Connell Apartments - 2017 AgreementAGREEMENT BETWEEN THE CITY OF GILROY
AND CONNELL APARTMENTS, L.P. FOR THE PROVISION OF COMMUNITY
DEVELOPMENT BLOCK GRANT FUNDS
This AGREEMENT is dated for identification this 7th day of August, 2017, by
and between the CITY OF GILROY, a California municipal corporation, whose address
is 7351 Rosarma Street, Gilroy, California, 95020 (hereinafter "CITY "), and CONNELL
APARTMENTS, L.P., a California limited partnership, whose address is 22645 Grand
Avenue, Hayward, California, 94541 (hereinafter "BORROWER ").
RECITALS
A. WHEREAS, CITY has received Community Development Block Grant
( "CDBG" or "CDBG Program ") funds from the United States Department of Housing
and Urban Development ( "HUD ") as an entitlement to CITY pursuant to the provisions
of Title I of the Housing and Community Development Act of 1974, as amended; and
B. WHEREAS, on August 7, 2017, the City Council awarded BORROWER
CDBG funding in the form of a loan (hereinafter "Loan ") for the acquisition of Connell
Apartments, a multifamily rental complex serving low- income households, located at
7010 Princevalle Street, 610 & 620 Fairview Drive, Gilroy, California (hereinafter
"Property"); and
C. WHEREAS, this Agreement will cover the acquisition referenced herein as
the "Project" to utilize Two - Hundred Thousand Dollars ($200,000) in CDBG funding;
and
D. WHEREAS, BORROWER is a limited partnership with partners and /or
affiliates with experience in the rehabilitation and ongoing ownership and operation of
affordable rental housing and is capable of complying with the Federal regulations
associated with use of CDBG funds; and
E. WHEREAS, BORROWER certifies that the activities carried out with
funds provided under this Agreement will meet the CDBG Program's national objective
of funding rehabilitation to provide decent affordable housing for lower - income
households and the outcome will be sustainability of the affordable housing stock; and
F. WHEREAS, as required by the CDBG Program, BORROWER and CITY
have entered into this Agreement, dated August 7,'2017, describing the Project and
governing the terms of the Loan; and
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G. WHEREAS, as required by the CDBG Program, BORROWER shall execute
each of the following documents in a form approved by CITY:
1. A Promissory Note evidencing the Loan specifying, i0er hlia, the principal
amount thereof, the interest accruing thereon, and the terms of repayment thereof '(the
"Note ").
2. A Deed of Trust securing the Note and naming CITY as beneficiary and
BORROWER as trustor, and recorded or to be recorded against Property (the "Deed of
Trust "). The Deed of Trust shall have such priority and be subject only to such matters
of record as may be approved in writing by CITY.
3. Such other documents and instruments as CITY may reasonably require;
and
H. WHEREAS, the Agreement, the Note, the Deed of Trust, and such other
documents and instruments as are reasonably required by CITY are collectively referred
to herein as the "Loan Documents "; and -
1. WHEREAS, as further consideration for the Loan and in furtherance of the
purposes of the CDBG Program, BORROWER has agreed to enter into this Agreement.
Per CDBG Program requirements, this Agreement shall, among other things, govern,
regulate, and restrict the use of CITY's CDBG funds for the acquisition of the Project;
and
J. WHEREAS, CITY neither warrants nor makes any representations as to
the quality, method, or adequacy of the work products and /or services to be provided
by BORROWER under the terms and conditions of this Agreement, except with respect
to compliance with Federal regulations.
AGREEMENT
NOW, THEREFORE, in consideration of -the recitals and mutual promises
contained herein, CITY does hereby engage BORROWER, and BORROWER agrees, to
perform the services set forth herein in accordance with the following terms and
conditions:
1. Acquisition. BORROWER shall use the funds to acquire the Project.
2. Schedule and Term. This Agreement shall commence on August 7, 2017
and remain in full force and effect and shall apply to Property until the earlier of the
date which is fifty-five (55) years after the date of issuance of a certificate of occupancy
for the Project (or the equivalent for the completion of rehabilitation of the Project), and
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(ii) December 31, 2074. BORROWER is subject to the Federal Reversion of Assets Rule
as detailed in Section 6. The terms and conditions of this Agreement shall apply during
the Reversion of Assets period, which runs for an additional five (5) years after this
Agreement expires. '
3. Provisions of CDBG Funding.
a. Total CDBG funding to BORROWER for the acquisition of the
Project shall not exceed (including reimbursed expenses) Two - Hundred Thousand
Dollars ($200,000).
b. Payments shall be made by CITY directly to BORROWER.
Payments shall be made by CITY to BORROWER only upon: (1) verification of
compliance with all applicable Federal regulations; and (2) verification that all
necessary CITY permits, including Planning approvals,, have been obtained.
C. BORROWER agrees to use funds provided Linder this Agreement
in conformity with all applicable CDBG Program requirements and related rules and
regulations, including the requirements of this Agreement and the other Loan
Documents. BORROWER acknowledges that it is familiar with the CDBG requirements
and has access to professional advice to the extent necessary to enable BORROWER to
fully comply with CDBG Program requirements. BORROWER takes full responsibility
for compliance with any CITY or HUD monitoring or audit findings or concerns
associated with the use of CDBG funds for Property and for compliance with CDBG
Program requirements.
e. BORROWER shall comply with HUD Housing Quality Standards
and local building requirements in renovating Property. The objective of Project shall
be to provide decent housing and the outcome of Project shall be to increase the
availability/ accessibility of affordable housing. BORROWER agrees to use funds
provided under this Agreement in conformity with all CDBG requirements, including
the requirements of this Agreement.
4. Terms of Loan.
a. Interest and payment terms of CITY Loans shall be as set forth in
the Promissory Note, dated as of even date herewith.
b. CITY shall have the option, during the duration of this Agreement,
to require repayment of the CITY Loans in full, including interest, if BORROWER does
not comply with CDBG Program requirements or the terms of this Agreement. Prior to
the exercise of any remedies by CITY, BORROWER and its limited partner shall be
provided with notice and an opportunity to cure as set forth in this Agreement.
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5. Program Income. Any income, revenue, or earnings received by
BORROWER, which are directly generated from, the use of funds provided under this
Agreement (hereinafter "Program Income "), shall be reported by BORROWER to CITY
on an annual basis. Unless otherwise required to be paid as residual receipts pursuant
to the terms of senior loan documents, CITY may, at its option, require BORROWER to
remit Program Income cash balances at the end of each fiscal year or may allow use of
Program Income for Program - eligible activities and expenses, as permitted by senior
lenders and -the limited partner. All Program Income shall: (1) be used solely to offset
the operating expenses of Property; (2) be subject to all the provisions of this
Agreement; and (3) be expended prior to submission of a Request for Reimbursement.
If any Program Income remains when this Agreement expires or terminates,
BORROWER shall promptly pay that Program Income to CITY.
6. Reversion of Assets. BORROWER agrees to comply with the Federal
Reversion of Assets Rule currently codified n1 24 CFR 570.503(b)(7), and in particular,
BORROWER agrees to use Property for an additional five (5) year term, upon
expiration of this Agreement, for provision of affordable housing for very low - income
and low - income households through the operation of Property. BORROWER shall
comply with the terms of this Agreement during the five (5) year Reversion of Assets
Term.
7. Close -Outs. BORROWER's obligation to CITY shall not end until all
close -out requirements are completed. Activities during this dose -out period shall
include, but are not limited to, making final payments, disposing of program assets
(including the return of all unused materials, equipment, unspent cash advances,
Program Income balances, and accounts receivable to BORROWER) and determining
the custodianship of records.
8. Disallowed Costs. BORROWER is liable for repayment of disallowed
costs as determined by CITY and /or HUD. Disallowed costs may be identified through
audits, monitoring, or other sources. BORROWER shall be afforded the opportunity to
respond to any adverse findings, which may lead to disallowed costs. The CITY shall
make the final determination of disallowed costs, subject to the provisions of applicable
CDBG regulations; OMB Circular A 87, Cost Principles for State and Local
Governments; OMB Circular A 110, Grants and Agreements with Institutions of Higher
Education, Hospitals, and other Nonprofit Organizations; OMB Circular A 122, Cost
Principles for Nonprofit Organizations; and applicable HUD regulations.
9. Recaptured Funds. Any CDBG funds recaptured by BORROWER as a
result of Property being sold within the CDBG affordability period must be used for
CDBG projects in accordance with all CDBG rules.
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10. Restrictions on Alienation.
a. During the term of this Agreement, BORROWER shall not sell,
convey, alienate, transfer, dispose of, encumber, assign, discontinue, or change use or
lease Property described herein or any interest in said Property without first obtaining
the written consent of CITY. Notwithstanding the foregoing, (i) BORROWER may
transfer limited partner interests without the prior consent of the CITY, and (ii)
BORROWER's limited partner may remove the general partner of BORROWER in
accordance with BORROWER's limited partnership agreement, and replace the general
partner with an affiliate of the limited partner or with another nonprofit corporation
without the prior consent of the CITY, and (iii) BORROWER may transfer the Property
to the general partner or an affiliate thereof by exercise of the option and /or right of
first refusal granted to it in BORROWER's partnership documents, without the prior
consent of the CITY.
b. In the event that BORROWER agrees to, and actually does sell,
convey, alienate, transfer, dispose of, encumber, assign, discontinue, or change use or
lease Property to any party without the prior written consent of CITY, if required, then
it shall be a default under this Agreement, the Promissory Note, and Deed of Trust, and
CITY may declare the Loan immediately due and payable, and demand payment in full
of balance remaining on Loan and any other costs or amounts.
11. Transfer of Rights. Except in connection with transfers permitted under
Section 10.a. above, this Agreement shall not be assigned without the express prior
written consent of CITY, and any attempt to do so may be, at the sole discretion of
CITY, a default of the terms of this Agreement, Promissory Note, and Deed of Trust.
12. Property Restrictions Associated with CDBG Funding.
a. Use and Affordability- BORROWER shall comply with the use and
affordability restrictions set forth in that certain Affordability Agreement and Deed
Restriction dated August 1, 2007 and recorded on August 23, 2007 against the Property
as Instrument No. 19560689 in the Official Records of Santa Clara County, as amended
(the "Regulatory Agreement ").
b. Management of Property.
(1) BORROWER is responsible for all maintenance, repair, and
management functions, including, without limitation, routine and extraordinary repairs
and replacement of capital items.
(2) BORROWER must have a written tenant selection policy.
(3) Reserved.
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(4) Each eligible household selected to occupy a unit in Property
shall enter into a written rental or occupancy agreement with BORROWER, the form of
which shall be subject to approval by CITY.
(5) BORROWER shall maintain Property, including its common
and office areas in a safe and sanitary manner in accordance with local Health, Building,
and Housing Code requirements, Housing Quality Standards, and other applicable
requirements.
(6) BORROWER shall keep Property in a well- maintained, well-
landscaped, neat, clean, litter -free, and graffiti -free condition.
(7) BORROWER shall use commercially reasonable efforts to
resolve complaints related to noise, parking, litter, or other neighborhood concerns.
(8) Upon determination of CITY, and written notice to
BORROWER thereof, that BORROWER has failed to operate Property in accordance
with this Agreement, CITY may require BORROWER to contract with a qualified
management agent to operate Property, or to make such other arrangements, as CITY
deems necessary, to ensure performance of the required functions.
(9) BORROWER shall maintain tenant files and other records to
document that CDBG income, race ethnicity and other tenant verifications are
performed and properly recorded.
(10) BORROWER may establish reasonable rules of conduct and
occupancy. Such rules shall be consistent with Federal and State law and shall not
distinguish or discriminate among tenants. The rules shall be in writing and shall be
given to each tenant upon occupancy. Any change to such rules shall become effective
no less than thirty (30) days after giving notice thereof to each household in Property.
13. Reporting Requirements.
a. Required Reports. BORROWER shall file an annual report with CITY no
later than 120 days after the end of the calendar year ending December 31, Lidless
otherwise specified below. The report shall be in such form and contain such
information as required by CITY and shall consist of the following minimum items:
(1) An income and expense statement for the reporting period
prepared in accordance with generally accepted accounting principles;
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(2) Proposed annual budget for the new fiscal year which sets
forth BORROWER's estimate of operating income, operating expenses, and debt service
'for the year, amounts payable to reserves, and proposed rent adjustments;
(3) A tenant report form providing HUD- required statistical
information on the occupants at Property: income level, rent, race, ethnicity, age, intake
date, start and end dates of lease/ occupancy, household size, and any other
information as required by CITY to accurately monitor BORROWER's performance
Linder this Agreement and CDBG program rules;
(4) An audit of Property's financial statements prepared in
accordance with generally accepted accounting principles by an independent certified
public accountant. CITY may require the audit to be accompanied by a supplemental
report prepared in accordance with CITY's requirements. BORROWER shall file this
report with CITY no later than ninety (90) days after the end of the calendar year ending
December 31.
(5) CITY may, from time to time during the term of this
Agreement, request additional information regarding Property's tenant and financial
records and BORROWER shall promptly supply such information in the reports
required hereunder.
b. Maintenance of Records. BORROWER shall maintain all records
pertaining to the rehabilitation work for five (5) years after final payment and all other
pending matters are closed. BORROWER shall also maintain tenant files for a period of
five (5) years after the final date of occupancy.
C. Access to Records. BORROWER shall provide HUD and /or CITY
and /or any of their duly authorized agents and representatives, during normal
business hours and upon reasonable notice, access to any books, documents, papers,
and records of the project for the purpose of making audits, examinations, excerpts, and
transcriptions.
d. CITY Responsibilities:
(1) CITY shall conduct periodic on -site inspection of the CDBG
units to verify compliance with Housing Quality Standards and local codes in addition
to monitoring BORROWER's compliance with Federal CDBG requirements.
(2) CITY shall annually provide BORROWER with the HUD
income limits used for eligibility and recertification.
14. Right to Inspect. At any time during normal business hours with at least
seventy -two (72) hour notice and as often as may be deemed necessary, BORROWER
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agrees that HUD and /or CITY and /or any of their respective authorized agents and
representatives shall have access to and the right to examine its work site, offices,
facilities, property, and individual iuuts, and to interview tenants and employees of
Property, for the purpose of verifying compliance with applicable State, Federal, and
local regulations and compliance with the conditions of this Agreement. CITY and its
authorized agents and representatives shall also have the right, throughout the term of
this Agreement, to enter Property and inspect all records (including tenant files)
pertaining to this Agreement, the rehabilitation work, or operation of Property.
15. Reliance Upon Professional Skill. It is mutually agreed by the parties
that CITY -is relying upon the professional skill of BORROWER, and BORROWER
represents to CITY that its work shall conform to generally recognized professional
standards in the industry. Acceptance of BORROWER's work by CITY does not operate
as a release of -BORROWER's said representation.
16 Independent Contractor. It is agreed that BORROWER is an independent
contractor and all persons working for or under the direction of BORROWER are
BORROWER's agents and employees, and said persons shall not be deemed agents or
employees of CITY.
17. Reserved.
18. Insurance.
a. Commercial General Liability Insurance. BORROWER shall obtain
and maintain Commercial General Liability insurance in a minimum amount of One
Million Dollars ($1,000,000) per occurrence. If a general aggregate limit is used, either
the general aggregate limit shall apply separately to this Agreement or the general
aggregate limit shall be twice the required occurrence limit. BORROWER's insurance
coverage shall be written on an occurrence basis.
b. Reserved.
C. Builder's Risk Insurance. BORROWER or BORROWER's
contractor shall obtain and maintain Builder's Risk (Course of Construction) insurance
in a minimum amotult of One Million Dollars ($1,000,000) per claim. Such coverage
shall name CITY as a loss payee as their interest may appear.
d. Workers' Compensation Insurance. BORROWER shall obtain and
maintain statutory Workers' Compensation insurance and Employer's Liability
insurance in a minimum amount of One Million Dollars ($1,000,000) per accident.
e. Hazard Insurance: For the duration of this Agreement,
BORROWER shall insure Property against loss or damage by fire and such other risks,
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in such amounts and under the types of coverage, as shall from time to time be required
by CITY. The insurance shall be maintained with companies and in forms satisfactory
to CITY. CITY shall not by reason of accepting, rejecting, approving, or obtaining
insurance incur any liability for the existence, nonexistence, form, or legal sufficiency
thereof, or solvency of any insurer, or for the payment of losses. All policies of
insurance shall contain a standard mortgage loss payable endorsement with loss
payable to CITY, subject to the prior rights, if any, of the beneficiary under any deed of
trust to which the Deed of Trust is intended by BORROWER and CITY to be
subordinate, and shall also provide that they cannot be terminated as to CITY except
upon thirty (30) days' prior written notice. Unless CITY otherwise agrees in writing,
the original of all such policies shall be delivered to and held by CITY, together with
receipts satisfactory to beneficiary evidencing payment of the premiums therefor.
f. Acceptability of Insurers. Insurance is to be placed with insurers
with a muiimum current A.M. Best's Rniuig of A:VII unless otherwise acceptable to
CITY.
g. Verification of Coverage. Insurance, deductibles, or self - insurance
retentions shall be subject to CITY's approval. Original Certificates of Insurance with
endorsements shall be received and approved by CITY before work commences, and
insurance must be in effect for the duration of the Agreement. The absence of insurance
or a reduction of stated limits shall cause all work on Project to cease. Any delays shall
not increase costs to CITY or increase the duration of Project.
h. Other Insurance Provisions:
(1) For any claims related to BORROWER's services pursuant to
this Agreement, BORROWER's insurance coverage shall be primary coverage at least as
broad as ISO CG 20 0104 13 with respect to CITY, its officers, officials, employees, and
volunteers. Any insurance or self - insurance maintained by CITY, its officers, officials,
employees, and volunteers shall not contribute to it.
(2) BORROWER grants CITY a waiver of any rights to
subrogation which any insurer of BORROWER may acquire against CITY by virtue of
the payment of any loss tinder such insurance (ISO CG 24 04 for CGL) and an
endorsement to the Workers' Compensation policy. This provision applies regardless
of whether or not CITY has received a waiver of subrogation endorsement from the
insurer.
(3) BORROWER shall provide thirty (30) days' notice to CITY in
the event of cancellation or modification to the stipulated insurance coverage.
(4) In the event BORROWER employs subcontractors as part of
the work covered by this Agreement, it shall be the responsibility of BORROWER to
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ensure that all subcontractors comply with the same insurance requirements as stated in
this Agreement.
(5) Approval of the insurance by CITY or acceptance of the
Certificate of- Insurance by CITY shall not relieve or decrease the extent to which
BORROWER may be held responsible for payment of damages resulting from
BORROWER's services or operations pursuant to this Agreement, nor shall it be
deemed a waiver of CITY's rights to insurance coverage hereunder.
(6) If, for any reason, BORROWER fails to maintain insurance
coverage that is required pursuant to this Agreement, the same shall be deemed a
material breach of Agreement. CITY, at its sole option, may terminate this Agreement
and obtain damages from BORROWER resulting from said breach, subject to any
applicable notice and cure periods. Alternately, CITY may purchase such required
insurance coverage, and without further notice to BORROWER, CITY may deduct from
'sums due to BORROWER any premium costs advanced by CITY for such insurance.
19. Hold Harmless. To the fullest extent permitted by law, BORROWER shall
defend, indemnify, and hold CITY, its officers, employees, agents, and volunteers,
harmless from any-liability for damage or claims of same, including, but not limited to,
personal injury, property damage, and death, which may arise from services or
operations of BORROWER or BORROWER's contractors, subcontractors, agents, or
employees under this Agreement. CITY shall cooperate reasonably in the defense of
any action, and BORROWER shall employ competent counsel reasonably acceptable to
the City Attorney.
20. Compliance with Federal Requirements. BORROWER agrees to comply
with the following Federal laws, regulations, procedures, and any other HUD
regulations present or as may be amended, added, or waived in the future pertaining to
the use of CDBG fLmds, including, but not limited to, HUD regulations as may be
promulgated regarding subrecipients:
a. CDBG Program Rules, 24 CFR, Part 570, as amended.
b. Uniform Administrative Requirements for Nonprofit Organizations
(OMB Circular A -110), Attachments A, B, C, F, H, N, and O, as applicable, and as
modified by 24 CFR 570.502 (b).
C. Cost Principles for Nonprofit Organizations (OMB Circular A -122)
and applicable provisions of 24 CFR, Part 84, for nonprofit entities.
d. Title VI of the Civil Rights Act of 1964, as amended
(42 U.S.C. 2000a, et seq.) and HUD regulations with respect thereto, including the
regulations under 24 CFR, Part 1, wl-dch state that no person in the United States shall
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on the grouuid of race, color, or national origin be excluded from participation in, be
denied the benefits of, or be subjected to discrimination under any program or activity
receiving Federal financial assistance.
e. Title VIII of the Civil Rights Act of 1968 (Fair Housing Act)
(42 U.S.C. 3601 - 3620), wluch prohibits discrimination in the sale or rental of housing,
the financing of housing, or the provision of brokerage services against any person on
the basis of race, color, religion, sex, national origin, handicap, or familial status. Multi-
family dwellings must also meet the design and construction requirements at
24 CPR 100.205 which implement the Fair Housing Act (42 U.S.C. 3601 -19).
f. Section 109 of Title I of the Housing and Community Development
Act of 1974, which states that no person in the United States shall on the ground of race,
color, national origin, sex, or religion be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or activity funded in
whole or in part under this Title.
g. The Housing and Community Development Acts of 1974 and 1977,
as amended, which provide that no person in the United States shall be excluded from
participation in, -be denied the benefits of, or be subjected to discrimination tinder any
program or activity funded in whole or in part with funds made available pursuant to
said acts.
h. The provisions of 24 CFR, Part 570, relating to compliance with
applicable uniform administrative requirements, as described in Section 570.502.
i. The provisions of 24 CFR 570, Subpart K, describing other program
requirements, and the provisions of 24 CFR 85, relating to the uniform administrative
requirements in the acceptance and use of Federal funds.
j. Age Discrimination Act of 1975, as amended (42 U.S.C. 6101),
which states that no persons in the United States shall, on the basis of age, be excluded
from participation in, be denied the benefits of, or be subjected to discrimination under
any program or activity receiving Federal financial assistance.
k. Section 3 of the Housing and Urban Development Act of 1968,
which requires that to the greatest extent feasible, opportunities for training and
employment be given to lower - income persons within the unit of local government or
the metropolitan area in which the project is located, and that contracts for work in
connection with the project be awarded to eligible business concerns which are located
in, or owned in substantial part by, persons residing in the same metropolitan area as
the project. BORROWER shall comply with CITY'S procedures for implementation of
Section 3.
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1. Executive Order 11063, Equal Opportunity in Housing, as amended
by Executive Order 12259, which prohibits discrimination because of race, color,
religion (creed), sex, or national origin in the sale, leasing, rental, or other disposition of
residential property and related facilities assisted with Federal funds.
M. Section 504 of the Rehabilitation Act of 1973, as amended (PUB.
L.94 -135), and implementing regulations, which state that no otherwise qualified
handicapped individual in the United States shall solely by reason of his /her handicap
be excluded from participation in, be denied the benefits of, or be discriminated against
under any program or activity receiving Federal financial assistance. Section 504 also
imposes requirements to ensure that "qualified individuals with handicaps" have
access to programs and activities that receive Federal funds.
n. Architectural Barriers Act of 1968, as amended
(42 U.S.C. 4151 - 4157) —Requires that certain Federally funded buildings- of facilities be
designed, constructed, or altered to ensure accessibility to, and use by, physically
handicapped persons. Buildings or facilities allocated or reallocated CDBG funds after
December 11, 1995, that meet the definition of "residential structure" (as defined in
24 CFR 40.2) or the definition of "building" (as defined in 41 CFR 101- 19.602(a)) are
subject to the Architectural Barriers Act and must comply with the Uniform Federal
Accessibility Standards. The Uniform Standards can be found at Appendix A to
24 CFR, Part 40, for "residential structures" and at Appendix A to 41 CFR, Part 101 -19,
for "general buildings."
o. Americans with Disabilities Act (ADA) (42 U.S.C. 12131;
47 U.S.C. 155, 201, 218 and 225) —Provides comprehensive civil rights to individuals
with disabilities in the areas of employment, public accommodations, State and local
government services, and telecommunications. The ADA also states that discrimination
includes the failure to design and construct facilities (built for first occupancy after
January 26, 1993) that are accessible to and usable by persons with disabilities. The
ADA also requires the removal of architectural and communication barriers that are
structural in nature in existing facilities. Removal must be readily achievable, easily
accomplishable, and able to be carried out without much difficulty or expense.
P. The Uniform Federal Accessibility Standards set forth in 24 CFR,
Part 40, Appendix A.
q. Conflict of interest regulations as contained in 24 CFR 570.611,
which require, among other things, that except for approved eligible administrative or
personnel costs, no public official, member, or person who is an employee, agent,
consultant, or officer of BORROWER or CITY may obtain a personal or financial interest
or benefit from the activity ftmded under this Agreement, or have an interest in any
contract, subcontract, or agreement with respect thereto, or the proceeds thereunder,
either for themselves or those with whom they have family or business ties, during their
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tenure or for one (1) year thereafter. BORROWER shall incorporate or cause to be
incorporated in every contract required to be in writing a provision prohibiting such
interest pursuant to the purposes of this section.
r. Interest of Certain Federal Officials. No member of or Delegate to
the Congress of the United States, and no Resident Commissioner, shall be admitted to
any share or part of this Agreement or to any benefit arising from same.
S. Prohibition Against Payments of Bonuses or Commissions. The
assistance provided under this Agreement shall not be used in the payment of any
bonus or comnussion for the purpose of obtaining HUD approval of the application for
such assistance, or HUD approval of applications for additional assistance, or any other
approval or concurrence of HUD required under this Agreement, Title I of the Housing
and Community Development Acts of 1974 or 1977, or HUD regulations with respect
thereto provided, however, that reasonable fees or bona fide technical, consultant,
managerial, or other such services, other than actual solicitation, are not hereby
prohibited if otherwise eligible as program costs.
t. Copyrights. If this Agreement results in a book or other
copyrightable material, the author is free to copyright the work, but HUD reserves a
royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise
use, and to authorize others to use, all copyrighted material and all material which can
be copyrighted.
U. Patents. Any discovery or invention arising out of or developed in
the course of work aided by this Agreement shall be promptly and fully reported to
CITY and HUD for determination by HUD as to whether patent protection on such
invention or discovery will be sought and how the rights in the invention or discovery,
including the rights under any patent issued thereon, shall be disposed of and
administered in order to protect the public interest.
V. Executive Order 11246, entitled, "Equal Employment
Opportunity," as amended by Executive Orders 11375 and 12086, and the regulations
issued pursuant thereto (41 CFR, Chapter 60), which provide that no person shall be
discriminated against on the basis of race, color, religion, sex, or national origin in all
phases of employment during the performance of Federal or Federally assisted
contracts. BORROWER shall take affirmative action to ensure that applicants for
employment are employed, and that employees are - treated during employment,
without regard to their race, color, religion, sex, or national origin. Such action shall
include, but not be limited to, the following: employment, upgrading, demotion or
transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or
other forms of compensation; and selection for training, including apprenticeship.
BORROWER shall post in conspicuous places, available to employee and applicants for
employment, notices to be provided by the Federal government or CITY setting forth
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the provisions of this nondiscrimination clause. BORROWER shall state that all
qualified applicants will receive consideration for employment without regard to race,
color, religion, sex, or national origin. Equal Employment Opportunity language must
be included in all construction contracts exceeding Ten Thousand Dollars ($10,000).
W. The requirements relating to small, minority, and women's
business enterprises set forth in Executive Order No. 11625 of October 13, 1971, 36 Fed.
Reg. 19967, as amended by Executive Order No. 12007 of August 22, 1977, 42 Fed.
Reg. 42839; and Executive Order No. 12432 of July. 14, 1983, 48 Fed. Reg. 32551; and
Executive Order No. 12138 of May 18, 1979, 44 Fed. Reg. 29637. BORROWER shall
comply with CITY procedures for an outreach program to ensure the inclusion, to the
maximum extent possible, of minorities and women, and entities owned by minorities
and women in all contracts.
X. Political Reform Act. BORROWER shall comply with the
applicable provisions of the Political Reform Act of 1974, as amended, relating to
conflicts of interest (codified at California Government Code Section 87000, et seq.).
BORROWER will promptly advise CITY of the facts and circumstances concerning any
disclosure made to it or any information obtained by it relating to conflicts of interest.
Y. Partisan Activitv Prohibited. No funds provided in this Agreement
shall be used for any partisan political activity or to further the election or defeat of any
candidate for public office; nor shall they be used to provide services, or for the
employment or assignment of personnel in a manner supporting or resulting in the
identification of programs conducted pursuant to this Agreement with the following:
(1) any partisan or nonpartisan political activity or any other political activity associated
with a candidate, or contending faction or group, in an election for public or party
office; (2) any activity to provide voters or prospective voters with transportation to the
polls or similar assistance in connection with any such election; or (3) any voter
registration activity.
Participants employed in the administration of CITY's CDBG Plan
and /or Program, and participants whose principal employment is in connection with
an activity financed by the CDBG Program or its proceeds are subject to limitation on
political activities under the Hatch Act (5 U.S.C. 1502(a), 18 U.S.C. 595). All participants
may take part in nonpartisan activities outside working hours.
Z. Lobbying Prohibited.
(1) No Federal appropriated funds have been paid or will be
paid, by or on behalf of BORROWER, to any person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress, an officer or
employee of Congress, or an employee of a Member of Congress in connection with the
awarding of any Federal contract, the making of any Federal grant, the making of any
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Federal loan, the entering into of any cooperative agreement, and the extension,
continuation, renewal, amendment, or modification of any Federal contract, grant, loan,
or cooperative agreement.
(2) If any funds other than Federal- appropriated fronds have
been paid or will be paid to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with this Federal
contract, grant, loan, or cooperative agreement, BORROWER shall complete and submit
Standard Form —LLL, "Disclosure Form to Report Lobbying," in accordance with its
instructions.
(3) BORROWER shall require that the lobbying certification
language of Paragraph (iv) below, be included in the award documents for all
subawards at all tiers (including subcontracts, subgrants, and contracts under grants,
loans, and cooperative agreements) and that all subrecipients shall certify and disclose
accordingly.
(4) This lobbying certification is a material representation of fact
upon which reliance was placed when this transaction was made or entered into.
Submission of this certification is a prerequisite for making or entering into this
transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file
the required certification shall be subject to a civil penalty of not less than Ten
Thousand Dollars ($10,000) and not more than One Hundred Thousand Dollars
($100,000) for each such failure.
aa. Residential Lead -Based Paint Hazards. The Residential Lead -Based
Paint Hazard Reduction Act of 1992 ( "Title X ") sets out specific requirements for
Federally owned residential property and housing receiving Federal assistance.
BORROWER agrees to comply with the regulations issued by the Secretary of HUD set
forth in 24 CFR 570.608 and 24 CFR, Part 35, and all applicable rules and orders issued
thereunder which prohibit the use of lead -based paint in residential structures
undergoing Federally assisted construction or rehabilitation and require the elimination
of lead -based paint hazards. Every contract or subcontract, including painting,
pursuant to which such Federally assisted construction or rehabilitation is performed,
shall include appropriate provisions prohibiting the use of lead -based paint.
bb. Federal Labor Standards Provisions. (The Davis -Bacon Act, the
Contract Work Hours and Safety Standards Act, and the Copeland (Anti- Kickback)
Act.) BORROWER shall ensure that all contractors engaged under contracts in excess of
Two Thousand Dollars ($2,000) for the construction, alteration, and /or repair (including
painting and decorating) of any building or work financed in whole or in part with
assistance provided under this Agreement, shall comply with HUD requirements
pertaining to such contracts and the applicable requirements of the regulations of the
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Department of Labor under 29 CFR, Parts 3, 5, and 5a, governing the payment of wages
and the ratio of apprentices and trainees to journeymen provided, that if wage rates
higher than those required under such regulations are imposed by State or local law,
nothing heretulder is intended to relieve BORROWER of its obligation, if any, to require
payment of the higher rates. BORROWER shall cause or require to be inserted in full, in
all such contracts subject to such regulations, provisions meeting the requirements of
29 CFR 5.5 and for such contracts in excess of Twenty-Five Thousand Dollars ($25,000),
29 CFR 5a.3.
CC. Debarment, Suspension, or Ineli ig bility. The provisions of 24 CFR,
Part 24, relating to the employment, engagement of services, awarding of contracts, or
funding of any contractors or subcontractors during any period of debarment,
suspension, or placement in ineligibility status. BORROWER shall not directly or
indirectly employ, award contracts to, or otherwise engage the services of any
contractor or subrecipient during any period of debarment, suspension, or placement
on ineligibility status. BORROWER should check all contractors, subcontractors, lower -
tier contractors, and subrecipients against the Federal publication, which lists debarred,
suspended, and ineligible contractors.
dd. Relocation and Real Property Acquisition. Contractor shall comply
with: (1) the Uniform Relocation Assistance and Real Property Acquisition Policies Act
of 1970, as amended (URA) and 24 CFR 570.606(b); and (2) the requirements of
24 CFR 570.606(c) governing the Residential Antidisplacement and Relocation
Assistance Plan ('Plan) under Section 104(d) of the HCD Act. Under the URA and the
Plan, the subrecipient must provide relocation assistance to persons (families,
individuals, businesses, nonprofit organizations, and farms) that are displaced as a
direct result of acquisition, rehabilitation, demolition, or conversion for a CDBG-
assisted project. All Property occupants must be issued certain notices on a timely
basis. The Plan also requires the one - for -one replacement of any occupied or vacant
occupiable low- /moderate - income housing that is demolished or converted to another
use in connection with a CDBG - assisted project. Finally, the Plan requires the
identification of the steps that will be taken to minimize displacement.
ee. Compliance with Clean Air and _Water Acts. This Agreement is
subject to 42 U.S.C. 1857, et sect., and 33 U.S.C. 1251, et seq., and the regulations issued
pursuant thereto. Therefore, BORROWER agrees as follows:
(1) BORROWER stipulates that any facility to be utilized in the
performance of any nonexempt contract or subcontract is not listed on the List of
Violating Facilities issued by the Environmental Protection Agency (EPA) pursuant to
40 CFR 15.20.
(2) BORROWER agrees to comply with all the requirements of
Section 114 of the Clean Air Act, as amended (42 U.S.C. 1857c -8), and Section 308 of the
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Federal Water Pollution Control Act, as amended (33 U.S.C. 1318), relating to
inspection, monitoring, entry, reports, and information as well as all other requirements
specified in said Section 114 and Section 308, and all regulations and guidelines issued
thereunder.
(3) BORROWER stipulates that as a condition for the award of
the contract, prompt notice will be given of any notification received from ,the Director
Office of Federal Activities, EPA, indicating that a facility utiliied or to be utilized for
the contract is under consideration to be listed on the EPA List of Violating Facilities.
(4) BORROWER agrees that criteria and requirements in
Subparagraphs (1) through (5) of this Section will be included in every nonexempt
subcontract and contractor shall take such action as CITY or HUD requires as a means
of enforcing such provisions.
(5) In no event shall any amount of the assistance provided
under this Agreement be utilized with respect to a facility which has given rise to a
conviction under Section 113(c)(1) of the Clean Air Act or Section 309(c) of the Federal
Water Pollution Control Act.
ff. Cost - Effective Energy Conservation and Effectiveness Standards.
BORROWER shall comply with applicable energy conservation and effectiveness
standards found in 24 CFR, Part 39.
gg. Historic Preservation. BORROWER shall comply with applicable
provisions of the Historic Preservation Act and related laws and Executive Orders.
Before any commitments are made to make any physical improvements or alterations
or demolition of any building, BORROWER must first receive confirmation from CITY
that the State Office of Historic Preservation has been consulted.
hh. Procurement. BORROWER shall comply with applicable
procurement requirements of 24 CFR, Part 84, in the awarding of contracts under this
Agreement.
21. Applicable Laws and Attorneys' Fees. This Agreement shall be
construed and enforced pursuant to the laws of the State of California. Should any legal
action be brought by a party for breach of this Agreement or to enforce any provision
herein, the prevailing party of such action shall be entitled to reasonable attorneys' fees,
court costs, and other such costs as may be fixed by the court. Reasonable attorneys'
fees of the City Attorney's Office, if private counsel is not used, shall be based on
comparable fees of private attorneys practicing in Santa Clara County.
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22. Nondiscrimination.
a. BORROWER shall afford equal employment, tenant access, and
service opportunities for all persons without discrimination because of race, color,
religion, sex, familial status, sexual orientation, political affiliation, national origin,
ancestry, age, marital status, physical or mental disability, military or veteran status,
gender identity or expression, genetic information, or any arbitrary factor in violation of
any State, Federal, or local law governing discrimination in rental housing.
b. BORROWER, when or if advertising the availability of all the units,
must ensure that measures are taken so that individuals with handicaps can find out
about, apply for, and be able to rent units on the Property. BORROWER shall supply
special communication systems and materials upon request to provide access to and
communicate with tenants or prospective tenants with handicaps or limited English
proficiency.
C. BORROWER may establish reasonable rules of conduct and
occupancy. Such rules shall be consistent with Federal and State law and shall not
distinguish or discriminate among tenants or prospective tenants. The rules shall be in
writing and shall be given to each occupant upon occupancy. Any change to such rules
shall become effective no less than thirty (30) days after giving notice thereof to each
household in Property.
23. Amendment. This Agreement may be amended in writing and signed by
both parties.
24. Termination. CITY may terminate this Agreement by complying with
any applicable notice /cure provisions of this Agreement upon the occurrence of an
Event of Default (as defined in Paragraph 25) subject to applicable notice and cure
periods.
25. Events of Default. CITY may, at any time in its absolute discretion, elect
to terminate this Agreement and demand repayment in frill of the Promissory Note in
the event of any of the following occurrences which continues beyond expiration of
applicable notice and cure periods (each an "Event of Default "):
a. If BORROWER abandons its rehabilitation work under the
Agreement for a period of at least thirty (30) consecutive days after work commences.
b. If BORROWER shall have made any intentional, material
misrepresentation of any nature with respect to any information or data furnished to
CITY in connection with Property.
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C. If there is pending litigation with respect to the performance by
BORROWER of any of its duties or obligations under this Agreement which may
materially jeopardize or materially adversely affect the undertaking of or the carrying
out of the terms of this Agreement.
d. If BORROWER shall have taken 'any material action pertaining to
Property, which requires CITY approval without having obtained such approval.
e. If BORROWER is in default and such default continues beyond
expiration of applicable notice and cure periods under any provision of thus Agreement
or BORROWER materially fails to comply with any term of the Agreement or other
Loan Documents.
f. If BORROWER makes improper use of CDBG funds.
g. If BORROWER intentionally submits to CITY any reports which are
incorrect or misleading in any material respect.
h. If BORROWER files a petition for bankruptcy protection.
i. If CITY elects to terminate this Agreement for any of the above
reasons, CITY shall provide BORROWER with appropriate notice and an opportunity
to cure as detailed under Section 26.
26. Right to Cure. CITY shall, before exercising any remedy for an Event of
Default, give written notice of such default to BORROWER and to BORROWER's
limited partner, if any. BORROWER and BORROWER's limited partner shall have
thirty (30) days after such notice is given to cure any monetary default (subject to late
charges and interest during such default) and sixty (60) days to cure any nonmonetary
default, except to the extent the default cannot reasonably be cured within said_period,
in wluch case CITY shall refrain from pursuing its remedies resulting from a
nonmonetaiy default if BORROWER, within said sixty (60) day period, commences to
cure the default and thereafter in good faith diligently pursues the completion of such
cure.
Nothing in the foregoing sections shall be construed to mitigate or delay
the accrual of any interest, penalties, or other damages applicable to any default as
otherwise provided in this Agreement.
Notwithstanding anything to the contrary herein, CITY shall deliver a
copy of any notice of default to BORROWER's limited partner and such limited partner
shall have the right to cure the default within the time periods set forth above. Any
cure of any violation of or default under this Agreement made or tendered by any
limited partner of BORROWER shall be deemed to be a cure tendered by BORROWER
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and shall be accepted or rejected on the same basis as if made or tendered by
BORROWER.
27. Attachments or Exhibits. Except as expressly referenced herein, no
portion of any terms or conditions included in any attachments or exhibits shall be a
part of this Agreement, and they shall have no force or effect. If any attachments or
exhibits to this Agreement are inconsistent with this Agreement, this Agreement shall
control.
28. Entire Agreement. This Agreement contains the entire understanding
between the parties with respect to the subject matter herein. There are no
representations, agreements, or understandings (whether oral or written) between or
among the parties relating to the ,subject matter of this Agreement which are not fully
expressed herein.
29. Authority to Execute. The persons executing this Agreement on behalf of
the parties warrant that they are duly authorized to execute this Agreement. ,
30. Waiver. The failure of CITY to insist upon a strict performance of any of
the terms, conditions, and covenants contained herein shall not be deemed a waiver of
any rights or remedies that CITY may have and shall not be deemed a waiver of any
subsequent breach or default in the terms, conditions, and covenants contained herein.
31. Headings. The headings in this Agreement are inserted for convenience
purposes only and shall not affect the terms of this Agreement.
32. Public Records. The parties recognize and acknowledge that CITY is
subject to the California Public Records Act, California Government Code Section 6250
and following. Public records are subject to disclosure.
33. Severability. If any provision of this Agreement is found by a court of
competent jurisdiction to be void, invalid, or unenforceable, the same will either be
reformed to comply with applicable law or stricken if not so conformable, so as not to
affect the validity or enforceability of this Agreement.
34. Notices. Any notice required to be given to BORROWER shall be deemed
to be duly and properly given if mailed to BORROWER, postage prepaid, addressed to:
Connell Apartments, L.P.
22645 Grand Avenue
Hayward, California, 94541
Attention: President
With a copy to:
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CREA Connell Apartments, LLC
c/o CREA, LLC
30 S. Meridian Street
Suite 400
Indianapolis, Indiana 46204
Attention: Asset Management Department
With a copy to:
Cannon Heyman & Weiss, LLP
726 Exchange Street
Suite 500
Buffalo, New York 14210
Attention: Timmon M. Favaro, Esq.
or personally delivered to BORROWER at such address or at such other addresses as
BORROWER may designate in writing -to CITY.
Any notice required to be given CITY shall be deemed to be duly and
properly given if mailed to CITY, postage prepaid, addressed to:
City of.Gilroy - HCD
7351 Rosanna Street
Gilroy, CA 95020
Attn: City Administrator
or at such other addresses as CITY may designate in writing to BORROWER.
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IN WITNESS WHEREOF, this Agreement is executed by CITY and BORROWER.
"CITY ":
City of Gilroy,
a municipal corporation
By.
Its:
APPROVED S TO FORM:
By:
City Attorney
M P.M..
me
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"BORROWER ":
Connell Apartments, L.P.,
a California limited partnership
By: Connell Apartments LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit
corporation,
its sole member aQer n
By:
Jan Pe{prs ,Vxecutive Vice President /COO