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Current Council Agenda and Past Meeting Information

COUNCIL AGENDA ITEM NO. 6

Meeting Date: April 27, 2004

Subject/Title: Approve a Resolution approving and authorizing the execution of an Implementation Agreement to the Disposition and Development Agreement (DDA) between the Brentwood Redevelopment Agency and Sycamore Place II Senior Housing Corporation, and approving and authorizing the execution of a Subordination Agreement

Prepared by: Gina Rozenski, Redevelopment Manager

Submitted by: Howard Sword, Director of Economic Development

RECOMMENDATION
Approve a Resolution approving and authorizing the execution of an Implementation Agreement to the DDA between Brentwood Redevelopment Agency and Sycamore Place II Senior Housing Corporation for the Agency to contribute an additional amount not to exceed $225,000 towards a portion of City Infrastructure and Building Fees for the Sycamore Place II Project, and approving and authorizing the execution of a Subordination Agreement for the Agency’s interest in the real property located at 161 Sycamore Drive to liens and claims of U.S. Department of Housing & Urban Development.

A companion resolution is on tonight’s Redevelopment Agency agenda.

PREVIOUS ACTION
In June 2000, the City Council approved an option to sell the parcel located at 161 Sycamore Drive, the old corporation yard, for the development of a senior apartment complex similar to the existing Sycamore Place I complex.

In May 2001, the City’s Right of Way Division performed an appraisal that resulted in a land value of $530,722. This was later confirmed by an updated appraisal dated January 3, 2002.

On January 8, 2002, the Brentwood Redevelopment Agency approved a contribution from its Low and Moderate Housing Fund in the amount of $585,421 to the Sycamore Place II project, a 40-unit, very low income senior housing project.

On November 12, 2002, the City Council and the Brentwood Redevelopment Agency approved the Disposition and Development Agreement (“DDA”) between the Agency and Christian Church Homes of Northern California (“CCH”) (now known as Sycamore Place II Senior Housing Corporation). The DDA memorialized the deal points of the development transaction for Sycamore Place II, and the Agency’s contribution of $585,421, of which $530,722 was used for land acquisition.

The DDA included a Promissory Note and a Deed of Trust in the amount of $530,722, the amount of the purchase price of the parcel. Escrow closed in June 2003, whereafter CCH became the owner of 161 Sycamore Drive.

The DDA also included a condition that the Agency’s DDA, and all associated DDA documents such as the Promissory Note, Regulatory Agreement and Deed of Trust, are subordinate to liens and claims of the U.S. Department of Housing and Urban Development (“HUD”) for this project.

BACKGROUND
Request for Additional Advance
At the time of DDA approval in November 2002, the total development cost for the project was valued at $5,338,041, and shared by the funding sources as follows:

1. HUD 202 Funds $4,167,199
2. County HOME Funds 585,421
3. Brentwood Redevelopment Agency L/M Funds 585,421
Total $5,338,041

Due to unprecedented price spikes in framing lumber and steel, extreme volatility in California Worker’s Compensation costs, significant increase in labor costs, and rapid escalation in construction insurance costs, the project’s construction cost increased by 25%. After three rounds of value engineering from July to November 2003, a savings of 5.5% was achieved for a total construction cost of $4,101,978. New subcontractor bids were received in March 2004 that added $375,640. The new bids will hold through the HUD loan closing in May 2004. A HUD-approved cost estimator verified the final construction cost of $4,477,618.

In an effort to keep the project moving forward, CCH has deferred all its administration fees to date, plans to defer its administration fees after HUD loan closing in May 2004, and has advanced $175,336 to cover project costs.

The financial gap between the initial project cost of November 2002 and the new project cost of March 2004 is $1,144,023. To close the financial gap, Christian Church Homes has received additional funds from HUD (a unique occurrence known as amendment funds) in the amount of $722,700. Also, the County has approved an additional $100,000 contribution, and CCH is proposing to sponsor an additional $96,323.

CCH is requesting the Redevelopment Agency to fill the final gap amount of $225,000 (“Additional Advance”), bringing the total Agency contribution to $810,421 ($585,421 + $225,000), or $20,261 per unit.

Analysis of Request for Additional Advance
Twenty percent of the annual tax increment revenues are deposited directly into the Agency’s Housing Fund and are primarily set-aside for the sole purpose of preserving, improving and increasing affordable housing within the Merged Redevelopment Project Areas. Since housing developers are conditioned to supply 15% of all newly constructed dwelling units within our Project Areas as affordable housing, the Agency’s Housing Fund is a principal funding source to assist with the financial burden, if any, of producing this affordable housing.

Since these units are being built within the Merged Redevelopment Project Areas, a 15% inclusionary housing obligation of 6 units is triggered, per Health & Safety Code Section 33413(b)(1). But this project itself is adding 39 very-low income dwelling units to the Agency’s inventory of inclusionary housing, essentially meeting the 6-unit obligation and providing an additional 33 affordable units. The units will be deed- and rent-restricted for a period of 55 years, and age-restricted.

Proceeding with this project is consistent with the Redevelopment Plan and the Five-Year Implementation Plan to provide affordable housing, while also complying with inclusionary housing requirements and removing obstacles to infill residential development. The project integrates the proposed residential use with the surrounding existing uses, which, in turn, strengthens the immediate neighborhood and the community in general.

The need for senior housing is critical in our community, as evidenced by a waiting list of 112 applicants for Sycamore Place I, and an interest list of 172 elderly households for Sycamore Place II. While HUD 202 program forbids the establishment of a local preference to serve primarily Brentwood seniors, the percentage of Sycamore Place I residents who are from Brentwood or have family living in the immediate surrounding area, and those on the waiting and interest lists, is above 60%. The average annual income for tenants is $12,300, and rental rates must be no more than 30% of their adjusted monthly income. Consequently, tenants’ monthly rents are typically in the range of $250 per month, and households are categorized as extremely low income.

Past Agency contributions from its Housing Fund to eligible affordable housing projects have ranged from $11,500 to over $50,000 per unit. The proposed Agency contribution to the Sycamore Place II project is $20,261, well within the average.

The per-unit-development cost is $162,060, and is below the average multi-family development cost of $200,000 to $215,000 per unit.

The purpose of the First Implementation Agreement is to modify and implement the DDA by making certain changes to reflect the Additional Advance of $225,000. The First Implementation Agreement also requires that the original Promissory Note and Deed of Trust be amended to incorporate the Additional Advance.

The Redevelopment Subcommittee and Staff recommends the City Council approve the Additional Advance, and approve the execution of the First Implementation Agreement, Restated Promissory Note, and Modification of Deed of Trust. Staff further recommends that the Additional Advance be used solely for the purposes of paying a portion of the City Fees for the Sycamore Place II project, which CCH is in agreement.

Request for Subordination of Interest
Section 703 of the DDA provides that so long as a mortgage affecting the project site is held by the U.S. Department of Housing and Urban Development, the Redevelopment Agency’s interest in the site and all provisions of the DDA are subordinate. HUD mandates all other funding sources to comply with this subordination on all its projects. While HUD recognizes that Section 703 subordination clause exists, because the Agency closed our real estate transaction in June 2003, the Agency appears first on the title report. Before HUD will close its loan in May 2004, it requires the Agency to execute and record the attached Subordination Agreement as a “belts and suspenders” measure. Staff recommends the City Council authorize execution of the Subordination Agreement since the DDA already contains provisions for junior position.

FISCAL IMPACT
The Additional Advance of $225,000 will be funded by the Redevelopment Agency’s Housing Fund 302 in this fiscal year. The Housing Fund is stable and healthy and can financially support the Additional Advance. CCH will execute an Amended Promissory Note and Modification of Deed of Trust in the amount of $810,421, which includes the original contribution and the Additional Advance. The terms remain the same as the original note: loan is payable in full at the end of 55 years with 3% simple interest.

There is no fiscal impact on the Agency by executing the Subordination Agreement, since the DDA already provided for junior position to HUD.

Attachments: Resolution
First Implementation Agreement
Subordination Agreement

COUNCIL RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING AND AUTHORIZING THE EXECUTION OF A FIRST IMPLEMENTATION AGREEMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD AND SYCAMORE PLACE II SENIOR HOUSING CORPORATION, AND APPROVING AND AUTHORIZING EXECUTION OF A SUBORDINATION AGREEMENT
WHEREAS, the Redevelopment Agency of the City of Brentwood ("Agency") is carrying out the Merged Area Redevelopment Plan (the "Redevelopment Plan") ; and
WHEREAS, Agency and Christian Church Homes of Northern California ("CCH") entered into a Disposition and Development Agreement, dated as of November 2, 2002 (the "DDA"), pursuant to which CCH agreed to, among other things, purchase from Agency certain real property located at 161 Sycamore Avenue (the "Site") for the purpose of developing and constructing a 40-unit apartment complex for low-income seniors ("Project"); and
WHEREAS, pursuant to the DDA, Agency funded a loan from Agency's Low-Moderate Income Housing Fund ("Housing Fund") to CCH in the amount of $530,722, to pay for the acquisition of the Site (the "Original Loan"), which Original Loan is evidenced by a promissory note ("Original Note") executed by CCH and is secured by a deed of trust executed by CCH for the benefit of Agency and recorded against the Site; and
WHEREAS, pursuant to the DDA, as a condition to the Original Loan, CCH also executed an Affordable Housing Covenant (the "AHC") which was recorded against the Site; and
WHEREAS, CCH conveyed the Site to Sycamore Place II Senior Housing Corporation, a California nonprofit public benefit corporation ("Developer"), and pursuant to that certain Assignment and Assumption Agreement between CCH and Developer, CCH assigned to Developer all of its rights, title, interest, duties and obligations under the DDA, the Original Note, Deed of Trust, AHC, and all other related documents and instruments entered into by CCH in connection with the DDA and CCH's acquisition of the Site ("Agency Documents"); and
WHEREAS, as a condition to the Project, the City requires Developer to pay certain City development fees (the "City Fees") including, but not limited to, the following: (a) Building, electrical, plumbing, and mechanical permit fees; (b) Delta Expressway fees; (c) Water connection fees; (d) Waste water connection fees; (e) Roadway fees; (f) Parks & trail fees; (g) Community facilities fees; (h) Administration fees; (i) Fire fees; (j) Lot line adjustment fees; and (k) Base map revision fees; and
WHEREAS, Developer now anticipates incurring additional costs of development of the Site that were not contemplated at the time of execution of the DDA, and. Developer is requesting of Agency that it provide additional funds to enable Developer to pay for such increased development costs; and
WHEREAS, Developer has requested Agency to make an additional advance of Housing Funds to be loaned to Developer in an amount not to exceed $225,000 (the "Additional Advance") to be used solely to pay a portion of the City Fees; and
WHEREAS, the Developer and Agency staff have cooperated in the preparation of a First Implementation Agreement to Disposition and Development Agreement (the "Implementation Agreement") to make minor modifications to the DDA to provide for the Additional Advance to Developer, and the terms and conditions relating to such Additional Advance; and
WHEREAS, at the time of approval of the DDA, the Agency prepared a report (the "Report") pursuant to Section 33433 of the Health and Safety Code containing a copy of the proposed DDA and a summary describing the costs of the DDA to the Agency and other information required by said Section 33433.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BRENTWOOD DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council hereby finds and determines that the Agency providing the Additional Advance to Developer, pursuant to the terms and conditions set forth in the Implementation Agreement, will assist in the elimination of blight within the redevelopment project area and provide housing for very low-income senior citizens. This finding is based upon the fact that the Additional Advance, provided for under the First Implementation Agreement, will ensure that the Project is developed on the Site, consisting of thirty-nine (39) units of very low-income senior housing (plus one (1) manager's unit), in accordance with and in implementation of the Redevelopment Plan.
Section 2. The City Council hereby finds and determines that the Additional Advance to be provided by the Agency pursuant to the Implementation Agreement is consistent with the Implementation Plan for the Merged Redevelopment Project.
Section 3. The City Council hereby approves, and authorizes Agency to execute, the Implementation Agreement and Subordination Agreement substantially in the form currently on file with the City Clerk, subject to any minor, technical or clarifying changes which may be approved by Agency Counsel. The Agency is further authorized to take such further actions and execute such documents as are necessary to carry out the DDA, as modified by the Implementation Agreement, on behalf of the Agency, including without limitation all actions and documents necessary for the disbursement of the Additional Advance to the Developer and development of the Site in accordance with the DDA, as modified by the Implementation Agreement.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 27th of April, 2004 by the following vote:

AYES: Members
NOES:
ABSENT:
_____________________________
Brian Swisher
Mayor

ATTEST:
__________________________________
Karen Diaz, CMC
City Clerk/Director of Administrative Services

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
The Redevelopment Agency of
The City of Brentwood
150 City Park Way
Brentwood, CA 94513

FIRST IMPLEMENTATION AGREEMENT
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
This FIRST IMPLEMENTATION AGREEMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") is entered into as of , 2004 by and between the REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD (the "Agency") and SYCAMORE PLACE II SENIOR HOUSING CORPORATION, a California nonprofit public benefit corporation ("Developer").
Recitals
A. The Agency and Christian Church Homes of Northern California ("CCH") entered into a Disposition and Development Agreement dated as of November 2, 2002 ("DDA"). Pursuant to the DDA, CCH agreed to, among other things, purchase from Agency certain real property located at 161 Sycamore Avenue, as more particularly described on Exhibit A attached hereto and incorporated herein by this reference ("Site") for the purpose of developing and constructing a 40-unit apartment complex for low-income seniors ("Project"), all as more particularly described in the DDA.
B. Pursuant to the DDA, Agency agreed to make a loan of funds from Agency's Low-Moderate Income Housing Fund ("Housing Fund") to CCH in the amount of FIVE HUNDRED THIRTY THOUSAND SEVEN HUNDRED TWENTY-TWO DOLLARS ($530,722) to be used to pay for the acquisition of the Site (the "Original Loan"). The Original Loan is evidenced by a promissory note ("Original Note") executed by CCH. The Original Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of November 12, 2002, executed by CCH for the benefit of Agency. The Deed of Trust was recorded in the Official Records of Contra Costa County, California ("Official Records") on June 27, 2003, as Document No. 2003030524200 ("Deed of Trust"). CCH also executed an Affordable Housing Covenant against the Site (the "AHC") which was recorded in the Official Records. Agency funded the Original Loan and CCH acquired the Site from Agency in June 2003.
C. CCH conveyed the Site to Developer pursuant to a grant deed dated , 200_. Pursuant to that certain Assignment and Assumption Agreement dated as of , 200_ between CCH and Developer, CCH assigned all of its rights, title, interest, duties and obligations under the DDA, Original Note, Deed of Trust, AHC, and all other related documents and instruments entered into by CCH in connection with the DDA and CCH's acquisition of the Site ("Agency Documents"). Developer accepted such assignment and agreed to assume and perform all of the obligations, covenants, and agreements of CCH under the Agency Documents.
D. As a condition to the Project, the City requires Developer to pay certain City development fees (the "City Fees") including, but not limited to, the following: (a) Building, electrical, plumbing, and mechanical permit fees; (b) Delta Expressway fees; (c) Water connection fees; (d) Waste water connection fees; (e) Roadway fees; (f) Parks & trail fees; (g) Community facilities fees; (h) Administration fees; (i) Fire fees; (j) Lot line adjustment fees; and (k) Base map revision fees. The above City Fees do not include plan check or other fees levied and charged by other taxing agencies, including but not limited to fire district, flood control and school district.
E. At the time of execution of the DDA, CCH anticipated that the total projected financing would provide sufficient funds to pay for all costs of development, including the City Fees. Developer now anticipates incurring additional costs of development of the Site that were not contemplated at the time of execution of the DDA. Developer is requesting of Agency that it provide additional funds to enable Developer to pay for such increased development costs.
F. Developer has requested Agency to make an additional advance of Housing Funds to be loaned to Developer in an amount not to exceed TWO HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($225,000) ("Additional Advance") to be used solely to pay a portion of the City Fees. Agency has agreed to make the Additional Advance to Developer on certain conditions provided herein, including that the Additional Advance be disbursed and used only to pay City Fees under the terms and conditions of the this Agreement and that the Additional Advance be secured by the Deed of Trust. Developer shall also execute and cause to be recorded a Modification of Deed of Trust.
G. The Developer and the Agency accordingly desire to make minor modifications to the DDA in light of changed conditions and current conditions and the further planning and decisions of the parties.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, it is hereby declared, understood and agreed as follows:
Agreements
1. Purpose of this First Implementation Agreement. The purpose of this First Implementation Agreement is to modify, effectuate, and implement the DDA by making certain changes necessary to reflect the further planning and decision of the parties in light of changed circumstances following execution of the DDA.
2. Design and Construction of Project. Developer shall design, finance, and construct the Project in a single phase. The total estimated cost of the Project is SIX MILLION FOUR HUNDRED EIGHT TWO THOUSAND SIXTY-FIVE DOLLARS ($6,482,065).
3. Additional Advance. The Agency has previously funded all amounts under the Original Loan. Agency agrees to loan to Developer, and Developer agrees to borrow from Agency, an additional sum not to exceed TWO HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($225,000) (the "Additional Advance"). The Additional Advance shall be used solely for the purposes of paying a portion of the City Fees. All other fees and costs to construct the Project shall be borne solely by Developer. The City shall have no liability for payment of the Additional Advance.
In connection with the Additional Advance, Developer shall execute and deliver to Agency an Restated and Amended Promissory Note ("Restated Note") in substantially the form attached hereto as Exhibit B and incorporated herein by this reference, and a Modification of Deed of Trust, attached hereto as Exhibit C and incorporated herein by this reference. The Restated Note amends, restates, supersedes and replaces in its entirety the Original Note. The Agency shall be permitted to pay the proceeds of the Additional Advance directly to the City on behalf of Developer to pay for certain City Fees within the time set forth by the City for issuance of building permits to the Developer for the Project. Should the Developer pay the City directly for the issuance of building permits for the Project, the Agency shall fund the proceeds of the Additional Advance to Developer to reimburse the Developer for the costs it incurs in paying the City Fees, provided however that the amount of funds provided by Agency shall not exceed $225,000.
4. Construction Commencement and Completion. Developer shall commence construction of the Project no later than fifteen (15) days following the date of this Agreement ("Commencement Date"), shall diligently pursue construction completion of the Project thereafter, and shall complete construction of the Project, to Agency's satisfaction, no later than twelve (12) months after the Commencement Date as evidenced by a certificate of completion or certificate of occupancy from the City stating that the Project has been inspected and found to be constructed in substantial compliance with the approved plans and specifications. The Developer and Agency agree that failure of the Developer to satisfactorily complete any of the above conditions as described in this Section 4 shall be a default under this Agreement, the DDA and the Restated Note and shall give rise to any and all remedies thereunder, including causing all amounts due under the Restated Note to become due and payable pursuant to the terms of the Restated Note.
5. Developer Obligated. Developer agrees to be bound by the DDA, Restated Note, Modification of Deed of Trust and all other Agency Documents, and Developer shall fulfill all of the duties and obligations of the developer thereunder. Trustor hereby makes the representations, warranties, covenants, agreements and grants made by CCH under the DDA and all other Agency Documents as though made by Trustor as of the date hereof and assumes all of the duties and obligations of CCH under the DDA and all other Agency Documents.
6. Notices. Any notices required or desired to be sent pursuant to this Agreement shall be deemed to have been received: (a) when personally delivered, if by hand delivery or by a recognized overnight courier (such as UPS, DHL or Fed-Ex); or (b) if sent by certified mail, return receipt requested, then one week following deposit of the same in any United States Post Office, postage prepaid and addressed as follows, or to such other addresses as the parties shall from time to time designate in writing:
Agency: Redevelopment Manager
Redevelopment Agency of the City of Brentwood
150 City Park Way
Brentwood, CA 94513

Developer: Sycamore Place II Senior Housing Corporation
Attn: Rob Weber
303 Hegenberger Road, Suite 201
Oakland, California 94621-1419
7. Attorney's Fees. In the event any action is commenced to enforce or interpret any term or condition of this Agreement, in addition to costs and any other relief, the prevailing party shall be entitled to reasonable attorney's fees. Jurisdiction shall be maintained in Contra Costa County.
8. Authorization. Developer warrants that it has obtained all necessary consents and approvals, and is authorized, to enter into, execute and bind Developer and undertake all of the obligations of developer as set forth hereunder and under the Agency Documents, Restated Note, and Modification of Deed of Trust.
9. Force and Effect. The effective date of this Agreement shall be the date that this Agreement is signed by the Agency. Except as modified and amended by this Agreement, all other provisions of the DDA shall remain unchanged and in full force and effect.
[Signature Page Follows]

In Witness Whereof, the parties have executed this Agreement as of the date first written above.
AGENCY:
REDEVELOPMENT AGENCY OF THE
CITY OF BRENTWOOD
By:
Executive Director
DEVELOPER:
SYCAMORE PLACE II SENIOR HOUSING CORPORATION, a California nonprofit public benefit corporation
By:_________________________________
Donald H. McCreary, Executive
Director

[SIGNATURES MUST BE NOTARIZED]

EXHIBIT A
LEGAL DESCRIPTION OF THE SITE
The land referred to herein is situated in the State of California, County of Contra Costa, City of Brentwood, and is described as follows:
PARCEL TWO, AS SHOWN ON THE MAP OF MS-352-96, WHICH MAP WAS FILED ON AUGUST 29, 1996 IN BOOK 169 OF PARCEL MAPS, PAGE 43, CONTRA COSTA COUNTY RECORDS.
EXCEPTING THEREFROM:
THAT PORTION OF SAID LAND GRANTED TO THE CITY OF BRENTWOOD BY RESOLUTION NO. 98-122 RECORDED JANUARY 27, 1999, INSTRUMENT NO. 99-22284, CONTRA COSTA COUNTY RECORDS.
ASSESSOR'S PARCEL NUMBER: 016-160-041

EXHIBIT B

FORM OF PROMISSORY NOTE

RESTATED AND AMENDED AGENCY PROMISSORY NOTE

Not to Exceed , 2004
$755,722 Brentwood, California

FOR VALUE RECEIVED, SYCAMORE PLACE II SENIOR HOUSING CORPORATION, a California nonprofit public benefit corporation (the "Maker"), having an address of 303 Hegenberger Road, Suite 201, Oakland, California 94621-1419, promises to pay THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD, or order ("Payee" or "Agency"), a principal sum of SEVEN HUNDRED FIFTY FIVE THOUSAND SEVEN HUNDRED TWENTY-TWO DOLLARS ($755,722) (the "Loan") or so much of that sum as may be advanced under this promissory note ("Note"), plus interest as specified in this Note.
1. This Note evidences an aggregate loan (the "Loan") from Payee to Maker which consolidates an original loan in the principal amount of up to Five Hundred Thirty Thousand Seven Hundred Twenty Two and no/100 Dollars ($530,722.00) with an additional advance in the principal amount of up to Two Hundred Twenty Five Thousand and no/100 Dollars ($225,000.00). This Note amends, restates, supersedes and replaces in its entirety the earlier promissory note evidencing the original loan of $530,722 dated November 12, 2002 and executed by Christian Church Homes of Northern California ("CCH") for benefit of Payee ("Original Note"). The Original Note was made pursuant to that certain Disposition and Development Agreement (the "DDA") between CCH and Payee dated November 12, 2002. The Original Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of November 12, 2002, and executed by CCH, as trustor, for benefit of Agency, as trustee ("Deed of Trust"). The Deed of Trust was recorded on June 27, 2003, in the Official Records of Contra Costa County, California as Document No. 2003030524200. Pursuant to the DDA, Maker and Payee also executed and recorded an "Affordable Housing Covenant" which requires that the rental housing units constructed on the subject property ("Site") to be operated and maintained as a 40-unit very low-income senior rental housing project ("Project"). Pursuant to that certain Assignment and Assumption Agreement dated as of ________________, 200_ between CCH and Maker, CCH assigned to Maker, and Maker agreed to assume, all of CCH's rights, title, interest, duties and obligations under the DDA, Original Note, Deed of Trust, and the Affordable Housing Covenant. In connection with this Note, Maker and Payee are entering into a First Implementation Agreement to Disposition and Development Agreement dated concurrently herewith ("Implementation Agreement").
2. This Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing covering certain real and personal property, as therein described (the "Property"), dated as of November 12, 2002, and recorded in the Official Records of Contra Costa County, California on June 27, 2003, as Document No. 2003030524200 ("Deed of Trust").
3. The principal sum of this Note shall bear interest at the rate of three percent (3%) per annum, simple interest. Interest shall be payable on the first day of each month in arrears. Interest shall be calculated on the basis of a 360 day year and actual days elapsed, which results in more interest than if a 365 day year were used.

4. All principal and all accrued and unpaid interest shall be due and payable in full no later than June 27, 2058 ("Maturity Date") or upon an event of default as hereinafter described.
5. Payment shall be made in lawful money of the United States to Payee c/o The City of Brentwood, 150 City Park Way, Brentwood, California 94513. The place of payment may be changed from time to time as the Payee may from time to time designate in writing.
6. The occurrence of any of the following shall constitute an event of default under this Note: (i) There shall be a failure to make the payment of any installment of principal or interest, if any, or any other sum secured hereby which continues for fifteen (15) days after notice that such payment is due; (ii) There shall be a failure to comply with any other term, obligation, covenant or condition contained herein, provided, however, that Maker shall not be in default if Maker, after Payee sends written notice demanding cure of such failure, (a) cures the failure within thirty (30) days, or (b) if the cure requires more than thirty (30) days, immediately commences to cure the failure and thereafter diligently prosecutes such cure to completion within one hundred twenty (120) days after giving notice of the default; (iii) There occurs a default following any applicable notice and the expiration of any applicable cure period by Maker under the Deed of Trust, the DDA, the First Implementation Agreement or the Affordable Housing Covenant; or (iv) Construction of the Project is not commenced on the Site within thirty (30) days from the date of this Note, or is not completed (as evidenced by a Certificate of Completion recorded in the Official Records of Contra Costa County) within twelve (12) months from the date of commencement of construction.
Upon the occurrence of any event of default, at the option of the Payee hereof, the entire unpaid principal sum and all accrued by unpaid interest under this Note shall become immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character. This option may be exercised at any time following any such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of Payee's option. Payee's failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event of default. Payee's failure in the exercise of any other right or remedy hereunder or under any agreement which secures the indebtedness or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof.
7. At all times following an event of default hereunder by reason of Maker's failure to pay principal due under this Note or any amounts due under any loan documents securing this Note, the interest rate on the sums as to which Maker is in default (including principal, if Payee has elected to declare it immediately due and payable), shall bear interest as of the date such sums were due until repaid at a rate equal to the lower of the highest rate then allowed by law or five percent (5%) over the prime interest rate announced by Wells Fargo Bank, N.A. as of the date such sums were due.
8. Maker and any endorsers hereof and all others who may become liable for all or any part of this obligation, severally waive presentment for payment, demand and protest and notice of protest, and of dishonor and nonpayment of this Note, and expressly consent to any extension of the time of payment hereof or of any installment hereof, to the release of any party liable for this obligation, and any such extension or release may be made without notice to any of said parties and without any way affecting or discharging this liability.

9. Maker agrees to pay immediately upon demand all reasonable costs and expenses of Payee including reasonable attorneys' fees, (i) if after an event of default this Note be placed in the hands of an attorney or attorneys for collection, (ii) if after an event of default hereunder or under the Deed of Trust, DDA, Implementation Agreement, the Affordable Housing Covenant, or under any loan document referred to herein Payee finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefor or to the protection of its rights under this Note, the Deed of Trust, the DDA, Implementation Agreement, the Affordable Housing Covenant or other loan document, or (iii) if Payee seeks to have the Site abandoned by or reclaimed from any estate in bankruptcy, or attempts to have any stay or injunction prohibiting the enforcement or collection of the Note or prohibiting the enforcement of the Deed of Trust or any other agreement evidencing or securing this Note lifted by any bankruptcy or other court.
10. If Payee shall be made a party to or shall reasonably intervene in any action or proceeding, whether in court or before any governmental agency, affecting the property or the title thereto or the interest of the Payee under the Deed of Trust, including, without limitation, any form of condemnation or eminent domain proceeding, Payee shall be reimbursed by Maker immediately upon demand for all costs, charges and attorneys' fees reasonably incurred by Payee in any such case, and the same shall be secured by the Deed of Trust as a further charge and lien upon the Site.
11. Any notices provided for in this Note shall be given by mailing such notice by certified mail, return receipt requested at the address stated in this Note or at such address as either party may designate by written notice.
12. This Note shall be binding upon Maker, its successors and assigns.
13. This Note shall be construed in accordance with and be governed by the laws of the State of California.
14. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.
15. This Note shall be subject to prepayment in whole or in part at any time without premium or other penalty. If the Project is financed with capital grant funds provided by the United States Department of Housing and Urban Development ("HUD"), then any prepayment(s) shall be made only with (a) residual receipts, as that term is defined in the Regulatory Agreement between the Maker and HUD and executed in connection with the Site (the "HUD Regulatory Agreement"), and only after obtaining the prior written approval of HUD, or (b) funds which are separate and apart from the Project or the assets or income of the Project (except residual receipts as approved by HUD). Prepayment(s) made from residual receipts may be made only after final closing of the capital advance grant provided by HUD and only after the end of a semi-annual or annual fiscal period as approved by HUD. In this regard, the Payee shall have no claim, and will not later assert any claim for payment against the Site, the proceeds of the HUD capital advance, any reserve or deposit required by HUD and deposited with HUD or another in connection with the capital advance transaction, or against the rents or other income from the Site. Notwithstanding the foregoing, as long as HUD is the holder of the first mortgage against the Site or as long as the HUD Regulatory Agreement is outstanding and in effect, the Payee shall not declare a default under this Note unless it has received the written approval of HUD.

IN WITNESS WHEREOF, Maker has executed this Note as of the date first written above.

SYCAMORE PLACE II SENIOR HOUSING CORPORATION, a California nonprofit public benefit corporation

By:
Its:

"MAKER"

EXHIBIT C

FORM OF MODIFICATION OF DEED OF TRUST

Recording Requested By And
WHEN RECORDED MAIL TO:
The Redevelopment Agency of
The City of Brentwood
150 City Park Way
Brentwood, CA 94513

Space above for Recorder's Use

MODIFICATION OF DEED OF TRUST

This Modification of Deed of Trust (this "Modification of Deed of Trust") is made as of _________, 2004, by and among SYCAMORE PLACE II SENIOR HOUSING CORPORATION, a California nonprofit public benefit corporation ("Trustor"), Christian Church Homes of Northern California, a California nonprofit public benefit corporation ("CCH"), and the REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD ("Agency").

Factual Background

A. Agency made a loan (the "Original Loan") to CCH in the amount of Five Hundred Thirty Thousand Seven Hundred Twenty Two and no/100 Dollars ($530,722). Trustor is an affiliate of CCH.

B. The Original Loan is evidenced by a promissory note dated as of November 12, 2002, made payable to Agency in the stated principal amount of $530,722.00 (the "Original Note"). The Original Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of November 12, 2002, executed by CCH, as trustor, for benefit of Agency, as beneficiary ("Deed of Trust"). The Deed of Trust was recorded on June 27, 2003, in the Official Records of Contra Costa County, California as Document No. 2003030524200. The Deed of Trust encumbers certain property (the "Property") located in the Contra Costa County, California, as more particularly described on Exhibit A attached hererto and incorporated herein by this reference.

C. CCH has conveyed its right, title and interest in and to the Property to Trustor.

D. Trustor has requested Agency to make an additional advance in an amount not to exceed TWO HUNDRED TWENTY-FIVE THOUSAND NO/100 DOLLARS ($225,000) ("Additional Advance"). In connection with the Additional Advance, Trustor has executed a restated and amended promissory note (the "Restated Note") to evidence the aggregate loan ("Loan") of funds in an amount not to exceed Seven Hundred Fifty Five Thousand Seven Hundred Twenty Two and No/100 Dollars ($755,722) from Agency to Trustor.
E. Agency has consented to the transfer of the Property by CCH to Trustor and has agreed to make the Additional Advance provided that, among other things, Trustor and CCH execute and deliver this Modification of Deed of Trust.

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Assumption of Obligations. Trustor hereby makes the representations, warranties, covenants, agreements and grants made by CCH under the Deed of Trust as though made by Trustor as of the date hereof and assumes all of the duties and obligations of CCH under the Deed of Trust.

2. Reaffirmation of Loan; Increase of Loan. The outstanding principal balance on the Original Note is Five Hundred Thirty Thousand Seven Hundred Twenty Two and No/100 Dollars ($530,722), plus accrued but unpaid interest. Upon funding of the Additional Advance, the outstanding principal balance under the Loan shall be Seven Hundred Fifty Five Thousand Seven Hundred Twenty Two and No/100 Dollars ($755,722) plus accrued but unpaid interest.
3. Additional Advance. Agency agrees to make the Additional Advance subject to the terms contained herein, the terms of the Restated Note and the terms of the First Implementation Agreement to Disposition and Development Agreement entered into by Agency and Trustor concurrently herewith. All references to Loan herein and in the Deed of Trust shall include both the Original Loan and the Additional Advance.

4. Deed of Trust. The Deed of Trust is modified to secure payment and performance of the Loan as amended to date in addition to all other secured obligations thereunder. The Original Loan and the Additional Advance are evidenced by the Restated Note and are secured by the Deed of Trust.
5. Restated Note. The Original Note shall be modified and replaced in its entirety by the Restated Note. The indebtedness evidenced by the Original Note and the Additional Advance are consolidated in the Restated Note so as to constitute a single indebtedness of the Trustor to Agency. All references to Note herein and in the Deed of Trust shall mean the Restated Note.
6. Consent of Agency to Transfer. Agency hereby consents to CCH's conveyance of its right, title and interest in and to the Property to Trustor. Agency consent shall not be construed as a consent to or an agreement to consent to any other transfer of any interest in the Property to any other person or entity or as creating a course of dealing between the parties with respect thereto.

7.. Counsel. Trustor acknowledges that Trustor has had adequate opportunity to carefully read this Modification of Deed of Trust and to consult with an attorney of Trustor's choice prior to signing it. No consent, approval or authorization of or notice to any person or entity is required in connection with Trustor's execution of and obligations under this Modification of Deed of Trust, and Trustor acknowledges its execution and delivery of this Modification of Deed of Trust is made voluntarily without any duress or undue influence of any kind. No course of prior dealing, usage of trade, parol or extrinsic evidence of any nature shall be used to supplement, modify or vary any of the terms hereof. Trustor acknowledges that is relying on no written or oral agreement, representation, warranty or understanding of any kind made by Agency or any employee, member, attorney or agent of Agency, except for the agreements of Agency set forth herein.

8. Effect of Modifications. All references in any document to the Deed of Trust shall now and hereafter mean the Deed of Trust as hereby modified.

9. No Prejudice of Rights. This Modification of Deed of Trust shall not prejudice any rights or remedies of Agency under the Deed of Trust, as hereby amended, or any other loan documents.

10. Full Force and Effect. As specifically hereby amended, the Deed of Trust shall remain in full force and effect. Nothing in this Modification of Deed of Trust shall impair the lien of the Deed of Trust, which shall remain a lien encumbering the Property.

11. Severability. If any court of competent jurisdiction determines any provision of this Modification of Deed of Trust to be invalid, illegal or unenforceable, that portion shall be deemed severed from the rest, which shall remain in full force and effect as though the invalid, illegal or unenforceable portion had never been a part of this Modification of Deed of Trust.

IN WITNESS WHEREOF, the parties have entered into this Modification of Deed of Trust as of the year and date set forth above.

TRUSTOR:
SYCAMORE PLACE II SENIOR HOUSING CORPORATION, a California nonprofit public benefit corporation
By:_________________________________
Donald H. McCreary, Executive Director

CCH:
Christian Church Homes of Northern California, a California nonprofit public benefit corporation
By:_________________________________
Donald H. McCreary, Executive Director

AGENCY:
REDEVELOPMENT AGENCY OF THE
CITY OF BRENTWOOD
By:
Executive Director

EXHIBIT A

LEGAL DESCRIPTION

The land referred to herein is situated in the State of California, County of Contra Costa, City of Brentwood, and is described as follows:
PARCEL TWO, AS SHOWN ON THE MAP OF MS-352-96, WHICH MAP WAS FILED ON AUGUST 29, 1996 IN BOOK 169 OF PARCEL MAPS, PAGE 43, CONTRA COSTA COUNTY RECORDS.
EXCEPTING THEREFROM:
THAT PORTION OF SAID LAND GRANTED TO THE CITY OF BRENTWOOD BY RESOLUTION NO. 98-122 RECORDED JANUARY 27, 1999, INSTRUMENT NO. 99-22284, CONTRA COSTA COUNTY RECORDS.
ASSESSOR'S PARCEL NUMBER: 016-160-041

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Law Offices of Goldfarb & Lipman
1300 Clay Street, 9th Floor
City Center Plaza
Oakland, CA 94612
Attention: Robert C. Mills

(SPACE ABOVE THIS LINE FOR RECORDER’S USE)

SUBORDINATION AND MODIFICATION AGREEMENT
(Sycamore Place II)

NOTICE TO THE AGENCY: THIS SUBORDINATION AND MODIFICATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

THIS SUBORDINATION AGREEMENT (the "Agreement") is entered into as of the ____ day of ____________, 2004, by and between the Redevelopment Agency of the City of Brentwood (the "Agency") and Sycamore Place II Senior Housing Corporation, a California nonprofit public benefit corporation (the "Borrower").

RECITALS

A. The Borrower is the owner of that certain real property ("the Land") located in the City of Brentwood and more particularly described in Exhibit A, attached hereto and incorporated by reference herein, on which the Borrower intends to develop 40 units of rental housing for very low-income seniors (the "Improvements"). The Land and the Improvements are collectively referred to herein as "the Project."
B. The Agency made a loan to Christian Church Homes of Northern California, a California nonprofit public benefit corporation ("CCHNC') in the amount of Five Hundred Thirty Thousand Seven Hundred Twenty-Two Dollars ($530,722) (the "Agency Loan"). The Agency Loan is evidenced by a promissory note ("Agency Note") executed by CCHNC in favor of the Agency dated November 12, 2002 and secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated November 12, 2002 ("Agency Deed of Trust") and recorded against the Land on June 27, 2003 under Recorder's Series No. 03-305242 in the Official Records of the County of Contra Costa ("Official Records"). The Agency Loan was made pursuant to the terms of a Disposition and Development Agreement dated November 12, 2002 by and between the Agency and CCHNC (the "DDA"). In connection with the Agency Loan an Affordable Housing Covenant by and between CCHNC and the Agency dated November 12, 2002 was recorded against the Land on June 27, 2003 in the Official Recorder's under Recorder's Series No. 03-305243 (the "Agency Affordable Housing Covenant"). The DDA, the Agency Note, the Agency Deed of Trust and the Agency Affordable Housing Covenant may be referred to, herein, collectively, as the "Agency Loan Documents."
C. CCHNC has assigned all of its rights, title and interest under the Agency Loan Documents to the Borrower pursuant to an Assignment and Assumption Agreement by and between CCHNC and the Borrower dated and recorded in the Official Records concurrently herewith.
D. The Agency has agreed to loan additional funds to the Borrower in the amount of Two Hundred Twenty Five Thousand Dollars ($225,000) (the "Additional Agency Loan").
E. The Additional Agency Loan is evidenced by a first implementation agreement to disposition and development agreement by and between the Agency and the Borrower dated and recorded in the Official Records concurrently herewith (the "Implementation Agreement"), a restated and amended agency promissory note made by the Borrower dated (the "Amended and Restated Promissory Note") and a modification of Deed of Trust by the Borrower dated and recorded in the Official Records concurrently herewith (the "Amendment to Deed of Trust").
F. In order to finance construction of the Improvements, the U.S. Department of Housing and Urban Development ("HUD") under Section 202 of the Housing Act of 1959, as amended, has granted the Borrower Dollars ($ ) (the "HUD Capital Advance Grant"), subject to the terms and conditions of a capital advance use agreement (the "HUD Use Agreement") being recorded concurrently herewith in the Official Records, a regulatory agreement restricting the use and occupancy of the Improvements and the income derived therefrom being recorded concurrently herewith in the Official Records (the "HUD Regulatory Agreement"). The HUD Capital Advance Grant is evidenced by a promissory note (the "HUD Note") secured by a deed of trust being recorded concurrently herewith in the Official Records (the "HUD Deed of Trust").
G. It is a condition precedent to obtaining the HUD Capital Advance Grant that the Agency modify the terms and conditions of the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust as set forth in this Agreement.
H. It is also a condition precedent to obtaining the HUD Capital Advance Grant that the HUD Use Agreement, HUD Regulatory Agreement and the HUD Deed of Trust shall unconditionally be and remain at all times, so long as these HUD documents are in effect, a lien or charge upon the Property prior and superior to the lien or charge of the Agency Loan Documents.
I. HUD is willing to make said grant provided that the Agency will specifically and unconditionally subordinate the lien or charge of the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust, to the lien or charge of the HUD Use Agreement, the HUD Regulatory Agreement and the HUD Deed of Trust.
J. It is to the mutual benefit of the parties herein that HUD make such grant to the Borrower; and the Agency is willing to modify the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust, as set forth in this Agreement and that the HUD Use Agreement, HUD Regulatory Agreement and HUD Deed of Trust shall, when recorded, constitute a lien or charge upon the Property which is unconditionally prior and superior to the lien or charge of the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust.
K. The Agency and the Borrower therefore desire to modify the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note, and Amendment to Deed of Trust pursuant to this Agreement and subordinate the Agency Loan Documents as amended by the Implementation Agreement, the Amended and Restated Promissory Note, to grant HUD certain rights with respect to the HUD Capital Advance Grant
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, it is hereby declared, understood and agreed as follows:
1. Amendment of Agency Loan Documents – HUD Rider. The HUD provisions that are currently incorporated into the Agency Loan Documents are hereby amended and restated by the HUD Rider attached hereto as Exhibit B and the Implementation Agreement, Amended and Restated Promissory Note and Amendment to Deed of Trust are hereby modified to include the HUD Rider attached hereto as Exhibit B as a part thereof.
2. Subordination of Agency Loan Documents to HUD Documents. The HUD Regulatory Agreement, the HUD Use Agreement and the HUD Deed of Trust and any renewals, modifications, extensions or advances thereunder or secured thereby shall unconditionally be and remain at all times, so long as these HUD Documents are in effect, liens, claims or charges on the Property therein described, prior and superior to the lien or charge of the Agency Loan Documents as amended by the Implementation Agreement, the Amended and Restated Promissory Note and Amendment to Deed of Trust. The Parties agree to the following priority of encumbrances on the Property:
i. HUD Use Agreement
ii. HUD Deed of Trust;
iii. HUD Regulatory Agreement;
iv. Agency Affordable Housing Covenant;
v. Agency Deed of Trust;
vi. Implementation Agreement; and
vi. Amendment to Deed of Trust

3. Notices. HUD agrees that it shall use its best efforts to provide the Agency with a copy of all notices of default provided to Borrower under the HUD Documents,

4. No Other Agreement. With regard to the priority of the deeds of trust, use agreements and regulatory agreements described herein, this Agreement shall be the sole and only agreement with regard to the subordination of the lien of the Agency Deed of Trust and Agency Affordable Housing Covenant to the liens, claims or charges of the HUD Regulatory Agreement, HUD Use Agreement and the HUD Deed of Trust.

5. Agency Acknowledgments. The Agency agrees and acknowledges that:

a. HUD, in making disbursements pursuant to the HUD Note, the HUD Use Agreement, the HUD Deed of Trust and the HUD Regulatory Agreement, is under no obligation or duty to, nor has HUD represented that it will, see to the application of such proceeds by the person or persons to whom HUD disburses such proceeds and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat the subordination herein made in whole or in part;

b. The Agency intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust, in favor of the lien or charge upon the Property of the HUD Regulatory Agreement, HUD Use Agreement and the HUD Deed of Trust and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination specific grants and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination.

c. Neither the execution, delivery nor recordation of the HUD Note, HUD Deed of Trust, HUD Use Agreement, or HUD Regulatory Agreement nor the performance of any provision, condition, covenant or other term thereof, will conflict with or result in a breach of the Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust.

6. Full Force and Effect. The Agency Loan Documents, as amended by the Implementation Agreement, the Amended and Restated Promissory Note and the Amendment to Deed of Trust, remain unmodified and are in full force and effect.
7. Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties.
8. California Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
9. Counterparts. This Agreement may be signed by the different parties hereto in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

SIGNATURE PAGE FOLLOWS

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first above written.

BORROWER:

Sycamore Place II Senior Housing Corporation, a California nonprofit public benefit corporation

By: _____________________________
Name: _____________________________
Its: _____________________________

AGENCY:

Redevelopment Agency of the City of Brentwood

By:______________________________
Name:____________________________
Title: Executive Director

APPROVED AS TO FORM:

By______________________________
Agency Counsel

SIGNATURES MUST BE NOTARIZED

EXHIBIT A

Legal Description of the Land

The land referred to herein is situated in the State of California, County of Contra Costa, City of Brentwood, and is described as follows:
PARCEL TWO, AS SHOWN ON THE MAP OF MS-352-96, WHICH MAP WAS FILED ON AUGUST 29, 1996 IN BOOK 169 OF PARCEL MAPS, PAGE 43, CONTRA COSTA COUNTY RECORDS.
EXCEPTING THEREFROM:
THAT PORTION OF SAID LAND GRANTED TO THE CITY OF BRENTWOOD BY RESOLUTION NO. 98-122 RECORDED JANUARY 27, 1999, INSTRUMENT NO. 99-22284, CONTRA COSTA COUNTY RECORDS.
ASSESSOR'S PARCEL NUMBER: 016-160-041

EXHIBIT B

HUD-REQUIRED PROVISIONS RIDER

BRENTWOOD SENIOR II (SYCAMORE II) AGENCY LOAN DOCUMENTS

This HUD-Required Provisions Rider (the "Rider") is dated as of _____________, 2004, and is attached to and made a part of that certain Disposition and Development Agreement (the "DDA") between Christian Church Homes of Northern California, a California nonprofit public benefit corporation ("CCHNC") (the "Borrower"), that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing made by CCHNC dated November 12, 2002 ("Agency Deed of Trust"), that certain Affordable Housing Covenant by and between CCHNC and the Agency dated November 12, 2002 (the "Agency Affordable Housing Covenant"), that certain First Implementation Agreement to Disposition and Development Agreement by and between the Borrower and the Agency dated (the "Implementation Agreement") that certain modification to deed of trust by the Borrower dated ("Amendment to Agency Deed of Trust"), and that certain restated and amended promissory note by the Borrower dated (the "Agency Note") (the DDA, the Agency Affordable Housing Covenant, the Agency Deed of Trust, the Amendment to Agency Deed of Trust, the Agency Note and the Implementation Agreement may be referred to herein, collectively, as the "Agency Loan Documents") relating to the property commonly known as Sycamore Place II Senior Housing (herein "the Development"). In the event of any conflict, inconsistency or ambiguity between the provisions of this Rider and the provisions of the Agency Loan Documents, the provisions of this Rider shall control. All capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Agency Loan Documents. As used in this Rider, the term "HUD Documents" shall mean the following documents relating to the HUD Section 202 Capital Advance for the Development, HUD Project No. 121-EE154-NP-WAH:

A. Deed of Trust on the Property from Borrower to HUD (the "HUD Deed of Trust");

B. Regulatory Agreement between Borrower and HUD recorded against the Property ("HUD Regulatory Agreement");

C. Capital Advance Program Use Agreement between Borrower and HUD recorded concurrently herewith (the "HUD Use Agreement"), incorporated by reference in the HUD Deed of Trust;

D. HUD Security Agreement between Borrower and HUD (the "HUD Security Agreement");

E. HUD Project Rental Assistance Contract (the "PRAC"); and

F. Other HUD Capital Advance documents.

1. Term of Rider. Notwithstanding anything else in this Rider to the contrary, the provisions of this Rider shall be and remain in effect only so long as the HUD Documents, or any of them, are in effect; thereafter, this Rider and its requirements shall be deemed no longer in effect.

2. Subordination. The covenants contained in the Agency Loan Documents shall be subordinate to the rights of HUD under the HUD Documents, and to the HUD rules and regulations pertaining thereto; and furthermore, the Agency Loan Documents shall not be enforceable against the HUD Secretary, his or her successors and assigns, should the HUD Secretary acquire title to the Property by power of sale, foreclosure, or by deed in lieu of foreclosure. In addition, so long as the HUD Documents are in effect, in the event that there are any conflicts between the terms and conditions in the Agency Loan Documents and the terms and conditions of the HUD Documents and HUD rules and regulations pertaining thereto, the HUD Documents and HUD rules and regulations shall prevail. No default may be declared under the Agency Loan Documents without HUD's prior written consent.

3. HUD Rules. During the time period in which Section 202 or the PRAC regulations apply to the Development, rents approved by HUD pursuant to the Section 202 program and the PRAC shall be deemed to be in compliance with the Agency Affordable Housing Covenant. Nothing in the Agency Loan Documents shall in any way limit, interfere or conflict with the rights of HUD with respect to development, operation and management of the Development; nor can the Agency Loan Documents in any way jeopardize the continued operation of the project on terms at least as favorable to existing as well as future tenants.

4. Disbursement of Agency Loan Funds. Upon continued satisfaction of the conditions precedent to loan disbursement set forth in the DDA, the Agency shall disburse the Agency Loan proceeds to Borrower from time to time following approval by the Agency and HUD of Borrower's requisitions in accordance with the HUD Documents. HUD approval of a requisition shall be deemed Agency approval, provided that the requisition conforms to the use of Agency funds shown in the Approved Development Budget. The Agency agrees that the uses of Agency funds shown in the Approved Development Budget are eligible uses. Requisitions not requiring HUD approval shall be submitted only to the Agency for approval and disbursement pursuant to the DDA.

5. Residual Receipts. Any whole or partial repayment of the principal and any other payments as set forth in the Agency Loan Documents shall be made only from Residual Receipts (as defined in the HUD Documents), and then only after obtaining the prior written approval of HUD, or from the Borrower's own funds.

6. Indemnification. Enforcement by the Agency of any indemnification provisions in the Agency Loan Documents will not and shall not result in any monetary claim against the Development, the HUD Capital Advance proceeds, any reserve or deposit required by HUD in connection with the HUD Capital Advance, or the rents or other income from the Development other than residual receipts authorized for release by HUD, without the prior written consent of HUD, but the Agency shall have the right to add any amounts due the Agency pursuant to indemnification provisions in the Agency Loan Documents to the principal amount of the Loan and the Agency Note and interest shall accrue thereon commencing on the date indemnification payments are due.

7. Transfer. Approval by HUD of a Transfer of Physical Assets (as defined in Handbook 4350-1 Rev-1) ("TPA") shall constitute approval of the transfer by the Agency and the Borrower shall deliver to the Agency, at the same time as its delivery to HUD, any application for HUD's approval of a proposed transfer. Also, the Borrower shall require the transferee to expressly assume the Borrower's obligations under the Agency Loan Documents; provided, however, HUD shall not be required to enforce the requirements of this sentence and if Borrower and any transferee fail to include such assumption in transfer documents, such failure shall not affect the validity of the transfer. The Agency shall have the right to specifically enforce the requirement that any transferee assume the Borrower's obligations under the Agency Loan Documents. In the absence of such written assumption, no transfer shall be deemed to relieve the transferor from any obligations under the Agency Loan Documents.

8. Default under Agency Loan Documents. The Agency shall not declare a default under the Agency Loan Documents unless it has received the prior written approval of HUD, and the Agency's right to accelerate the Agency Note during the term of the HUD Documents shall be enforceable only with the prior written approval of HUD. HUD has agreed that, in the event that HUD delivers to Borrower a notice of default under the HUD Documents, then HUD shall concurrently deliver to the Agency a copy of said notice, and the Agency shall have the right (but not the obligation) to cure any or all defaults specified in said notice for such period as is provided under applicable law; provided, however, that failure to provide the notice described herein shall not cause HUD to incur any liability nor be construed to restrict the right of HUD to proceed with foreclosure proceedings, in the event of a default by Borrower, under applicable laws.

9. Receiver. The Agency, for itself, its successors and assigns further covenants and agrees that in the event of the appointment of a receiver in any action by the Agency, its successors or assigns, to foreclose the Agency Deed of Trust (as amended by the Amendment to Deed of Trust), no rents, revenue or other income of the Development collected by the receiver or by the mortgagee-in-possession shall be utilized for the payment of interest, principal, or any other charges due and payable under the Agency Deed of Trust (as amended by the Amendment to Deed of Trust), except from Residual Receipts, if any, as the term is defined in the HUD Regulatory Agreement. The appointment of a receiver shall require approval by the Secretary of HUD, and pursuant to HUD regulations, as long as the Agency is the beneficiary under the Agency Deed of Trust, the Agency cannot be mortgagee-in-possession. In the event of the appointment, by any court, of any person, other than HUD or the Agency, as a receiver or a mortgagee or party in possession, or in the event of any enforcement of any assignment of leases, rents, issues, profits, or contracts contained in the Agency Loan Documents, with or without court action, no rents, revenue or other income of the Development collected by the receiver, person in possession or person pursuing enforcement as aforesaid, shall be utilized for the payment of interest, principal or any other amount due and payable under the provisions of the Agency Loan Documents, except from Residual Receipts in accordance with the HUD Regulatory Agreement. The receiver, person in possession or person pursuing enforcement shall operate the Development in accordance with all provisions of the HUD Documents.

10. Amendment. No amendment to the Agency Loan Documents made after the date of this Rider shall have any force or effect until and unless such amendment is approved in writing by HUD.

IN WITNESS WHEREOF, the Borrower and the Agency have executed this Rider as follows:

BORROWER:

Sycamore Place II Senior Housing Corporation, a California nonprofit public benefit corporation

By: _____________________________
Name: _____________________________
Its: _____________________________

AGENCY:

Redevelopment Agency of the City of Brentwood

By: ______________________________
Name: ______________________________
Title: Executive Director

APPROVED AS TO FORM:

By______________________________
Agency Counsel

SIGNATURES MUST BE NOTARIZED
 

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov