Central Valley Coalition for Affordable Housing - Regulatory Agreement and Declaration of Restrictive CovenantsCommonweaith Land Title Company
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020 -6141
Attn: City Clerk
01110 16 q1'
NO FEE PER GOVERNMENT CODE
SECTIONS 6103 AND 27383
23535299
Regina Alcomendras
Santa Clara County - Clerk- Recorder
12/16/2016 09:54 AM
Titles: 1 Pages: 25
Fees: 0.00
Taxes: 0
Total: 0.00
REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS
This Regulatory Agreement and Declaration of Restrictive Covenants ( "Agreement ") is made and
entered into this 13 day of cq^ I.cr2016, by and between the City of Gilroy, a municipal corporation
( "City "), and Central Valley Coalition for Affordable Housing, a California nonprofit public benefit
corporation ( "Owner ").
RECITALS
A. Owner is the owner of certain real property located in the City of Gilroy, Santa Clara
County, California, more particularly described in Exhibit "A" attached hereto and incorporated herein by
this reference (the "Property").
B. The City has enacted Section 50.60 of the City of Gilroy Zoning Ordinance, which
encourages responsible growth in the community, and restricts the amount of housing which may be
constructed each year (the "Residential Development Ordinance" or "RDO ").
C. The City has determined that it would be desirable to stimulate the development by
private developers of permanent housing for very low and low income, in the City which satisfies certain
conditions. In furtherance of this goal, the City has enacted the following: (1) Section 50.60 (b)(2)(c) of
the City of Gilroy Zoning Ordinance which exempts from the RDO a residential development sponsored
by a non - profit organization funded by federal, state, or local governments as long as they meet certain
criteria included in the ordinance where the exemption is approved by the City Council (the "RDO
Exemption "), and (2) the RDO Affordable Housing Exemption Procedure attached hereto as Exhibit "B"
( "AHEP ") which sets forth the specific criteria for implementing the RDO Exemption for affordable
housing developments.
D. Section 1.02 (A) (1) of the AHEP requires, among other provisions, that an applicant for
an affordable housing project,apply for and obtain approval of an Affordable Housing Exemption for the
proposed development and enter into an agreement with the City with respect to the long -term operation
of the development.
E. The City has granted a project exemption (Resolution No. 2015 -43), subject to certain
conditions specified therein, to the Residential Development Ordinance to allow the construction of a
ninety -eight (98) unit rental housing project, consisting of eighteen (18) one (1) bedroom apartments,
fifty -six (56) two (2) bedroom apartments, twenty -four (24) three (3) bedroom apartment units, to be
rented and occupied solely by individuals that are very low and low income in accordance with RDO
Exemption. Ninety percent (90 %) of the units for each phase of the project shall be affordable to
households with incomes 60 percent (60 %) or less of the County median income and 10 percent (10 %) of
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the units of each phase shall be affordable to households with incomes 50 percent (50 %) or less of the
County median income.
F. The conditions of approval for the RDO HE 15 -01 exemption (Resolution No. 201543)
require that, among other things, prior to issuance of a Building Permit, Owner shall enter into an
agreement with the City that will ensure the continued affordability of all units within the project for a
minimum period of fifty -five (55) years, and specifies the number of units that are to be constructed in the
development, the number of bedrooms in each unit, and the specific terms for renting units in the
development.
G. The parties are entering into this Agreement to satisfy the requirement of the RDO HE
exemption described in Recital F above, and to ensure that the Project will be used and operated in
accordance with the RDO HE exemption.
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged,
City and Owner agree as follows:
Definitions. The following terms shall have the respective meanings assigned to them in
this Section 1:
(a) "Certificate of Occupancy Date" means the date of issuance by the City of a
fully - executed and complete Building Clearance Form for the Project.
(b) "Closing Date" means the date this Agreement is recorded in the Official
Records of the Recorder's Office of Santa Clara County, California (the "Official Records ").
(c) "Gross Income" means the total of current adjusted gross income, as calculated
for federal income tax purposes and relevant HUD guidelines, of all adult persons who intend to reside
permanently in a household intending to occupy a Unit.
(d) "HUD" means the United State Department of Housing and Urban Development
(e) "Low Income Household" shall mean persons whose incomes do not exceed the
qualifying limits for low income individuals established for Santa Clara County, California, as amended
from time to time, pursuant to Section 8 of the United States Housing Act of 1937. In the event such
federal standards are discontinued, income limits for Low Income Households shall be those set by the
California Department of Housing and Community Development for Santa Clara, California as below
eighty percent (80 %) of Median Income, adjusted for family size.
(f) "Very Low Income Household" shall mean persons whose incomes do not
exceed the qualifying limits for very low income individuals established for Santa Clara County,
California, as amended from time to time, pursuant to Section 8 of the United States Housing Act of
1937. In the event such federal standards are discontinued, income limits for Very Low Income
Households shall be those set by the California Department of Housing and Community Development for
Santa Clara, California as below fifty percent (50 %) of Median Income, adjusted for family size.
(g) "Project" means the ninety-eight (98) unit rental affordable housing project
consisting of eighteen (18) one (1) bedroom apartments, fifty -six (56) two (2) bedroom apartments,
twenty-four (24) three (3) bedroom apartment units, to be developed on the Property, together with all
landscaping, parking spaces and appurtenances thereto, and the Property upon which it is constructed, as
the same may from time to time be modified or replaced.
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(h) "Project Approvals" means all governmental approvals obtained by Owner for
the development and construction of the Project, including without limitation the CUP.
(i) "Rent" means the total of monthly payments by a tenant for a Unit for the
following: use and occupancy of a Unit and associated facilities; any separately charged fees or service
charges assessed by Owner which are required of all tenants, other than security deposits, laundry facility
fees, late payment fees, insufficient funds fees and special event or room rental fees; the cost of an
adequate level of service for utilities paid by the tenant, if any, including garbage collection, sewer, water,
electricity, gas and other heating, cooling and refrigeration fuel, but not telephone service, cable television
and any other tenant ordered service; any other interest, taxes, fees or other charges for use of the Unit,
land or associated facilities and assessed by a public or private entity other than Owner, and paid by the
tenant. The City may determine the cost of utilities by using the utility allowance promulgated by the
United States Department of Housing and Urban Development under the Section 8 Program (i.e., the
program administered under Section 8 of the United States Housing Act of 1937, as revised or replaced
from time to time) for Santa Clara County, California or the County of Santa Clara established maximum
monthly allowances for utilities and services.
0) "Term" means the period of time beginning on the Closing Date and ending on
the later of (i) fifty -five (55) years following the Certificate of Occupancy Date, or (ii) the date of
expiration of the longest running occupancy and rent affordability restriction placed on the Property as of
the Closing Date with respect to any source of debt or equity financing for the Project.
(k) "Units" means the dwelling units to be constructed on the Property as part of the
Project.
2. The Owner hereby acknowledges and agrees that the Project is to be developed, owned,
managed and operated to provide ninety-eight (98) unit rental affordable housing project consisting of
eighteen (18) one (1) bedroom apartments; fifty -six (56) two (2) bedroom apartments, twenty-four (24)
three (3) bedroom apartment units, which shall be rented and occupied during the Term of this Agreement
solely by Very Low and Low Income individuals. To that end, and for the Term of this Agreement; the
Owner hereby represents, covenants, warrants and agrees as follows:
(a) Development and Use as Rental Housing. Owner shall complete construction of
the Project in accordance with all Project Approvals and all loans and encumbrances encumbering the
Property. Owner shall own, manage and operate the Project to provide ninety-eight (98) units of rental
housing, which shall be rented and occupied solely by Very Low and Low Income individuals during the
Term of this Agreement. If at any time during the Term of this Agreement, there are less than the
required number of rental Units rented to and occupied by Very Low and Low Income individuals, Owner
shall market available Units within the Project only for rent to individuals which meet the target
household income category necessary to bring the Project into compliance with the requirements of this
Agreement, until such time as the Units of the Project are rented to and occupied by the requisite number
of Very Low and Low Income individuals.
(b) Compliance With Laws. Each Unit, and all common areas, shall be maintained
in conformity with applicable building codes and regulations and all other applicable laws.
(c) Prohibition of Use for Transient Housing. None of the Units on the Property shall
at any time be utilized on a transient basis, or as a hotel, motel, dormitory, fraternity house, sorority
house, rooming house, nursing home, hospital, sanitarium, rest home, retirement home, or trailer court or
park.
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(d) Nondiscrimination. The Owner shall not give preference to any particular class
or group of person in renting the Units, except to the extent that all of the Units are required to be leased
to Low and/or Very Low Income households, provided such limitation is allowed by applicable laws.
The Owner agrees that there shall be no discrimination against or segregation of any person or group of
persons, on account of race, color, creed, religion, sex, sexual preference, marital status, national origin,
or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Project
nor shall the Owner, or any person claiming under or through the Owner, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location, number,
use, or occupancy of tenants, lessees, sublessees, subtenants or vendees of the Project or in connection
with the employment of persons for the operation and management of the Project. All deeds, leases or
contracts made or entered into by Owner as to the Units or the Project or any portion thereof during the
Term shall contain a prohibition against discrimination or segregation as set forth in this subsection (d)
above.
(e) Taxes and Assessments. Owner shall pay all real and personal property taxes,
assessments and charges and all franchise, income, employment, withholding, sales, and other taxes
assessed against Owner or the Project, or otherwise payable by Owner, at such times and in such manner
as to prevent any penalty from accruing, or any lien or charge from attaching to the Project; provided,
however, that Owner shall have the right to contest in good faith, any such taxes, assessments or charges.
If Owner exercises its right to contest any tax, assessment or charge against it or the Project, Owner; on
final determination of the proceeding or contest, shall immediately pay or discharge any decision or
judgment rendered against it or the Project, together with all costs, charges and interest.
(f) Maintenance. Owner shall at all times maintain the Project in good repair and
working order, reasonable wear and tear excepted, and in a safe and sanitary condition, and from time to
time shall make all necessary and proper repairs, renewals and replacements in order to keep the
development in a good, safe and sanitary condition.
3. Occupant and Rent Restrictions. Owner hereby represents, warrants, and covenants as
follows:
(a) Occupancy by Very Low and Low Income Individuals. Owner agrees to exert
diligent efforts to see that the Project provides residential rental housing, which shall be rented and
occupied solely by Very Low and Low Income individuals during the Term of this Agreement. Attached
hereto as Exhibit "C is a listing of the number of Units within the Project and the number of bedrooms in
each Unit. If, at any time during the Term of this Agreement, less than the required number of Units are
rented to and occupied by Very Low and Low Income individuals, Owner agrees to market the available
Units in the Project only for rent to households which meet the target household income category
necessary to bring the Project into compliance with the requirements of the Agreement, until the required
number of Units in the Project are rented to and occupied by the requisite number of Very Low and Low
Income individuals. The marketing requirements set forth in this subsection (a) above shall apply
regardless of the reason for less than the required number of Units being rented to and occupied by Very
Low and Low Income individuals at any given time during the Term of this Agreement, including without
limitation where such situation exists as the result of income increases of any tenant who may at one time
have qualified for the targeted household income category.
(b) Allowable Rent. The rent payable for each Unit shall not exceed thirty percent
(30 %) of the area median income units for Santa Clara County, adjusted for imputed household size, as
determined by HUD consistent with CTCAC (as defined below) and LIHTC rules and regulations. The
AHEP, and accordingly this Agreement, requires that rental rates shall be as permitted by the California
Tax Credit Allocation Committee ( CTCAC) based on sixty percent (60 %) and fifty percent (50 %),
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respectively, income level rental rates for Santa Clara County. Rent for any Unit may only be increased
one (1) time per year, and the Rent levels following an increase, or upon a new occupancy, shall not
exceed the applicable Rent levels required pursuant to this Subsection (b). A tenant shall not be required
to pay a cleaning and/or security deposit totaling in the aggregate more than the monthly Rent for a Unit.
(c) Effect of Increase in Income. City reserves the right to review all documents and
materials related to tenant eligibility, and to verify the continuing eligibility of all tenants and prospective
tenants. All prospective tenants shall have their eligibility verified by the Owner prior to rental of the
Unit. Owner shall re- certify tenant incomes annually thereafter. If a tenant household's income increases
during its tenancy, the following shall apply (subject to the requirements of other lenders and applicable
state and federal regulations):
(i) If the tenant household's income does not exceed one hundred twenty
percent (120 %) of the maximum income which qualifies as a Very Low or Low Income Household .as
applicable to such Unit and the tenant's occupancy, the tenant shall be allowed to remain in its Unit.
(ii) If a tenant household is found to make more than one hundred twenty
percent (120 %) of the maximum income which qualifies as a Very Low or Low Income Household as
applicable to such Unit and the tenant's occupancy, the tenant shalt be given written notice to vacate.
Such notice shall require the tenant to vacate the Unit not later than one hundred twenty days (120) after
the date that Owner becomes aware of the income increase, subject to any legally required noticing
procedures.
(d) Advertising and Outreach. Owner shall advertise the existence and terms of this
rental program to the general public, coordinate specific outreach efforts to Very Low and Low Income
individuals through cooperation with social service agencies, City agencies, and other entities serving
such Very Low and Low Income individuals, and accept applications from prospective tenants. Owner
shall keep a list of all qualified tenants, and shall make this list, along with all relevant financial data
pertaining to prospective tenants, available to City upon request. All tenants shall be selected off of this
list. Owner shall provide the City with a detailed outreach and advertising plan acceptable to City not less
frequently than annually during the Term of this Agreement, in order to insure that the housing needs for
Very Low and Low Income individuals are met.
(e) Compliance with A/S Approval. Except as otherwise provided in this
Agreement, rental of the Units within the Project shall be subject to and shall comply with the criteria for
occupancy standards set forth in the applicable architectural and site review approval and subsequent
building permits for the Project as the same may be amended from time to time. No deviation from such
criteria for occupancy standards shall be allowed except as expressly agreed to by the City on application
of Owner, determined in City's sole discretion.
Income Certification and Reporting.
(a) Tenant Certifications.
(i) During any period that income and household size and composition
certifications from each tenant and household are required to be submitted to any federal, state and/or
county agencies under the terms of any loan from such agencies recorded against the Project, Owner
shall submit copies of those certifications to City at the same time that submittal of such certifications are
required to be made to the applicable federal, state and /or county agencies.
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(ii) During any period when income and household size and composition
certifications from each tenant and household are not required to be submitted to any federal, state, and/or
county agencies under the terms of any loans from such agencies recorded against the Project, the
requirements of this subsection (ii) shall apply. Immediately prior to initial occupancy by such tenant
household and annually thereafter, Owner shall obtain income and household size and composition
certifications by each tenant household obtained in such form required by City from time to time. Owner
shall obtain updated forms for each tenant household on request by the City, but in no event less
frequently than once a year. Owner shall verify that the income information provided by an applicant or
occupying household in an income certification is accurate by taking one or more of the following steps
as part of the verification process; (1) obtain pay stubs for the three (3) most recent pay periods; (2) obtain
an income tax return for the most recent tax year; (3) obtain an income verification form from the
applicant's current employer; (4) obtain an income verification form from the Social Security
Administration and /or the California Department of Social Services if the applicant receives assistance
from either of such agencies; or (5) if the applicant is unemployed and has no such tax return, obtain
another form of independent verification. Copies of tenant income certifications and documents verifying
income shall be maintained during the entire occupancy of a Unit by a household and for period of not
less than five (5) years thereafter and shall be available to the City within five (5) days after request.
(b) Annual Report to City. Each year the Owner shall submit an annual report to the
City on a form to be provided by the City, except that to the extent that an annual report containing the
information required by this subsection (b) below is required to be submitted to any federal, state and/or
county agencies under the terms of any loans from such agencies recorded against the Project, the annual
report to be submitted to the City shall be on the same forms as is required to be submitted to such
federal, state and/or county agencies.
The annual report shall include for each Unit, the Rent and the income and family size and
composition of the household occupying the Unit. The report shall also state the date the tenancy
commenced for each Unit. The income and household size and composition information shall be as
supplied by each tenant household in the certification form required by Section 4(a) above. A true copy
of each such form, signed by the tenant, shall be attached to the Owner's annual report to the City. For
each calendar year during the Term, an annual report shall be filed with the City not later than September
30 of the following calendar year.
(c) Additional Information. The Owner shall provide to the City any additional
information required by the laws of the City, the State of California and the United States, as the same
may be amended from time to time.
(d) Lease. To the extent not in conflict with the requirements of any loan to which
this Agreement has been expressly subordinated by written agreement of the City, the provisions of this
subsection (d) shall apply. Owner shall include in leases and rental agreements for all Units, provisions
which authorize Owner to immediately terminate the occupancy of any individual who misrepresented
any fact material to the household's qualification as a Very Low or Low Income Household. Each lease
or rental agreement shall also provide that the household is subject to annual certification in accordance
with Section 4(a) above. Owner shall specifically refer to this Agreement in any lease of a Unit and to
any purchase and sale contract with respect to any portion of the Project, provided that failure to do so
shall not invalidate or otherwise affect the effectiveness of this Agreement. Every grant deed for all or
any portion of the Project shall specifically state that the grant is made subject to all of the terms and
conditions set forth in this Agreement, provided that Owner's failure to comply with these requirements
shall not invalidate or otherwise affect the effectiveness of this Agreement.
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(e) Cooperation. City acknowledges and agrees that Owner may be obtaining
financing for the Project with assistance from the California Tax Credit Allocation Committee, California
Housing Finance Agency, California Municipal Finance Authority, California Community Reinvestment
Corporation, Santa Clara County, other state or federal housing agencies, and California Bank of Trust
which financing will be secured by deeds of trust, pledge agreements, financing agreements and/or
regulatory agreements to be recorded prior or subsequent to the lien of this Agreement. In addition, the
City agrees to subordinate this Agreement to the liens of the deed of trust, pledge agreements and
regulatory agreements required in connection with the Owner's receipt of financing for the development
California Bank & Trust, California Municipal Finance Authority, California Community Reinvestment
Corporation and agrees to execute commercially reasonable subordination or intercreditor agreements
which are reasonably required to effect such subordination.
5. Indemnification. The Owner hereby covenants and agrees that it shall indemnify, defend
with counsel acceptable to City and hold harmless the City and the City's officers, members,
commissioners, directors, officials, employees, and agents (collectively, the "Indemnified Parties "), from
and against any and all claims arising directly or indirectly from this Agreement and the construction, .
ownership, operation or management of the Project; and all reasonable costs and counsel fees incurred by
the Indemnified Parties in defense of such a claim, or in order to assert its rights under this Section 5,
except to the extent such claims arise from the gross negligence or willful misconduct of an Indemnified
Party.
6. Term. This Agreement shall become effective upon its execution and delivery and shall
remain in full force and effect for the Term. This Agreement shall bind any successor, heir or assign of
Owner, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise,
with or without the approval of the City, except as expressly released by the City. This Agreement shall
inure to the benefit of the City and its successors.
7. Covenants to Run with the Land. The City and Owner hereby declare their express intent
that the covenants and restrictions set forth in this Agreement are covenants running with the land, and
that the covenants shall be binding upon all successors in title to the Project or any portion thereof for the
Term hereof. Each and every contract, deed or other instrument hereafter executed covering or conveying
the Project or any portion thereof shall be held conclusively to have been executed, delivered and
accepted subject to such covenants and restrictions, regardless of whether such covenants and restrictions
are set forth in such contract, deed or other instrument.
The Owner and the City hereby declare their understanding and intent that:
(a) The covenants and restrictions contained in this Agreement shall be covenants
running with the land pursuant to California Civil Code section 1460 et seq.; and
(b) The burden of the covenants and restrictions set forth in this Agreement touch
and concern the Project in that the Owner's legal interest in the Property and all improvements thereon
may be rendered less valuable thereby; and
(c) The benefit of the covenants and restrictions set forth in this Agreement also
touch and concern the Project by enhancing and increasing the enjoyment and use of the Project and Units
by Very Low and Low Income Households, furthering the public purpose for which exemption from the
RDO was granted to Owner.
Notwithstanding the foregoing, all covenants and restrictions contained herein without regard to
technical classification or designation shall be binding upon the Owner and its successors in interest for
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the benefit of the City, and such covenants and restrictions shall run in favor of City for the entire Term,
without regard to whether the City is an owner of any land or interest therein to which such covenant and
restrictions relate.
8. Uniformity, Common Plan. The covenants and restrictions set forth in this Agreement
shall apply uniformly to all Units, in order to establish and carry out a common plan for the use of the
Property.
9. Enforcement by the City. if the Owner defaults in the performance of any of the Owner's
obligations under this Agreement, City shall have the right to pursue any or all of the following actions,
or any other remedy provided by law or in equity:
(a) Action to Compel Performance. The City may bring an action at law or in equity
to compel the Owner's performance of its obligations under this Agreement and /or to prevent the
violation of the terms and conditions of this Agreement by Owner.
(b) Action for Damages. The City may bring an action to collect damages from the
Owner due to Owner's default.
(c) All Remedies Available and Cumulative. City shall have the right to exercise all
available rights and remedies, and to maintain any action at law or suits in equity or other proceedings,
including without limitation, specific performance, to enforce the terms, covenants and restrictions of this
Agreement. No delay in enforcing the provisions hereof as to any breach or violation shall impair,
damage or waive the right of the City to enforce the provisions hereof in the future for any continuing or
new breach or violation of any of the terms, covenants or restrictions contained in this Agreement. All
rights and remedies, including without limitation those set forth in this Section 9 above, of any party
legally entitled to enforce this Agreement shall be cumulative and the exercise of any such right or
remedy shall not impair or prejudice and shall not be a waiver of the right to exercise any other such
rights and remedies.
10. Lienor's Remedies. The provisions of this Agreement do not limit the right of any
obligee to exercise any of its remedies for the enforcement of any pledge or lien upon the Property;
provided, however, that in the event of any foreclosure, under any mortgage, deed of trust or other lien or
encumbrance, or a sale pursuant to any power of sale included in any such mortgage or deed of trust, or in
the case of a deed in lieu of foreclosure, the purchaser (or other transferee) and their successors in interest
and assigns and the Property shall be, and shall continue to be, subject to all of the covenants and
restrictions set forth in this Agreement. The provisions of this Section 10 shall not apply with respect to
any loan to which this Agreement has been expressly subordinated pursuant to a separate written
instrument executed by City.
11. Right of Inspection. City shall have the right from time to time during the Term of this
Agreement, and for a period of five (5) years thereafter, upon giving Owner reasonable notice, to examine
and make copies of all books, records or other documents of the Owner which pertain to the Project. All
such books, records and other documents pertaining to the Project shall be maintained at the office of the
Owner or management agent. All such books, records and documents shall be maintained by Owner for a
period of not less than five (5) years, or such longer period as required by this Agreement.
12. Attorneys' Fees and Costs. In any action brought to enforce or interpret this Agreement,
the prevailing party shall be entitled to all costs and expenses of suit, including reasonable attorneys' fee.
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13. Recording and Filing. City and Owner shall cause this Agreement and all amendment
and supplements to it, to be recorded in the Official Records, at Owner's cost.
14. Governing Law. This Agreement shall be governed by the laws of the State of
California.
15. Amendments. This Agreement shall be amended only by a written instrument executed
by the parties hereto or their successors in title, and duly recorded in the Official Records. The City and
its successors and assigns, on the one hand, and the Owner and its successors in interest and assigns, on
the other, shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any
of the covenants or restrictions contained in this Agreement without the consent of any tenant, lessee,
easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust or any other person or
entity having any interest less than a fee in the Property. This Agreement shall not be amended, modified
or terminated except upon the written consent of the City and upon the recordation of an amendment
hereto duly executed and acknowledged by City and Owner. Whenever any approval, amendment,
request or other action by the City is required or permitted under this Agreement, such action may be
given, made or taken by the City Administrator , or his designee, in his /her discretion without further
approval by the City Council and such action shall be in writing. The City Administrator is authorized, in
his or her sole and absolute discretion to (i) approve non - material modifications to the terms of the
instrument and agreements to be executed to implement this Agreement, and (ii) approve requests by the
Owner for reasonable extensions of time deadlines set forth in this Agreement. Amendments to the
Agreement authorized by the City Administrator shall not reduce the Term or affect the affordability
requirements, number of Units or otherwise affect the restrictions and/or covenants for affordability.
16. Notice. All notices shall be given personally or by first class mail, postage prepaid,
addressed as shown on the signature page of this Agreement. Notices shall be deemed given on the
earlier of the date delivered or the second day following the date on which the same have been mailed in
the manner required by the prior sentence. Any of the parties may, by notice given in the manner
required by this Section 16, designate any further or different addresses to which subsequent notices shall
be sent.
17. Severability. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall
not in any way be affected or impaired thereby.
18. Assignment. This Agreement may be assigned to Gilroy Pacific Associates II, a
California Limited Partnership, which is an entity created by the Owner for the sole purpose of
developing, owning, managing and operating the Project in which the Owner shall remain as managing
general partner. Notwithstanding any other provision of this Agreement, no other duties or obligations of
the Owner under this Agreement may be assigned by the Owner without the prior written consent of City,
in the sole and absolute exercise of City's discretion.
19. Other Agreements. The parties acknowledge and agree that the operation of the Units in
accordance with this Agreement satisfies the Owner's obligations under the AHEP and the RDO
Exemption with respect to the income, rent and length of stay restrictions applicable to the Units. In the
event of any inconsistency between this Agreement and the foregoing documents and approvals with
respect to the income and rent restrictions applicable to the Project, this Agreement shall control.
20. Counterpart s. The parties hereto agree that this Agreement may be executed in
counterparts, each of which shall be deemed an original, and said counterparts shall together constitute
one and the same Agreement, binding all of the parties hereto, notwithstanding that all of the parties are
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not signatories to the original or the same counterparts. For all purposes, including, without limitation,
recordation, filing and delivery of this instrument, duplicate, unexecuted and unacknowledged pages of
the counterparts may be discarded and the remaining pages assembled as one document.
44�83((1- 28819)22- 71759�(3vv5 pg -10-
9CI23SU7b737991J767 -00116 12/6/2016 10:27 AM
IN WITNESS WHEREOF, the City and the Owner have executed this Agreement by duly
authorized representatives on the date and year shown below.
Approved As to Form:
1
CITY ATTORNEY
Dated: / ,)— a , 20 16
CITY OF GILROY, a municipal corporation
4
By:
Gabr ',e,l A. e 1La l e r-
Its: G*rh1 AAM'inis+ra+cr
Address:
7351 Rosanna Street
Gilroy, CA 95020 -6141
Central Valley Coalition for Affordable Housing,
a California nonprofit public benefit corporatoin
C.
By: Christina Alley
Its: Chief Executive acer
Address:
3351 M Street, Suite 100
Merced, CA 95348
Dated: e C SK , 201 W
44G8,�331 - 28g8992�2--�7117gg9yp33��v5� ppg,g33 -11-
rls-QZ3SU7873vZ- W67 -001 l6 12/6/2016 10:27 AM
A Notary Public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA
COUNTY OF S n n +A LAG i A ss.
On DeCemloeir 13,F before me, Gandra E- I�aVA Notary Public,
personally appeared A,&.6rie1 A. &D Z -qlez who proved to me on the basis of satisfactory
evidence to be the person(4 whose name is /i* subscribed to the within instrument and acknowledged
to me that helWe /tpCy executed the same in his/bef /tlir authorized capacityWs), and that by his/hef /dw- tr
signature(K) on the instrument the personf), or the entity upon behalf of which the person(sj acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
SANDRA E. NAVA
WITNESS my hand and official seal. =Oft Commission s 2086it9
C -: Notary Public - California i
Q� GG = Santa Clara County '
MY (Seal) Comm. res Nor 11, 2018+
(Signature)
A Notary Public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA
COUNTY OF S4 n4a 04M 04M ss.
On Dezember 13 2DI b, before me, Sandra re. N, V Ct -,Notary Public,
personally appeared f- rdbrje A . GonyA1pz,, who proved to me on the basis of satisfactory
evidence to be the person(s) whose nameA is /gfe subscribed to the within instrument and acknowledged
to me that he lore /tWy executed the same in his/Vr /dwrr authorized capacityXs), and that by his/heY /tWir
signature(X) on the instrument the persoo), or the entity upon behalf of which the personal acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
(Signature)
44G8,�331- 2RR8992�2�-�71177S911((3vv5nn pp8S33
CJS-QZ3SZT/bW,09%767 -00116 12/6/201610:27 AM
SANDRA E. NAVA
Commission #t 2086119
(Seal)
rA
-: Notary Public - California i
= Santa Clara County '
Comm. ires Nov 11, 2018+
-12-
G[07:INOT A J 1:IZe3khI=1i�, k I
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of Merced )
On December 8, 2016
before me, Chelsey Alley, Notary Public
(insert name and title of the officer)
personally appeared Christina Alley
who proved to me on the basis of satisfactory evidence to be the person�ttkey whose name* is /a�
subscribed to the within instrument and acknowledged to me that Xshe executed the same in
h s /her /th *r authorized capacity(i�, and that by l /her /fl�eir signature() on the instrument the
person, or the entity upon behalf of which the personi --A acted, execu ed the instrument. VN
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signatu
(Seal)
CHELSEY ALLEY
Notary Public - California
Z -• Merced County
Z Commission # 2146206 It
I My Comm. Expires Mar 14, 2020 t
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
4831 - 28�92- 7793v5p 0g3
�4Z35ZT/b ,291 67- 00116 12/6/2016 10:27 AM
All that certain real property situated in the City of Gilroy, County of Santa Clara, State of
California, described as follows:
City of Gilroy
PARCEL ONE:
Parcel A: Lot 56 shown and delineated on the Map of Tract 10276, "Harvest Park II ", filed
October 26, 2016, in Book 898 of Maps, at pages 17 - 24.
Parcel B:
A non - exclusive easement for ingress and egress purposes as an appurtenance to Parcel A
above, across all of Parcel E (Harrier Place - a private street) and designated "I.E.E" (Ingress
and Egress Easement) as shown on the Map.
Parcel C:
A non - exclusive easement for ingress /egress and parking purposes as an appurtenance to
Parcel A above, over, on and across a portion of Parcel "D" and designated "I.E.P.E"
(Ingress /Egress and Parking Easement) as shown on the Map
APN: 790 -06 -044, (portion)
PARCEL TWO:
Lot 92 as shown on the Map of Tract No. 9950, Harvest Park, filed for record on November
29, 2012, in Book 857 of Maps, at Page 15, Santa Clara County Records.
APN: 790 -65 -092
EXHIBIT "B"
AHEP
[to be attached]
4831 - 28�92 -- 777SS93v5
§FY? §W,nn ppg3
79'9%767 -001 I6 12/6/2016 10:27 AM
RDO AFFORDABLE HOUSING EXEMPTION PROCEDURE
City of Gilroy
Revised December 4, 2006
Section 1.00 Statement of Intent
It is the intent of this policy to set forth the specific criteria and guidelines for the
affordable housing exemption provided in the City of Gilroy Zoning Ordinance,
Section 50.62 (b) (3) and (4). The goal of this exemption is to enhance public
welfare by meeting the current and future housing needs of all segments of the
community. This exemption is :intended to encourage private developers to
construct housing that is affordable to Very Low, Low and Moderate income
households, as specified in this document.
Section 1.01 Definitions
Affordable Housing:
A dwelling unit, either rented or owned, which is affordable to households
with Very Low, Low, or Moderate incomes, as specified by this document.
Applicant:
Any person, partnership, corporation, firm, or any entity or combination of
entities, which seek permits or approval for residential development in the
City of Gilroy.
Dwelling Unit:
Housing which is designed and intended for occupancy as a residence by one
(1) household. This term includes condominiums, townhouses, single- family
homes, multi- family homes and apartments.
HUD:
United States Department of Housing and Urban Development.
Resale Controls:
Legal restrictions imposed upon property owners by the City to ensure that
the dwelling units will remain affordable to Very Low, Low, and Moderate
income households, as defined in this document, for a specified time.
Page 1 of 6
Residential Development (RDO):
All development that includes single family dwellings, multi - family dwellings,
condominiums, townhouses, cooperative developments, and land
subdivisions intended to be sold to the public for residential use.
Residential Development Ordinance:
Section 50.60 of the City of Gilroy
responsible growth in the community,
which may be constructed each year.
Zoning Ordinance that encourages
and restricts the amount of housing
Very Low, Low and, Moderate Income Levels:.
Income categories established by HUD for Santa Clara County. Very Low and
Low income levels are calculated based on Median household size and
income.
Section 1.02 General Requirements
(A) One hundred percent (100 %) of the housing units granted an exemption
from the Residential Development Ordinance under this program must be
sold and /or rented at prices that are affordable to Very Low, Low, or
Moderate income households, as specified by sections 1.03 and 1.04. The
procedure for this exemption shall be as follows:
Procedure:
(1) The applicant must apply for an "RDO Affordable Housing Exemption," and
must submit all required fees at the time of application. Consideration for
approval of this application shall be made in accordance with the criteria
contained within Zoning Ordinance section 50.62.
(2) At the time of application for the exemption, the applicant must specify the
number of units to be constructed. The applicant must also identify the
number of units that will be affordable to households with Very Low, Low, and
Moderate incomes, as defined by this document.
(3) Rental and /or sale prices of all units shall be reviewed and approved by
the City, and shall be affordable to .households with Very Low, Low, and
Moderate incomes, as specified by sections 1.03 and 1.04.
(4) Approval of the application will be based upon compliance with this policy
and all other City requirements, as may be updated from time to time. The
applicant must receive approval of the RDO exemption prior to Tentative
Page 2 of 6
Map approval. In situations where a Tentative Map is not required, the
applicant must receive approval of the RDO exemption prior to
Architectural and Site Review approval.
(5) After approval of this application, and prior to receiving Tentative Map
approval (or Architectural and. Site Review approval in situations where
Tentative Maps are not required), the applicant must enter into a contract
with the City (hereafter referred to as Agreement) agreeing to provide
affordable housing as delineated in this policy, and as approved by the
City Council. This Agreement will assure affordability of the units. Failure
to. comply with the terms of the Agreement will void all approvals, and the
project will not be allowed to proceed without complying with the
Residential Development competition procedures of Zoning Ordinance
section 50.60, regardless of the stage of construction of the project.
(B) The applicant shall advertise the existence and. terms of this policy to the
general public and accept applications from prospective purchasers and
tenants. The applicant shall keep a list of all qualified purchasers and
tenants, and shall make this list, along with pertinent financial data,
available to the City upon request.
(C) All tentative maps, architectural and site reviews, or other development
permits approving residential development shall contain conditions sufficient
to ensure compliance with the requirements set forth in this policy. These
conditions shall include but not be limited to conditions that specify the
number of affordable units (whether for sale or rental), their prices and
Resale Controls.
(D) All dwelling units proposed under this program must be constructed with the
same quality of design, construction and materials as required foe market
rate housing. This requirement shall apply to projects that consist solely of
affordable housing units, as well as projects that combine affordable housing
with market rate housing.
(E) Low and Very Low income. rental units constructed through this program
shall be affordable for a minimum of 55 years, and Low and Very Low
income for -sale units shall be affordable for a minimum of 30 years. Grant
deeds and /or Codes, Covenants and Restrictions (CC &Rs). for units
constructed under this program shall state that these units are required to
remain affordable for these time periods, and shall be recorded against the
property with the County Recorder of Santa Clara County.
Page 3 of 6
(F) Resale controls shall be incorporated as part of the Agreement signed by
individual purchasers of these units. This Agreement shall be recorded
against the property with the county recorder of Santa Clara County.
(G) The developer shall provide the City with a detailed outreach and advertising
plan, in order to insure the housing needs of existing Gilroy Very Low, Low,
and Moderate Income residents are met.
Section 1.03 Procedure for Renting Affordable Units
(A) The City reserves the right to review documents and verify the eligibility of all
prospective tenants.
(B) In the event an income increase disqualifies a tenant [from hereon referred
to as Over- Income Tenant] from meeting the income requirements to rent a
unit through this program, the following rules shall apply:
(1) The property owner shall re- certify incomes annually. If a tenant is
found to make more than 1.20% of the maximum income to qualify as a
Low Income household, the tenant will be given up to 90 days to
relocate.
(2) During the time the Over - Income Tenant continues to rent the unit,
the rental rate of the unit may not increase above the maximum rental
.rates per bedroom size which are determined by the City. (see.
Appendix).
(C) The developer shall specify, in the Agreement entered into with the City, the
number of units that are to be constructed and the number of bedrooms in
each unit.
(D) Cost of Housing:
Rental housing constructed through this program shall be affordable to
Very Low, Low, and Moderate income households, consistent with the
intent of this policy. Rental rates shall be equivalent to the California Tax
Credit Allocation Committee (CTCAC) 50% income level rental rates for
Santa Clara County. The rental rates shall be revised with every published
revision of California Tax Credit Allocation Committee (CTCAC) rental
rates. (See Appendix)
Tenants in this program may be required to pay a cleaning and /or security
deposit of not more than the cost of the monthly rent.
Page 4of6
Section 1.04 Procedure for Selling Affordable Dwelling Units
(A) All saleable dwelling units constructed through this program shall be sold to
households that qualify for affordable housing, as defined in this document.
For thirty years from the sales date, resale of these homes shall be' subject
to a resale Agreement that will ensure that these units remain affordable
housing for a 'period of years as specified in the Agreement. The standard
time period for affordability should be no less than 30 years. Transfer of
these homes shall be to Very Low, Low, and Moderate Income households,
and will be subject to the same resale restrictions applied to the original
sale. Transfers by gift, devise, or inheritance to an existing spouse, surviving
joint tenant, or a spouse as part of a dissolution proceeding, or in connection
with marriage shall not be considered a transfer for the purpose of this
policy.
(B) The City reserves the right to review and approve documents verifying the
eligibility of all homebuyers, prior to sale and transfer of each property.
(C) All dwelling units constructed under the terms of this program shall be sold
to owners who occupy the residences as their principal place of residence.
(D) Resale of these units shall be conducted as provided for in this policy. Upon
resale, the purchaser's income must correspond to the initial income
category established for this unit by the developer.
(E) All homebuyers shall enter into an Agreement, recorded on the property,
which provides that the home shall be subject to Resale Controls.
(F) Cost of Housing:
a. Houses constructed in this program should be affordable to Low and
Moderate Income
households in the following ratios:
1. At least 40% of the units should 'be affordable to households earning
below 60% of Median Income.
2. At least 15% of the units should be affordable to households earning
above 60% up to 80% of Median Income.
3. At least 15% of the units should be affordable to households earning
above 80% up to 100% of the Median Income.
4. Not more than 30% of the units should be sold to households earning
above 100% up to 120% of Median Income..
Page 5 of 6
The Median Income shall be as published by the California Department of
Housing and Community Development for Santa Clara County.
b. Residences constructed in this program shall be sold at or below the City
of Gilroy's published sales prises or other pricing structure approved by
the City, prior to initiating outreach and marketing efforts required in
Section 1.02.G of this document.
(G) If the developer is unable to find Low and Moderate Income buyers who are
qualified to purchase homes through this program, the developer shall be
required to continue to solicit potential Low and Moderate Income buyers for
eight (8) months after the date of issuance of the Certificate of Occupancy.
After this time, the developer shall be allowed to sell the homes to any
person, without regard to income levels. These homes shall, however, be
sold at Low and Moderate Income prices, as determined by the City, and
shall remain affordable, in 'accordance with this policy. The applicant shall
provide the City with a report on the marketing efforts of these projects,
prior to the end of the eight (8) month period.
(H) For sale homes constructed through this program shall not be leased or
rented, unless exceptional circumstances are established by the owner that
the leasing or renting of the home is necessary and approved by the City
Planning Division and Division of Housing and Community Development. Any
such lease or rental shall be consistent with the rental rates as established
by this policy for Very Low, Low, and Moderate Income households and
limited in time to not more than one -year.
Page 6of6
RENTAL UNITS
Rental rates will be based on unit size, and will not distinguish between the income
levels of the renters. The rental rate for a unit is found by using the following
steps:
1. The typical household size each unit can accommodate is determined by
using figure 1., although the number of people actually housed in each unit .
will vary by circumstance.
2. Rental rates shall be equivalent to the California Tax Credit Allocation
Committee (CTCAC) 50% income - level rental rates for Santa Clara County.
Figure 1
Number Of _Bedrooms In
Dwelling Unit
Typical Household Size
Single Residential Occupancy
1
Studios
1
1
2
2
3
3
4
4
6
5
8
The project manager shall provide the City with a rental report in January, April,
July and October of each year. This report shall provide the following elements:
1. Name of the project
2. Number of Units in the project
3. Rental rate of each unit
4. Name, unit number, and income level of each lease holder
Page 1 of 2
FOR -SALE UNITS:
HUD income limits shall be used to determine eligibility for participation in this
program.
Houses constructed in this program should be affordable to. Low and. Median
Income households in the following ratios:
1. At least 40% of the units should be affordable to households earning 50% to
60% of Santa Clara. County Median Income, as defined in the Policy.
2. At least 15% of the units should be affordable to households earning above
60% up to 80% of Median Income.
3. At least 15% of the units should be affordable to households earning above
80% up to 100% of the Median Income.
4. Not more than 30% of the units should be sold to households earning above
100% up to 120% of Median Income.
The City Council, may permit an exception to the above ratios and approve the
allocation of market -rate units from the Market -Rate Exempt pool, not to exceed
25 % of the total units in a development, if the development meets the following
criteria:
a) Total Affordable Units in a project meet the following affordability levels
(calculated as a percentage of the total affordable units):
20% below 50% of Santa Clara Median Income
25% between 50% and 80% of Santa Clara :Median Income
0 25% between 80% and 100% of Santa Clara Median Income
0 30% between 100% and 120% of Santa Clara Median Income
b) The project complies with the requirements of the Neighborhood District,
policy.
c) A Master Plan is required
d) The development provides substantial public and /or private infrastructure
improvements, beyond those required by the " "Neighborhood District Policy,"
as negotiated through a Development. Agreement.
The applicant shall submit proposed sales rates to staff, with backup
documentation demonstrating that the units will be affordable to buyers in each
income category in the specified percentages. The following provisions will apply
to all homes sold under this program:
® Prices for homes sold in this program will be based on the homebuyer putting a
maximum of a 10% down payment on the home.
® The monthly mortgage shall include PITI.
o All projects constructed through this program must provide a minimum of three
bedrooms in twenty percent (20 %) of the units.
® Applicants are responsible for financing their units.
Page 2 of 2
EXHIBIT "C"
IDENTIFICATION OF UNITS RESERVED
LOW INCOME HOUSEHOLDS
Number of Units
Number of Bedrooms
18
1 bedroom
54
2 bedroom
24
3 bedroom
The income levels of each household occupying a Unit shall be limited as follows: ninety percent of the
units shall not exceed sixty percent (60 %) of Area Median Income; ten percent of the units shall not
exceed fifty percent (50 %) of Area Median Income.
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