owner of any Outstanding Bond or Bonds. "Bond Register" shall mean the registration books of the Trustee with respect to the Bonds. "Bond Year" shall mean a twelve -month period ending on December 15, except that the first Bond Year 01211 begin on the date on which the Bonds are initially delivered and end on the next succeeding December 15. "Borrower" shall mean LINC Community Development Corporation, a California nonprofit public benefit corporation, and permitted successors and assigns. "Borrower Representative" means the person or persons at the time designated by the Borrower to act on the behalf of the Borrower by written certificate furnished to the Issuer, the Oversight Agent, the Program Administrator and the Trustee containing the specimen signatures of such person or persons and signed by the Borrower Representative. Such certificate may designate an alternate or alternates. "Business Day" means a day, other than a Saturday, Sunday, legal holiday or day on which the New York 41111 Stock Exchange is closed, on which banking institutions are not closed in the State of California, or in any state in which the principal office of the Trustee is located. "Certificate of Continuing Program Compliance" means the certificate with respect to the Project to be filed by the Borrower with the Issuer, the Program Administrator, the City and the Trustee which shall be substantially in the form attached to the Regulatory Agreement. "City" shall mean the City of Seal Beach, California. "Closing Date" shall mean December 21, 2000, being the date when the Bonds were delivered to the Original Purchaser. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations in effect thereunder. "Continuing Disclosure Agreement" shall mean that certain Continuing Disclosure Agreement between the Borrower and the Dissemination Agent named therein dated the Closing Date as originally executed and as it may be amended from time to time in accordance with the terms thereof. "Costs of Issuance" shall mean all items of expense payable or reimbursable directly or indirectly by the Issuer and related to the authorization, issuance and sale of Bonds, which expenses shall include, but not be limited to, printing costs, costs of reproducing documents, filing and recording fees, initial fees and charges of the Trustee and other Fiduciaries, legal fees and disbursements, professional consultants fees and disbursements, reimbursements to the Issuer and its agents for administrative, travel and overhead expenses, bond discount, underwriting fees and other financing costs (if not otherwise provided for), fees and charges for execution, III - B -2 transportation and safekeeping of Bonds, Series A Bond insurance premiums and fees and expenses, and all other costs, charges, fees and expenses in connection with the foregoing. • "Cost of Issuance Fund" shall mean the Cost of Issuance Fund established pursuant to the Indenture. "Cost of Project" shall mean, to the extent authorized by the Code, the Regulations and the Act, any and all costs incurred by the Borrower with respect to the acquisition of the Project, including, without limitation, costs for the acquisition of property and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determnnng the feasibility of the Project, contractors' and developers' overhead and supervisors' fees and costs directly allocabletothe Project, administrative and other expenses necessary or incident to the Project and the financing thereof. "Coverage Ratio" means, for any period of time, with respect to the Series A Bonds, the ratio derived by dividing the sum of the Net Operating Revenues received by the Borrower plus the earnings accruing to the Series A Bonds Debt Service Reserve Fund by the annual debt service payable on the Series A Bonds in the applicable fiscal year. "Coverage Requirement Certificate" means the certificate filed by the Borrower as described in the Loan Agreement. "Counsel' s Opinion" shall mean an opinion signed by an attorney or firm of attorneys acceptable to the Issuer. Any such attorney may be in the regular employment of the Issuer. "County" means the County of Orange. "Debt Service Requirement" shall mean, as of any date of calculation with respect to the Bonds, the sum • of (i) all interest due or to become due on such date on all Outstanding Series A Bonds plus (ii) all Principal Installments due or to become due on such date on all Outstanding Series A Bonds or, if no Principal Installment is due and payable on such date on any Outstanding Series A Bonds, one -half of the Principal Installments, if any, due and payable on all Outstanding Series A Bonds on the next succeeding Interest Payment Date. "Debt Service Reserve Fund Requirement" shall mean, as of any date of determination, an amount equal to the least of: (a) Maximum Annual Debt Service with respect to the Bonds, (b) ten percent (10 %) of the initial principal amount of the Bonds, or (c) one hundred twenty-five percent (125 %) of the average annual debt service on the Bonds in each remaining Bond Year. As of the Closing Date, the Debt Service Reserve Fund Requirement is $448,051.83. "Deed of Trust" shall mean the Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing, executed as of the Closing Date, by the Borrower, which secures the Borrower's obligations to repay the Loan and constitutes a lien on real property. "Depository" shall mean (a) initially, DTC, and (b) any other Securities Depository acting as Depository under the Indenture. "Depository System Participant" means any participant in the Depository's book -entry system. "DTC" shall mean The Depository Trust Company, New York, New York, and its successors and assigns. "Event of Default" shall mean, with respect to the Indenture, a Series A Bonds Event of Default, as set forth in the Indenture. • B -3 "Fees and Charges" shall mean all fees and charges authorized to be received by the Issuer from the Borrower pursuant to the terms and provisions of the Loan Agreement for the purpose of paying the Issuer Annual Fee and the fees and expenses of the Fiduciaries. • "Fiduciary" shall mean the Trustee, each Paying Agent, the Rebate Analyst, the Program Administrator and the Oversight Agent. "Fiscal Year" or "fiscal year" shall mean (a) with respect to the Issuer, the twelve -month period ending June 30 or such other fiscal year of the Issuer which may be adopted, and (b) with respect to the Borrower, each twelve- month period ending June 30 or such other fiscal year of the Borrower which may be adopted. "Fund" shall mean a fund created and established by the Indenture. "Generally Accepted Accounting Principles" or "GAAP" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor and the Governmental Accounting Standards Board or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Financial Accounting Standards Board or its successor. "Government Obligations" shall mean bonds or other obligations which as to principal and interest constitute direct obligations of the United States of America and which are not subject to redemption prior to their maturity at the option of any person other than the holder thereof. "Improvements" shall mean, as of the Closing Date or at any time thereafter, any structures (other than mobile homes, improvements, personal property and fixtures not owned by the Borrower), site improvements, facilities and fixtures located on the Property. "Income Certification" means the Income Computation and Certification in the form attached to the • Regulatory Agreement. "Indenture" shall mean the Indenture of Trust as from time to time amended or supplemented by Supplemental Indentures in accordance with the terms and provisions of the Indenture. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery • Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service "Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attention: Called Bond Department; Standard & Poor's Rating Group "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds as the Issuer may designate in a written request delivered to the Trustee. "Interest Payment Date" shall mean June 15 and December 15 of each year, commencing June 15, 2001, in which interest on any Bonds is due and payable. "Issuer" shall mean the Redevelopment Agency of the City of Seal Beach, a California redevelopment agency duly organized and validly existing under the general laws of the State. "Issuer 'Bridge Loan Agreement" means the Bridge Loan Agreement, dated as of December 1, 2000, between the Agency and the Borrower. • B-4 "Issuer Loan Agreement" means the Loan and Grant Agreement, dated as of December 1, 2000 between the Agency, as grantor, and the Borrower, as grantee. . • "Loan" shall mean the loan made by the Issuer, pursuant to the Loan Agreement, to the Borrower to finance the Project. "Loan Agreement" shall mean the Loan Agreement dated as of December 1, 2000, by and among the Borrower, the Issuer and the Trustee. "Loan Documents" shall mean the Loan Agreement, the Note and the Deed of Trust, as each item may be amended and supplemented from time to tune. "Maximum Annual Debt Service" shall mean at any point in time, with respect to the applicable Series A Bonds then Outstanding, the maximum amount ofprincipal (assuming sinking fund payments) and interest becoming due in the then current or any future Bond Year on such Series A Bonds. "Median Income for the Area" means the median income for the Area as most recently determined pursuant to the Act. "Net Operating Revenues" means Operating Revenues, less the Operation and Maintenance costs during such fiscal year or period and less the amount to be held by the Borrower pursuant to the Loan Agreement. "Net Proceeds" shall mean any proceeds resulting from the Issuer's enforcement of its rights under the Deed of Trust, insurance or condemnation proceeds paid with respect to the Project which are available after payment therefrom of all expenses incurred in the collection thereof. III "Note" shall mean the promissory note executed by the Borrower in accordance with the Loan Agreement. "Officer's Certificate" shall mean a certificate executed by an Authorized Officer. "Operating Reserve Fund Requirement" means an amount equal to fifty percent (50 %) of the then Maximum Annual Debt Service on the Series A Bonds. As of the Closing Date, the Operating Reserve Fund Requirement is $224,026. "Operating Revenues" means, for any fiscal year or other period, all rents, income, receipts and other revenues derived by the Borrower arising from the operation of the Project, including rental income from mobile home spaces, determined in accordance with Generally Accepted Accounting Principles and all other money howsoever derived by the Borrower from the operation of the Project or arising from the Project, but not including resident security deposits. . "Operation and Maintenance Costs" means, for any fiscal year or other period, the reasonable and necessary costs and expenses of operating the common areas of the Project and of managing and repairing and other expenses necessary to maintain and preserve the common areas of the Project in good repair and working order, calculated in accordance with Generally Accepted Accounting Principles, including, but not limited to (a) utility services supplied to the common areas of the Project, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, (b) compensation to the management agent, salaries and wages of employees, payments to employee retirement systems, fees of auditors, accountants, attorneys or engineers, and (c) all other reasonable and necessary costs of the Borrower or charges required to be paid by it related to the operation and maintenance of the common areas of the Project, including, but not limited to, costs of insurance and property taxes, if any, but excluding in all cases (i) depreciation, replacement and obsolescence • charges or reserves therefor, (ii) amortization of intangibles or other bookkeeping entries of a similar nature, (iii) costs of capital additions, replacements, betterments, extensions or improvements to the common areas of the B -5 Project, which under Generally Accepted Accounting Principles are chargeable to a capital account or to a reserve for depreciation, (iv) debt service on the Loan, and (v) the amount deposited in the Administration Fund. "Original Purchaser" shall mean Kinsell, Newcomb & De Dios, Inc. and Girard Securities, Inc. • "Outstanding, " when used with reference to an applicable series of Bonds, shall mean, as of any date, Bonds of such series theretofore or then being delivered under the provisions of the Indenture, except: (i) any Bonds of such series canceled by the Trustee or any Paying Agent at or prior to such date, (ii) Bonds of such series for the payment or redemption of which moneys equal to the Principal Amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held by the Trustee or the Paying Agent in trust (whether at or prior to the of maturity or redemption date), provided that if such Bonds are to be redeemed, notice of such redemption shall have been given as in the Indenture provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, (iii) Bonds of such series in lieu of or in substitution for which other Bonds shall have been delivered pursuant to the Indenture, and (iv) Bonds deemed to have been paid as provided in the Indenture. "Oversight Agent" shall mean Rosenow Spevacek Group, Inc., and any successor thereto appointed by the Issuer subject to the consent of ACA (such consent not be reasonably withheld), which entity shall also act as the initial Oversight Agent under the Administration Agreement. "Participants" shall mean those broker - dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository. "Participating. Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Agreement. "Paying Agent" shall mean the Trustee, acting as paying agent, or any other bank, trust company or national banking association designated or appointed pursuant to the Indenture to act as a paying agent for the Bonds, and • each successor or successors and any other bank, trust company or national banking association at any time substituted in its place pursuant to the Indenture. "Permitted Encumbrances" ¢hall mean, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent; (ii) recorded tenant leases and other encumbrances of record as of the date of acquisition that will not materially impair Bondholders' rights to the Project; (iii) the Deed of Trust; (iv) the Regulatory Agreement, the Agency Deed of Trust and the Agency Regulatory Agreement; (v) any right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in a manner prescribed by law after the Closing Date; (vi) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of Closing Date and which, in the opinion of the Oversight Agent, will not materially impair the use of the Project as contemplated in the Regulatory Agreement; and (vii) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Deed of Trust and to which the Issuer and the Trustee consent in writing. "Pledged Revenues" shall mean Revenues but excluding therefrom, amounts on deposit in the Repair and Replacement Fund, the Administration Fund, the Rebate Fund, the Rental Assistance Fund and the Resident Services Fund. "Policy" means the bond insurance policy issued by ACA relating to the Senes A Bonds. "Prepayment" shall mean any moneys received or recovered by the Issuer representing any voluntary payment of principal of or interest (including any penalty, fee, premium, or other additional charge for Prepayment which may be provided by the terms of the Deed of Trust) on the Loan prior to the scheduled payments of principal 1111 and interest called for by such Loan. B -6 "Principal Amount" shall mean, with respect to any Bond and at any date of computation, the stated principal amount thereof. • "Principal Installment" shall mean, as of any date of computation, the amount payable in any Bond Year on account of: (i) the Principal Amount of Bonds of a particular series maturing in such Bond Year net of the aggregate of Sinking Fund Installments, if any, established and paid for in the prior Bond Years with respect to the Bonds of such series; plus (ii) the amount of any Sinking Fund Installments due in such Bond Year with respect to Bonds of such series. "Principal Payment Date" shall mean December 15 in each year, commencing December 15, 2001. - "Program Administrator" shall mean, initially, Rosenow Spevacek Group, Inc., and thereafter any successor Program Administrator under the Administration and Oversight Agreement appointed by the Issuer subject to the consent of ACA (such consent to be unreasonably withheld). "Program Administrator's Fee" shall mean such amount to be paid to the Program Administrator pursuant to the Administration Agreement. "Project" shall consist of the Property and the Improvements. "Project Fund" shall mean the Project Fund established pursuant to the Indenture and administered under and pursuant to the Loan Agreement. "Property" shall mean real property commonly known as the Tropics Mobile Home Park located within the City of Seal Beach, California, all as more particularly described in the Regulatory Agreement. "Qualified Investments" shall mean and include any of the following (including any funds comprised of the • following, which may be funds maintained or managed by the Trustee and its affiliates): (a) Cash deposits (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in the next paragraph). (b) Direct obligations of (including obligations issued or held in book entry form on the books of the Department of Treasury) the United States of America. In the event these securities are used for defeasance, they shall be non - callable and non - payable. • (c) Obligations of the following federal agencies so long as such obligations are backed by the full faith and credit of the United States of America: (i) U.S. Export-Import Bank (Eximbank) (ii) Rural Economic Community Development Administration (iii) Federal Financing Bank (iv) General Services Administration (v) U.S. Maritime Administration (vi) U.S. Department of Housing and Urban Development (PHAs) (vii) Small Business Administration (viii) Government National Mortgage Association (GNMA) (ix) Federal Housing Administration (x) Farm Credit System Financial Assistance Corporation (d) Direct obligations of any of the following federal agencies which obligations are not fully • guaranteed by the full faith and credit of the United States of America: B -7 - (i) Senior debt obligations rated in the highest long -term rating category by at least two nationally recognized rating agencies issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC). III (ii) Senior debt obligations of the Federal Home Loan Bank System. (iii) Senior debt obligations of other Government Sponsored Agencies approved by ACA. (e) U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks which either (i) have a rating on their short-term certificates of deposit on the date of purchase in the highest short-term rating category of at least two nationally recognized rating agencies, (ii) are insured at all times by the Federal Deposit Insurance Corporation, or (iii) are collateralized with direct obligations of the United States of America at 102% valued daily. All such certificates must • mature no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank). (f) Commercial paper which is rated at the time of purchase in the highest short-term rating category of at least two nationally recognized rating agencies and which matures not more than 270 days after the date of purchase. (g) Investments in (i) money market funds rated in the highest short-term rating category of at least one nationally recognized rating agencies (including any such funds for which the Trustee or an affiliate may be acting as an investment advisor for providing other services) and (ii) public sector investment pools operated pursuant to SEC Rule 2a -7 in which the issuer's deposit shall not exceed 5% of the aggregate pool balance at any time and such pool is rated in one of the two highest short-term rating categories of at least two nationally recognized rating agencies. (h) Pre - refunded municipal obligations defined as follows: Any bonds or other obligations of • any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on an irrevocable escrow account or fund (the "escrow "), in the highest long-term rating category of at least two nationally recognized rating agencies; or (ii) (A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or direct obligations of the United States of America, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate. (i) General Obligations of states with a short-term rating in one of the two highest rating categories and a long -term rating in one of the, two highest rating categories of at least two nationally recognized rating agencies. In the event such obligations are variable rate obligations, the interest rate on such obligations must be reset not less frequently than annually. (j) Investment agreements approved in wnting by ACA. III B -8 (k) Other forms of investments (including repurchase agreements) approved in writing by • ACA. Notwithstanding the foregoing, upon payment or defeasance of the Series A Bonds in full, all references to "ACA" in the foregomg definition of Qualified Investments shall mean the Issuer. "Qualified Project Period" means the period as defined in Section 142(d)(2)(A) of the Code; provided, such period is subject to extension in accordance with the Regulatory Agreement. "Qualified Residents" means Very Low Income Residents. "Qualified Space" means a Very Low Income Space. "Rating Agencies" shall mean any of Fitch, Inc., Standard & Poor's Ratings Services, a division of McGraw -Hill Companies, Inc., or Moody's Investors Service, Inc., and such others as may be designated by the Issuer from time to time. "Rebatable Arbitrage" shall mean the amount (determinable as of the last day of each fifth Bond Year and upon retirement of the last Bond Outstanding) of arbitrage profits payable to the United States at all times and in the amounts specified in Section 148(f) of the Code and any applicable Regulations. "Rebate Analyst" shall mean the entity engaged by the Borrower or the Issuer to compute the Rebatable Arbitrage annually pursuant to the Indenture. "Rebate Fund" shall mean the Rebate Fund created and established by the Indenture. III . "Rebate Regulations" shall mean those final, temporary, and proposed Treasury Regulations promulgated under Section 148(f) of the Code. "Regulations" shall mean the Income Tax Regulations promulgated or proposed under the Code by the Department of the Treasury, as the same may hereafter be amended, including regulations promulgated by the Department of the Treasury to implement the requirements of Section 148 of the Code. "Regulatory Agreement" shall mean the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of December 1, 2000, by and among the Issuer, the Trustee and the Borrower. "Rental Assistance Fund" shall mean the fund by that name established pursuant to the Indenture. "Repair and Replacement Fund" shall mean the Repair and Replacement Fund established pursuant to the Indenture. "Representation Letter" shall mean the representation letter from the Issuer to DTC. "Required Rebate Deposit" shall mean an amount determinable as of the end of each fifth Bond Year and as of the date of retirement of the last Bond, which when added to amounts then on deposit in the Rebate Fund, if any, equals the aggregate amount of Rebatable Arbitrage for the Bonds less the amount of Rebatable Arbitrage theretofore paid to the United States with respect to the Bonds, if any. "Resident Services Fund" shall mean the fund by that name established pursuant to the Issuer Loan Agreement, held by the Trustee, and administered by the Oversight Agent. III B -9 "Residual Net Proceeds" shall mean (i) so long as the Series A Bonds shall remain Outstanding, such Net Proceeds as are available after redeeming all the then Outstanding Series A Bonds, and (ii) on and after the date on which the Series A Bonds are no longer Outstanding, all such Net Proceeds which would have been available for • the redemption of Series A Bonds. "Residual Prepayments" shall mean (i) so long as the Series A Bonds shall remain Outstanding, such Prepayments as are available after redeeming all the then Outstanding Series A Bonds, and (ii) on and after the date on which the Series A Bonds are no longer Outstanding, all such Prepayments which would have been available for the redemption of Senes A Bonds. "Revenue Fund" shall mean the Revenue Fund created and established by the Indenture. "Revenues" shall mean (i) Operating Revenues; (ii) Prepayments; (iii) the proceeds of any insurance, including the proceeds of any self-insurance covering the loss relating to the Project; provided, however, that the Net Proceeds of any public liability insurance, casualty insurance or title insurance required to be maintained pursuant to the Loan Agreement shall be applied as specified in the Loan Agreement and the Indenture; (iv) all amounts on hand from time to time in the funds and accounts established by the Trustee under the Indenture; (v) all proceeds of rental interruption insurance policies, if any, carried with respect to the Project pursuant to the Loan Agreement; (vi) any proceeds derived from the exercise of remedies under the Deed of Trust; and (vii) any additional property that may from time to time, by delivery or by writing of any kind, be subjected to the lien of the Indenture by the Issuer or by anyone on its behalf, subject only to the provisions of the Indenture. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax -(516) 227 -4039 or 4190; Midwest Securities Trust Company, Capital Structures -Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax -(312) 663 -2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Fax -(215) 496 -5058; and, in accordance with then current guidelines of the Securities and Exchange • Commission, such other addresses and/or such other securities depositories as the Issuer may designate in a written request of the Issuer delivered to the Trustee. "Series A Bonds Debt Service Fund" shall mean the Series A Bonds Debt Service Fund created and established by the Indenture. "Series A Bonds Debt Service Reserve Fund" shall mean the Series A Bonds Debt Service Reserve Fund created and established by the Indenture. "Series A Bonds Debt Service Reserve Fund Requirement" shall mean, as of any date of determination, an amount equal to the least of: (a) Maximum Annual Debt Service with respect to the Series A Bonds, (b) ten percent (10 %) of the initial principal amount of the Series A Bonds, or (c) one hundred twenty -five percent (125%) of the average annual debt service on the Series A Bonds in each remaining Bond Year. "Series A Bonds Event of Default" shall have the meaning set forth in the Indenture. "Series A Bonds Redemption Fund" shall mean the Series A Bonds Redemption Fund created and established by the Indenture. "Series A Bonds Trust Estate" shall mean all proceeds, Funds, Accounts, Revenues, Prepayments, the Loan, the Loan Agreement (other than the rights of the Issuer under the Loan Agreement, which are reserved by the Issuer as set forth in the Indenture), the Deed of Trust, rights, interests, collections, and other property pledged to the payment of any Senes A Bonds pursuant to the Indenture and in the granting clauses of the Indenture. • B -10 "Sinking Fund Installment" shall mean the amount required to be applied by the Issuer to the payment of the principal portion of the Redemption Price of Term Bonds (other than at the option or election of the Issuer) on 411 any one date as specified in the Indenture. "Space" means a mobile home space within the Project upon which a mobile home may be placed. "State" shall mean the State of California. "Supplemental Indenture" shall mean an indenture supplemental to or amendatory of the Indenture adopted • by the Issuer in accordance with the Indenture. "Surplus Fund" shall mean the Surplus Fund created and established by the Indenture. "Tax Certificate" shall mean that certain Tax Certificate executed on the Closing Date with respect to the Bonds. "Term Bonds" shall mean the Series A Bonds maturing on December 15, 2008, December 15, 2013 and on December 15, 2035. "Trustee" shall mean the bank or trust company or national banking association appointed pursuant to the Indenture to act as trustee under the Indenture, and its successor or successors and any other bank or trust company or national banking association at any time substituted in its place pursuant to the Indenture. "Trustee Fee" shall have the meaning set forth in the Indenture. "Trust Estate" shall mean the Series A Bonds Trust Estate. • "Very Low Income Residents" means individuals or families with an Adjusted Income which does not exceed the amount promulgated by the U.S. Department of Housing and Urban Development for very low income households for the Area as adjusted for household size as set forth below. In no event, however, will the occupants of a Space be considered to be Very Low Income Residents if all the occupants are students, as defined in Section 151(c)(4) of the Code, as such may be amended, no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy ofthe unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full -time course of institutional on -farm training under the supervision of • an accredited agent of such an educational organization or of a state or political subdivision thereof. "Household Size" Adjustment for 1' = 70 %; Adjustment for 2 = 80 %; Adjustment for 3 = 90 %; Adjustment for 4 = 100 %; Adjustment for 5 = 108 %; Adjustment for 6 = 116 %; Adjustment for 7 = 124 %; Adjustment for 8 = 132 %; and assuming one person will occupy a recreational vehicle, two persons will occupy a single -wide mobilehome, and three persons will occupy a multisectional mobilehome. "Very Low Income Spaces" means the Spaces in the Project designated for occupancy by Very Low Income Residents pursuant to the Regulatory Agreement. • B -11 0 • • [THIS PAGE INTENTIONALLY LEFT BLANK] • • APPENDIX C • HISTORICAL AND FORECASTED PROJECT RECEIPTS AND DISBURSEMENTS • • 1 • • [THIS PAGE INTENTIONALLY LEFT BLANK] • • • SEAL BEACH ASSOCIATES, LLC dba SEAL BEACH TRAILER PARK Historical and Forecasted Statements of Cash Receipts and Disbursements and Accountants' Compilation Report For the Year Ended December 31,1999 • and III Forecasted Statements For Ten Years • Indepen Accountants' Report on Agreed -Upon Procedures January 1, 1999 through December 31, 1999 III • . . , . [THIS PAGE INTENTIONALLY LEFT BLANK] • •