SR-9A (11)
SEP 1 6 1997
F \HOUSING\sHARE\WPFILES\ST AFFRPT'04THSTRPT WPD
Council Meeting September 16, 1997
Santa Momca,
C9)
To Mayor and City Council
From
City Staff
Subject
Proposed amendments and waiver of CitYWide Housing Trust Fund
gUidelines, and adoption of a resolution to Forego Pubhc Bidding procedures
for Construction of a Public Parking Structure at 1136-1144 Fourth Street
INTRODUCTION
This report addresses recommended changes to the CitYWide Housing Trust Fund
Guidelines as well as recommended Council actions necessary to accommodate the
construction of the Fourth Street Senior Housing Project
ThIS report recommends that the City Council take the follOWing actions a) authonze staff
to amend all four City Housing Trust Funds to permit the option to administratively waive
the City requirement for a Regulatory Agreement and to eliminate the Borrower's option
to request an extension of the term of the City's loan In lieu of loan repayment In the case
of all projects funded under the HUD Section 202 and Section 811 Programs; b) waive
the Citywide Housing Trust Funds GUidelines, on a one-tIme basIs only, to permit as an
eligible actIVIty the construction of the public parking structure to be constructed under the
Fourth Street Senior Citizen HOUSing Project and to pay the Parking Authonty for the loss
of parking meter revenue dunng construction; c) adopt a resolution With findings to forego
the bidding procedures for construction of the public parking structure to be constructed
under and as the foundatlon for the Fourth Street Senior Cittzen HOUSing Project
9A
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SEP 1 6 1997
BACKGROUND AND DISCUSSION
What follows is background and discussion on each of the three recommendations being
presented for City Council approval.
Amendment to Trust Fund Guidelines for Section 202 and 811 Proiects
Staff recommends that City Council approve an amendment to the City's four housing
Trust Fund Program gUidelines to prOVide staff with the option to administratively waive
certain requirements of those GUidelines for HUD Section 202 and Section 811 proJects,
depending upon the IndiVidual requirements of the source of funds The purpose of such
a waiver IS to aVOid duplication of HUD requirements and to structure City financing of
Section 202 and Section 811 projects to more closely resemble conventional lending
actiVities exempt under Article XXXIV of the State Constitution
The City has four different funds from which It makes 10ngMterm loans to construct
affordable housing the Citywide Housing Trust Fund, the CitYWide Housing Acquisition
and Rehabilitation Trust Fund Program (CHARP), the PICO Neighborhood Housing Trust
Fund, and the HOME Trust Fund While each of these trust funds IS governed by a
different set of program gUidelines, all four Involve many of the same reqUirements,
Including a requirement for a City Regulatory Agreement The Regulatory Agreement has
been the primary mechanism used to ensure that the housing remains restricted and
affordable to low and moderate Income households In particular, the Regulatory
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Agreement sets forth requirements concerning project rents, marketing and management
procedures, and tenant income and selection
From time to time, affordable housing projects bUilt in the City of Santa Monica receive
primary funding from another source, such as the federal government, while receiving
secondary funding from the City. Projects funded under the Section 202 Supportive
Housing for the Elderly Program and Section 811 Supportive Housing for the Disabled
Program are good examples. Since 1993, Section 202 and Section 811 funding awards
totaling approximately $164 million have been made to four projects including 201
affordable housing units in the City. Staff anticipates that there may be additional Section
202 and Section 811 projects proposed in the City In the near future.
The HUe Section 202 and 811 programs reqUire federal Regulatory Agreements of their
own. A copy of the standard HUD Regulatory Agreement for the Section 202 program
IS provided In Attachment A. The baSIC requirements of the HUD Regulatory Agreement
are very similar to the City's standard Regulatory Agreement. For example, the HUe
Regulatory Agreement sets forth requirements concerning the proJect's operating budget
and procedures; management procedures, establishment of a reserve fund, annual
finanCial reporting, bookkeeping, assignment of rents as security, and, tenant selection
crltena These requirements closely mirror the basic reqUirements of the City's standard
Regulatory Agreement.
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One of the few basic differences between the HUD Regulatory Agreement and the City
Regulatory Agreement is the term of the Agreement. While the HUD Regulatory
Agreement requires a forty (40) year term, the term required by the City varies depending
upon which of the four Trust Funds is used to finance the project. The PICO
Neighborhood Trust Fund and CHARP Trust Fund require terms of 35 years, with the City
haVing the ability to extend the term by an additional 15 years In exchange for forgiVing the
Borrower's loan The Citywide HOUSing Trust Fund and HOME Trust Fund reqUire a term
of 50 years, With the City haVing the ability to extend the term by an additional 25 years in
exchange for forgiVing the Borrower's loan Thus, the City terms are generally longer than
the term reqUired by HUD
Apart from the term of the Regulatory Agreement, projects funded under the Section 202
and Section 811 programs are regulated by the HUD Regulatory Agreement In much the
same way as they would be regulated by the City's Regulatory Agreement. Waiving the
City'S reqUirement for a Regulatory Agreement on Section 202 and Section 811 projects
will assist the CIty'S efforts to preserve Its remaining Article 34 authOrity (granted under the
City's own voter-approved initiative, PropOSition N).
Artlde XXXIV requires that low rent hOUSing projects developed, constructed, or acqUired
by any state public body be approved by a majonty of the qualified electors of the City
Section 37001 5 (e) of the Health and Safety Code states that Article XXXIV shall not be
Interpreted to apply to certain actiVities of a public body (I e , the City) when such body,
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"Provides assistance to a low rent housing project and mOnitors construction or
rehabilitation of such project and compliance with conditions of such assistance to the
extent of:
(1) carrying out routine governmental functions.
(2) Performing conventional activities of a lender
(3) Imposing constitutionally mandated or statutOrily authonzed conditions accepted
by a grantee of assistance."
Staff believes that by removing the City requirement for a Regulatory Agreement for
Section 202 and Section 811 projects, the City would eliminate an aspect of the City's
Involvement In affordable housing projects that In some cases may go beyond the role of
a conventional lender. In thiS way, Section 202 and Section 811 projects may be able to
qualify for an exemption under Section 37001 5(e)
There is an additional eJement of the City's Trust Fund requirements which staff IS
recommending In order to bring the City's practices in hne with a conventional lender.
Specifically, as Indicated, all of the City's Trust Funds contain a provision which allows
the City to accept an extension of the Regulatory Agreement for a minimum of fifteen or
twenty five years (depending upon the Trust Fund) In lieu of repayment of the loan Such
an option IS not a conventional lending practice Rather, It is a practice that is used by the
City as the regulator of affordablllty on the project to gain a longer term of affordablllty On
the HUD Sedion 202 projects, staff recommends that the City relinquish Its regulatory role
to HUD In thiS regard.
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One Time Onlv Waiver of Trust Fund Guidefines to Permit and Pay for Construction
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of Parkina Structure and Pay for Lost Parkina Meter Revenues
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On June 15, 1993, the City Council conducted a public hearing on the sale of air rights
above Parking Lot 4 to the Jewish Federation Council (JFC), authorized the sale of air
nghts to JFC, and authonzed the City Manager to negotiate and execute a Option to
Purchase Agreement ("Option Agreemenr) with JFC for the exclusive right to purchase the
air nghts and develop the project In the Option Agreement between the City and JFC, the
agreed-upon sale price for the air nghts was $2.25 million The June 15, 1993 City
Council staff report made clear that the revenue from the proceeds from the sale of air
rights would be used to pay for the cost of replacing the eXisting 165 public parking spaces
In a new parking structure and to pay the Parking Authonty for the loss of parking meter
revenue dUring construction. Thus, the cost of the parking structure Will be fully offset by
the sale of air nghts
Staff estimates that the cost of constructing the parking structure (Including development
costs, environmental mitigations, off-site Improvements, project and construction
management services, and any required testing) together with the cost of paYing the
Parking Authonty for the loss of parking meter revenue during construction Will be
approximately $2 25 million.
It IS anticipated that construction Will begin on the public parking structure portion of the
project In the early spnng, 1998, although this IS subject to change depending upon the
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status of the legal challenge to the project However, the proceeds from the sale of air
nghts will not be available until the closing of the HUD loan, which will not occur until a few
months after start of construction of the parking structure Before HUD can close its loan
and disburse payments for construction of the housing project, a .platform" must be In
place for the hOUSing project In the case of this project, the .platform" consists of the
parking structure Therefore, a large portion of the pubhc parking structure must be bUilt
before the HUD funds are available to construct the hOUSing project Construction funds
for the structure could be made available by the City as described below until the time of
the HUD closing when the proceeds from the sale of air rights can be used to reimburse
those expenditures
Staff recommends that funds be made available temporarily for that purpose from the
CitYWide Housing Trust funds. Under all four trust fund guidelines, use of the program
funds IS limited prlmanly to construction and rehabllltatlon of affordabJe housing and
associated predevelopment activities. In order to use the funds to construct the public
parking structure which Will serve as a platform for the Fourth Street Semor Citizen proJect,
the trust funds requirements must be waived Staff recommends that this be done on a
one-time baSIS only It IS Important to note that all funds expended on the public parking
structure Will be fully replenished to the housing trust funds upon the clOSing of the HUD
loan and receipt by the City of the proceeds from the sale of air fights
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Waiver of Public Biddina Reauirements for Public Parkina Structure
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Section 2 24 071 of the Municipal Code requires that every contract involving an
expenditure of more than $25,000 for public works proJects, including the construction of
public bUildings, be let to the lowest bidder after appropnate notice In a newspaper of
general circulation. Staff believes that the public parking structure proposed to be built
under the Fourth Street Project falls under the definition of a public works project and is
therefore subject to the requirements of MuniCipal Code Section 2 24071
For reasons outlined In detail below, staff believes that applYing the City's pubhc bidding
reqUirements to thiS proJect would Significantly increase the costs of the project and extend
the schedule, perhaps to the pOint of losing HUD funding. Therefore, staff recommends
a waiver of the CIty'S bidding requIrements for the project. Under Section 2.24 071 (d) of
the Municipal Code, by two-thirds vote the City Council may grant a waiver from the
bidding requirements when It finds that, YThe goods or services can be purchased more
economically on the open market" (Section 2 24 071(d){1)) This circumstance clearly
applies to thiS project.
Due to the nature of the HUD regulations governing funding for the parking structure, the
project must necessanly involve two phases, Including the publiC parking structure as
phase I, and the reSidentIal project as phase" However, only the public parking structure
is subject to the City's bidding requirements under MUnicipal Code Secbon 224.071
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Funded pnmanly by HUD, the housing project IS not a public works project HUD does not
require open public bidding. Therefore, If the City were to apply its bidding requirements
to the public parking structure, there IS a significant risk that two separate contractors
ultimately would be selected to construct each of the two project phases. The
disadvantages of haVing separate contractors for each phase have to do with coordination
and timing, which In turn affect costs. Those Implications are described in greater detail
below
Coordination and Costs
On the Fourth Street Project, there will be many Interrelated systems between the parking
structure and hOUSing project which will reqUire careful coordination If this coordination
IS not done properly, it could cost the proJect time and money. For example, the conduits
and "sleeving" for the plumbing, sewer, and electrical service to the housing project will
come directly up through the parking structure Also, a holding tank must be Installed
underneath the parking structure In order to contain storm water runoff generated primanly
from the hOUSing project A smgle contractor responsible for both phases Will have a
greater stake In understanding the relationship between the first and second phases and
Will therefore take measures to ensure proper coordination If two separate contractors
are used, and if as a result Interrelated bUildings systems are not properly coordinated,
this could lead to timing and costs overruns, as well as overall liability and bonding
problems.
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During the development of a similar air rights project In the City of Beverly Hills, the
developer used separate contractors for the two project phases Mistakes were made In
the fittings between the two project phases, ultimately resulting in $250,000 In remedial
repal rs
Another potential coordination problem associated with two general contractors Involves
the use of subcontractors It is likely that the subcontractors for the first phase Will be
different from the subcontractors for the second phase Once again, this could adversely
affect coordination between the two phases On the other hand, if one general contractor
IS used for the entire project, the selection of subcontractors for both phases can be done
Simultaneously, thereby Significantly Increasing coordination between the two phases.
Project Schedule and Timing
The timely development of the proposed project is Important for several reasons. First, the
longer it takes to bUild the parking structure, the greater the loss of parking meter revenues
and cost of compensating the Parking Authority for this loss of revenues Secondly, it IS
commonly understood that longer construction periods add to project costs Thirdly,
because thiS project has already had a four-year old funding reservation from HUD, HUe
has made It clear that their continued commitment to the prOject hinges upon its timely start
of construction As Indicated, the housing portion cannot begin until the parking structure
IS substantially complete. Therefore, If construction does not begin on time, HUD Will no
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longer be required to fund the proJect. HUD has indicated that If construction start-up IS
delayed, it will pull their financing, thus killing the project
The selection of subcontractors has timing as well as coordination implications. The
selection process for subcontractors usually takes several weeks If two separate
selection processes occur, the time needed for bidding would double, potentially adding
several weeks to the proJect schedule
HaVing separate contractors for each phase would affect the project schedule In another
way If two separate contractors are used, for liability reasons it is unlikely that the
contractor for phase I would be Willing to allow the contractor for Phase II to begin work
until the work on phase I IS complete With a Single general contractor, start of
construction on phase II could begin prior to completion of phase I, thereby compressing
the project schedule.
Between the extra time needed for two subcontractor selection processes and the
addItional time needed to complete phase I before starting on phase II, It IS estimated that
the use of separate general contractors to bUild each phase of the project would add an
additional six (6) months to the project schedule This would significantly add to the costs
to the City, both in terms of project development costs as well as the costs of making up
lost parking meter revenues.
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It should be emphasized that waiving the bidding reqUirements by no means eliminates
competitive bidding for this project While the developer would enter Into a negotiated
general contract With a single contractor, this contractor would be required to get a
mInimum of three competitive bids for each line Item In the development budget
To summanze, by waiving the CIty'S bidding reqUirements for the public parking structure,
the developer can select a single general contractor to develop the entire proJect, which
would in tum ensure significantly greater coordination between the project's two phases;
significantly reduce the time-and therefore costs-needed to construct the project; and,
significantly Improve coordination between the construction of the two phases, sparing the
project from potentially significant cost overruns
Therefore, staff recommends that the City Council adopt the attached Resolution
authOriZing the City Manager to forego the bidding procedures otherwise reqUired by
Section 224071 on the basis that the services necessary to construct the public parking
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structure can be purchased more economically on the open market.
FINANCIAUBUDGETARY IMPACTS
As specified below, existing budget authority will be used to construct the parking
structure
Account Number
Amount
01-720-264-20095-8905-99229
01-720-264-20095-8905-99710
TOTAL
$1,232,029
$1.017.971
$2,250,000
These funds will be reimbursed to the City once HUD escrow closes
RECOMMENDATIONS
Staff recommends that the City Council:
a) Authorize staff to amend all four City Housing Trust Funds to permit the option
to administratively waive of the City requirement for a Regulatory Agreement and
to eliminate the Borrower's option to request an extension of the term of the City's
loan In lieu of loan repayment in the case of all projects funded under the HUD
Section 202 and Section 811 Programs;
b) Waive Citywide Housing Trust Funds Guidelines, on a one~tlme basis only, to
permit as an eligible activity the construction of the public parking structure to be
constructed under the Fourth Street Senior Citizen Housing Project and to pay the
Parkmg Authority for the lass of parking meter revenue during construction,
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c) Adopt a resolution with findings to forego public bidding procedures for
constructIon of the public parking structure to be constructed under and as the
foundation for the Fourth Street Senior Citizen Housing Project
Prepared by
Jeff Mathieu, Director of Resource Management
Robert Moncnef, Housing Manager
Tad Read, Senior Development Analyst
Marsha Moutrie. City Attorney
Linda Mills-Coyne, Deputy City Attorney
Attachment A.
Attachment B.
HUD Section 202 Capital Advance Program Regulatory Agreement
Resolution of the City Council Authorizing a Waiver of Bidding
Requirements for Public Works Projects Pursuant to MUnicipal Code
Section 2.24071 (d)(1) for Construction
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ATTACHMENT A
TIus agreement entered mto lius
whose address
heremafter called Mongagor. and me undersigned Secretary of HOUS1Og and Urban development heremafter called HUD
Capital Advance Program
Regulatory Agreement
Housing for the Elderly or HandICapped (Nonprofit)
Section 202 of the Housing Act of 1959 or Sed !On 811 at
the National Affordable HouSIng Act
day of
In consu1eratlon of me makmg of the capual advance by HUD and
the disbursement of any pan thereof. and m order ro comply With
therequarements of the Housmg Act ofl959 or NauonaJ Affordable
Housmg Act of 1990 and the Regulauons adopted by the Secretary
pursuant thereto. the Mortgagor agrees for lIself.lts successors and
assigns. and any owner of the mortgaged property. that 10 connec-
tion With the mortgaged property and me project operated thereon
and so long as the capital advance IS outstanding
The Note and Mortgage bear no mterest and repayment IS not
requued so long as the housmg rernams available for very low-
mcome elderly persons or very low-mcome persons With
dtsabilitles (wtuchever IS applICable)
2 Mongagor wdl establISh and nwntam a specaaJ fund to be
known as Ihe revenue fund account Ul a bank which IS a
member of we Federal Deposu Inswance Corporcluon, Sav-
mgs Assoclallon Insurance Fund. or the NahonaJ Credll Uruon
Share Insurance Fund. 1Oto wluch Will be depoSited all rentals,
charges. InCome and revenue ansmg from the operation or
o\VJI.erslup of the projeCt The bank: m wJuch tlus account IS
estabhshed shall proVide collateral acceptable to HUD to equal
themaxunum amount 10 me accowllat anyone tune when such
amount exceeds $100,000 If me bank w1l1 not proVide
appropnate collateral m such mstances. the Mortgagor will be
requued to estabhsh accounts 10 two or more banks so that the
lOW amount on deposu at any bme does not exceed $100,000
m anyone bank: Expenduures shaU be made from the revenue
fund account only 10 accordance With me operatmg budget
subnuued to and approved by HUD
3 Not laretlhan 30 days pnortothe begmmng ot each fiscaJ year,
the Mortgagor shall submu an operaUng budget for that fiM:.u
year to HUD The budget shall mclude aU necessary operaung
expenses. current mamtenance charges. expenses of reason-
abje upkeep and repau'S. taxes and specaal assessment levies.
prorated amounts requited for msurance and all other expenses
mCldent to the operation of the project. and shall show the
expected revenue to pay such expenses, Ulcludmg reserve fund
depoSits The expenses Ulcurred and dtsbursements shall not
exceed the reasonable and necessary amount Ihereof, and the
Mortgagor will nol expend any amount or mcur any obl1ga-
uons In excess of the amounts approved In the annual operatmg
budget except upon wnuen certification by the Mortgagor to
HUD that such expenses were unantJClpatedand are necessary
and proVided further. that nothmg 10 dus section shalllumt the
U.S. Department of Housing
and Urban Development
OffICe of Housing
Federal Housing Commissioner
19
. between
amount wtuchthe Mongagormay expend from fundsobtamed
from some other source than project revenues or other funds
requued of the Mongagor pursuant to llus Agreement or the
Capital Advance Agreement
4. As secunty for the Capital Advance (or tile required paymenls
Wlder tJus Agreement mto the reserve fund for replacements.
and for all ocher obhganons of the Mongagor Wlder thiS
Agreement. the Mortgagor hereby assigns. pledges and mort.
gages to HUD ail ItS nghts to the mcome and charges of
whatever son winch It may receive or be enbtled to receIVe
from the operahon of the mongaged property, subject. how-
ever. to any assignment of cenlS or project mcome m the
Mortgage referred to herem Until a default occurs under thiS
Agreement. however. pemllsslon IS granted to Mortgagor to
collect and retain under the prav 1S10hS of t1us Agreement such
rents. Income, operatII1g surplus and charges. but upon default
thiS permISSIon IS temunaled, as to all rents, Ulcome. operaung
surplus and charges due or collected thereafter.
5. (8) Mortgagor will estabbsh and mamtaUI a reserve fund for
replacements m a separate account to a bank winch IS
msured by the Federal DepoSit Insurance Corporation,
Savmgs Association Insurance Fund, or me Nauonal
Credit Uruon Share Insurance Fund Concunently Wtth
me effective commencement of rental assistance pay-
ments Wlder the Project Renw AssIStance Contract, We
MOClgagor will deposit an amount equal lO $
per month Wlless a dIfferent d~!~ or amOWlt IS approved In
wnung by HUD.
Such fund, whether In the fonn of a cash depoSit or
Invested U1 obhgatlons of, or fully guaranteed as to
pnnclpal by ,the Uruted States of Amencashall at ail tunelo
be subject to the control of HUD DISbursements from
such fund. whelher for the purpose of effectmg replace-
ment of SlnJctural elements and mechamcal eqUIpment of
the project for any other purpose. may be made only after
Ihe consent 10 wntmg of HUn In the event of a defaull
m the terms of the mongage. HUD may demand the full
or panaal apphcatlon of the balance m such fund to be
amOWlt due on the mortgage debt
(b) Mongagor will depoSlt the mmunum capital mvesunent
With an escrow agent acceptable 10 HUD purusant to
Regulations
(c) Wlthm 60 days after the end of each fISCal year. any
Page 1 01 5
tonn HUD.92466-CA (4192)
rpl HMdbook 4571 4 & 4.0;71 5
resIdual receipts. realized from the operal1on of the mort-
gaged propeny shall be deposlled in a separate residual
receipts account. Residual receipts shall be under the
control ofHUD and shall be dIsbursed only at the dlscre-
Ilon of HUn for su(,h pllIJlOSt: as it may delenTl1ne to be
necessary or appropnate
6 The real property covered by the Mongage and thiS Agreement
1S deSCribed m Schedule A attached hereto
7 Mortgagor shall not Without the wntten approval of the
Secretary ,
(a) Transfer, dispose of or encumber any of the mortgaged
property A1ly such transfer shall be only to a person or
persons or corporallon sausfactoJ)' to and approved by
HUD, who shall, by legal and vahd Instrument In wrllmg.
to be recorded or filed In the same recordmg office m
wruch conveyances of the properly covered by Lhe Mort-
gage are reqUired to be filed or recorded. duly assume all
oblJgatJons under tlus Agreemenl and under the Note and
Mongage.
(b) AsSign. transfer. dispose of, or encumber any personal
property, mcludmg rents orcltarges. and shall DordlSburse
or payout any funds except as proVided herem and m Ihe
CapllaJ Advance Agreemenl
(c) Remodel. reconsuuct, add 10, or demolish any part of [he
mongaged property or subtract from any real or pen-onal
properly of the project;
(d) Pay any compensauon or make any dlsUloollon of mcome
or other assets to any of Its officers. directors or stockhold-
ers.
(e) Emer mro any contract or contracts for SUpervISOry or
managenal servIces,
(f) ReqUlreasa condmon ofoccupancyorleasmgofany umt
or reSIdential space m lhe prOJecf. any conslClerauon or
deposit other than a secunty depos1t m an amount equal
to one month's total tenant payment or $50. wluchever IS
greater The family IS expected 10 pay thesecumy deposit
from Its own resources and other available pubhc or
pnvale resources The Mongagormay collect the secunty
deposit on oUI lru.tallmem bill>IS
The secunty deposlls musl be placed m a segregaled
mterest-beanng account A record shall be mamtamed of
the amowll m ttus account that IS annbutable to each
family III reSidence In the project Annually for all
fatmhes. and when computmg the amount avadable for
disbursement. the Mongagor shall allocate 10 lhe famJl y . ~
balance, the mterest accrued on the balance dunng lIle
year Unless prohIbited by State or local law.
theMongagormay deducI for the family. from the accrued
mterest for lhe yeM. the ddnuDlstrallve cost of compulmg
the allocauon to the famtly' s balance The amount of the
adImmstralive cost adjustment shall not exceed the ac-
crued mterest allocated 10 the family's balance for the
year. The amount of the segregated. mterest-beanng
account mamlaIJJed by Ihe Mortgagor must at aU tunes
equal the lotal amount collected from the fanultes then Ul
occupancy plus any accrued mterest and less allowable
adrnmlStrlluve cost adjusunents The Mongagor must
campi y w ilh any applicable State and local laws concem-
109 mlerest payments on security deposItS.
The Mongagor, subject to Stale and local law . may use the
famLly's secunty depoSit balance as reunbursement for
any unpaW famdy conmbulLOn or other amount Whllh lhe
faImly owes under the lea<ie in accordance WIth the
Regulations
(g) Pennn the use of the dwellmg accommodatlon~ 01 the
project for any purpose except the use which was ongl-
nail y mlended. or penmt commercial use greater than that
ongmally approved by HUD
(h) Amend Its articles of mcorporauon or by-laws other than
as penruted under the terms of the amcles of mcorporatlon
approved by HUD
8 Mortgagor shall mamlam the mortgaged premISes, acconuno-
dalloru; and me grounds and etjulpment appunenant thereto. In
good and subslanual repalf and candlllon, provided that, 10
the event all or any of the buddmgs covered by the Mongage
shall be destroyed or damaged by fire or other casually. the
money denved from any Insurance on the propeny shall bt:
apphed In accordance With the terms of the Mongage
9. Mortgagor shall not file any petlllon m bankruptcy or m~ol-
vency. or for a receIVer. or for reorgamzauon or compasJllOn,
or make any asslgrunent for the benefit of creditors or to a
trustee for creditors: or pennlC an adJudtcation U1 bankruPICY,
or UlSQlvency. the takmg possessIOn of the mortgaged property
or an y part thereof by a receiver. or the seiZure and sale of the
mongaged property or any part thereof under JUdiCial process
or purusant to any power of sale and fad to have such adverse
acnons set asIde wlllun 45 days.
10 Mortgagor shall from funds other than project mcome Imme-
diately satisfy or release any mecharuc' s hen, or any other hen
which auaches 10 themongaged propeny oranypersonaJ prop-
erty used m the operauon of the prOject. and shall dlSl1Uss or
have dIsmissed or vacaled any recewerslup. or petition In
bank-ruptcy or assignment for benefit of ue(htors. crednon.
bill or Insolvency proceedmg Ulvolvmg the project or the
mongaged property
I 1 (a) If the Mortgagor has or comes to have any nonprojeCI
funds. all mcomeand other funds of the mortgaged project
shall be segregated from any such funds of Ihe Mortgagor
and segregated from any funds of any other corporallons
or persons Income and other funds pledged [0 the
mortgaged proJCc I shall be expended on] y for the purposes
of the project
(b) Mongagor shall proVide for the management of the
project sallsfaclory to HUD Any management contract
entered 1010 by the Mortgagor mvolvmg the prOject shall
Page 2 of 5
form HUD-92466-CA
...f Hl'Indhnok X)(YX Y
contaln a provl::.lon th.lt u shall ~ ~ubJl:ct lO lenmnallon,
wuhout pen....lly dI1d wlIh or wlIhoUl cause. upon wnllen
request by HUD addressed to the Mortgagor and me
management agent. Upon receipt of suclI request the
Mongagor shallunmedlately move to !ennUlate the con-
tract wuJun a penod of not more than 60 days and shall
make arrangements sauSfSClory to HUD for conunumg
proper management of the project.
(c) Neither Mortgagor norUs agents shall make any payments
for services, suppltes or matenals unless such servlCes are
aclUaUy rendered for the project or such supplies or
matenals are delIvered to the project and are reasonably
necessary for Its operauon. Payments for such services Or
matenals shall nOl exceed the amount ordmanly prod for
such services, suppbes or matenals m the area where the
services are rendered or me suppbes or materials fur-
mshed
(d) The mongaged property. eqUipment, bUlldmgs. plans,
offices, deVices. books. appar.ttus. conuaCb. rel.Ordll,
documents. and all other papers relallng thereto sh.dl at all
urnes be mamlaH1ed m reasonable condman for proper
audu and subject to exammatlon and lRspeclJon at any
reasonable (lme by HUD and Its duly authonzed agents
Mortgagor and Its successors, asSlgns or ItS agents shall
retalJ\ caples of all wntten conuaclS or other lnSlrUments
wluch affect the mortgaged propeny, all or any of which
may be subject 10 mspecllon and exammallon by H UD or
liS duly aumonzed agents.
(e) The books and accounts of the operal1ons of the mort-
gaged property and of the projeCI shall be kepi lR accor-
dance With the reqUirements of HUD
(0 Within 60 days foUowmg the end of each fiscal year HUn
shall be furrushed WIth a complete annual fmanclal report
based upon an exammatlon of the books and records of
Mortgagor prepared m accordance With the ~Ulrements
of HUD. certified to be an officer of me Mortgagor and.
when requITed hy HUD. prepared and certified by ..
Certified Public Accounldl1t, or olher person aCL.cpled 10
HUD
(g) Althe requclll 01 HUn.llS agenll> , employeell. or attorneys.
the Mongagor shall give specllu.. answefl> 10 4UellllOnl>
upon which mfonnatlon IS desued from LUne to tune
relative to the mcome, asseLS, habdlt1es. contracts. orera-
lion. and condJUon of the property and the starus of the
Mortgage and any olher mfonnatlon wllh respect to the
Mortgagor or the mortgaged property and of the projeLt
wtuch may be requesled
(h) All receipts of the project shall be deposited III the name
of the project m a banJ... whose deJX>Sus are llISured by the
FDIC. Savmgs ASl>oclatlon Insurance FWld. or lIle Na-
IlOna] Credit Uruon Share Insurance Fund Such funds
shall be withdrawn ani y ID accordance With the pro VISions
of tlus Agreemenl for expensel> of lite project My person
recelvmg funds of lhe project shall unmedlalely deposll
such funds 10 the proJCCl bank account and fadmg W 10 do
10 vlolatlon of dus Agreement shall hold such lunlb m
UUst Any person recelvmg property of the project m
vlOlallOfi of filS Agreement shall unmeduueJy cJehver
such property to the projCct and frohng so to do shall hold
such property m trust
(I) Mortgagor shall at alltunel>,lf reqUIred by the laws of the
Junsdtcuon. mamtam m full force and effect a bcense to
operate the project from lite S lale and/or other hcenmg
authonty. Mongagorshallleaseany pornonofthe project
only on tenns approved by HUD
(j) Mortgagor shall not collecl from lenants or occupanlS or
prospecllve lenams or occupants of lite project any admlll-
Slon fee. founder's fee, hfe-care fee. or sundar payment
pursuant to any agreement. oral or wnuen, whereby the
Mongagor agrees to funush accommodatlons or services
m the projeCt to persons malang such payments
(k) No officer, dIrector, lIlIstee. member, stockholder nor
aulhoflzed represenlabve of me Mortgagor excepl for
management by sponsor or non-profit affiliate, shall ha w
any fmanclal mtecest m any conuactural arrangement
entered mto by the Mortgagor m connecl1on With rendl-
uon of serVices, the proVISJon of goods or supphe~.
management of the projeCl, procuremenl of !he sue or
other matters whatsOever
12 (a) If pmJectlS funded under Secllon 202 of me Housmg Act
of 1959. as amended, Mongagor wdllumt pubhc OLCU-
pancy of the project to elderly fanulles and mdlvlduals w.
dermed 10 Secllon 202 of the Housmg Act of 1959. and
applicable HUD Regulations. If project IS funded under
Seellon 811 of the Nauonal Affordable Housmg At..t of
1990, Mongagor wlll hrmtpubl1c occupancy of tile project
to persons wuh dlsablliues as defmed ill Sectlon 8n of lhe
Nallonal Affordable Housmg Act of 1990, and appbcable
HUD Regulations. The cntena govenung ehglbtluy 01
lenams for adrmsslon lo Secuon 202 or Secuon 811 uml.!.
and the conwuons of cOnlmued occupancy shall be m
accordance wlIh the Project Rental AsSIstance COnlrOCl
(b) Except as proVided m (d) below Mortgagor will make Us
dwelling accommodations and serviCes avadable to ch-
glble occupants at charges estabhshed 10 accordance wllh
a schedule to be approved m wnung by HUD Such
acconunodabons shall not be rented for a penod less than
30days Commerc13l faclhues.lf any. shall be rented only
m accordance With a schedule of charges fixed by !he
Mortgagor and approved m wnung by HUD Subleasmg
of dwelling accommodauons or commercial factllues
shall be penmned only upon !he lerTIlS and condUlOns
approved by HUn m wrnmg
(c) Upon pnor wnuen approval by the Secretary. Mortgagor
may charge to and receive from any tenant such amount>
as from tune 10 tune may be mutually agreed upon
between the tenanl and the Mortgagor for any facllmes
and/or services which may be funushed by the Mortgagor
Page 3of5
form HUD-92466-CA
or others to such tenant upon request, III addluon to the
facllmes and serVices mcluded III the approved ProjeCt
Rental ASSistance Conuacl.
(d) Nothing conuuned m dus Agreement shall be conslrued to
reheve the Mortgagorot any obII gallOns under Ute ProjeCt
Rental ASSistance Contract
13 Mortgagor Will comply wIlh lhe proVISIOns ot any Federdl.
SUlteor local law prohlblUng dlscnmmatlon III housmg on the
grounds of race. color. creed. age. sex. handicap. famlJtaJ
status or natIOnal ongm. mcludmg Tille VI of the C Ivtl R1ghts
ACI of 1964 (42U S C 2000d-l), the Fau Housmg Act
(42U S.C 3601), Seellon 504 ot the Reha.b1l1tallon Act of
1973(29U.S C 794). Age Dlscnmmatlon Act oj
J975(42U S.C.6IOJ) Executive Orders 11063 and U246. Section
3 of lhe HOllsmg and Urban Development Act of 1968. and the
affIrmauve fair housmg marketmg requirements at 24CFR
part 200. subpart M
J4 No l1ugauon seeJang !he recovery of a sum m excess of$5.000
nor any acuon for spectfic performance or other equnable
rehef shall be mstuuted nor shall any claun for a sum In excess
of $5,000 be settled or compromIsed by the Mongagor unless
pnor wntten consent thereto has been obtaIned from HUD
Such consent may be subjeCt to such teoos and condUlOns as
HOD may prescnbe
l'i Upon a ViolatIon of any of the above prOVIsions 01 Ibl!>
Agreement by Mongagor. HUD may give wnuen notice,
thereof. to Mongagor. by reglsrered or certIfied mad. ad-
dressed to the address stated In thts Agreement, or such other
address as may subsequently, upon appropnate wnuen nollce
thereof to HUD, be deSIgnated by the Mongagor as Its legal
busmess address If such violation IS not corrected 10 !he
sausfacuon of HUD wuhm 30 days after the dale such notlce
IS mailed or wlthm such further hOle as HUD detennmes IS
necessary to correct the vlolauon. Without further notIce H UD
may declare a Default under tlus Agreement effective on the
date of such declaration of default and such default HUD may
(a) Take possession of the project. brmgan)' action necessary
to enforce any nghts of ll1e Mongagor growmg out of the
proJect operauon. and operate the project m accordance
wllh the terms of thiS Agreement until such lIme as HUD
In Ib dJscreuon detennmes that the Mongagor 1$ dgdUl III
a posUlon to operate the project 10 accordance WIth the
tenns of tJus Agreemem and mcomphance with the re-
quuementsof Ute Note and Mortgage. or requIre Power ot
Anomey from Mongagor to etfecOJate uansfer of the
project to a HUD approved nonprof1t corporatIOn
(b) CoUect all rents and charges In connectIOn Wllh the
operatIOn of the project and use such collectIOns to pay the
M0l1gagor's obligations under this Agreement and under
the Note and Mongage, and the necessary expenses of
preservmg !he propeny and operalmg the project
(c) Declare the whole of Said mdebtedness unmedl3tely due
and payable and then proceed with the foreclosure of the
mortgage
(d) Apply to any coun, Stale or Federal. for specific perfoon-
ance of thts Agreement. for an InJunctlon agamsl any
violation of chi!> Agreement, for the appomnnent of a
receiver W take over afKl operate me propeny m at-cor-
dance WIth the tenns of thIS Agreement. or for such other
rehef as may be appropriate, since the injUry to HUD
ansmg from a default Wlder any of the tenns of thil>
Agreement would be ureparable and the amount of dam-
age would be difficult to ascertaUl
(e) ReqUlre the Mortgagor to transter all of Its nghe ttck and
mterest m the project and to aU project assets to a pnvate
nonprofit corporauon deSignated by HUD and. lor thll>
propose the Mortgagor hereby conStitutes am:! appomb
HUD its true and lawful anomey-m.facl. With full power
of subStlruhon m the preJntses. (0 transfer the project and
all project assets to the pn vate nonprofit corporal1on
deSignated by HUD. 1f the Mongagor tads or refuses to
make such a transfer as requlfed by HUD
16 (a) Mortgagor has executed the Project Rental ASSIMUJl(.e
Contract The terms of the PrOject Rental Asslstant.e
Contract, when executed, shall be meorporared by refer-
ence mto dus Regulatory Agreemenr
(b) A vlolallon of rite PrOject Reneal AsSistance ContraCt may
be constnJed to constitute a default hereunder In the sole
dlscreuon of HUD.
(c) In the event said Project Rental ASSIstance Commet
expIres Of tennmares betore the e;,: plrallon or tennm3uon
of thiS Agreement. the prov1slons of Uns paragraph and
~IJlY o!her reference to SiUd Contr det, and to asStsted unib
conramed herem shall be self-cancellmg and shall no
longer be effectlve as of the date of the explratlOn or
tennmallon of the Project RentaJ AsSistance Contr dl..l
17 A5 used ill tins Agreement the term
(a) "Default" means a default declared by HUD when a
VIOlation of this Agreement IS not COrTected to Its sallsfac-
tlon wlthan the Ume allowed by thIs Agreement or such
further tune as may be allowed by HUD after wnuen
nouce,
(b) "DlsmbutJon" means any withdrawal or takmg of c~h or
other assets of the project other than for payment of
reasonable expenses ancJdentto JIS consl11.JCllon, opera-
uon and matntenance,
(c) "Mortgage" mcludes "Deed of Trust", "Chattel Mort-
gage" Declarallon of Covenants" and any other secunty
for the Note Identified herem;
(d) "Mortgaged Property" mcludes propeny, real. personal.
or mixed, covered by the mongage or mongages securmg
the note held by HUD.
(e) "Mortgagee" refers to the holder of the mongage Identi-
fied herem. IlS successors and assignS.
Page 4 01 5
form HUD.92466-CA
(1) "ProjCCt"lOcludes the mortgaged property aru1 all Ib other
assets or whatsoever SltuaIt, used m or owned Ily the
busmess conducted on saId mortgaged property.
(g) "Residual ReceIpts" means any cash remauung after,
(I) The Payment of.
(I) All amounts reqUIred to be depoSited m the
reserve fund for rep)acemenlS;
(n) All obligations of rhe project other than the
mongageheld by HUD unless funds for payment
are set aside or defennent of payment has been
approved by HUD, and
(2) The segregalJon of.
(I) An amount equal to the aggregate of all speCIal
funds requIred to be mamtaUled by the projeCt.
(II) A11tenanl secumy depOSIts held.
(h) "AsSisted UrulS" refer lO uruts assisted pursuant 10 PrOjeCl
Rental AssIslallce Contract.
(I) "AsslSlaJlce ContraCt" refers to a Project Renlal
AsSIstance Contract between the Mongagor and
HUD under Sectlon 202 of the Housmg Act of
1959 or between the Mongagor and HUD under
Section 811(d)(2) of the National Affordable
Housmg Act of 1990
Unllcd States of Amenca
Secretary of HOUSing and Urban Development (Signature)
By (Name)
Official Tille
Dale
J 8 Hun shall not be liabJe for any of us actions hereunder except
for arbItrary and capnclOus conduct
19 ThJs UlStrument shall bmd. and Ole benefits shall mure to, the
respective pames hereto, thelT legal representatives, execu-
tors, adnllrustralors, successors In office or lDleresl, and &-
signs. and aU owners of me mortgaged propeny. so long as the
Mortgage IS outstandmg
20 The lDValu:bty of any clause. part or proVISion of thiS Agree-
ment shall not affect the vabdny of the remammg ponlOns
thereof
21 Mongagor warrants tbatlt has not. and Will not. execute any
other agreement With proVISIOns contradictory of, or m oppo-
SItion to. the proVISiOns hereto. and that. m any evenl. the
requJrernents ofdus Agreement are paramount and comrollmg
as to the nghts and obhgauons set forth and supersede any other
requuements m confhct therewith
22 Mortgagor does not assume personal habllll y for paymenlS due
under the NOle and mongage or for payments 10 the reserve for
replacemenl fund However, defaults or other fadures (0
fonow program requIrements may result m lumted demal of
partICipation or debannent from HUD or orner Federal pro-
grams
23 Mortgagor shall have avaIlable necessary equIpment or de-
vIces and make reasonable accommodations (0 meel the needs
of persons With VISUal and/or hearmg unpamnents m compli-
ance With SeCllon 504 of the Rehabllnatlon Act of 1973 (29
V.S.C. 794) and 24 CFR Part 8
Owncr(Slgnature )
By (Name)
Official ntle
Date
Page 5 of 5
torm HUD-92466-CA
ATTACHMENT B
F:housinq/share/wpfiles/devprojs/4thst202/bidreso
City Council Meeting 9/16/97 Santa Monica, California
RESOLUTION NO.
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA
AUTHORIZING A WAIVER OF BIDDING REQUIREMENTS
FOR PUBLIC WORKS PROJECTS
PURSUANT TO MUNICIPAL CODE SECTION 224 071(d)(1)
FOR THE CONSTRUCTION OF A PUBLIC PARKING STRUCTURE
ON LOT 4 LOCATED AT 1116-1146 FOURTH STREET
WHEREAS, the City of Santa Monica Will develop at the cost of approximately
$2,250.000 a 165-space parking structure on Lot 4 Jocated at 1116-1146 Fourth Street to
replace eXisting public parking spaces and to prOVide a foundation for a 56-unit HUD
Section 202 Program project for senior cItizens, and,
WHEREAS, Section 2.24071 of the MUnicipal Code requires that every contract
InvolVing more than Twenty-Five Thousand Dollars ($25,000,00) for public works projects,
including public bUildings, shall be let to the lowest responsible bidder after notice by
publication In a newspaper of general Circulation In the City of Santa Monica, and,
WHEREAS, pursuant to Section 2 24 071 (d) of the Municipal Code, the City Council
may by two-thirds affirmative vote of Its membership, forego the bidding procedures
othel'Wlse reqUired by Section 2.24.071 of the MUnicipal Code If the City Council finds that
the goods or services can be purchased more economically on the open market; and,
1
WHEREAS, the City Council finds that by foregoing the bidding requirements for
public works projects for development of the public parking structure on Lot 4, the public
parking structure can be constructed more economically because the developer of the
senior housing proJect may select. a single general contractor to JOintly develop the senior
housing project and the public parking structure on behalf of the City, which will result In
greater coordination between the construction of the public parking structure and
construction of the senior housing project, thereby significantly redUCing both the time and
costs to the City In developing the public parking structure
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AND ORDER AS FOLLOWS
SECTION 1. Pursuant to MUniCipal Code Section 2 24 071 (d}{1), the City Council
hereby authonzes the City Manager to forego the bIdding procedures otherwise required
for public works projects for the development and construction of the public parking
structure to be located upon Parking Lot 4
APPROVED AS TO FORM
~~
City Attorney
2