Community Redevelopment Agency of Ih. CITY OF LOS ANGELES

Transcription

1 Community Redevelopment Agency of Ih. CITY OF LOS ANGELES DATE I MAR 7 20n FILE CODE I 1200 West 7th Street I Suite 500 Los An9.eles I California 90d17-2j81 T I F Honorable Council of the City of Los Angeles John Ferraro Council Chamber 200 N. Spring Street Room 340, City Hall Los Angeles, CA CRA File No Council District: 14 Contact Person: D. Rios Phone # COUNCIL TRANSMITTAL: Transmitted herewith, is a Board Memorandum adopted by the Agency Board on March 7, 2011, for City Council review and approval in accordance with the "Community Redevelopment Agency Oversight Ordinance" entitled: VARIOUS ACTIONS RELATED TO: First and Evergreen. Approval of Grant agreement not to exceed $2,100,000 to provide funds to East LA Community Corporation to pay for predevelopment and acquistion costs associated with purchase of property for a potential affordable multifamily housing project located at East First Street in the Adleanted Eastside Redevelopment Project Area. EASTSIDE REGION (CD 14) RECOMMENDATION That City Council approve(s) recommendation(s) on the attached Board Memorandum. ENVIRONMENTAL REVIEW The proposed property acquistion will be undertaken pursuant to State of California Environmental Quality (CEQA) Guidelines Section (b)(2)(A), which allows agencies to enter into land acquistion agreements when the agency has conditioned the future use of the site on CEQA compliance. Future use of the property will be subject to subsequent environmental review pursuant to CEQA and Agency approval of the project. FISCAL IMPACT STATEMENT There is no fiscal impact to the City's General Fund, as a r Christi cc: Sharon Gin, Office of the City Clerk (Original & 3 Copies on 3-hole punch) Lisa Johnson Smith, Office of the CAO Ivania Sobalvarro, Office of the CLA Steve Ongele, Office of the Mayor

2 cc: Noreen Vincent, City Attorney's Office

3 THE COMMUNITY REDEVEI..-...IPMENTAGENCY OF THE CITY OF L,...-:>ANGELES, CALIFORNIA MEMORANDUM DATE: MARCH 7,2011 EA1990 TO: era/la BOARD OF COMMISSIONERS FROM: STAFF: CHRISTINE ESSEL, CHIEF EXECUTIVE OFFICER DAVID RICCITIELLO, REGIONAL ADMINISTRATOR DAN RIOS, ASSISTANT PROJECT MANAGER ARMANDO PENA, SENIOR HOUSING FINANCE OFFICER SUBJECT: First and Evergreen. Approval of Grant Agreement not to exceed $2,100,000 to provide funds to East LA Community Corporation to pay for predevelopment and acquisition costs associated with purchase of property for a potential affordable multifamily housing project located at East First Street in the Adelante Eastside Redevelopment Project Area EASTSIDE REGION (CD 14) RECOMM ENDATIONS That the CRA/LA Board of Commissioners, subject to City Council approval: 1. Authorize the Chief Executive Officer (CEO) or designee to negotiate and execute a Grant Agreement with the East LA Community Corporation for an amount not to exceed $2,100,000 of Adelante Eastside Low and Moderate Income Housing Funds in Budget Line Item Affordable Housing (Objective AE 1990) to pay for acquisition and predevelopment costs associated with the future development of an affordable multifamily housing project to be located at East First Street; and 2. Waive the CRA/LA Conditional Grant Policy provisions requiring repayment, a promissory note and 25% matching requirement. That the CRA/LA Board of Commissioners: SUMMARY 3. Adopt a resolution finding that an economically feasible alternative method of financing the Project on substantially comparable terms without subordination of CRA/LA's deed of trust and affordability restrictions on the Project site is not reasonably available, and authorizing subordination of said deed and restrictions to conventional loans during both the construction and permanent phases of the Project. East LA Community Corporation ("ELACC"), a nonprofit community corporation based in Boyle Heights is requesting a grant in an amount not to exceed $2,100,000 to pay for acquisition and

4 EAST LA COMMUNITY C,'-.-,{PORATION 1 ST AND EVERGREEN C,\NT 2 predevelopment costs associated with the acquisition of the site located East First Street in Boyle Heights, The acquisition of the site will strengthen ELACC's ability to go forward to secure additional funding sources during the predevelopment phase necessary to complete a future multifamily affordable housing project on the site, It's anticipated that the project will have the ability to generate between units, which will be targeted to families with incomes ranging from very low to moderate levels and with unit sizes to include 1, 2 and 3 bedroom units, CRA\LA will record an Agreement Containing Covenants restricting the rents for a 55- year term, The acquisition cost of the site is approximately $1,750,000 or $64.00 per square foot. ELACC has ordered an appraisal, which will be provided to staff for review and approval when completed, The CRA/LA will only disburse acquisition funds in an amount up to the value established by an appraisal, which has been reviewed and approved by CRA/LA Real Estate Department staff in its independent judgment and discretion. Approximately $350,000 of Grant funds will be used to pay for acquisition closing costs and predevelopment costs. The projected Total Development Costs is $22,212,784 or $424,618 per unit. Anticipated funding sources include: Low Income Housing Tax Credits, the Los Angeles Community Redevelopment Agency, Los Angeles Housing Department, and the Federal Home Loan Bank's Affordable Housing Program. The CRA/LA's Conditional Grant Policy includes grants for predevelopment and acquisition costs in excess of $500,000 provided some type of service or performance repayment is provided, a promissory note and a 25% matching requirement. Staff is seeking a waiver of these requirements based on ELACC's long history of social services to lower income households in the community, their ongoing commitment to improving the community for the benefit of residents, and given that the property will be restricted for the development of affordable housing with 55-year covenants. PREVIOUS ACTIONS Initial Action. DiSCUSSION & BACKGROUND Location The site is located in the Boyle Heights at 2935 East First Street and within the Adelante Eastside Redevelopment Project Area. Grant Recipient The Developer is East LA Community Corporation, Inc., a California 501 (c) (3) non-profit community development corporation. The organization's Executive Director and President is Maria Cabildo. ELACC is a community-based housing and economic development organization established in 1996 to achieve comprehensive long-term community development in the greater East Los Angeles area. ELACC seeks to improve the quality of life of the residents by developing affordable housing and by providing social services for the community residents it serves. Most of ELACC's portfolio consists of the affordable rental units are that are targeted to residents with incomes at

5 EAST LA COMMUNITY CL.. r'oration 1 ST AND EVERGREEN GI ",NT 3 50% or below of Area Median Income ("AMI"). ELACC has completed over 12 housing developments comprising almost 400 units of affordable housing including multifamily rental and home ownership projects throughout the eastside area of Los Angeles and in adjacent areas of Los Angeles County. ELACC has three currently funded CRA projects in construction totaling 120 units. ELACC plans to apply for federal low income housing tax credits during predevelopment and the other funding sources. Therefore a California limited partnership will be formed during the predevelopment phase to assume all the terms and obligations of all the secured funding sources needed to complete the project. Selection Process ELACC sent a letter to the CRA/LA requesting financial assistance to acquire and pay for predevelopment costs associated with the subject property. Description and Project Context East LA Community Corporation (ELACC) is proposing to develop affordable housing for low income families. The proposal is for a development of approximately units above a onestory parking structure for the residents, a community room, laundry rooms, and outdoor play areas. The site is located at northwest intersection of First Street and Evergreen Avenue in Boyle Heights. The addresses are First Street. The property is composed of five parcels. The property is 27,000 sq. ft. and zoned C2-1. It is bordered by First Street to the south, Evergreen Avenue to the east, an alley to the north, and some small business to the west. The units will be available to low income working families earning between 30% - 50% of the Area Median Income (AMI), adjusted for family size. The qualifying incomes would be between approximately $15,120 for a t-bedroorn apartment for a household of two and $34,025 for a 3- bedroom apartment for a household of 5 (based on May 2010 HCD Income Limits). CRA\LA will record an Agreement Containing Covenants restricting the rents for a 55-year term. Low Income Housing Tax Credits, the Los Angeles Community Redevelopment Agency, Los Angeles Housing Department, and AHP will provide the funding for this development Community Benefits The recommended grant will be used to provide much needed quality affordable housing to low income and moderate income families who are priced out of new market rate housing by creating improved living conditions for residents. The units to be developed will remain affordable to low, very low and moderate income households for at least 55 years. The proposed development will provide benefits both for individuals as well as the community as a whole. The development will create a community that is diverse economically; provide opportunities for young families just starting out, many of whom may have grown up in the community, to live in Boyle Heights; help reduce traffic congestion by allowing low income workers to live closer to their jobs, and; reduce overcrowding caused when families "double up" to share high housing expenses.

6 EAST LA COMMUNITY G {PORATION 1 ST AND EVERGREEN l,."1.nt 4 Finally, this development will revitalize a deteriorated and blighted site of Boyle Heights located in a very visible and prominent located across from the Evergreen Cemetery. The future project will be required to comply with all CRA/LA policies including Construction Careers Policy. Staff anticipates that with the approval of this proposal, the projected affordability mix will be in compliance with the Adelante Eastside Redevelopment Project Area's 15% Inclusionary Housing Requirement and the statutory obligation to spend funds from the Low and Moderate Income Fund in proportion to need, Findings The State Redevelopment Law was amended in 1989 (Section ) to allow subordination of income and use restrictions. The subordination is permitted when the CRA/LA makes a finding that an economically feasible alternative method of financing or refinancing without subordination is not reasonably available and when the CRA/LA obtains written commitments reasonably designed to protect the CRA/LA's investment in the event of default. Currently, no domestic lending institutions are willing to provide conventional financing without subordination of covenants, as well as CRA/LA loans and ground leases. Prior to agreeing to such subordination, the CRA/LA will require that the Subordination Agreement contains notice and cure provisions which reasonably protect the CRA/LA's covenant in the event of the Developer's default under any of the senior loans (Subordination Resolution, Attachment D). SOURCE OF FUNDS Adelante Low and Moderate Income Housing Fund and Tax Exempt Bond Housing Series D. PROGRAM AND BUDGET IMPACT The proposed action is consistent with the amended FY2011 Adelante Eastside Budget and Work Program. Following approval of this program, $5,899,700 of 7,999,700 will remain for the Affordable Housing budget category. There is no impact on the City's General Fund as a result of the recommended action. ENVIRONMENTAL REVIEW The proposed property acquisition will be undertaken pursuant to State of California Environmental Quality Act (CEQA) Guidelines Section 15004(b)(2)(A), which allows agencies to enter into land acquisition agreements when the agency has conditioned the future use of the site on CEQA compliance. Future use of the property will be subject to subsequent environmental review pursuant to CEQA and Agency approval of the project.

7 EAST la COMMUNITY COl "JORATION 1ST AND EVERGREEN Gk,,-JT 5 AUTHORITY GRANTED TO CEO OR DESIGNEE If the Grant Agreement is approved, the CRA/lA Chief Executive Officer or designee would be authorized to take such actions as may be necessary to carry out the Agreement, including, but not limited to, executing the CRA/lA Grant Documents. Christine Essel Chief Executive Officer By: Calvin E. Rallis Chief Operating Officer Real Estate and Economic Development There is no conflict of interest known to me that exists with regard to any CRA/lA officer or employee concerning this action. Attachment A: location/site Map Attachment B: Purchase and Sale Agreement Attachment C: Agreement Containing Covenants Attachment 0: Subordination Resolution

8 ATTACHMENT A SITE LOCATION MAP First Street

9 l;.i\llfornia ASSOCIATION OF REALTOIElS ATTACHMENT B COUNTeR OFFER f@il' U$f$ by Seller Of EI~. May be tised fur Muttlpi\!!l C!oo~ Ofiw. (CAJt. ~ 00, Rav~ t'ifill) No. _ _= o. ~ fqliowh't!;l attaehad addenda am itlcorpol'8ied Into this Counter Offer: a oa..,.... "" C": It. _ ~ 2. FHGiHTTO ACCEFfT OTHER OFFERS: If this Is a Bellllir Counter O!fer, (l) Seifer has fh$ right to cof'ltirrue to offer the ~rtv for sale or for anothi\jr transaction, and 10 ~ any other offer at any time prior to Aooeptanoo, as descmbed In paragraph 3 and 01) SeRer's acoo~n $ of anoiher offer prl r to Buygfs Aceeptano~ of this Co!.lnter otter, shall T'EJIIO:ke this Courrter Offer. :. EXPIRATION: The Counter Offer snail be dee \'eiioke(! MtI the deposits.. If any, shall be returned unless thl$ Counter Offer Is signed by the Buyer Qr SeIer fa It Is sent e. C oj signed Cgtmler Offer 1$ p$t$ol'la!ly received by the person making this counter Offer or by S ~ ts a.~ to re(:$l1le It, by 5;00 PM on Itle third Oay AfWr the later date s. in paragraph 5 01'. (if ci'iecketd} by CV:JJ.a~ (date). at AMIPM. ThIs Coooter Offer may ~ ~ in counterparts,

10 t..t'l:lu'ukn11t ASSOCIATION OF RTiAtTORS<0 Th:e feiloyling ~ and oonlftons are hereby I~ra.ted In and made a part qj ihe: 0 t:\asidenl'la! P-Jrcnase Agreement. o Manufael:ured Horoo PuI'Qhas"e Agraement. n Buslnsss Pureha$e Agfeen'lIlint, 0 Residential LYs~ Or Month to-montn Rental Agreement, 0 vacant land Pureh IiA reemeln Resl,dential I Pu,-a Agreement, C Commercia! Property Purchase Agreement, C other ~Jt. _~._ dated~l :::: :.o~ property known e\s ;'l?~~ ii ~.::g,~(!;t jtp-:~&~ *-_. ".. in which?t..#'f~" G~V4Jn,. -~If?I..--. ~.is \"$fle1red to-as ("BuyerffIl'lflO1nf') and ~.. _~ Is refernjd to as ("$eilerjlam:llord"). ~.~~f~~~.~;,'!. ~7k:..e ~~ ::t/jji~.l.l!il~~::.dd"'~1-=-- ~e...-ln~~~i11~il:~, -:2Jt '*2uLMme ~._~.~~... _ ~~~~~~::LiiL$O~~~~:::B~ ~ ~-~----._--.-~---~----~~-~---~ ~,-~.-~ ~--.-~~--~~--~ --~.~ ~ ~ A':.me REViSED (PAGE ~:~;~~~:f OS MAS'TEM: COpy ADOENOUIV! (AOM PA~F "V n;:- '1'), ~?~~-=~::::~~J -- o~

11 ATTACHMENT C TO GRANT AGREEMENT (FORM OF AGREEMENT CONTAINING COVENANTS) NO FEE DOCUMENT Recording requested by and when recorded, mail to: The Community Redevelopment Agency of the City of Los Angeles, California 1200 W. ih Street, Suite 201 Los Angeles, CA Attn: _ Assessor's Identification Number: AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY (Grant #. ) This AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY ("Covenant Agreement") is made this day of, 2011, by and between the Community Redevelopment Agency of the City of Los Angeles, a public body, corporate and politic (the "Agency" or CRA\LA), and East LA Community Corporation, a California nonprofit public benefit corporation ("Owner"). RECITALS A. The Agency wishes to promote the redevelopment of its Adelante Eastside Redevelopment Project Area through the development multifamily rental housing affordable to moderate income households. B. The Owner has acquired,, the-real property located at East First Street, Los Angeles, CA and as more particularly described in Exhibit A (the "Property"), for the development of a multifamily rental housing affordable targeted to moderate income income households commonly referred to as the as the 1st and Evergreen Street site (,'Project"), which shall contain fifty-two (52) residential units, of which fifty-one (51) shall be rented to Low and Very Low Income Households, as defined in this Covenant Agreement for the Project. C. Owner has agreed, as part of the purchase price of this Property, to execute this Covenant Agreement and that this Covenant Agreement shall be recorded against the Property. This Covenant Agreement is intended to evidence Owner's obligations with respect to the affordability and habitability of the Project. D. The purpose of this Covenant Agreement is to regulate and restrict the occupancy, rents, operation, ownership, and management of the Property. The covenants in this Covenant Agreement are intended to run with the land and be binding on Owner and Owner's successors for the full term of this Covenant Agreement.

12 NOW THEREFORE, IN CONSIDERATION of the mutual agreements, obligations, and representations, and in further consideration for the aforementioned funding, Owner and Agency hereby agree as follows: DEFINITIONS The following terms have the meanings and content set forth in this section wherever used in this Covenant Agreement or attached exhibits. 1. "AGENCY" means the Community Redevelopment Agency of the City of Los Angeles, California, a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California and its authorized representatives, assigns, transfers, or successors-ininterest thereto. The principal office of the Agency is located at 1200 West Seventh Street, Suite 201, Los Angeles, California "AREA MEDIAN INCOME" means the median income for the Los Angeles Primary Metropolitan Statistical Area (PMSA), with adjustments for household size, as determined from time to time by the California Department of Housing and Community Development ("HCD"). 3. "ASSISTED UNIT" means one of 51 housing units on the Property that are restricted to moderate Income Income Households. 4. "CITY" is the City of Los Angeles, a municipal corporation, and its officers, officials, directors, employees, agents and authorized representatives. 5. "GRANT AGREEMENT" means the Grant Agreement executed concurrently with this Covenant Agreement by Owner and the Agency, as well as any amendments to, modifications of, or restatements of said documents. 6. "GRANT DOCUMENTS" are collectively the Grant Agreement and this Covenant Agreement as they may be amended, modified, or restated from time to time, along with all exhibits and attachments to these documents. 7. "ELIGIBLE HOUSEHOLD" means a household that qualifies as a Moderate Income Household. 8, "IMPROVEMENTS" shall mean the development to be developed on the Property as a 52 unit affordable housing project targeted to Moderate Income Households" 14. "LOW INCOME HOUSEHOLD" means a household whose annual income does not exceed fifty percent (80%) of the median income for the Los Angeles Metropolitan area as determined by HCD with adjustments for smaller and larger households, 10. "OWNER" is the East LA Community Corporation, a California non-profit public benefit corporation and it's authorized representatives, assigns, transferees, or successors-ininterest thereto.

13 10. HPERFORMANCE DEED OF TRUST'~ means that performance deed of trust in the form of Attachment 2, placed on the Property as security for the Housing Management Requirements (as defined in the Grant Agreement) and this Covenant Agreement by Owner as trustor with the Agency as the beneficiary, as well as any amendments to, modifications of, and restatements of said performance deed of trust. 11. "PROJECT" means the acuisition and operation of the Property for residential use and related purposes according to the terms of the Grant Agreement and this Covenant Agreement. 12. "PROPERTY" means the real property described in the attached Exhibit A, which is hereby incorporated into this Covenant Agreement by this reference, and any buildings or Improvements now or hereafter situated on said real property. 13. "QUALIFYING RENT" means the maximum rent for an Assisted Unit allowed under this Covenant Agreement, less an allowance for tenant-paid utilities as calculated by the Los Angeles Housing Authority for the Section 8 Rental Assistance Program, and is the consideration, including any bonus, benefits or gratuity, demanded or received by Owner for or in connection with the use or occupancy of a rental unit, including parking, laundry facilities, and other housing services and amenities of any kind that are reasonably deemed as part of rent by the Agency. 14. "VERY LOW INCOME HOUSEHOLD" means a household whose annual income does not exceed fifty percent (50%) of the median income for the Los Angeles Metropolitan area as determined by HCD with adjustments for smaller and larger households OWNER'S OBLIGATIONS 15. COMPUANCE WITH AGENCY DISPOSITION DOCUMENTS. Owner's actions with respect to the Property shall at all times be in full conformity with all of the requirements of the Disposition Documents, including without limitation the Housing Management Requirements, attached as Exhibit of the Grant Agreement. In the event of any conflict between the terms of the Housing Management Requirements and this Covenant Agreement, the terms of this Covenant Agreement shall prevail. 16. TERM OF AGREEMENT. This Covenant Agreement shall commence upon execution and shall remain in full force and effect for fifty-five (55) years from the date of execution of issuance of a Certificate of Occupancy for the entire Project, regardless of any expiration of any sale, assignment, transfer, or conveyance of the Property, unless terminated earlier by the Agency in writing or extended by the mutual consent of the parties. However, failure to record this Covenant Agreement or the certificate by the Agency shall not relieve Owner of any of the obligations specified herein PROJECT OCCUPANCY AND RENTS 17. OPERATION OF PROPERTY. Owner and its agents shall lease, operate and manage the Property after completion in full conformance with the terms of the Covenant Agreement. Owner agrees to maintain and operate the Assisted Units so as to provide decent, safe, and sanitary housing. 24. TENANT SELECTION. Before leasing the Property, Owner must provide Agency for its review and approval Owner's written tenant selection plan. The Owner's tenant

14 selection plan must, at a minimum, meet the requirements for tenant selection set out in 24 C.F.R (e) and any modifications thereto. Owner shall give priority for Assisted Units to Eligible Households who have been displaced as a result of the City of Los Angeles' public projects. 27. NOTICE TO TENANTS. There are three (3) points in time when the Owner is required to give written notice to all tenants of Restricted Units: A. Upon initial move-in/lease execution, Owner shall give written notice, to all tenants of Restricted Units, of the duration of the rent restrictions under this Covenant Agreement. Borrower must maintain, in its files, a copy of each notice containing each tenant's signed acknowledgment of the notice required hereunder. The notice shall, at the least, contain language that the rent restrictions under this Covenant Agreement shall be for fifty-five (55) years, and shall terminate on or about March 31, Upon termination of the rent restriction period under this Covenant Agreement, rents may be set at market rates unless otherwise restricted by some other legal, regulatory, or contractual req uirement. B. Twelve (12) months prior to the termination of the rent restriction period under this Covenant Agreement, or at such other time as may be required by law, Borrower must give written notice to its tenants of the termination of the restrictions on the Restricted Units before their rents may be raised to market rent levels. C. Ninety (90) days prior to the termination of the rent restriction period under this Covenant Agreement, or at such other time as may be required by law, Owner must again give written notice to its tenants of the termination of the restrictions on the Restricted Units before their rents may be raised to market rent levels. 28. INCOME CERTIFICATION. Owner shall limit for the full term of the Covenant Agreement the rental of Assisted Units to Eligible Households. The income levels and other qualifications of applicants for Assisted Units shall be certified within ten (10) business days of the household's expected occupancy of one (1) of the units. Owner acknowledges that it has received a copy of the current City of Los Angeles rules governing income certification, and shall comply with these rules as they may be amended. On an annual basis, Owner shall provide the Agency with a copy of an occupancy summary report showing the present occupants, rent, and size of the Assisted Units on the Property, and any other information which the Agency requests and which relates to the eligibility of these households. If the household size of an Eligible Household changes, the Agency may request additional income documentation to determine eligibility. The Agency may require the Owner, at any time, to re-examine for compliance with this Covenant Agreement, the income of each tenant household and immediately submit its findings to the Agency.

15 21. maintained AFFORDABILITY RESTRICTIONS. The affordability of the Project shall be as follows A. Fifty-one (51) units in the Project shall at all times be occupied or held vacant and available for rental by Low Income (households which do not exceed 80% percent of median income and Very Low Income Households (households which do not exceed 50% percent of the area median income for the Los Angeles Metropolitan area as determined by HCD with adjustments for smaller and larger households). Income determination shall be made at the time of initial occupancy of a unit by a tenant. Notwithstanding the foregoing, Owner may set aside One (1) of the fifty-one (52) units for use as a "Manager's Unit," which unit shall be occupied by a person (or household) employed as an on-site manager of the Project. If the "Manager's Unit" is so occupied, it shall not be subject to the income limits set forth above, and the number of Restricted Units available to [Moderate Income Households] shall be reduced to 51 units. 30. PROJECT RENTS. Rents for Restricted Units shall be limited to Qualifying Rents as set forth in Section 29 of this Covenant Agreement. Eligible Households shall be given at least thirty (30) days written notice prior to any rent increase. The maximum allowable rent that may be charged for an Assisted Unit may change from time to time when there are changes in the Area Median Income as published by HCD, or when there are changes made to the allowances deducted for tenant paid utilities as calculated by the Los Angeles Housing Authority. In no event, however, will the resulting maximum allowable rent for a Assisted Unit exceed the HCD fair market rents set for rental housing units of the same number of bedrooms for the area. For projects subject to the City's Rent Stabilization Ordinance, the maximum rent increase allowed by that ordinance may be less or more than that allowed by changes in the Area Median Income. In such instances, the rents on restricted units may only be raised to the lesser of the two (2) allowed increases. MAXIMUM RENTAL CHARGES. The total monthly charges for rent, utilities, to each: Low Income Household shall not exceed one-twelfth (1/12) of thirty percent (30%) of Eighty percent (80%) of the area median income for the Los Angeles Metropolitan area as determined by HCD and Very Low Income Household shall not exceed one-twelfth (1/12) of thirty percent (30%) of Fifty percent (50%) of the area median income for the Los Angeles Metropolitan area as determined by HCD with adjustments for smaller and larger households Monthly charges shalt be prorated for part time or partial services, as published by the State of California Department of Housing and Community Development's Multifamily Housing Program. Owner shall annually certify each household's gross income for the purpose of this Section, Rental Charges do not include any rent subsidy paid by a third party entity to the Owner on behalf of the tenant. Owner shall give the Agency written notice of any proposed rate adjustment at least thirty (30) days prior to such adjustment. 23. CONDOMINIUM CONVERSION. Owner shall not convert Property units to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the term of this Covenant Agreement. 24. NONDISCRIMINATION. Owner shall not discriminate or segregate in the use, enjoyment, occupancy, conveyance, lease, sublease, or rental of Property units on the basis of race, color, ancestry, national origin, religion, sexual preference, age, marital status,

16 family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), or any other arbitrary basis. Owner shall include a statement in all advertisements, notices and signs for the availability of Property units for rent to the effect that Owner is an Equal Housing Opportunity Provider. The Project shall be developed and the Improvements shall be maintained, for the duration of this Covenant Agreement, to comply with all applicable federal, state and local disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. PROPERTY MANAGEMENT 25. MANAGEMENT RESPONSIBILITIES. Owner is specifically responsible, subject to its obligations herein, for all management functions with respect to the Property, including without limitation the selection of tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The Agency shall have no responsibility over management of the Property. 26. MANAGEMENT ENTITY. The Agency shall have the right to review and approve the management entity chosen by Owner for the Property and the right to require a change in the management agent at any time during the term of this Covenant Agreement. Any contracting of management services by Owner shall not relieve Owner of its primary responsibilities for proper performance of management duties. 27. FINAL MANAGEMENT PLAN. At least ninety (90) calendar days prior to completion of rehabilitation of the Project, Owner shall submit to the Agency for review and approval a plan for marketing and managing the Property (the "Final Management Plan"). The Plan shall address in detail how Owner plans plans to market the availability of Project units to prospective Eligible Households in accordance with the City of Los Angeles's affirmative fair housing marketing guidelines, and how Owner plans to certify the eligibility of Eligible Households. The Plan shall also address how the Owner and the management entity plan to manage and maintain the Property, and shall include appropriate financial information and documentation. The Plan shall include a form lease agreement that Owner proposes to enter into with Project tenants. Owner shall abide by the terms of this Plan in marketing, managing, and maintaining the Property. At least ninety (90) calendar days prior to completion of rehabilitation of the Project, Owner shall also submit a proposed management contract, if any, to the CRA\LA for the Agency's prior review and approval. The Agency shall have the right to review and approve any proposed amendments to the management contract or any new management contracts during the term of this Covenant Agreement. 28. MAINTENANCE AND SECURITY. Owner shalt at its own expense maintain the Property in good condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions for the benefit of Project occupants. Owner shall not commit or permit any waste on or to the Property, and shall prevent and/or rectify any physical deterioration of the Property. Owner shall provide adequate ongoing security equipment and services for Project occupants. Owner shall maintain the Property in conformance with all applicable state, federal, and local laws, ordinances, codes, and regulations and the Final

17 Management Plan; but Owner's maintenance obligations shall not be limited only to the standards contained in these laws or the Final Management Plan. In the event that Owner fails to maintain the Property in accordance with these standards and after at least ten (10) business days prior notice to Owner, the Agency or the Agency's contractor or agent may, but shall be under no obligation to, enter upon the Property, make such repairs or replacements as are deemed necessary in the Agency's discretion, and provide for payment thereof. Any amount advanced by the Agency to make such repairs, together with interest thereon from the date of such advance at the same rate of indebtedness as specified in the Note (unless payment of such an interest rate would be contrary to applicable law, in which event such sums shall bear interest at the highest rate then allowed by applicable law), shall become an additional obligation of Owner to the Agency and shall be secured by any Deed of Trust, if not previously reconveyed. 29. INSPECTION AND RECORDS. Owner shall maintain records which clearly document Owner's performance of its obligations to operate the Property under the terms of this Covenant Agreement. Owner shall submit any records to the Agency within ten (10) business days of the Agency's request. Owner shall permit the Agency to enter and inspect the Property for compliance with obligations under this Covenant Agreement upon 24 hours advance notice to Owner or Owner's management agent of such visit by the Agency, or such other notice or may be required by law. Owner's rental agreements with the tenants of the Project shall also provide for periodic inspection of the Project units for health and safety reasons. 30. FEES, TAXES, AND OTHER LEVIES. Owner shall be responsible for payment of all fees, assessments, taxes, charges and levies imposed by any public authority or utility company with respect to the Property, and shall pay such charges prior to delinquency. 31. INSURANCE COVERAGE. Owner shall cause to have in full force and effect during the term of this Covenant Agreement insurance coverage as required by the Grant Agreement, which insurance requirements hereby incorporated by reference into this Covenant Agreement. 32. PROPERTY DAMAGE OR DESTRUCTION. If any building or improvements erected by Owner on the Property shall be damaged or destroyed by an insurable cause, Owner shall, at its own cost and expense, diligently repair or restore the Property consistent with' the original Plans and Specifications for the Project. Such work or repair shall be commenced within one hundred twenty (120) days after the damage or loss occurs and shall be completed within one (1) year thereafter. All insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration-and, if such insurance proceeds shall be insufficient for such purpose, Owner shall make up the deficiency. Owner shall not, by agreement or otherwise, permit any other party or lender to use insurance proceeds in a manner inconsistent with the intent and/or language of this section and the Loan Agreement. 33. HAZARDOUS MATERIALS Owner shall comply with all of the obligations contained in any Grant Agreement or future Loan Agreements with respect to Hazardous Materials. GENERAL PROVISIONS

18 34. SUBORDINATION. This Covenant Agreement shall be subordinated in priority only to the liens and encumbrances approved by the Agency as set forth in the Grant Agreement 35. TRANSFER AND ENCUMBRANCE OF PROPERTY. During the term of this Covenant Agreement, Owner shall not make or permit any sale, assignment, conveyance, lease (other than the rental of Project units to Eligible Households and other eligible residential tenant occupants or transfer of the Property or any part thereof, without the prior written consent of the Agency. The Agency may give its consent to a sale, transfer, or conveyance provided that all of the following conditions are met: (a) Developer is in compliance with the Loan Documents, or the sale, transfer, or conveyance will result in the cure of any existing violations of the Loan Documents; (b) the proposed transferee enters into a written assignment and assumption agreement, in a form and content reasonably satisfactory to Agency's legal counsel, assuming all obligations of Developer imposed by the Agreement Containing Covenants and other Loan Documents, and, if requested by Agency, provides an opinion of such transferee's counsel to the effect that this Agreement and the Agreement Containing Covenants are valid, binding and enforceable obligations of such transferee, subject to bankruptcy and other standard limitations affecting creditor's rights; (c) the transferee demonstrates to the Agency's satisfaction that it is capable of and intends to own and operate the Site in full compliance with the Agreement Containing Covenants and the other Loan Documents; (d) the transferee demonstrates one of the following: (i) the transferee or its property manager has at least three year's experience in the ownership, operation and management of simllar size rental housing projects, and at least one year's experience in the ownership, operation and management of rental housing projects containing below-market-rate units, without any record of material violations of discrimination restrictions or other state or federal laws or regulations or local governmental requirements applicable to such projects, or (ii) the transferee agrees to retain a property management firm with the experience and record described in subclause (i) above, or (iii) Developer or its management company will continue to manage the Development for at least one year following such transfer and during such period will provide training to the transferee and its manager in the responsibilities relating to the affordable units; (e) the transferee (d) the transferee does not have pending against it, and does not have a history of significant and material building code violations or complaints concerning the construction, maintenance, upkeep, operation and regulatory agreement compliance of any of its projects as identified by any local, state or federal regulatory agencies; and (e) the terms of the sale, transfer, or conveyance shall not jeopardize the Agency's security interest in the Site and is in full compliance with all standards,' including eligibility requirements and other conditions imposed by any funding sources for the Development and the Loan. During the term of this Covenant Agreement, Owner shall not engage in any financing or other transaction creating any mortgage or other encumbrance or lien upon the Property (except for any financing provided by the Agency), without the prior written consent of the Agency. The Agency may give its consent to such financing if and to the extent necessary to maintain or improve the afford ability, financial operation or condition of the Property. 36. DEFAULT AND REMEDIES In the event of any breach or violation of any agreement or obligation under this Covenant Agreement, or of any Event of Default as defined by any Loan Agreement which in any way pertains to or affects the continuing operation of the Property, and after the Agency has given written notice to Owner and an opportunity to cure in the same time and manner provided for with respect to Events of Default in said Loan Agreement, the Agency may proceed with any or all of the following remedies:

19 A. Bring an action in equitable relief seeking the specific performance by Owner of the terms and conditions of this Covenant Agreement, and/or enjoining, abating, or preventing any violation of said terms and conditions, and/or seeking declaratory relief; B. Enter upon, take possession of, and manage the Property, either in person, by agent, or by a receiver appointed by a court, and collect any rents, income, deposits, or reserves and apply them to operate the Property; C. After notice provided for herein, make such repairs or replacements to the Property as are necessary and provide for payment thereof; D. Initiate and pursue any private and/or judicial foreclosure action allowed under applicable law and the power of sale provision in the Performance Deed of Trust; E. Pursue any other remedy set forth in the Grant Agreement; or F. Pursue any other remedy allowed at law or in equity. 37. NONmLlABILITY OF OFFICIALS, EMPLOYEES AND AGENTS. The Agency's officers, officials, employees or agents shall not be personally liable to Owner for any obligation created under the terms of this Covenant Agreement except in the case of actual fraud or willful misconduct by such person. 38. INDEMNITY. Notwithstanding the insurance coverage required herein, Owner shall indemnify and hold the Agency and City ("Indemnitees") free and harmless against any losses, damages, liabilities, claims, demands, judgments, actions, court costs, and legal or other expenses (including attorneys' fees) which the Indemnitees may incur as a direct or indirect consequence of (1) Owner's failure to perform any obligations as and when required by this Covenant Agreement; (2) any failure of any of Owner's representations or warranties to be true and complete; or (3) any act or omission by Owner or any contractor, subcontractor, management agent, or supplier with respect to the Project or the Property, except where such losses are caused by the sale negligence or willful misconduct of the Indemnitees. Owner shall pay immediately upon the Indemnitees' demand any amounts owing under this indemnity. The duty of the Owner to indemnify includes the duty to defend the Indemnitees in any court action, administrative action, or other proceeding brought by any third party arising from the Project or the Property. The Indemnitees may make all reasonable decisions with respect to its/their representation in any legal proceeding, including, but not limited to, the selection of attorney{s). Owner's duty to indemnify the Indemnitees shall survive the term of this Covenant Agreement. 39. GOVERNING LAW. This Covenant Agreement shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law and those provisions preempted by federal law. 40. COVENANT AGREEMENT CONTROLS. In the event that any provisions of this Covenant Agreement and any Loan Agreement conflict, the terms of the Covenant Agreement shall control. 41. TIM E. Time is of the essence in this Covenant Agreement.

20 39. CONSENTS AND APPROVALS. Any consent or approval of the Agency required under this Covenant Agreement shall not be unreasonably withheld. Any approval must be in writing and executed by an authorized representative of the Agency. 42. NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between Owner and the Agency shall be sufficiently given and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Owner and the Agency as follows: Agency: Community Redevelopment Agency of the City of Los Angeles 1200 West Seventh Street, Suite 201 Los Angeles, CA Attention: Asset Management Owner: East LA Community Corporation 533 S. Boyle St. Los Angeles, CA Attention: Maria Cabildo, Executive Director 43. BINDING UPON SUCCESSORS. All provisions of this Covenant Agreement shall be binding upon and inure to the' benefit of the heirs, administrators, executors, successors-in-interest, transferee, and assigns of Owner and the Agency, and shall run with the land for the full term of this Covenant Agreement, regardless of any assignment, payment, prepayment, expiration, extinguishment of any Agency Loan or Note, any reconveyance of any Deed of Trust, or any conveyance or transfer of the Property. Any successor-in-interest to Owner and any purchaser or transferee of the Property shall be subject to all of the duties and obligations imposed on Owner under this Covenant Agreement for the full term of this Covenant Agreement. The term "Owner" as used in this Covenant Agreement shall include all such assigns, successors-in-interest, and transferee. 44. RELATIONSHIP OF PARTIES. The relationship of Owner and the Agency for this Project during the term of this Covenant Agreement shall not be construed as a joint venture, equity venture, or partnership. The Agency neither undertakes nor assumes any responsibility or duty to Owner or any third party with respect to the operation of the Property or the actions of Owner. Except as the Agency may specify in writing, Owner shall have no authority to act as an agent of the Agency or to bind the Agency to any obligation. 45. WAIVER. Any waiver by the Agency of any obligation in this Covenant Agreement must be in writing. No waiver will be implied from any delay or failure by the Agency to take action on any breach or default of Owner or to pursue any remedy allowed under this Covenant Agreement or applicable law. Any extension of time granted to Owner to perform any obligation under this Covenant Ag reement shall not operate as a waiver or release from any of its obligations under this Covenant Agreement. Consent by the Agency to any act or omission by Owner shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the Agency's written consent to future waivers. 46. OTHER AGREEMENTS. Owner represents that it has not entered into any agreements that would restrict or compromise its ability to comply with the terms of this Covenant Agreement. Owner shall not enter Into any agreements that are inconsistent with the terms of this Covenant Agreement without an express waiver by the Agency in writing.

21 47. AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to this Covenant Agreement must be in writinq, and shall be made only If executed by both Owner and the Agency. 48. SEVERABILITY. Every provision of this Covenant Agreement IS intended to be severable. If any provision of this Covenant Agreement shall be held Invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. IN WITNESS WHEREOF, the Agency and the Owner have caused this Covenant Agreement to be executed by their duly authorized representatjves. Executed this day of, 2011 THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES 8y: _ Christine Essel Chief Executive Offlcer APPROVED AS TO FORM AND LEGALITY Carmen A. Trutanlch, City Attorney By: _ Executed this day of, 2011 THE EAST LA COMMUNITY CORPORATION, a California nonprofit public benefit corporation 8y: Maria Cabildo

22 Executive Director THIS DOCUMENT MUST BE NOTARIZED FOR RECORDING

23 ATTACHMENT D - SUBORDINATION RESOLUTION SUBORDINATION RESOLUTION THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CA RESOLUTION NO,_ A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA REGARDING THE SUBORDINATION OF ITS USE RESTRICTIONS PURSUANT TO SECTION 33334,14 OF THE COMMUNITY REDEVELOPMENT LAW AND THE SUBORDINATION OF ITS DEEDS OF TRUST. WHEREAS, the Community Redevelopment Agency of the City of Los Angeles, California (the "CRA/LA") proposes to enter into a grant agreement secured by affordable housing covenants, in connection with providing $2,100,000 to the East LA Community Corporation, a non-profit community corporation, (the "Developer"), pursuant to which the CRA/LA will provide financial assistance to the Developer for the purpose of developing up to 63 units of housing, affordable to moderate income, low income and very low income households (the "Project") and one unit will be for a Property Manager; and WHEREAS, the grant agreement requires covenants to be recorded against the Project placing certain limits on the maximum rents that can be charged and the maximum income that can be earned by tenants qualified to rent such housing (the "Income and Rent Restrictions", which term shall include any recorded notice of such restrictions); and WHEREAS, the Developer has obtained commitments of financing from lender(s) conditioned upon the subordination of the CRA/LA's Income and Rent Restrictions and Deed of Trust; and. WHEREAS, there has been presented to the CRA/LA evidence sufficient on which to find that an economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without subordination of the Income and Rent Restrictions and Deeds of Trust, is not reasonably available. NOW, THEREFORE, THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: 1. The CRA/LA hereby finds that an economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without said subordination, is not reasonably available. 2. The CRA/LA hereby authorizes the Chief Executive Officer of the era/la, or such other official of the CRA/LA as the Chief Executive Officer may designate, to take such actions as may be necessary in order to subordinate the CRA/LA's loan, Deed of Trust, and Income and Rent Restrictions to the lien(s) of lender(s) providing financing for the Project, but only upon receipt by the Chief Executive Officer or such designee of written commitments from such lender, reasonably designated to protect the CRA/LA's investment in the event of default, such as the following: