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REDEVELOPMENT AGENCY AGENDA ITEM NO. 7

Meeting Date: June 10, 2003

Subject/Title: Approve Resolution to Authorize the Executive Director to execute the Affordable Housing Contribution Agreement for the development of an eight-unit apartment complex in the Downtown Redevelopment Project Area.

Submitted by: Gina Rozenski, Redevelopment Analyst

Approved by: John Stevenson, Executive Director

RECOMMENDATION
Approve Resolution No. ____ to authorize the Executive Director to execute the Affordable Housing Contribution Agreement for the development of an eight-unit apartment complex in the Downtown Redevelopment Project Area.

PREVIOUS ACTION
On March 18, 2003, the City’s Planning Commission, by its Resolution No. 03-14, approved the land use entitlements for an eight-unit apartment complex at 449 and 433 First Street and, by its Resolution No. 02-29, approved this project’s design review. The applicants are Roberto and Esther Arteaga (“Owners”).

As part of the Planning Commission approvals, and in accordance with Community Redevelopment Law Health & Safety Code Section 33413, this project was conditioned with a 15% affordable housing obligation.

BACKGROUND
Health & Safety Code Section 33413 requires that 15% of all housing units constructed within the Redevelopment Project Areas be restricted and available at affordable housing costs. Of those units, at least forty percent (40%) shall be affordable to very low-income households. Therefore, two (2) of the eight (8) proposed units must have affordability restrictions. One unit must be restricted to, available to and occupied by a very low-income household, and one unit by a low-income household. Consequently, this project is conditioned with a 25% affordability restriction (2 of 8 units = 25%). Rental units must be restricted for a period of 55 years.

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 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.

After meeting and discussing the project’s financial proforma with the Owner’s representative, a financial analysis was performed to determine the potential loss of value imposed on this project by the 25% affordability restriction. An analysis of the project’s net operating income was performed on two rental income scenarios: market rate and 25% restricted. Applying a reasonable cap rate for multi-family residential projects, and subtracting the cost to develop the project, it was determined that the project was encumbered with a 1% loss on the return on cost due to the 25% affordability restriction, when compared to the market rate scenario.

After review by and direction from the Redevelopment Subcommittee, the Owner’s representative and staff agreed that by the Agency paying the project’s City fees and Delta Expressway fees (“City Fees”) in an amount not to exceed $87,000, the financial burden of the 25% affordability condition would be reduced, thereby giving the Owners a return on cost similar to that of a market rate project. It was also agreed that, depending on the project’s schedule, the Agency will either pay the contribution directly to the City, or reimburse the Owners upon evidence of their payment of the City Fees.

Most importantly, this project eliminates a blighted condition in the Project Area, complies with the Implementation Plan to encourage infill residential projects, creates new affordable housing opportunities in the Project Area, keeps the units affordable for 55 years, and provides the required inclusionary housing count. Furthermore, the Agency shall receive increased tax increment revenues generated by this new project that will repay the Agency’s investment in eleven years, in net present value dollars.

To secure the Agency’s contribution to this project, the Agreement provides that the contribution shall be considered a grant upon satisfaction of a few conditions: 1) issuance of building permits, 2) commencement of construction, 3) completion of the project, and 4) execution of the Regulatory Agreement. Should the Owners not satisfactorily complete these conditions, the contribution converts to a loan with a term of four years with 5% simple interest. The Owners are in agreement with these terms.

FISCAL IMPACT
The Agency’s Housing Fund will pay the contribution of $87,000 towards this affordable housing project. This amount is included in the 2003/04 Agency budget .

Attachment: Resolution No. ___
Affordable Housing Contribution Agreement (includes Regulatory Agreement and
Agency Promissory Note)

AGENCY RESOLUTION NO.____

RESOLUTION OF THE REDEVELOPOMENT AGENCY OF THE CITY OF
BRENTWOOD APPROVING AND AUTHORIZING THE EXECUTION OF AN
AFFORDABLE HOUSING CONTRIBUTION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND ROBERTO AND ESTHER ARTEAGA

WHEREAS, the Redevelopment Agency of the City of Brentwood (the “Agency”) is carrying out the Merged Area Redevelopment Plan (the “Redevelopment Plan”) and in connection therewith adopted an Implementation Plan on March 28, 2000, by Resolution No. RA15, in accordance with Health and Safety Code Section 33490 of the Community Redevelopment Law; and

WHEREAS, the Agency is authorized by its Redevelopment Plan and its Implementation Plan, in accordance with Health and Safety Code Section 33334.2, to use its 20% Housing Set Aside Fund for the purposes of increasing and improving the supply of housing for persons and families of very low, low or moderate income; and

WHEREAS, in connection therewith, the Agency may pay all or part of the cost of development fees (“City Fees”) to defray the cost of production of affordable housing either inside or outside the Merged Redevelopment Project Areas (“Project”); and

WHEREAS, the Agency has prepared an Affordable Housing Contribution Agreement (“Agreement”), along with a Regulatory Agreement and Agency Promissory Note, between the Agency and Roberto and Esther Arteaga (“Owners”), pursuant to which the Agency proposes to contribute to the Owner’s development of an eight-unit apartment complex at 449 and 433 First Street (“Development”) the cost of City Fees upon satisfactory completion of the Development (“Contribution”), as set forth in the Agreement.

NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. The Development will be of benefit to the Project. This finding is based on the fact that the Development is located within the Project area and will improve the supply of affordable housing.

Section 2. The Agency’s Contribution to the Development will assist in the elimination of one or more blighting conditions inside the Project and will increase and improve the supply of housing for persons and families of very low, low or moderate income. This finding is based on the following facts:

(a) The Development will provide for the replanning, redesign and redevelopment of an under-developed area that is stagnant and improperly utilized.

(b) The Contribution of the City Fees for the Development is conditioned on the completion of housing affordable to persons of very low and low income and restricted for a period not less than 55 years;

(c) The Implementation Plan identifies goals and objectives for the five-year period from Fiscal Year 1999-00 through Fiscal Year 2003-04 as follows:

To encourage expansion and improvement of the supply of very low, low and moderate income housing; and

To create new very low, low and moderate income housing opportunities in the Project Areas.

Section 3. The Agency hereby approves the Agreement and its exhibits in the form attached hereto as Exhibit 1, together with such minor technical and clarifying revisions as shall be approved by the Executive Director and Agency Counsel.

Section 4. The Agency hereby authorizes the Executive Director to execute the Agreement on behalf of the Agency and to take all further actions reasonably necessary to carry out the provisions of the Agreement.

PASSED AND ADOPTED by the Redevelopment Agency of the City of Brentwood at a regular meeting held on the10th day of June 2003 by the following vote:

AYES:
NOES:
ABSENT:
ABSTAIN:

Brian Swisher, Agency Chairperson

ATTEST:

Karen Diaz, Agency Secretary

EXHIBIT 1

AFFORDABLE HOUSING CONTRIBUTION AGREEMENT

[attached]

AFFORDABLE HOUSING CONTRIBUTION AGREEMENT

1. PARTIES AND DATE

This Agreement is made this day of , 2003, between the REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD, CALIFORNIA, a public body, corporate and politic, organized and operating under the Community Redevelopment Law of the State of California (Health & Safety Code Section 33000 et seq.) (the "Agency"), and ROBERTO AND ESTHER ARTEAGA, individuals (“Developer”).

2. RECITALS

2.01. The Agency is carrying out the Redevelopment Plan for the Brentwood Redevelopment Project ("Redevelopment Project") approved and adopted by the City on July 9, 1991, by Ordinance No. 496, as amended. The Redevelopment Plan is incorporated herein by reference and made a part hereof as though fully set forth herein.

2.02. Pursuant to Health & Safety Code Section 33490, on March 28, 2000, by Resolution No. RA15, the Agency adopted an Implementation Plan for the Project which identified the following goals and objectives for the five (5) year period from fiscal year 1999-2000 through 2003-2004:

1. To encourage expansion and improvement of the supply of very low, low and moderate income housing.

2. To create new very low, low and moderate income housing opportunities in the Project Areas.

2.03 The Developer owns that certain real property located at 449 and 433 First Street and identified as Assessor Parcel Numbers 013-160-006 and 013-160-007 (“Developer’s Property”) as described in Legal Description of the Developer’s Property, attached as Exhibit A hereto.

2.04 The Developer has received the necessary development entitlements from the City to construct on the Developer’s Property a multi-family residential development (the “Project”) consisting of eight (8) residential units, as approved and adopted by the City’s Planning Commission on March 13, 2003, by Resolution No. 03-14 and Design Review No. 02-29. The City’s approved Project is incorporated herein by reference and made a part hereof as though fully set forth herein.

2.05 Developer and Agency agree that two (2) units in the Project shall be subject to the conditions and restrictions, and the rights of Agency as specified in the Regulatory Agreement, attached as Exhibit B hereto.

2.06 As a condition to the Project, the City requires Developer to pay all 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
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.

2.07 Developer is willing to enter into the Regulatory Agreement subject to the Agency paying the City Fees as described and set forth in Section 2.06(a) through (k) of this Agreement, in an amount not to exceed $87,000. All other fees and costs to construct the Project shall be borne solely by Developer.

2.08. The Agency is authorized to provide for the construction, rehabilitation or preservation of affordable housing necessary for carrying out the Redevelopment Plan and in connection therewith, may pay all or part of the cost of development fees to defray the cost of production of affordable housing either within or without the project area (Health & Safety Code Section 33334.2).

3. TERMS

3.01. 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 ONE MILLION FORTY SIX THOUSAND DOLLARS ($1,046,000).

3.02. Contribution. The Agency shall contribute to the Project by paying the City Fees on behalf of Developer for constructing the Project in the amount not to exceed EIGHTY SEVEN THOUSAND DOLLARS ($87,000) (the "Contribution"). The City shall have no liability for payment of the Contribution.

3.03. Conditions of Contribution. The Agency shall pay the Contribution directly to the City within the time set forth by the City for issuance of building permits to the Developer for the Project. The Agency shall reimburse the Developer, upon evidence of payment, a portion or all of the Contribution for City Fees already paid by the Developer for the Project. The Contribution shall be considered a grant from the Agency upon satisfaction of the following conditions by the Developer:

A. Request issuance by the City of building permits for construction of the Project within forty-five days (45) after execution of this Agreement.

B. Commence Project construction, defined as poured foundations for the two permitted buildings, within thirty (30) days after the date of issuance of building permits for the Project.

C. Satisfactory completion of Project within two hundred forty (240) days after issuance of building permits for the Project 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.

D. Delivery by the Developer to the Agency of the executed and acknowledged Regulatory Agreement, attached hereto as Exhibit B, at the time of execution of this Agreement.

E. Delivery by the Developer to the Agency of the executed and acknowledged Agency Promissory Note (“Promissory Note”), attached hereto as Exhibit C, at the time of execution of this Agreement.

3.04. Conversion of Contribution to Loan. The Developer and Agency agree that failure of the Developer to satisfactorily complete the conditions as described in Section 3.03 shall cause the Agency’s Contribution to immediately convert to a loan subject to the conditions and restrictions, and the rights of Agency as specified in the Promissory Note. The loan shall have a term of four years with five percent (5%) simple interest, payable in semi-annual installments by the Developer to the Agency. The time of performance of the conditions described in Section 3.03 may be extended upon mutual written agreement between the Agency and Developer, or unless extended by a Force Majeure Event, as described in Section 3.23.

3.05. Inspection. The City shall have the right at all times to inspect the construction of the Project to monitor compliance with City plans and specifications.

3.06. Indemnity and Insurance

A. Developer shall defend, indemnify and hold the Agency and the City and each of their respective elected officials, officers, employees, and agents free and harmless from any and all liability from loss, damage, or injury to or death of persons or property in any manner arising out of or incident to the design, installation and/or construction of the Project and Developer’s performance of this Agreement, including without limitation all damages, attorney’s fees and court costs, whether or not resulting from the negligence of Developer or Developer’s agents. This indemnity shall extend to any claims arising because Developer has failed to properly secure any necessary easements, land rights, contracts, or approvals, but shall not extend to any claims arising out of the sole negligence of the Agency or the City. This indemnity shall also extend to any legal action commenced by any third party against the Agency or the City challenging the terms of this Agreement or seeking judicial review.

B. Developer shall require its general contractor for the Project to
obtain and maintain insurance of the types and in the amounts described below in a form and with carriers satisfactory to Agency.

(1) Commercial General Liability Insurance. Occurrence version commercial general liability insurance or equivalent form with a limit of not less than ONE MILLION DOLLARS ($1,000,000) (or as otherwise approved, in writing, by the Agency) each occurrence shall be maintained. If such insurance contains a general aggregate limit, it shall apply separately to this agreement or be no less than five (5) times the occurrence limit. Such insurance shall:

(a) Name the Agency and the City, its officials, officers, employees and agents as additional insureds, by endorsements, with respect to performance of the Project. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed insured.

(b) Be primary with respect to any insurance or self-insurance programs covering the Agency or the City, its officials, officers, employees and agents.

(c) Contain standard separation of insured provisions.

(2) Business Automobile Liability Insurance. Business automobile liability insurance or equivalent form with a limit of not less than ONE MILLION DOLLARS ($1,000,000) each accident shall be maintained. Such insurance shall include coverage for owned, hired and non-owned automobiles and shall contain the provisions set forth in subsections B.(1)(a), (b) and (c) set forth directly above.

(3) Worker’s Compensation Insurance. Worker’s compensation insurance with statutory limits and employer’s liability insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) each accident shall be maintained.

(4) Other Insurance Requirements. Developer shall:

(a) Prior to commencing construction of the Project, furnish Agency with properly executed certificates of insurance which shall clearly evidence all insurance required in this section and provide that such insurance shall not be canceled, allowed to expire or be materially reduced in coverage except on thirty (30) days prior written notice to Agency.

(b) Provide to Agency certified copies of endorsements and policies if requested by Agency, and properly executed certificates of insurance evidencing the insurance required herein.

(c) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior to the time when the City has issued a certificate stating that the Project has been inspected and found to be constructed in substantial compliance with the approved plans and specifications.
(d) Maintain all insurance required herein from the time of commencement of construction of the Project until the time when the City has issued a certificate stating that the Project has been inspected and found to be constructed in substantial compliance with the approved plans and specifications.

(e) Place all insurance required herein with insurers licensed to do business in California.

3.07. Commencement of Construction and Inspection. Developer and its contractor or subcontractors shall not commence construction of the Project until Developer has delivered to the Agency properly executed certificates of insurance evidencing the insurance required by Section 3.06. For purposes of this Section 3.07, commencement of construction of the Project is defined as poured foundations for the two permitted buildings for the Project. All work performed on the Project shall be done in substantial compliance with City approved plans and specifications and in a good and workmanlike manner. All work performed by Developer, its contractor or agents to construct the Project shall be subject to inspection by City, and Developer shall require its employees, contractors and agents to comply with all instructions given by City during construction. Inspection by City or its employees or agents shall not relieve Developer of its liability for design defects or improper or inadequate workmanship.

3.08. Compliance with Applicable Laws. All work performed on the Project shall be performed in a manner which complies with all applicable federal, state, county and local government laws, regulations and rules, including all rules and regulations of City, as these rules and regulations may be modified or changed from time to time.

3.09. Contractor Licenses. All work performed on the Project shalll be done only by contractors licensed in the State of California and qualified to perform the type of work required and comply with the City’s Business License Ordinance.

3.10. Acceptance of Work. Upon completion of the Project to the reasonable satisfaction of the City, the City shall certify, by issuance of a certificate of completion or certificate of occupancy, that the Project has been inspected and found to be constructed in substantial compliance with the approved plans and specifications.

3.11 Notice. 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: Roberto and Esther Arteaga
325 Sherwood Drive
Brentwood, CA 94513

3.12. 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.

3.13. Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the matters contained herein.

3.14. Assignment.

A. Except as specifically provided herein, this Agreement shall not be assigned by the Developer without the prior written consent of the Agency, which consent shall not be unreasonably delayed, and any assignment without such written consent shall be void and ineffective.

B. This restriction shall not apply to any assignment or other transfer of the Developer's interest in this Agreement to any trust, partnership, corporation, limited liability company or other entity that is managed and controlled by Roberto and Esther Arteaga, whether individually or through any trust, partnership, corporation, limited liability company or other entity. This restriction shall not be deemed to limit or restrict the making of dedications or the granting of easements or permits to facilitate the Project, or to prohibit, limit or restrict the leasing or rental of all or any of the Project on the Developer’s Property. This restriction on assignment shall also not be deemed to prohibit, limit or restrict the assignment or granting of any security interests in this Agreement or in the Developer’s Property for the purpose of securing loans or funds to be used for financing the construction of the Project, or the exercise by any lenders of their rights and remedies, including, without limitation, foreclosure, under the agreements and instruments evidencing or securing any such financing.

C. Any proposed assignee of the Developer pursuant to an assignment as to which the Agency's approval is required shall have the qualifications and financial responsibility necessary and adequate, as may reasonably be determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Developer. Any such proposed assignee, by instrument in writing satisfactory to the Agency, for itself and its successors and assigns, and for the benefit of the Agency, shall expressly assume all of the applicable outstanding obligations of the Developer under this Agreement and agree to be subject to all conditions and restrictions to which the Developer is subject with respect to the interest acquired. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such assignment so that the Agency may confirm compliance with these requirements. The Agency’s approval of the proposed assignment shall be given to the Developer in writing, shall not be unreasonably delayed and shall be deemed given if no written notice of disapproval is received by the Developer within twenty (20) business days after request for the approval is made.

3.15. Time of Essence. Time is of the essence for this Agreement.

3.16. Use of the Developer’s Property. The Developer agrees to devote the Developer’s Property to the uses specified in the Redevelopment Plan and to comply with all other provisions and conditions of the Redevelopment Plan.

3.17. Nondiscrimination

A. The Developer agrees that during the period of time this Agreement is in force and effect, there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Developer’s Property, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Developer’s Property.

B. During the period this Agreement is in force and effect, Developer shall refrain from restricting the rental, sale or lease of the Developer’s Property on the basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person. All deeds, leases or contracts executed during such period shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

(1) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land."

(2) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

"That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination of segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased."

(3) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land."

3.18. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder this Agreement shall be given effect to the fullest extent reasonably possible.

3.19. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter.

3.20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

3.21. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto.

3.22. No Agency. Neither Developer nor any of Developer’s agents, engineers, contractors or subcontractors are or shall be considered to be agents of the Agency or the City in connection with the performance of any of Developer’s obligations under this Agreement.

3.23. Enforced Delay: Extension of Times of Performance. In addition to the specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in default, and the time for performance shall be equitable extended, where delays or defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts of another party; acts or the failure to act of any public or governmental agency or entity (except that acts or the failure to act of the City or the Agency shall not excuse performance by the City or the Agency); or any other causes beyond the control or without the fault of the party claiming an extension of time to perform ("Force Majeure Event"). An extension of time for any such cause shall only be for the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other parties more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Agreement may also be extended in writing by the Agency and the Developer.

3.24 Termination. The Agency may terminate this Agreement upon written notice to the Developer should Developer fail to timely complete the conditions set forth in Section 3.03. Upon termination of this Agreement by the Agency, the amount of the Contribution shall immediately convert to a loan, in accordance with Section 3.04, and subject to the terms and conditions in the Promissory Note.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective representatives thereunto duly authorized. The date of this Agreement shall be the date it has been executed by all of the parties hereto.

, 2003 REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD

By:
Executive Director
"AGENCY"
, 2003

ROBERTO AND ESTHER ARTEAGA

By:

By:
"DEVELOPER"

Attachments: Exhibit A, Legal Description of Developer’s Property
Exhibit B, Regulatory Agreement
Exhibit C, Agency Promissory Note

EXHIBIT A

LEGAL DESCRIPTION OF DEVELOPER’S PROPERTY

[To Be Inserted.]

EXHIBIT B

REGULATORY AGREEMENT

STATE OF CALIFORNIA )
) ss
COUNTY OF )

On ________________, before me the undersigned, a notary public, personally appeared

( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence

to be the person whose name is subscribed to the within instrument and acknowledged to me that he she executed the same in his her authorized capacity, and that by his her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature


* * * * * * * * * * * * * * * *

STATE OF CALIFORNIA )
) ss
COUNTY OF )

On ________________, before me the undersigned, a notary public, personally appeared

( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence

to be the person whose name is subscribed to the within instrument and acknowledged to me that he she executed the same in his her authorized capacity, and that by his her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature

RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:

The Redevelopment Agency of
the City of Brentwood
150 City Park Way
Brentwood, CA 94513
Attn: Redevelopment/Housing Manager

REGULATORY AGREEMENT

THIS AGREEMENT is entered into as of the ___________ day of _____________, 2003, by and between Roberto and Esther Arteaga (“Owner”), and THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD (“Agency”). The Owner and Agency agree with reference to the following facts:

RECITALS

A. Owner owns that certain real property located at 449 and 433 First Street and identified as Assessor Parcel Numbers 013-160-006 and 013-160-007 (“Site”) as described in Legal Description of the Site, attached as Exhibit A hereto. Owner proposes to construct on the Site a multi-family residential development (the “Project”) consisting of approximately eight (8) residential units (each unit, together with all improvements thereon and membership and other rights appurtenant thereto, being referred to singly as a “Unit” and collectively as the “Units”) which Units shall be offered for rent.

B. Agency is acting to carry out its obligations under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.) by establishing an affordable housing program for the City of Brentwood.

C. For valuable consideration, the receipt of which is hereby acknowledged, Owner and Agency agree that two (2) Units on the Site shall be subject to the conditions and restrictions, and the rights of Agency as specified below (“Affordable Units”).

NOW, THEREFORE, Owner and Agency agree as follows:

ARTICLE 1
CONDITIONS AND RESTRICTIONS OF PROJECT

1.1 USE OF SITE. The Owner hereby covenants and agrees, for itself, its lessees, successors and assigns, as follows:

A. Development. The Site will be developed with approximately eight (8) apartment units, and appurtenant recreational, parking and landscaping improvements (the "Project").

B. Rent and Income Restrictions. The Affordable Units to be developed on the Site shall be rented to Eligible Households at Affordable Housing Cost rents adjusted by household size, less a utility allowance.

1.2. DEFINED TERMS. The following terms used in this Article 1 shall have the meanings set forth in this Section 1.2:

A. “Affordable Housing Cost” shall be as defined in Health and Safety Code Section 50053 or any successor statute thereto. If the statute is no longer in effect and no successor statute is enacted, the Agency shall establish the Affordable Housing Cost for purposes of this Agreement. For purposes of determining the Affordable Housing Cost: (i) the monthly rental rate for a 3 bedroom Affordable Unit shall be established using the assumption that the Eligible Household renting the Affordable Unit is comprised of four persons.

B. “Eligible Households” shall mean and include persons and families meeting the definitions of “Very Low Income Households” and “Low Income Households” under this Section 1.2.

C. “Very Low Income Household” shall mean a person or household whose annual gross income does not exceed 50% (which percentage shall be adjusted as provided in Title 25, Section 6932 of California Code of Regulations) of the Median Income (as defined below) and who otherwise meets Owner’s standard criteria for determining eligibility for occupancy. These occupancy criteria may include an evaluation of the applicant’s ability to pay rent, employment status and credit history. These specific standards may vary from time to time, but must be uniformly applied at all times.

D. “Low Income Household” shall mean a person or household whose annual gross income does not exceed 80% (which percentage shall be adjusted as provided in Title 25, Section 6932 of California Code of Regulations) of the Median Income (as defined below) and who otherwise meets Owner’s standard criteria for determining eligibility for occupancy. These occupancy criteria may include an evaluation of the applicant’s ability to pay rent, employment status and credit history. These specific standards may vary from time to time, but must be uniformly applied at all times.

E. “Median Income” is the area wide median gross yearly income in Contra Costa County, adjusted for household size, as established from time to time by the U.S. Department of Housing and Urban Development (“HUD”). In the event that such income determinations are no longer published or are not updated for a period of at least 18 months by HUD, Median Income shall mean the area wide median gross income for households in Contra Costa County, adjusted for family size, as published from time to time by the California Department of Housing and Community Development (“HCD”). In the event that such income determinations are no longer published, or not updated for a period of at least 18 months, the Agency shall provide Owner with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HUD or HCD.

1.3 AFFORDABILITY AND RENT RESTRICTIONS

A. Two (2) of the Units, or twenty-five percent (25%) of eight (8) Units, developed by the Owner on the Site shall be rent-restricted (“Affordable Units”) and occupied by Eligible Households. One (1) of the two (2) Affordable Units shall be rent-restricted to and occupied by Very Low Income Household (as defined in Section 1.2 above) and the remaining one (1) Affordable Unit shall be rent-restricted to and occupied by Low Income Households (as defined in Section 1.2 above). If there is a total of more than eight (8) Units developed on the Site, there shall be required additional Affordable Units in accordance with Community Redevelopment Law Section 33413.

B. The income of all persons residing in the Affordable Unit shall be considered for purposes of calculating the applicable income.

C. Owner shall use reasonable efforts to verify the income levels of all applicants for Affordable Units. This process may include obtaining a copy of each applicant’s most recent income tax return, verifying the applicant’s employment or income source, and conducting a credit search. Owner shall have the right to rely on the authenticity, truth and accuracy of all information and materials provided by or on behalf of an applicant.

D. There shall be no physical concentration of the Affordable Units. The Affordable Units shall be dispersed throughout the Site. The Affordable Units shall not be identifiable from the exterior or the interior. Comparable market rate units and Affordable Units shall, at the time of initial construction, be identical in quality, design and materials.

1.4. REPORTING REQUIREMENTS. Annual reports and annual income recertifications must be submitted to the Agency. The reports, at a minimum, shall include:

(1) The number of persons per unit
(2) Tenant name
(3) Initial occupancy date
(4) Rent paid per month
(5) Gross income per year
(6) Percent of rent paid in relation to income.

Annual income recertifications shall also contain those documents used to certify eligibility. Agency may, from time to time during the term of this Agreement, request additional or different information and Owner shall promptly supply such information in the reports required hereunder. Owner shall maintain all necessary books and records, including property, personal and financial records, in accordance with requirements prescribed by Agency with respect to all matters covered by this Agreement. Owner, at such time and in such forms as Agency may require, shall furnish to Agency statements, records, reports, data and information pertaining to matters covered by this Agreement. Upon request for examination by Agency, Owner, at any time during normal business hours, shall make available all of its records with respect to all matters covered by this Agreement. Owner shall permit Agency to audit, examine and make excerpts or transcripts from these records.

ARTICLE 2
NO DISCRIMINATION; COMPLIANCE WITH
REDEVELOPMENT PLAN

2.1. NO DISCRIMINATION. The Owner covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, sexual preference, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Owner itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Site.

2.2. NONDISCRIMINATION AND NONSEGREGATION CLAUSES. All deeds, leases or contracts made relative to the Site, the improvements thereon or any part thereof, shall contain or be subject to substantially the following nondiscrimination and nonsegregation clauses:

A. In deeds: The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, sexual preference, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.

B. In leases: The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, sexual preference, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased.

C. In contracts: There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, sexual preference, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land.

ARTICLE 3
MAINTENANCE AND MANAGEMENT

3.1. MAINTENANCE. The Owner and all successors in interest, agree that they shall maintain the improvements and landscaping on the Site in a clean and orderly condition and in good condition and repair and keep the Site free from accumulation of debris and waste materials for a period of fifty five (55) years from the date of recordation of this Agreement.

3.2. MANAGEMENT. During the term of this Agreement, Owner shall promptly notify the Agency in the event there is any change in the property management company managing the Project. The property management and maintenance agreement shall name the Agency as a third-party beneficiary permitting the Agency the right to enforce the Agreement. Owner shall submit a copy of such agreement to the Agency, provided the Agency shall not have the right to approve or disapprove such agreement except to ensure compliance of such agreement with the provisions of this paragraph 3.2.

ARTICLE 4
GENERAL PROVISIONS

4.1 NOTICES. Notices required to be given to the Agency or to Owner shall be given by hand delivery, recognized overnight courier (such as UPS, DHL or FedEx) or certified mail, return receipt requested, to the following addresses, or to such other address(es) as a party may designate from time to time by written notice to the other:

To Agency:
Redevelopment/Housing Manager
Redevelopment Agency of the City of Brentwood
150 City Park Way
Brentwood, CA 94513

To Owner:
Roberto and Esther Arteaga
325 Sherwood Drive
Brentwood, CA 94513

4.2. NO IMPAIRMENT OF LIEN. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument; provided, however, that any successor of Owner to the Site shall be bound by such covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise.

4.3 DURATION. The covenants contained in this Agreement shall be deemed to run with the land and shall remain in effect for a period of fifty-five (55) years from the date of recordation of this Agreement. The covenants against discrimination contained in paragraphs 2.1 and 2.2 of this Agreement shall be deemed to run with the land in accordance with Section 33438 of the Health and Safety Code or any successor statute and shall remain in effect in perpetuity.

4.4. SUCCESSORS AND ASSIGNS. The covenants contained in this Agreement shall be binding for the benefit of the Agency and its respective successors and assigns and any successor in interest to the Site or any part thereof, and such covenants shall run in favor of the Agency and such aforementioned parties for the entire period during which such covenants shall be in force and effect, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. The Agency, and such aforementioned parties, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. The covenants contained in this Agreement shall be for the benefit of and shall be enforceable only by the Agency, and its respective successors and such aforementioned parties.

4.5. NO TRANSFER. The Owner shall not sell, transfer, convey, encumber, assign or lease the whole or any part of the Site without the prior written notification to the Agency by the Owner. This prohibition shall not be deemed to prevent the granting of easements or permits to facilitate the development of the Site or to prohibit or restrict the leasing of Units when the Project is completed.

4.6. AMENDMENT. This Agreement may be amended only in writing by Agency and the Owner.

IN WITNESS WHEREOF, the Agency and Owner have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized, as of .

AGENCY:

REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD

By:
Executive Director

OWNER:
ROBERTO AND ESTHER ARTEAGA

By

By

STATE OF CALIFORNIA )
) ss
COUNTY OF )

On ________________, before me the undersigned, a notary public, personally appeared

( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence

to be the person whose name is subscribed to the within instrument and acknowledged to me that he she executed the same in his her authorized capacity, and that by his her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature

* * * * * * * * * * * * * * * *

STATE OF CALIFORNIA )
) ss
COUNTY OF )

On ________________, before me the undersigned, a notary public, personally appeared

( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence

to be the person whose name is subscribed to the within instrument and acknowledged to me that he she executed the same in his her authorized capacity, and that by his her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature

EXHIBIT A

LEGAL DESCRIPTION OF THE SITE

[To Be Inserted.]

EXHIBIT C

AGENCY PROMISSORY NOTE

RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:

The Redevelopment Agency of
the City of Brentwood
150 City Park Way
Brentwood, CA 94513
Attn: Redevelopment/Housing Manager

AGENCY PROMISSORY NOTE
Principal Not to Exceed , 2003
$87,000 Brentwood, California

FOR VALUE RECEIVED, ROBERTO AND ESTHER ARTEAGA (the “Maker”), having an address of 325 Sherwood Drive, Brentwood, California, 94513, promises to pay THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD ("Payee"), a principal sum of EIGHTY SEVEN THOUSAND DOLLARS ($87,000) (the "Loan"), in the event of termination by the Agency of the Affordable Housing Contribution Agreement (the “Agreement”) between Maker and Payee dated _____________________. 2003 for the development of that certain real property as described in the Legal Description of the Site (the “Site”), attached as Exhibit A hereto.
1. Pursuant to the Agreement, Maker and Payee have also executed and recorded a "Regulatory Agreement" which requires that the two rental housing units constructed on the Site be operated and maintained as affordable rental housing.
2. Maker acknowledges his obligation to pay this Note in full, and consents that payment of this Note shall be secured with a lien imposed against the Site. Maker consents to recordation of this Note in the Contra Costa County Recorder’s Office to provide record notice of the lien to secure collection. Maker also agrees that any and all amounts due hereunder shall be immediately due and payable upon the sale of the Site.
3. The principal sum of this Note shall bear interest at the rate of five percent (5%) per annum, simple interest.

4. The outstanding principal and all accrued interest shall be due and payable in full four (4) years from the date of recording this Note (the "Maturity Date"). Make shall make payments to Agency semi-annually on September 1 and March 1, commencing with whichever date occurs first upon written notice of termination of the Agreement by Agency to Maker.
5. Payment shall be made in lawful money of the United States to Payee c/o The Redevelopment Agency of 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 the following shall constitute an event of default under this Note: There shall be a failure to make the payment of any installment of principal or interest which continues for fifteen (15) days after notice that such payment is due.
Upon the occurrence of an event of default under this Note, at the option of the Payee hereof, the entire unpaid principal and interest sums owing on this Note shall become immediately due and payable. 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 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. 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 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 therefore or to the protection of its rights under this Note, or (iii) if Payee seeks to have attempts to have any stay or injunction prohibiting the enforcement or collection of the Note lifted by any bankruptcy or other court.
8. 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.
9. This Note shall be binding upon Maker, its successors and assigns.
10. This Note shall be construed in accordance with and be governed by the laws of the State of California.
11. 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.
12. This Note shall be subject to prepayment in whole or in part at any time without premium or other penalty.

13. In the event Maker fails to pay any amount owing hereunder, the Agency has the right to exercise all rights and remedies and to maintain any action in law or equity to enforce the terms and covenants of this Note. Without limiting the foregoing, the Agency shall have the right to proceed with foreclosure of the lien against the Site for all delinquent amounts, including interest, costs, attorneys’ fees and cost of the foreclosure proceedings.

ROBERTO and ESTHER ARTEAGA

By:

By: ____

"MAKER"


EXHIBIT A

LEGAL DESCRIPTION OF SITE


(to be inserted)

STATE OF CALIFORNIA )
) ss
COUNTY OF )

On ________________, before me the undersigned, a notary public, personally appeared

( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence

to be the person whose name is subscribed to the within instrument and acknowledged to me that he she executed the same in his her authorized capacity, and that by his her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature


* * * * * * * * * * * * * * * *

STATE OF CALIFORNIA )
) ss
COUNTY OF )

On ________________, before me the undersigned, a notary public, personally appeared

( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence

to be the person whose name is subscribed to the within instrument and acknowledged to me that he she executed the same in his her authorized capacity, and that by his her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature

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