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HomeMy WebLinkAboutItem 7b. Introduce an Ordinance for Development Impact Fee Deferral Program for Affordable Housing Projects Item 7b Department: Community Development Cost Center: 4008 For Agenda of: 9/17/2024 Placement: Public Hearing Estimated Time: 45 minutes FROM: Timmi Tway, Community Development Director Prepared By: David Amini, Housing Coordinator SUBJECT: ADOPT A RESOLUTION AND INTRODUCE AN ORDINANCE TO AMEND SECTION 4.56.050 (PAYMENT OF FEES) OF THE MUNICIPAL CODE TO ESTABLISH A DEVELOPMENT IMPACT FEE DEFERRAL PROGRAM FOR ELIGIBLE AFFORDABLE HOUSING PROJECTS RECOMMENDATION 1. Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, superseding Resolution No. 9903 (2007 Series) providing for the deferral of city-wide development impact fees for eligible affordable housing projects”; and 2. Introduce a Draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, establishing a development impact fee deferral program for eligible affordable housing projects”; and 3. Authorize the Community Development Director to approve applications for impact fee deferrals and execute agreements therefor, in forms approved by the City Attorney’s Office. The Director may refer approvals to City Council on an as-needed basis or concurrently with Affordable Housing Fund (AHF) awards. REPORT-IN-BRIEF In an effort to advance the Major City Goals of Housing and Homelessness, Council adopted Resolution 9903 (2007) which allows, upon request and at the discretion of the Community Development Director, deferral or waiver of impact fees imposed by the City on affordable housing projects. Deferral of impact fees has helped accelerate the production of affordable housing units in the City by reducing costs as well as enabling developers to leverage additional competitive tax credit funding. The updated resolution and ordinance proposed by staff will create a formal program for affordable housing developers to request and secure certain impact fee deferrals, in addition to cleaning up existing municipal code language related to the timing of development impact fee collection. All deferrals through the program will be in the form of a loan rather than an outright waiver of the fees. This will ensure that all infrastructure improvements secured through development impact fees will continue to be funded. Page 229 of 280 Item 7b POLICY CONTEXT The City’s Major City Goal for housing and homelessness states: Support the expansion of housing options for all, and continue to facilitate the production of housing, including the necessary supporting infrastructure, with an emphasis on affordable and workforce housing as well as accessibly connected development. Collaborate with local non-profit partners, non-governmental agencies, the county, the state, and federal governments to advocate for increase d funding and implementation of comprehensive and effective strategies to prevent and reduce homelessness. The Goal includes implementation measure no. 5 to implement Below Market Rate housing best practices. The City recently received the Prohousing designation from the State Housing and Community Development Department for innovation in housing policy and a demonstrated commitment to developing solutions to the state’s housing crisis. The City’s 6th Cycle Housing Element includes a Goal for Affordability, supported by the following policies and programs: Program 2.9 - Assist with the issuance of tax-exempt bonds, tax credit financing, loan underwriting or other financial tools to help develop or preserve at least 20 affordable units annually through various programs. The proposed resolution and draft Ordinance allow for deferral of impact fees in the form of a loan to the project. The financing mechanism of a loan, rather than a waiver of impact fees, enables projects to leverage the loan amount as soft funding, adding points to competitive tax credit financing applications. Program 6.16 - Incentivize 20 affordable housing developments per year during the planning period consistent with SLOMC Affordable Housing Incentives. The impact fee deferral program established by the ordinance will provide a standardized process for requesting and implementing impact fee deferral. This will incentivize development of affordable housing. DISCUSSION Background Per Resolutions 9131 (2000 Series) and 9903 (2007 Series), the City has allowed, upon request, the waiver or deferral of certain development impact fees for projects that provide below market rate residential units beyond the inclusionary requirement or for projects by Page 230 of 280 Item 7b non-profit affordable housing developers to defer the up-front cost of impact fees1. This effort has helped accelerate the production of below-market-rate units, especially those constructed by affordable housing developers using tax credits. Over the last decade, 300 units of housing across 8 projects have been constructed with the assistance of impact fee deferrals. Resolution No. 9903 allows for the waiver of impact fees in addition to deferral of fees. The outright waiver of impact fees creates a loss of revenue to the City ’s impact fee programs, which may delay the City’s ability to construct improvements paid for using impact fees. To avoid this loss of revenue, the City has only executed impact fee deferral loans since Resolution No. 9903 was adopted. The deferral of fees provides a defined term of repayment of fees and ensures no ultimate loss of revenue to cover the ongoing impacts of the development. Impact fee deferrals have successfully provided important financial incentives over the years to affordable housing projects. Impact fee deferral loans, combined with other funding sources such as Affordable Housing Fund (AHF) awards, Community Development Block Grant (CDBG) or other grant awards, all count as committed funding sources in competitive tax credit applications. The more committed funding sources a project has, the more competitive it will be in the tax credit allocation process, which is typically the final step in securing financing for affordable housing projects. At this time, a program update is recommended to formally remove the option of fee waivers, implement best practices, and continue to incentivize tax-credit funded below market rate units. The attached resolution and ordinance will formalize the existing practices of the Community Development Department and would not implement substantial changes. Proposed Program Update The proposed resolution provides clarity for developers by creating a formal program for impact fee deferral. The program includes application guidance and procedures, including identification of fee categories that may be deferred, a defined loan term and interest rate, and removing the option of waiving impact fees altogether. The Resolution allows for the promulgation of Developm ent Impact Fee Deferral Program Guidelines (see Attachment C), which will further define the scope of the program, including eligibility, approval authority, the application process, repayment, and other terms. After submitting an application for fee deferral to the City and receiving approval from the Community Development Director, the developer will be required to execute a Development Impact Fee Deferral Deed of Trust and Promissory Note, which will be recorded on the property. The Promissory Note describes the deferral as a loan on the property for a term of 20 years and shall account for an annual simple fixed interest rate 1 The City collects development impact fees in accordance with the Mitigation Fee Act to cover increased infrastructure and services required to serve increased development within the C ity. Impact fees include fees such as park improvement fees, police and fire capacity base fees, and traffic impact fees. Page 231 of 280 Item 7b of three percent, to be paid in full at the end of the term, in accordance with the d raft Ordinance. A 20- year term would provide time for project construction and permanent loan conversion and allow the City fees to be paid with a fixed, three percent simple interest rate. Previous impact fee deferral loans approved by the City have had terms ranging from 30 to 55 years, with interest rates ranging from 3 to 4 percent. Wastewater and water development impact fees have historically not been deferred, as the revenue from these fees offsets the need to increase rates for existing users. Therefore, impact fees that would be eligible for deferral under the program would include: police and fire base fees, parkland improvement fees, and transportation improvement fees. Additionally, the proposed development impact fee deferral update only applies to City- wide impact fees; it does not apply to application or user fees, assessments, or special taxes for infrastructure improvements applicable to special benefit areas. Development related processing fees for very-low and low income housing projects are separately allowed to be waived upon request by City Council Resolution No. 8415 (1995 Series). The proposed ordinance also clarifies the timing of the City’s collection of development impact fees to ensure consistency with state law. For all de velopment projects that are not eligible or do not apply for the development impact fee deferral option, all development impact fees must be paid to the city upon final inspection or the date of the certificate of occupancy, whichever occurs first, unless the City requires payment of fees earlier (issuance of building permit) as allowed by Government Code 66007. The proposed resolution supersedes and replaces Resolution No. 9903 (2007 Series) adopted by this Council on June 5, 2007 , which allowed for the deferral and waiver of impact fees for affordable housing projects Resolution No. 9903 (2007 Series) also includes applicability of impact fee waivers for Accessory Dwelling Units (ADUs), however, California Government Gode Section 66324 directly regulates impact fees applicable to ADUs, and therefore this provision is removed from the proposed update. Previous Council or Advisory Body Action On May 2, 1995, the City Council adopted Resolution No. 8415 (1995 Series) (page 35) which waived development review fees for affordable housing units at the direction of the Community Development Director. On November 21, 2000, the City Council adopted Resolution No. 9131 (2000 Series) for the purpose of waiving citywide development impact fees for affordable housing units in excess of inclusionary requirements or developed by non-profit housing corporations. On June 5, 2007, the City Council adopted Resolution No. 9903 (2007 Series) which superseded and replaced Resolution No. 9131 (2000 Series), to allow for development impact fee waivers for voluntary affordable housing units developed by private developers (such as ADUs) in addition to projects that exceed the number required to meet the City’s inclusionary requirements and projects by non-profit developers. Page 232 of 280 Item 7b Public Engagement Staff consulted developers of affordable housing projects, who voiced their support for continued fee deferrals through the program established by the proposed ordinance and resolution. Developers also concurred with the 20 year term of impact fee loans, as well as the timeline of the application and conditions of the deferral agreement. This item has been noticed in compliance with the City’s notification requirements. CONCURRENCE The Council Agenda Report was reviewed by the Community Development Department, Public Works, Finance Department, City Attorney, Utilities Department, City Administration for concurrence. ENVIRONMENTAL REVIEW The proposed resolution and draft Ordinance are exempt from the California Environmental Quality Act (CEQA), because it is not a “project” under Public Resources Code § 21065 in that the impact fee deferral program would not cause either a direct or reasonably foreseeable indirect physical change in the environment. Every development project subject to a development impact fee deferral loan would be required to undergo applicable development review, including CEQA compliance or finding of exemption. FISCAL IMPACT Budgeted: Yes Budget Year: 2024-25 Funding Identified: Yes Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $0 $ $ $ State Federal Fees Other: Total $0 $0 $0 $0 There is no financial impact directly associated with updating the development impact fee deferral program for eligible residential projects. The indirect impact of fee deferrals would be the delay in availability of impact fee revenue. Over the last 10 years, 8 impact fee deferral loans have been given to affordable housing projects, totalling $5 million in deferred impact fee revenue, with repayment terms ranging from 30 to 55 years at 3 percent interest. The proposed resolution would update the repayment term on all future deferral loans to 20 years, reducing the indirect impact on the City’s impact fee funds. Staff anticipates that about one project per year will be given an impact fee deferral loan under the program, with an average amount of about $500,000 in impact fees deferred per project. Page 233 of 280 Item 7b ALTERNATIVES 1. Council could decide not to approve the resolution and introduce the draft Ordinance. Council could direct staff to continue to implement fee deferrals through the existing resolution. This action is not recommended by staff because the resolution and draft Ordinance regarding the development impact fee deferral program provides updates and guidelines for clarity, removes the option for fee waivers consistent with current practice, and creates a formal application process for affordable housing developers. 2. Council could provide additional direction on program specifics, such as program applicability and loan term. Staff requests that Council provide specific direction on any proposed changes, which could be incorporated into a revised resolution to be presented with the second reading of the proposed ordinance . 3. Council could delay implementation of the new Ordinance until the comprehensive development impact fee study is completed. All development impact fees levied by the City will be reviewed by Council and staff at a later date through this comprehensive study, which will result in an update to the development impact fee schedule. This action is not recommended by staff. The updated impact fees would continue to be subject to deferrals under the existing resolution as well as the updated resolution that is being proposed. ATTACHMENTS A - Draft Ordinance establishing the development impact fee deferral program and clarifying eligibility and terms B - Draft Resolution modifying the development impact fee deferral program. C - Draft Development Impact Fee Deferral Guidelines D - Draft Development Impact Fee Deferral Application E - Draft Deferral Agreement F - Standard form Loan Deed of Trust G - Standard form Loan Promissory Note Page 234 of 280 O ______ ORDINANCE NO. _____ (2024 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING SECTION 4.56.050 (PAYMENT OF FEES) OF THE MUNICIPAL CODE TO ESTABLISH A DEVELOPMENT IMPACT FEE DEFERRAL PROGRAM FOR ELIGIBLE AFFORDABLE HOUSING PROJECTS. THE PROJECT IS EXEMPT FROM ENVIRONMENTAL REVIEW (CEQA) (IMPACT FEE DEFERRAL PROGRAM) WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California, on November 21, 2000, adopting Council Resolution No. 9131 (2000 Series) for the purpose of waiving city-wide development impact fees for affordable housing units in excess of inclusionary requirements; and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California, on June 5, 2007, adopting Council Resolution No. 9903 (2007 Series), which superseded and replaced Resolution No. 9131 (2000 Series); and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California, on September 17, 2024, adopting Council Resolution No. XXXX (2024 Series), which superseded and replaced Resolution No. 9903 (2007 Series); and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on September 17, 2024, for the purpose of considering the amendments amendment to Section 4.56.050 (Payment of Fees) of the Municipal Code to implement the Development Impact Fee Deferral Program; and WHEREAS, the City has identified Housing as a Major City Goal; and WHEREAS, the City’s Housing Element Programs 2.9 and 6.16 supports incentivization of affordable housing incentives; and WHEREAS, impact fees are an identified barrier to production of affordable housing; and WHEREAS, impact fees for affordable housing projects have been deferred by the City to help accelerate production of affordable housing; and WHEREAS, the aforementioned Program formalizes a process for applying for and receiving impact fee deferrals; and WHEREAS, deferral of impact fees structured as a loan owed to the City provides defined terms of repayment and ensures no ultimate loss of revenue to cover the ongoing impacts of the development; and Page 235 of 280 Ordinance No. ______ (2024 Series) Page 2 O _______ WHEREAS, the City Council finds that the proposed amendment is consistent with the General Plan, and other applicable City goals and policies as amended; and WHEREAS, notices of said public hearing were made at the time and in the manner required by law; and WHEREAS, the City Council has duly considered all evidence, including the deferral program’s consistency with the Mitigation Fee Act and the California Constitution, the City’s ongoing need to cover the costs of increased residential development, the input of interested parties, and evaluation and recommendations by staff. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. Incorporation of Recitals. The City Council find that the foregoing recitals and staff report presented with this ordinance are true and correct and are incorporated in the ordinance by this reference and adopted as the findings of the City Council. SECTION 2. Findings. Based upon all the evidence, the City Council makes the following additional findings: 1. The proposed amendments to Section 4.56.050 to implement the Impact Fee Deferral Program will not cause significant health, safety, or welfare concerns since the amendments are consistent with the General Plan and directly implement City goals and polices. 2. The proposed amendments to Section 4.56.050 of the Municipal Code are consistent with the 6th Cycle Housing Element Program 6.18 which states “Actively seek and collaborate with non -profit housing providers to (jointly) apply for three revenue sources each year during the planning period, including State, Federal and private/non-profit sources, and financing mechanisms to financially assist with the development of housing affordable to extremely low, very low and low or moderate income households.” SECTION 3. Environmental Determination. This Ordinance is exempt from the California Environmental Quality Act (CEQA), because it is not a “project” under Public Resources Code § 21065 and the CEQA Guidelines §15378 in that the impact fee deferral program would not cause either a direct or reasonably foreseea ble indirect physical change in the environment. Every development project subject to a development impact fee deferral loan would be required to undergo applicable development review, including CEQA compliance or finding of exemption. SECTION 4. Section 4.56.050, entitled “Payment of fees” is hereby amended to read as follows: Page 236 of 280 Ordinance No. ______ (2024 Series) Page 3 O _______ A. Except as otherwise provided in Section 66007 of the Government Code, development impact fees shall be paid to the city upon final inspection or the date the certificate of occupancy is issued, whichever occurs first, unless the City requires payment of those fees at an earlier time as authorized by Government Code 66007. In cases where payment of all or part of the required fee is deferred beyond the earlier date of final inspection or certificate of occupancy, the community development director may require that the applicant, at the applicant’s expense, execute a contract with the city to pay all deferred impact fees in accordance with the provisions of the City’s Impact Fee Deferral Program, as further described in subsection B of this Section and further approved and amended through City Council Resolution. B. Impact Fee Deferral Program 1. In accordance with the provisions and definitions of the City’s Development Impact Fee Deferral Program Guidelines, an eligible applicant may enter into a development impact fee deferral loan agreement for a qualifying residential development project. The fee deferral agreement shall explicitly provide for the recordation of a lien against the real property on which the approved development project is to be located, which shall be removed upon payment in full of all deferred fees. All costs assessed by the county for the recordat ion of the documents set forth herein shall be paid by the applicant at the time of execution of the fee deferral agreement. Deferral is at the sole discretion of the City. The Community Development Director will consider the needs of the City and the feasibility of the deferral request on a case-by-case basis. The decision of the Community Development Director (or the Council, if approval is deferred to the City Council by the Community Development Director) on an impact fee deferral application is final and not appealable. 2. The development impact fees eligible for deferral shall be limited to the fees identified in Section 4.56.030. Special district fees, water and wastewater impact fees shall not be eligible for the Impact Fee Deferral Program. SECTION 5. Severability. If any subdivision, paragraph, sentence, clause, or phrase of this Ordinance is, for any reason, held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the val idity or enforcement of the remaining portions of this Ordinance, or any other provisions of the city's rules and regulations. It is the city's express intent that each remaining portion would have been adopted irrespective of the fact that any one or more subdivisions, paragraphs, sentences, clauses, or phrases be declared invalid or unenforceable . Page 237 of 280 Ordinance No. ______ (2024 Series) Page 4 O _______ SECTION 6. Implementation. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage in The New Times, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage. INTRODUCED on the ____ day of _______, 2024, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ___ day of ___, 202 4, on the following vote: AYES: NOES: ABSENT: __________________________ Mayor Erica A. Stewart ATTEST: _______________________ Teresa Purrington City Clerk APPROVED AS TO FORM: ________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk Page 238 of 280 R ______ RESOLUTION NO. ______ (2024 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, SUPERSEDING RESOLUTION NO. 9903 (2007 SERIES) PROVIDING FOR THE DEFERRAL OF CITY-WIDE DEVELOPMENT IMPACT FEES FOR ELIGIBLE AFFORDABLE HOUSING PROJECTS. THE PROJECT IS EXEMPT FROM ENVIRONMENTAL REVIEW (CEQA), AS REPRESENTED IN THE STAFF REPORT AND ATTACHMENTS DATED SEPTEMBER 17, 2024 WHEREAS, the City’s General Plan requires that the costs of public facilities and services needed for new development shall be borne by new development unless the community chooses to help pay the costs of a certain development to obtain community- wide benefits; and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California, on November 21, 2000, adopting Council Resolution No. 9131 (2000 Series) for the purpose of waiving city-wide development impact fees for affordable housing units in excess of inclusionary requirements; and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California, on June 5, 2007, adopting Council Resolution No. 9903 (2007 Series), which superseded and replaced Resolution No. 9131 (2000 Series); and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California, on September 17, 2024, to introduce an ordinance to amend Section 4.56.050 of the Municipal Code to establish a development impact fee deferral program for qualifying affordable housing projects; and WHEREAS, at said hearing on September 17, 2024, the City Council considered all evidence, including the deferral program’s consistency with the Mitigation Fee Act and the California Constitution, the City’s ongoing need to cover the costs of increased residential development, the input of interested parties, and evaluation and recommendations by staff; and WHEREAS, fee deferral serves a public purpose because it would incentivize the development of affordable housing within the City by deferring certain up-front costs which can be burdensome and cost-prohibitive for developers of affordable housing and/or benefit the competitive score needed to secure state low-income tax credit financing. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis Obispo as follows: Page 239 of 280 Resolution No. _______ (2024 Series) Page 2 R _______ SECTION 1. Environmental Review. This fee deferral program is exempt from the California Environmental Quality Act (CEQA), because it is not a “project” under Public Resources Code § 21065 in that the impact fee deferral program would not cause either a direct or reasonably foreseeable indirect physical change in the environment. Every development project subject to a development impact fee deferral loan would be required to undergo applicable development review, including CEQA compliance or finding of exemption. SECTION 2. 1. In accordance with Ordinance No. XXXX (2024 Series) and the City’s Affordable Housing Development Impact Fee Deferral Program Guidelines, as modified from time to time, a developer of Affordable Housing projects may apply for a Development Impact Fee Deferral from the City. If the application is approved, the developer will be required to execute a Development Impact Fee Deferral Agreement and a Promissory Note, secured by a Deed of Trust. The Promissory Note and Deed of Trust will be recorded on the property. The Promissory Note shall describe the deferral as a loan on the property for a term of 20 years and shall account for an annual simple fixed interest rate of three percent, to be paid in full at the end of the term . The amount of deferred fees (the loan amount) will be calculated according to the City’s Fee Schedule in effect at the time the fees would otherwise become due, or as otherwise determined by the City, and shall be reflected in the Promissory Note. 2. The Community Development Director is authorized to approve and execute any eligible fee deferral under this Program. The Community Development Director may, at their discretion, refer approval of an impact fee deferral application to the City Council on an as-needed basis or concurrently with Affordable Housing Fund (AHF) awards. 3. The fee deferral period for any approved development project is twenty (20) years from the date of final occupancy for the project, with no payments required during the deferral period. Prior to or at the end of the deferral period, the impact fees and associated interest must be repaid in full in a single payment. 4. An annual simple fixed interest rate of three percent (3%) shall be paid in full at the end of the term. Interest shall accrue starting at the commencement of the deferral period for an approved development project. 5. The impact fee deferral plus any accrued interest may be paid at any time prior to the end of the deferral period without penalty. An early payment in the full amount plus interest would remove any loan contingencies. 6. Upon full repayment of the loan, the City shall cooperate with the applicant in recording a notice of cancellation of the lien. Page 240 of 280 Resolution No. _______ (2024 Series) Page 3 R _______ SECTION 3. “Affordable housing” means housing which can only be purchased or rented by a household with extremely low, very low-, low-, or moderate-income, as described in the City’s Below Market Rate Housing Standards. Eligible Affordable Housing projects are those as defined in the City’s Affordable Housing Development Impact Fee Deferral Program Guidelines, as modified from time to time. SECTION 4. Water and wastewater development impact fees shall not be eligible for deferral under this Resolution or the adopted Affordable Housing Development Impact Fee Deferral Program Guidelines. SECTION 5. This deferral only applies to City-wide development impact fees; it does not apply to fees, assessments, or special taxes for infrastructure improvements applicable to special benefit areas. Page 241 of 280 Resolution No. _______ (2024 Series) Page 4 R _______ SECTION 6. This Resolution supersedes and replaces Resolution No. 9903 (2007 Series) adopted by this Council on June 5, 2007 . This Resolution shall become effective thirty (30) days after final passage of Ordinance No. XXXX (2024 Series.) Upon motion by______________, seconded by ______________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this ______ day of _________ 2024. ___________________________ Mayor Erica A. Stewart ATTEST: _________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: __________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk Page 242 of 280 Page 1 DEVELOPMENT IMPACT FEE DEFERRAL PROGRAM GUIDELINES PROGRAM OVERVIEW The Impact Fee Deferral Program (“Program”) is designed to encourage the construction of qualifying residential development projects within the City of San Luis Obispo (the “City”) that further the City’s housing goals and strategies. The Program allows for the deferral of certain development impact fees that would otherwise be due and payable at the time of obtaining a building permit for an approved development project for a period of seventeen years with interest. Definitions “Applicant” means the owner or owners of record of the real property with an approved development project for which the deferral of certain development impact fees is sought pursuant to this Program. “Approved development project” means a project that has received any required discretionary action by the City (including projects that are exempt from discretionary review under Municipal Code Section 17.106.020) and found to be in compliance with all environmental requirements prior to issuance of a building permit. “Eligible Affordable Housing project” means an approved development project under this Program for which the City has approved the deferral of certain development impact fees. See table below for eligible projects. PROGRAM GUIDELINES Approval Authority The Community Development Director has the authority to approve any eligible fee deferral under this Program. The Community Development Director has authority to execute any documents necessary to enter into a fee deferral agreement with the Applicant. Application and Approval Process An applicant may file an application with the City for a fee deferral (Exhibit A). The Community Development Director may, in their sole discretion, approve or deny a fee deferral application, or defer approval of the application to the City Council. A fee deferral granted under this Program shall be acknowledged by a Development Impact Fee Deferral Agreement (Exhibit B), a Deed of Trust (Exhibit C), and Promissory Note (Exhibit D) to ensure the security for the repayment of deferred fees. The following requirements must be satisfied prior to the execution and recordation of a Development Impact Fee Deferral Agreement: 1) Submittal to the City of a completed fee deferral application; and 2) Approval of the fee deferral application; and Page 243 of 280 Development Impact Fee Deferral Program Guidelines Page 2 3) Payment of the administration fees (in accordance with the City’s Comprehensive Fee Schedule) and/or recordation costs, if applicable. Following execution of a Fee Deferral Agreement, and prior to issuance of certificate(s) of occupancy, Applicant/Developer will be required to execute a Promissory Note for the amount of the deferred impact fees (calculated according to the fee schedule in effect at that time), secured by a Deed of Trust. The approval of a fee deferral pursuant to this Program for any development project shall not be transferable to another project regardless of whether the applicant is the same for both projects and whether the other project is also an eligible project. Eligible Projects  Housing projects that provide units in excess of the City’s Inclusionary Housing Requirements (Municipal Code Chapter 17.138), to be rented to low, very low, extremely low or acutely low - income households.  Housing projects that are restricted to lower, very low, extremely low or acutely low -income households and that are built, owned and managed by a government agency or a nonprofit housing organization. Eligible Impact Fees  Fire impact fee; and  Parkland in-lieu fee; and  Parks and recreation development impact fee; and  Police impact fee; and  Transportation impact fees (citywide and designated subareas). Non-Eligible Fees  Special District Fees  Water and wastewater impact fees (these impact fees are established in order to pay for the capital costs of public facilities reasonably related to the needs of new development in the city). Repayment Terms The fee deferral period for any approved development project is twenty (20) years from the date of final inspection/certificate of occupancy, with no payments required during the deferral period. Prior to or at the end of the deferral period, the impact fees and associated interest must be repaid in full in a single payment.  The deferred amount (loan amount) will be calculated according to the fee schedule in effect at the time of final inspection/certificate of occupancy for the project.  An annual simple fixed interest rate of three percent (3%) shall be paid in full at the end of the term. Interest shall accrue starting at the commencement of the deferral period for an approved development project.  The impact fee deferral plus any accrued interest may be paid at any time prior to the end of the deferral period. An early payment in the full amount plus interest will remove any loan contingencies. GENERAL CONDITIONS Page 244 of 280 Development Impact Fee Deferral Program Guidelines Page 3 All applications for deferral under the Program shall be considered on a case-by-case basis. Approval is not guaranteed, and the City has complete and sole discretion to approve or deny any application for deferral, and to provide full or partial deferral, or none at all. All approval decisions shall be final, and the applicant shall have no right of appeal from any decision on any deferral application. The time from completed application to a deferral decision, evidenced by a deferral agreement, will vary depending on the quality and completeness of the application, the responsiveness of the applicant, and the workload of City staff, among other factors. Applicants shall comply with all laws with respect to the deferral of fees under the Program. The City makes no representation as to whether the applicant’s deferral of fees would subject applicant’s activities or project to the state prevailing wage laws, as set forth at Labor Code sections 1720, et seq, or to any building regulations or standards applicable to public housing, as that term is defined in the respective regulation(s) and/or standard(s). Applicants shall perform all work in compliance with all applicable laws including, without limitation, and as applicable, state prevailing wage laws pursuant to Labor Code sections 1720, et seq., and building regulations or standards applicable to public housing. In the event an applicant fails to comply with any applicable law, the applicant shall be liable for the payment of all penalties, wages and/or damages resulting therefrom, and shall defend, indemnify, and hold the City harmless for any violations or alleged violations of law. These provisions will be included in any impact fee deferral agreement. Applicant is encouraged to seek legal advice through legal counsel of their choosing for further guidance. Page 245 of 280 Page 246 of 280 Application For Development Impact Fee Deferral Program Eligibility for this program is defined in the City’s Development Impact Fee Deferral Program Guidelines. The following requirements must be satisfied prior to the execution of a fee deferral agreement: 1. Submittal to the City of a completed fee deferral application; and 2. Approval of the fee deferral application by the Community Development Director; and 3. Provision of adequate security securing the repayment through the recordation of a Fee Deferral Agreement; and 4. Payment of the administration fees (in accordance with the City’s Comprehensive Fee Schedule) and/or recordation costs, if applicable In no event shall a certificate of occupancy for an approved eligible project be issued until either of the following occurs: a. Payment of all applicable impact fees due; or b. Execution of a fee deferral agreement pursuant this Program PROJECT/PERMIT Location Of Project (Address): Click or tap here to enter text. Project Description: Click or tap here to enter text. Subdivision Name: Click or tap here to enter text. Lot Number: Click or tap here to enter text. Assessor’s Parcel Number(s): Click or tap here to enter text. REAL PROPERTY OWNER Property Owner Name (Signature Required Below) Enter text here. Cell Home Business Fax Enter text here. Cell Home Business Fax Enter text here. Address, City, State, Zip: Click or tap here to enter text. Email Address: Click or tap here to enter text. Page 247 of 280 APPLICANT Applicant Name (Signature Required Below) Enter text here. Cell Home Business Fax Enter text here. Cell Home Business Fax Enter text here. Applicant Address, City, State, Zip: Click or tap here to enter text. Applicant Representative Name Enter text here. Cell Home Business Fax Enter text here. Cell Home Business Fax Enter text here. Applicant Representative Address, City, State, Zip: Click or tap here to enter text. DOCUMENTS Required Documents For Signatures Received ☐ = ☐ ☐ Assessor’s parcel number/address/subdivision and lot listed and verified (legal description obtained from title company ☐ ☐ Vesting deed/grant deed verifying ownership attached ☐ ☐ Estimated impact fees listed with pending receipts attached (***you must obtain the most current versions of these receipts from he Building Department***) ☐ ESTIMATED IMPACT FEE INFORMATION *Do Not Write Below This Line (To Be Completed By Department Staff)* NOTE: The actual amount of fees deferred will be calculated pursuant to the Fee Schedule in effect at the time the fees are due, and applicant will be required to execute a promissory note and deed of trust for that amount at that time. Type of Fee Amount General Government Impact Fee $ Click or tap here to enter text. Fire Impact Fee $ Click or tap here to enter text. Parkland In-Lieu Fee $ Click or tap here to enter text. Parks & Recreation Impact Development Fee $ Click or tap here to enter text. Police Impact Fee $ Click or tap here to enter text. Transportation Impact Fee $ Click or tap here to enter text. IMPACT FEE SECTION STAFF APPROVAL: Signature (Print Name): Click or tap here to enter text. Page 248 of 280 `RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of San Luis Obispo Community Development Department 919 Palm Street San Luis Obispo, CA 93401-3249 Attn: Community Development Director No fee for recording pursuant to (Space above for Recorder's Use) Government Code Section 27383 The undersigned declare that there is no documentary transfer tax on this matter. IMPACT FEE DEFERRAL AGREEMENT (Affordable Housing Impact Fee Deferral Program) This IMPACT FEE DEFERRAL AGREEMENT ("Agreement") is made and entered into on this ______ day of __________________, 20__, by and between the City of San Luis Obispo, a California charter city and municipal corporation (the "City"), and [enter Owner's name and entity type] (the "Owner"), collectively referred to as the "Parties." RECITALS A. Owner is the owner of certain real property located at [enter street address] in the City, which is more particularly described in attached Exhibit A incorporated herein by this reference (the "Property"). B. On [enter date], the City [enter City approval body] adopted [enter entitlement name and number] (the "Project Approvals") to approve Owner's construction of [enter number of units] residential units on the Property (the "Project"). C. The City collects development impact fees in accordance with Chapter 4.56 of the San Luis Obispo Municipal Code and pursuant to the Comprehensive Fee Schedule established by the City. D. The Project is eligible for deferral of impact fees under Section 4.56.050 of the San Luis Obispo Municipal Code and the City’s Development Impact Fee Deferral Program Guidelines because [basis for eligibility; units in excess of Inclusionary Housing Ordinance req, 100% affordable and developed by nonprofit] Page 249 of 280 E. On [date], the City approved Owner’s Application for Development Impact Fee Deferral Program as to the Project. AGREEMENT NOW, THEREFORE, the Parties agree and acknowledge that the above recitals are true and accurate, and are incorporated into this Agreement by this reference, and the Parties mutually acknowledge and agree as follows: 1. Owner is electing to participate in the Impact Fee Deferral Program. 2. The City has agreed to issue a loan to Owner in the form of deferred payment of certain development impact fees associated with the Project. 3. Owner shall execute a Promissory Note, secured by a Deed of Trust, prior to the City’s issuance of certificate(s) of occupancy for the Project. The Promissory Note and Deed of Trust shall be recorded against the Property to secure repayment of the loan. 4. An estimated breakdown of the development impact fees to be deferred (the “loan amount”) is found in Exhibit A. The actual loan amount will be calculated according to the fee schedule in effect at the time of execution of the Promissory Note. ENFORCEMENT Default. Failure of the Owner to satisfy any of Owner's obligations under the terms of this Agreement, including without limitation execution of a Promissory Note and Deed of Trust as discussed herein, within ninety (90) days after the delivery of a notice of default from the City will constitute a default under this Agreement ("Default"), and the loan amount shall immediately be due and payable. In addition, the City may exercise any and all remedies available to it under the Municipal Code or other any other provision of law or equity, including but not limited to: withholding, conditioning, suspending or revoking any approvals for the Project, including without limitation final inspections for occupancy and/or the issuance of any certificates of occupancy; instituting against the Owner, or other parties, a civil action for declaratory relief, injunction or any other equitable relief, or relief at law, including without limitation an action to rescind a transaction and/or to require repayment of any funds received in connection with such a violation; where one or more persons have received financial benefit as a result of violation of this Agreement, the City may assess, and institute legal action to recover as necessary, a penalty in any amount up to and including the amount of financial benefit received, in addition to recovery of the benefit received. Page 250 of 280 Protest. Owner acknowledges and agrees that the Project Approvals referenced in the Recitals, which are incorporated herein, provided adequate and proper notice pursuant to Government Code Section 66020 of Owner's right to protest any requirements for fees, dedications, reservations, and other exactions as may be included in this Agreement, that no protest in compliance with Section 66020 was made within ninety (90) days of the date that notice was given, and that the period has expired in which Owner may protest any and all fees, dedications, reservations, and other exactions as may be included in this Agreement. Attorney's Fees and Costs. If either Party takes or commences any actions or proceedings, including litigation or arbitration, against the other by reason of any breach or claimed breach of any provision of, or in any way connected with, this Agreement, or seeks a judicial declaration of rights under this Agreement, the Party prevailing in such action or proceeding shall be entitled to recover from the other Party the prevailing Party's reasonable attorney's fees and costs, including, but not limited to, all expert witness fees, other witness fees and associated expenses, whether or not the proceeding or action proceeds to judgment. GENERAL PROVISIONS Appointment of Other Agencies. At its sole discretion, the City may designate, appoint or contract with any other public agency, for-profit or non-profit organization to perform some or all of the City's obligations under this Agreement. Records. The Owner shall retain all records related to compliance with obligations under this Agreement for a period not less than five (5) years from the date of origination of such records, and make them available to City employees or others designated by the City for inspec tion and copying on five (5) business days' written notice. The City shall be entitled to monitor compliance with this Agreement, and the Owner shall cooperate with City monitoring, including obtaining Eligible Household verification upon request of the City. Compliance With Law. The Owner shall keep itself informed of and shall observe and comply with all applicable State and Federal laws and regulations, and county and City of San Luis Obispo ordinances, regulations and adopted codes, which in any manner affect this Agreement, including, without limitation, and as applicable, state prevailing wage laws pursuant to Labor Code sections 1720, et seq., and building regulations or standards applicable to public housing, as that term is defined in the respective regulation(s) and/or standard(s). The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Owner to comply with this Section. Hold Harmless. Owner will indemnify and hold harmless (without limit as to amount) City and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss, all risk of loss and all damage (including expense and attorney's fees) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to the Project, the Affordable Units, or Owner's performance or Page 251 of 280 non-performance under this Agreement, including but not limited to claims pursuant to California Labor Code Section 1720 et seq., and to any building regulations or standards applicable to public housing, as that term is defined in the respective regulation(s) and/or standard(s) and shall protect and defend Indemnitees, and any of them with respect thereto, except to the extent arising from the proven gross negligence or willful misconduct of the City. The provisions of this Section shall survive expiration or other termination of this Agreement or any release of part or all of the Property from the burdens of this Agreement, and the provisions of this Section shall remain in full force and effect. Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the Party to receive such notice at the addressed set forth below: TO THE CITY: City of San Luis Obispo Community Development Department 919 Palm Street San Luis Obispo, CA 93401-3249 Attn: Community Development Director WITH COPY TO: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Attn: City Attorney TO THE OWNER [enter in Owner’s Information; insert more lines as necessary]: ______________________ ______________________ ______________________ ______________________ Attn: _________________ Any notice shall be deemed delivered on the first business day that delivery is attempted or upon receipt, whichever is sooner. As used herein, "business day" means any day other than a Saturday, Sunday, or any state or federal holiday on which financial institutions in San Luis Obispo County are authorized or required to close for observance thereof. Any Party may change the address to which notices are to be sent by notifying the other Parties of the new address, in the manner set forth above. Integrated Agreement. This Agreement sets forth the full and entire understanding of the Parties regarding the matter set forth herein. Any other prior or existing understandings or agreements by the Parties, whether formal or informal, regarding any matters addressed within this Agreement are hereby superseded or terminated in their entirety. Page 252 of 280 Each Party's Role in Drafting the Agreement. Each Party to this Agreement has had an opportunity to review the Agreement, confer with legal counsel regarding the meaning of the Agreement, and negotiate revisions to the Agreement. Accordingly, neither Party shall rely upon Civil Code Section 1654 in order to interpret any uncertainty in the meaning of the Agreement. Amendment of Agreement. No changes, amendments, or alterations to this Agreement shall be effective unless in writing and signed by all Parties hereto. Major amendments to this Agreement, shall be subject to the review and approval of the decision-making body which approved the Project. Minor amendments to this Agreement may be approved by the Director. Upon approval, a new Agreement containing the amendments shall be executed and recorded. Applicable Law. This Agreement shall be governed by California law. Venue shall be the County of San Luis Obispo. Waivers. Any waiver by the City of any obligation or condition in this Agreement must be in writing. No waiver will be implied from any delay or failure by the City to take action on any breach or default of Owner or to pursue any remedy allowed under this Agreement o r applicable law. Any extension of time granted to Owner to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the City 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 City's written consent to future waivers. Title of Parts and Sections. Any titles of the sections, subsections, or subparagraphs of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement's provisions. Multiple Originals; Counterpart. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. Recording of Agreement. This Agreement shall be recorded against the Property in the Official Records of the County of San Luis Obispo. Binding on Successors. Should Owner transfer any or all of its obligations under the Promissory Note, to be executed by Owner for the loan contemplated by this Agreement, to the extent permitted by and in compliance with the terms of the Deed of Trust which secures said Note, this Agreement shall be binding upon any such successor, assignee, or transferee. Severability. In the event any limitation, condition, restriction, covenant, or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain in full force and effect. Page 253 of 280 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the day and year first above written. OWNER: __________________, a ______________ By:________________________________ Its:________________________________ CITY: City of San Luis Obispo, a California charter city and municipal corporation By: ________________________ Timothea (Timmi) Tway, Community Development Director APPROVED AS TO FORM AND LEGAL EFFECT: By: _______________________ J. Christine Dietrick, City Attorney Page 254 of 280 EXHIBIT A Page 255 of 280 Page 256 of 280 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of San Luis Obispo Community Development Department 919 Palm Street San Luis Obispo, CA 93401-3249 Attn: Community Development Director No fee for recording pursuant to (Space above for Recorder's Use) Government Code Section 27383 The undersigned declare that there is no documentary transfer tax on this matter. DEED OF TRUST, DEED OF TRUST COVENANTS, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST, DEED OF TRUST COVENANTS, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Deed of Trust") is made as of this [enter date] day of [enter month], 20__, between [enter name of Trustor], a California limited partnership (“Trustor”), the lessee of the real property described herein below, whose address is: [enter address] and [enter name of title company] (“Trustee”) and the CITY OF SAN LUIS OBISPO, a municipal corporation, whose address is 990 Palm Street, San Luis Obispo, California 93401 ("Beneficiary"). WHEREAS, Trustor desires to develop a [ ]-unit apartment complex (“Project”) on its leasehold interest in certain real property located in the City of San Luis Obispo, State of California, which is further described in Exhibit A attached hereto and incorporated herein by this reference (“the Real Property”). WHEREAS, Beneficiary and Trustor desire to ensure that the Real Property remain affordable to extremely-low, very-low and low-income persons for a period of not less than 55 years following the Borrower’s occupancy of the completed project pursuant to the Affordable Housing Agreement entered between Trustor and Beneficiary on [date] and Promissory Note executed by Trustor on [date.] WHEREAS, to implement the Project, Beneficiary has agreed to make a loan to Trustor in the amount of $[enter amount] (the “Loan”), for the purpose of deferring development impact fee costs associated with development of the Real Property related to the Project, and Trustor has delivered that certain Promissory Note (“Note”) in favor of Beneficiary on the even date hereof. WHEREAS, the Affordable Housing Agreement and Note impose certain restrictions on the sale or transfer of the Real Property. NOW, THEREFORE, THIS DEED OF TRUST WITNESSETH: Trustor, in consideration of the indebtedness referred to below and the trust herein created, irrevocably grants, conveys, transfers and assigns to Trustee, in trust, with the power of sale and Page 257 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 2 2 right of entry and possession, all of Trustor's estate, right, title and interest in, to and under the Real Property; TOGETHER WITH all structures and improvements now existing or hereafter erected on the Real Property, all easements, rights and appurtenances thereto or used in connection therewith, all rents, royalties, issues, profits, revenues, income and other benefits thereof or arising from the use or enjoyment of all or any portion thereof (subject, however, to the right, power and authority given herein to Trustor to collect and apply such rents, royalties, issues, profits, revenues, income and other benefits prior to an Event of Default hereunder), all interests in and rights, royalties and profits in connection with all minerals, oil and gas and other hydrocarbon substances thereon or therein, development rights or credits, air rights, water, water rights (whether riparian, appropriative or otherwise and whether or not appurtenant) and water stock, all intangible property and rights relating to the Real Property or the operation thereof or used in connection therewith, including, without limitation, trade names and trademarks and all furniture and fixtures, now or hereafter located in, or on, or attached or affixed to, or used or intended to be used in connection with, the Real Property, including, but without limitation, all heating, lighting, laundry, incinerating, gas, electric and power equipment, pipes, plumbing, fire prevention and fire extinguishing, refrigerating, ventilating and communication apparatus, air cooling and air conditioning apparatus, shades, awnings, blinds, curtains, drapes, attached floor coverings, including rugs and carpeting and other installed appliances, attached cabinets, trees, plants and other items of landscaping, shall, to the fullest extent permitted by law and for the purposes of this Deed of Trust, be deemed to be part and parcel of, and appropriated to the use of, the Real Property and, whether or not affixed or annexed thereto, be deemed conclusively to be real property and conveyed by this Deed of Trust, and Trustor agrees to execute and deliver, from time to time, such further instruments and documents as may be required by Beneficiary to confirm the lien of this Deed of Trust on any of the foregoing; TOGETHER WITH all of the estate, interest, right, title, other claim or demand which Trustor now has or may hereafter acquire in any and all awards made for the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the whole or an y part of the Property (as hereinafter defined), including, without limitation, any awards resulting from a change of grade of streets and awards for severance damages; TOGETHER WITH all of the estate, interest, right, title and other claim or demand which Trustor now has or may hereafter acquire with respect to the unearned premiums accrued, accruing or to accrue and the proceeds of insurance in effect with respect to all or any part of the foregoing. All of the foregoing property referred to in this Deed of Trust, together with the Real Property, is herein referred to as the "Property." ARTICLE 1. PURPOSE AND CONSIDERATION. This Deed of Trust is established for the purpose of securing, in such order of priority as Beneficiary may elect: (a) The repayment of the indebtedness evidenced by the Promissory Note Secured by Deed of Trust (the "Promissory Note"), of even date herewith, executed by Trustor as Maker, payable to the order of Beneficiary, in the initial principal amount of [enter principal amount in words] ($XXX,XXX) ("Principal"), and any and all late charges, interest costs Page 258 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 3 3 or fees required thereunder, and all extensions, renewals, modifications, amendments and replacements thereof. (b) The payment of all other sums which may be advanced by or otherwise be due to Trustee or Beneficiary under any provision of this Deed of Trust with interest (if any) thereon at the rate provided herein or therein. (c) Performance of all covenants of Trustor made in this Deed of Trust. (d) Performance of all covenants of Trustor as set forth in the Promissory Note. (e) Performance of all covenants of Trustor as set forth in the Affordable Housing Agreement . (f) Performance of all covenants of Trustor as set forth in the Development Impact Fee Deferral Agreement. ARTICLE 2. DEED COVENANTS. To protect the security of this Deed of Trust, Trustor and Trustee hereby covenant and agree as follows: SECTION 2.01. Restrictions on Use and Occupancy. The Real Property shall be used solely for low, very-low, and/or extremely-low income rental housing purposes. SECTION 2.02. Term of Use and Occupancy Restrictions. Trustor agrees that the above restrictions to the use and occupancy of the Real Property shall remain in effect for a period of fifty-five (55) years from the date of Borrower’s occupancy of the completed project. SECTION 2.03. Covenants Binding. These affordability requirements shall be covenants running with the land as defined in California Civil Code Section 1460, and shall apply to the Real Property as further described in Exhibit A. Pursuant to Civil Code Section 1468, which governs such covenants, the provisions of this Deed of Trust shall be binding upon all parties having any right, title, or interest in any of the Real Property, or any portion thereof, and on their heirs, successors in interest and assigns for a period of 55 years from the date of Borrower’s occupancy of the completed project. The parties agree that all future deeds or transfers of interest regarding the Real Property shall show the restrictions of this Agreement for as long as the Agreement is in effect. SECTION 2.04. Performance of Obligations Secured. Trustor shall promptly pay when due the indebtedness evidences by the Note and any late charges, costs and/or fees provided for in the Note and shall further perform fully and in a timely manner all other obligations of Trustor contained herein or in the Note. ARTICLE 3 – INSURANCE REQUIREMENTS SECTION 3.01. Trustor shall keep the Property and all improvements thereon insured against loss or damage by fire with extended all-risk coverage clauses, including vandalism and malicious Page 259 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 4 4 mischief clauses, in an amount not less than one hundred percent (100%) of the full replacement cost of such improvements with a company or companies and in such form and with such endorsements as may be approved or required by Beneficiary. SECTION 3.02. Trustor shall also maintain in full force and effect a policy of homeowners' general liability insurance insuring Trustor against liability for bodily injury, property damage and personal injury arising out of the operation, use or occupancy of the Property. The initial amount of such insurance shall be One Hundred Thousand Dollars ($100,000.00) per occurrence and not in the aggregate and shall be subject to periodic increase based upon increased liability awards or the reasonable recommendation of Trustor's professional insurance advisor. Trustor shall name Beneficiary as an additional insured under such policy. Such insurance shall be primary with respect to any insurance maintained by Beneficiary and shall not call on Beneficiary's insurance for contributions. SECTION 3.03. Trustor shall pay all premiums for the insurance policies required to be maintained under this Deed of Trust within fifteen (15) days after Trustor's receipt of a copy of the premium statement or other evidence of the amount due. At least thirty (30) days prior to the expiration of such policy, Trustor shall deliver to Beneficiary a renewal of such policy. SECTION 3.04. Any insurance which Trustor is required to maintain under this Deed of Trust shall include a provision requiring that the insurance carrier give Beneficiary not less than thirty (30) days written notice prior to any cancellation or modification of such coverage. If Trustor (i) fails to deliver any policy or renewal to Beneficiary required under this Deed of Trust within the prescribed time period or (ii) if any such policy is canceled or modified to reduce the amount or type of coverage without Beneficiary's consent and no substituted comparable coverage is obtained by Trustor prior to such cancellation or modification, Beneficiary may obtain such insurance. In such case, Trustor shall reimburse Beneficiary for the cost of such insurance within fi fteen (15) days after receipt of a statement that indicates the cost of such insurance and upon proof that Beneficiary has paid said statement. SECTION 3.05. Trustor shall maintain all insurance required under this Deed of Trust with companies holding a "general policy rating" of A-8 or better, as set forth in the most current issue of "Best Key Rating Guide." Trustor acknowledges that the insurance described in this Section is for the primary benefit of Beneficiary. Beneficiary makes no representation as to the adequacy of such insurance to protect Trustor's or Beneficiary's interests. Therefore, Trustor shall obtain any additional property or liability insurance that Trustor deems necessary to protect Beneficiary and Trustor, in the exercise of reasonable judgment. SECTION 3.06. Notwithstanding anything to the contrary contained herein, Trustor's obligation to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Trustor; provided, however, that Beneficiary shall be named as an additional insured thereunder and that the coverage afforded Beneficiary will not be reduced or diminished by reason of the use of such blanket policy of insurance and provided further that the requirements set forth herein are otherwise satisfied. Page 260 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 5 5 SECTION 3.07. All of the above-mentioned insurance policies or certificates of insurance must be satisfactory to Beneficiary. Trustor’s compliance with each of the requirements in Sections 3.01 through 3.06 shall be considered material terms of this Deed of Trust. Beneficiary shall not by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any insurance, incur any liability for or with respect to the amount of insurance carried, the form or legal sufficiency of insurance contracts, insolvency of insurance companies or payment or defense of lawsuits and Trustor hereby expressly assumes full responsibility therefor and all liability, if any, with respect thereto. SECTION 3.08. Condemnation and Insurance Proceeds. SUBSECTION 3.08(a). Any award of damages in connection with any taking or condemnation, or for injury to the Property by reason of public use, or for damages for private trespass or entry onto the Property is hereby assigned and shall be paid to Beneficiary as further security for all obligations secured by this Deed of Trust. Upon receipt of such proceeds, Beneficiary may hold the proceeds as further security or apply or release them in the same manner and with the same effect as provided in this Deed of Trust for the disposition of proceeds of fire or other insurance. SUBSECTION 3.08(b). Any insurance proceeds or awards in connection with any casualty or damage or injury to the Property covered by insurance ("Insurance Proceeds") are hereby assigned to Beneficiary to be held and applied by Beneficiary in the manner hereinafter provided. Beneficiary may, at its option, and at its own expense, appear in and prosecute in its own name any action or proceeding to enforce any cause of action for such Insurance Proceeds. All Insurance Proceeds shall be applied by Beneficiary upon any indebtedness secured by this Deed of Trust and in any order determined by Beneficiary or, at the option of Beneficiary, the entire amount so collected or any part of that amount may be released to Trustor. This application or release shall not cure or waive any default or notice of default under this Deed of Trust or invalidate any act done pursuant to such notice. SUBSECTION 3.08(c). Trustor, immediately upon obtaining knowledge of the institution of any proceedings relating to condemnation or other taking of or damage or injury to the Property or any portion thereof, or knowledge of any casualty damage to the Property or damage in any other manner, shall immediately notify Beneficiary in writing. Beneficiary may participate, at its own expense, in any such proceedings and may join Trustor in adjusting any loss covered by insurance. ARTICLE 4. TAXES, LIENS AND OTHER ITEMS. Trustor shall pay, when due, all taxes, bonds, assessments, fees, liens (including prior trust deed liens), charges, fines, impositions and any and all other items which are attributable to or affect the Property and which may attain a priority over this Deed of Trust or the indebtedness or evidence of indebtedness secured hereby, by making payment prior to delinquency directly to the payee thereof. Trustor may initiate proceedings to contest any such taxes, bonds, assessments, fees, liens, charges, fines, impositions or other items so long as Trustor takes steps to ensure that Beneficiary's security is not threatened in any manner. Trustor shall pay all costs of the proceedings, including any costs or fees incurred by Beneficiary. Upon the final determination of any proceeding or contest, Trustor shall immediately pay the amounts due, together with all costs, charges, interest and penalties incidental to the proceedings. Page 261 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 6 6 ARTICLE 5. PRESERVATION AND MAINTENANCE OF PROPERTY. Trustor shall keep the Property and every part thereof in good condition and repair, ordinary wear and tear excepted, and shall not permit or commit any waste, impairment or deterioration of the Property nor commit, suffer or permit any act upon or use of the Property in violation of law or applicable order of any governmental authority, whether now existing or hereafter enacted and whether foreseen or unforeseen, including, without limitation, violation of any zoning, building or environmental protection statutes, ordinances, regulations, orders and restrictions or in violation of any covenants, conditions or restrictions affecting the Property or bring or keep any article upon any of the Property or cause or permit any condition to exist thereon which would be prohibited by or could invalidate any insurance coverage maintained or required hereunder to be maintained by Trustor on or with respect to any part of the Property and further shall do all other acts which from the character or use of the Property may be reasonably necessary to protect the security hereof, the specific enumerations herein not excluding the general. Trustor shall completely restore and repair promptly and in a good and workmanlike manner any building, structure or improvement thereon which may be damaged or destroyed and pay, when due, all claims for labor performed and materials furnished therefor, whether or not insurance or other proceeds are available to cover, in whole or in part, the costs of any such restoration or repair. Trustor shall notify Beneficiary immediately in writing of any damage to the Property in excess of Ten Thousand Dollars ($10,000.00). ARTICLE 6. PROTECTION OF SECURITY: COSTS AND EXPENSES. Trustor shall appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee and shall pay all reasonable costs and expenses, including, without limitation, costs of evidence of title and reasonable attorney's fees, in any such action or proceeding in which Beneficiary or Trustee may appear and in any suit brought by Beneficiary to foreclose this Deed of Trust or to enforce or establish any other rights or remedies of Beneficiary hereunder. If Trustor fails to perform any of the covenants or agreements in this Deed of Trust or if any action or proceeding is commenced which affects Beneficiary's interest in the Property or any part thereof, including, but not limited to, eminent domain, code enforcement or proceedings of any nature whatsoever under any federal or state law, whether now existing or hereafter enacted or amended, relating to bankruptcy, insolvency, arrangement, reorganization or other form of debtor relief, or to a decedent, then Beneficiary or Trustee may, but without obligation to do so and upon ten (10) days' prior written notice to and demand upon Trustor (unless a shorter notice period is necessary to protect Beneficiary's interest in the security hereof, in which cas e only reasonable notice and demand under the circumstances shall be required) and without releasing Trustor from any obligation hereunder, make such appearances, disburse such sums and take such action as Beneficiary or Trustee deems necessary or appropriate to protect Beneficiary's interest, including, but not limited to, disbursement of reasonable attorney's fees, entry upon the Property to make repairs or otherwise protect the security hereof, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of either Beneficiary or Trustee appear to be prior or superior hereto. Trustor further agrees to pay all reasonable expenses of Beneficiary (including fees and disbursements of counsel) reasonably related to the p rotection of the rights of Beneficiary hereunder, and enforcement or collection of payment of the Promissory Note, whether by judicial or non-judicial proceedings, or in connection with any bankruptcy, insolvency, arrangement, reorganization or other debtor relief proceeding of Trustor, or otherwise. Page 262 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 7 7 Beneficiary shall give Trustor ten (10) days' prior written notice before disbursing any amounts pursuant to this Article. Any amounts disbursed by Beneficiary or Trustee pursuant to this Section shall be additional indebtedness of Trustor secured by this Deed of Trust as of the date of disbursement. All such amounts shall be payable by Trustor immediately without demand. Nothing contained herein shall be construed to require Beneficiary or Trustee to incur any expense, make any appearance or take any other action. ARTICLE 7. ENFORCEMENT. Acknowledgement of Enforceability. Trustor represents, warrants, covenants and agrees that it has a leasehold interest in the Real Property and that it has good right and lawful authority to encumber the same as provided herein; that the Real Property is free from any and all liens and encumbrances excepting only such as have been approved by Beneficiary and that Trustor warrants and will defend the title to the Property against all claims and demands whatsoever not specifically excepted herein (and except for claims and demands arising from acts or omissions of Beneficiary or any predecessor-in-interest to Beneficiary not previously disclosed to Trustor), and Trustor will execute, acknowledge and deliver all and every such further assurances unto Beneficiary of the title to the Property hereby conveyed and intended so to be or that Trustor may be or shall become hereinafter bound so to do. Trustor covenants and warrants that the Promissory Note and this Deed of Trust are valid and enforceable obligations of Trustor in accordance with the terms thereof and hereof; and that this Deed of Trust does not, nor does the Promissory Note, nor does the performance or observance by Trustor of any of the matters or things in the Promissory Note or this Deed of Trust, contravene any covenant in any indenture or agreement affecting Trustor. ARTICLE 8. EVENTS OF DEFAULT. Each of the following shall constitute an event of default ("Event of Default") hereunder (including, if Trustor and Trustee consists of more than one person or entity, the occurrence of any of such events with respect to any one or more of such persons or entities): SECTION 8.01. Breach of Covenants. Default by Trustor in the performance of any of the material covenants or agreements of Trustor contained herein, in the Promissory Note, in the Affordable Housing Agreement, or any other note or instrument, trust deed or other obligation of Trustor relating to the Property secured by any part of or all of the Property, whether junior or senior to this Deed of Trust. Unless otherwise provided in this Deed of Trust, any default or failure to perform any covenant under this Deed of Trust shall not be an Event of Default if it is cured within thirty (30) days after written notice thereof given by the Beneficiary, provided, however, that if such failure to perform shall not be reasonably susceptible of cure within such 30-day period, such failure shall not constitute an Event of Default if Trustor shall commence to cure such failure within such 30-day period and diligently prosecute such cure to completion; provided, however, any such cure shall be completed within one hundred and twenty (120) days from the date of such written notice. SECTION 8.02. Appointment of Trustee. The appointment pursuant to an order of a court of competent jurisdiction, of a trustee, receiver or liquidator of the Property or any part thereof, or of Trustor, or any termination or voluntary suspension of the transaction of business of Trustor, or any attachment, execution or other judicial seizure of all or any substantial portion of Trustor's Page 263 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 8 8 assets; provided, however, that if such attachment, execution or seizure is involuntary, Trustor shall not be deemed in default unless the same is not discharged within ninety (90) days. SECTION 8.03. Bankruptcy Filing. The filing by or against Trustor of a petition in bankruptcy or for an arrangement or for reorganization or for other form of debtor relief pursuant to the federal Bankruptcy Act, as the same may be amended or replaced from time to time, or any other law, federal or state, whether now existing or hereafter amended or enacted relating to insolvency or debtor relief (except that in the case of a filing against Trustor, an Event of Default shall not exist unless Trustor fails to have the proceeding discharged within ninety (90) days after such filing), or the adjudication of Trustor as a bankrupt or an insolvent by a decree of a court of competent jurisdiction, or the making of an assignment for the benefit of creditors, or the admission by Trustor in writing of its inability to pay its debts generally as they become due, or the giving of consent by Trustor to the appointment of a receiver or receivers of all or substantially all of its property. SECTION 8.04. Misrepresentations. Any representation or disclosure made to Beneficiary by Trustor as an inducement to the making of the Loan evidenced by the Promissory Note that proves to be false or misleading in any material respect as of the time the same was made, whether or not any such representation or disclosure appears as part of this Deed of Trust. SECTION 8.05. Other Events. Any other event which, under this Deed of Trust, or under the Promissory Note or the Agreement, constitutes an Event of Default by Trustor hereunder or thereunder or gives Beneficiary the right to accelerate the maturity of the indebtedness, or any part thereof, secured hereby. SECTION 8.06. Cure Rights. (a) Monetary Default. If a monetary Event of Default occurs, prior to exercising any remedies thereunder, Beneficiary shall give the Trustor written notice of such default. Trustor shall have a period of ten (10) days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary. (b) Non-Monetary Default. If a non-monetary Event of Default occurs, prior to exercising any remedies thereunder, Beneficiary shall give Trustor written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of remedies by Beneficiary. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and if Trustor (a) initiates corrective action within said period, and (b) diligently, continually, and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within one hundred twenty (120) days after the first notice of default is given. ARTICLE 9. REMEDIES. Upon the occurrence of any Event of Default and the expiration of any applicable period within which to cure the same, Trustee and Beneficiary shall have the following rights and remedies: Page 264 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 9 9 SECTION 9.01. Acceleration. Beneficiary may declare the entire outstanding Principal, accrued and unpaid interest and all other sums or payments required hereunder to be due and payable immediately and notwithstanding the date such sums would otherwise be due in accordance with the Promissory Note and the Agreement. SECTION 9.02. Entry. Whether or not Beneficiary exercises the right provided in Section 9.01 above, Beneficiary, in person or by agent or court-appointed receiver, may enter upon, take possession of, manage and operate the Property or any part thereof and do all things necessary or appropriate in Beneficiary's sole discretion in connection therewith, including, without limitation, making and enforcing, and if the same be subject to modification or cancellation, modifying or canceling leases upon such terms or conditions as Beneficiary deems proper, obtaining and evicting tenants, and fixing or modifying rents, contracting for and making repairs and alterations, and doing any and all other acts which Beneficiary deems proper to protect the security hereof; and either with or without so taking possession, in its own name, in the name of Trustor or by court-appointed receiver (which may be appointed on notice or on ex parte application without notice), suing for or otherwise collecting and receiving the rents and profits, including those past due and unpaid, and applying the same less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby and in such order as Beneficiary may determine. Upon request of Beneficiary, Trustor shall assemble and make available to Beneficiary at the site of the Real Property any of the Property which has been removed therefrom. The entering upon and taking possession of the Property, or any part thereof, the collection of any rents and profits and the application thereof as aforesaid shall not cure or waive any Event of Default theretofore or thereafter occurring or affect any not ice or Event of Default or notice, and, notwithstanding continuance in possession of the Property or any part thereof by Beneficiary, Trustor or a receiver, and the collection, receipt and application of the rents and profits, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust or by law or in equity upon or after the occurrence of an Event of Default, including, without limitation, the right to exercise the power of sale. Any of the actions referred to in this Section may be taken by Beneficiary irrespective of whether any notice of an Event of Default or election to sell has been given hereunder and without regard to the adequacy of the security for the indebtedness hereby secured. SECTION 9.03. Judicial Action. Beneficiary may bring an action in any court of competent jurisdiction to foreclose this Deed of Trust or to enforce any of the covenants and agreements of this Deed of Trust, or the Promissory Note and the Affordable Housing Agreement. SECTION 9.04. Power of Sale. SUBSECTION 9.04(a). Beneficiary may elect to cause the Property or any part thereof to be sold under the power of sale herein granted in any manner permitted by applicable law. In connection with any sale or sales hereunder, Beneficiary may elect to treat any of the Property that consists of a right in action or that is property that can be severed from the Real Property or any improvements thereon without causing structural damage thereto as if the same were personal property and dispose of the same in accordance with applicable law, separate and apart from the sale of the Real Property. Page 265 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 10 10 SUBSECTION 9.04(b). Trustee may, and upon request of Beneficiary shall, from time to time, postpone any sale hereunder by public announcement thereof at the time and place noticed therefor. If the Property consists of several items of property, Beneficiary may designate the order in which such items shall be offered for sale or sold. Any person, including Trustor, Trustee or Beneficiary, may purchase at any sale hereunder, and Beneficiary shall have the right to purchase at any sale hereunder by crediting upon the bid price the amount of all or any part of the indebtedness hereby secured. SUBSECTION 9.04(c). Should Beneficiary desire that more than one sale or other disposition of the Property be conducted, Beneficiary may, at its option, cause the same to be conducted simultaneously, or successively, on the same day, or at such different days or times and in such order as Beneficiary may deem to be in its best interests, and no such sale shall terminate or otherwise affect the lien of this Deed of Trust on any part of the Property not sold until all indebtedness secured hereby has been fully paid. Upon any sale hereunder, Trustee shall execute and deliver to the purchaser or purchasers a deed or deeds conveying the Property so sold, but without any covenant or warranty whatsoever, express or implied, whereupon such purchaser or purchasers shall be let into immediate possession; and the recitals in any such deed or deeds of facts, such as default, the giving of notice of default and notice of sale and other facts affecting the regularity or validity of such sale or disposition, shall be conclusive proof of the truth of such facts and any such deed or deeds shall be conclusive against all persons as to such facts recited therein. SUBSECTION 9.04(d). In case of any sale of the Property pursuant to any judgment or decree of any court or at public auction or otherwise in connection with the enforcement of any of the terms of this Deed of Trust, Beneficiary, its successors or assigns, may become the purchaser, and for the purpose of making settlement for or payment of the purchase price, shall be entitled to deliver over and use the Promissory Note, together with all other sums, with interest, advanced and unpaid hereunder, in order that there may be credited as paid on the purchase price the sum then due under the Promissory Note, including principal thereon and all other sums, with interest, advanced and unpaid hereunder. SECTION 9.05. Proceeds of Sale. The proceeds of any sale made under or by virtue of this Article, together with all other sums that then may be held by Trustee or Beneficiary under this Deed of Trust, whether under the provisions of this Article or otherwise, shall be applied as follows: (a) First, to the payment of the costs and expenses of sale and of any judicial proceedings wherein the same may be made, including reasonable compensation to Trustee and Beneficiary, their agents and counsel, and to the payment of all expenses, liabilities and advances made or incurred by Trustee under this Deed of Trust, together with interest on all advances made by Trustee at the maximum rate permitted by law to be charged by Trustee. (b) Second, to the payment of any and all sums expended by Beneficiary under the terms hereof (including, but not limited to, sums paid by Beneficiary on the prior trust deed) not then repaid and all other sums required to be paid by Trustor pursuant to any provisions of this Deed of Trust or the Promissory Note, including, without limitation, all expenses, liabilities and advances made or Page 266 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 11 11 incurred by Beneficiary under this Deed of Trust or in connection with the enforcement hereof, together with interest thereon as herein provided. (c) Third, to the payment of the entire amount then due, owing or unpaid upon the Promissory Note, including attorney's fees and costs. (d) Fourth, all amounts otherwise due Beneficiary. (e) The remainder, if any, to the person or persons legally entitled thereto. SECTION 9.06. Waiver of Marshaling. Trustor, for itself and for all persons hereafter claiming through or under it or who may at any time hereafter become holders of liens junior to the lien of this Deed of Trust, hereby expressly waives and releases all rights to direct the order in which any of the Property shall be sold in the event of any sale or sales pursuant hereto, and to have any of the Property and/or other property now or hereafter constituted security for any of the indebtedness secured hereby, marshaled upon any foreclosure of this Deed of Trust or for any other security for any of said indebtedness. SECTION 9.07. Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission of Trustee or Beneficiary to exercise any right or power accruing upon any Event of Default shall impair any right or power or shall be construed to be a waiver of any Event of Default or any acquiescence therein; and every power and remedy given by this Deed of Trust to Trustee or Beneficiary may be exercised from time to time as often as may be deemed expedient by Trustee or Beneficiary. If there exists additional security for the performance of the obligations secured hereby, the holder of the Promissory Note, at its sole option, and without limiting or affecting any of its rights or remedies hereunder, may exercise any of the rights and remedies to which it may be entitled hereunder either concurrently with whatever rights and remedies it may have in connection with such other security or in such order as it may determine. Any application of any amounts or any portion thereof held by Beneficiary at any time as additional security hereunder, whether pursuant to this deed of trust or otherwise, to any indebtedness secured hereby shall not extend or postpone the due dates of any payments due from Trustor to Beneficiary hereunder or under the Promissory Note, or change the amounts of any such payments or otherwise be construed to cure or waive any default or notice of default hereunder or invalidate any act done pursuant to any such default or notice. In the event that Beneficiary shall have proceeded to enforce any right under this Deed of Trust by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then, and in every such case, Trustor and Beneficiary shall be restored to their former positions and rights hereunder with respect to the Property subject to the lien hereof. SECTION 9.08. Indemnity. Trustor agrees to defend, indemnify, and hold Beneficiary harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorney’s fees that Borrower may incur as a direct or indirect result of: Page 267 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 12 12 a) Trustor’s default, performance, or failure to perform any obligations as and when required by the Note and Deed of Trust; b) Trustor’s ownership of the Property; or c) The failure at any time of any of Trustor’s certifications, representations, or warranties to be true and correct. ARTICLE 10. MISCELLANEOUS SECTION 10.01. Severability; captions. In the event that any one or more of the provisions contained in this Deed of Trust shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Deed of Trust, and this Deed of Trust shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. SECTION 10.02. Certain Charges. Trustor agrees to pay the charges of Beneficiary for any service rendered Trustor, or on its behalf, connected with this Deed of Trust or the indebtedness secured hereby, including, without limitation, delivering to an escrow holder a request for full or partial reconveyance of this Deed of Trust, transmitting to an escrow holder moneys secured hereby, changing the records pertaining to this Deed of Trust and indebtedness secured hereby, showing a new owner of the Property and replacing an existing policy of insurance held hereunder with another such policy. SECTION 10.03. Notices. All notices required or permitted to be given under this Deed of Trust shall be in writing and shall be deemed to have been given upon (i) one business day after being deposited with Federal Express or another reliable overnight courier service for next day delivery, or (ii) five (5) business days after being deposited in the United States mail, by first class or registered or certified mail, postage prepaid, return receipt requested, and addressed as follows (or at such other address or which said party shall have theretofore notified in writing, as provided above, the party giving such notice). To the Beneficiary: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Attn: Community Development Director To the Trustee: [enter title company info] To the Trustor: [enter trustor info] With copies to: [enter managing director info] Page 268 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 13 13 SECTION 10.04. Trustor Not Released. Extension of the time for payment or modification of the terms of payment of any sums secured by this Deed of Trust granted by Beneficiary to any successor-in-interest of Trustor shall not operate to release, in any manner, the liability of the original Trustor. Beneficiary shall not be required to commence proceedings against such successor or refuse to extend time for payment or otherwise modify the terms of the payment of the sums secured by this Deed of Trust by reason of any demand made by the original Trustor. Without affecting the liability of any person, including Trustor, for the payment of any indebtedness secured hereby, or the lien of this Deed of Trust on the remainder of the Property for the full amount of any such indebtedness and liability unpaid, Beneficiary and Trustee are respectively empowered as follows: Beneficiary may from time to time and without notice (a) release any person liable for the payment of any of the indebtedness, (b) extend the time or otherwise alter the terms of payment of any of the indebtedness, (c) accept additional real or personal property of any kind as security therefor, whether evidenced by deeds of trust, mortgages, security agreements or any other instruments of security, or (d) alter, substitute or release any property securing the indebtedness; Trustee may, at any time and from time to time, upon the written request of Beneficiary (a) consent to the making of any map or plat of the Property or any part thereof, (b) join in granting any easement or creating any restriction thereon, (c) join in any subordination agreement or other agreement affecting this Deed of Trust or the lien or charge hereof, or (d) reconvey, without any warranty, all or part of the Property. SECTION 10.05. Inspection. Beneficiary may at any reasonable time or times make or cause to be made entry upon and inspections of the Property or any part thereof in person or by agent. SECTION 10.06. Reconveyance. Upon the payment in full of all sums secured by this Deed of Trust, Beneficiary shall request that Trustee reconvey the Property and shall surrender this Deed of Trust and Promissory Note evidencing indebtedness secured by this Deed of Trust to Trustee. Upon payment of its fees and any other sums owing to it under this Deed of Trust, Trustee shall reconvey the Property without warranty to the person or persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. The recitals in such reconveyance of any matters of facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." Five (5) years after issuance of such full reconveyance, Trustee may destroy the Promissory Note and this Deed of Trust unless otherwise directed by Beneficiary. SECTION 10.07. Interpretation. Wherever used in this Deed of Trust, unless the context indicates a contrary intent, or unless otherwise specifically provided herein, the word "Trustor" shall mean and include both Trustor and any subsequent owner or owners of the Property, and the word "Beneficiary" shall mean and include not only the original Beneficiary hereunder but also any future owner and holder, including pledgees, of the Promissory Note secured hereby. In this Deed of Trust wherever the context so requires, the masculine gender includes the feminine and/or neuter, and the neuter includes the feminine and/or masculine, and the singular number includes the plural and conversely. In this Deed of Trust, the use of the word "including" shall not be deemed to limit the generality of the term or clause to which it has reference, whether or not non- limiting language (such as "without limitation," or "but not limited to" or words of similar import) is used with reference thereto. The captions and headings of the Articles and Sections of this Deed Page 269 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 14 14 of Trust are for convenience only and are not to be used to interpret, define or limit the provisions hereof. Unless otherwise specified, in computing any period of time described herein, the term “days” means calendar days, unless the final days of any designated period of time is not a “business day” (as defined below), in which case the period shall run until the end of the next business day. A “business day” is any day that is not a Saturday, Sunday or legal holiday for national banks located in California. The last day of any period of time described herein shall be deemed to end at 5:00 p.m., Pacific Time. SECTION 10.08. Consent. The granting or withholding of consent by Beneficiary to any transaction as required by the terms hereof shall not be deemed a waiver of the right to require consent to future or successive transactions. SECTION 10.09. Successors and Assigns. All of the grants, obligations, covenants, agreements, terms, provisions and conditions herein shall run with the land and shall apply to, bind, and inure to the benefit of the heirs, administrators, executors, legal representatives, successors and assigns of Trustor and the successors-in-trust of Trustee and the endorsees, transferees, successors and assigns of Beneficiary. In the event that Trustor is composed of more than one party, the obligations, covenants, agreements and warranties contained herein as well as the obligations arising therefrom are and shall be joint and several as to each such party. SECTION 10.10. Governing Law. This Deed of Trust shall be governed by and construed under the laws of the State of California. Venue for any action or proceeding arising out of or in connection to this Deed of Trust shall be the Superior Court for the County of San Luis Obispo. SECTION 10.11. Trustor Waivers. Trustor waives the benefit of all laws now existing or that hereafter may be enacted with respect to any statute of limitations for the filing of any action or claims by Beneficiary. SECTION 10.12. Subordination. This Deed of Trust shall not diminish or affect the rights of Senior Lenders (as defined below). Beneficiary and Trustor acknowledge and agree that this Deed of Trust is subject and subordinate in all respects to the liens, terms, covenants and condition s of the Senior Financing Documents (as defined below) and to all advances heretofore made or which may hereafter be made pursuant to any of the Senior Financing Documents, including all sums advances for the purposes of (i) protecting or further securing the lien of any of the Senior Financing Documents, curing defaults by the Trustor under any of the Senior Financing Documents or for any other purpose expressly permitted by any of the Senior Financing Documents, or (ii) constructing, renovating, repairing, furnishing, fixturing or equipping the Project or the Property. The terms and provisions of the Senior Financing Documents are paramount and controlling, and they superseded any other terms and provisions hereof in conflict therewith. Trustor shall be permitted to refinance the loans evidenced by the Senior Financing Documents, and this Deed of Trust shall be subject and subordinate to the liens, terms, covenants and conditions of any such refinancing. Beneficiary shall execute instruments further evidencing such subordination upon request. The “Senior Financing Documents” shall mean, collectively described below, and recorded concurrently herewith: (a) Page 270 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 15 15 SECTION 10.13. Request for Notices of Default and Sale. SUBSECTION 10.13(a). Beneficiary hereby requests that a copy of any notice of default and notice of sale as may be required by law or by this Deed of Trust be mailed to Beneficiary at its address above stated. SECTION 10.14. Transfer. Trustor shall not voluntarily or involuntarily assign or otherwise transfer any of its rights, duties, liabilities or obligations hereunder or under the Note without the prior written consent of Beneficiary. Notwithstanding the forgoing, Trustor shall have the right to sell, convey, transfer or dispose of the Property or any part thereof or any interest therein, or the enter into an agreement to do so, to the extent permissible under and pursuant to the requirements of the Affordable Housing Agreement, provided also that transferee agrees to assume all of the obligations of Trustor under this Deed of Trust, the Note and the Affordability Agreement, and the Note shall not become due and payable. In addition, and notwithstanding anything to the contrary in this Deed of Trust or the other documents evidencing and/or securing the Loan (the “Loan Documents”), (a) the withdrawal, removal and/or replacement of a general partner of the Trustor (the “General Partner”) by the limited partner of Trustor for cause pursuant to the terms of the Trustor’s amended and restated agreement of limited partnership shall not constitute a default under any of the Loan Documents, and any such actions shall not accelerate the maturity of the Loan, provided that any substitute general partner that is not an affiliate of the limited partner is reasonably acceptable to Beneficiary and is selected with reasonable promptness (it being agreed that no consent of Beneficiary shall be required if the substitute general partner is an affiliate of the Limited Partner), and (b) all or a portion of the interests of Trustor’s limited partners shall be transferable without the consent of the Beneficiary except that, prior to payment in full of all capital contributions, the interest the limited partners in the Trustor shall be transferable to a non-affiliate of the limited partners only with the consent of the Beneficiary, which consent shall not be unreasonably withheld. SECTION 10.15 Attorney’s Fees. In any action, to interpret or enforce any provision of this Deed of Trust, the prevailing party shall be entitled to reasonable costs and attorney’s fees. SECTION 10.16 Extended Use Agreement. In order to receive and allocation of federal low income housing tax credits, Trustor will be require to record in the real property records of the County in which the property is located, an “extended low-income housing commitment” (as defined in Section 42(h)(6)(B) of the Internal Revenue Code of 1986, as amended (“Code”)) (“Extended Use Agreement”). Beneficiary acknowledges and agrees that, in the event of a foreclosure of its interest under this Deed of Trust or delivery by the Trustor of a deed in lieu thereof (collectively, a “Foreclosure”), Beneficiary agrees to comply with the following rule contained in Section 42(h)(6)(E)(ii) of the Code: For a period of three (3) years from the date of Foreclosure, with respect to any unit that had been regulated by the Extended Use Agreement, (i) none of the eligible tenants occupying those units at the time of Foreclosure may be evicted or their tenancy terminated (other than for good cause, including by not limited to, the tenants’ ineligibility pursuant to regulations of Section 42 of the Code, (ii) not may any rent be increased except as otherwise permitted under Section 42 of the Code. Page 271 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 16 16 [Signatures appear on the following page] IN WITNESS WHEREOF, the undersigned have executed this Deed of Trust as of the day and year first above written. BORROWER: [enter LP name]., a California limited partnership By: [enter managing general partner name], a California nonprofit public benefit corporation, its managing general partner By: [enter CEO name], CEO SIGNATURE MUST BE NOTARIZED Page 272 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 17 17 State of California } County of San Luis Obispo } On , before me, , Date Name and Title of the Officer personally appeared, , Name of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature Signature of Notary Public Place Notary Seal Above State of California } County of San Luis Obispo } On , before me, , Date Name and Title of the Officer personally appeared, , Name of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature Signature of Notary Public Place Notary Seal Above A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached and not the truthfulness, accuracy, or validity of that document. A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the docu ment to which this certificate is attached and not the truthfulness, accuracy, or validity of that document. Page 273 of 280 [enter project name] Impact Fee Deferral Deed of Trust Page 18 18 Exhibit A Legal Description Page 274 of 280 15070445.1 CITY OF SAN LUIS OBISPO PROMISSORY NOTE – IMPACT FEE DEFERRAL SECURED BY DEED OF TRUST $[enter amount] Date: [enter date] At San Luis Obispo, California FOR VALUE RECEIVED, [enter borrower entity/LP name]., a California limited partnership ("Borrower"), promises to pay to the order of the City of San Luis Obispo (“City”) a municipal corporation and charter city in the State of California (“Lender”), at such place as the Lender may from time to time designate by written notice to borrower, the principal sum of [enter amount in words] ($enter amount) (“Loan”), together with interest on the unpaid principal balance from time to time outstanding. Until the Loan is paid in full, the Loan will bear interest at an annual simple fixed rate of three percent (3.0%) (“Interest Rate”). A breakdown of this value (City Im pact Fees) is seen in Exhibit A. Interest hereunder shall not be compounding. Principal and interest shall be payable in lawful money of the United States of America. Interest shall be computed based upon a three hundred sixty-five (365) day year. 1. Payment; Maturity. No payments of interest or principal shall be due on this Note prior to the Maturity Date (as defined below), so long as no Event of Default hereunder shall have occurred and be continuing. All unpaid interest amounts shall accrue under this Note. The principal amount of this Note, plus all accrued and unpaid interest, and all other amounts owing hereunder or under the Deed of Trust (defined below) shall be due and payable on [enter date 20 years from signing date] (the “Maturity Date”). This Note shall be deemed satisfied when the principal amount of this Note, all interest accrued thereon and all other amounts due hereunder and under the Deed of Trust are paid in full. 2. Security. This Note is secured by a Deed of Trust, Deed of Trust Covenants, Assignment of Rents, Security Agreement and Fixture Filing by and between Borrower and Lender, dated as of the date hereof (the “Deed of Trust”) and recorded against Borrower’s interest in that certain real property located in San Luis Obispo, California, as more particulary described in the Deed of Trust (the “Property.”) The terms of the Deed of Trust are incorporated herein by this reference. Borrower agrees to pay all the collection and enforcement costs, expenses and attorneys’ fees paid or incurred by Lender or adjudged by a court in any litigation or controversy connected with this Note. 3. Prepayment. This Note may be prepaid, at any time, in whole or in part, without premium or penalty. 4. Application of Payments. Each payment under this Note shall be applied (a) first, to the payment of accrued interest; (b) second, at the option of Lender, to the payment of any other amounts owing under this Note and the Deed of Trust, other than accrued interest and principal, including, but not limited to, advances Lender may have made for attorney fees or late charges due hereunder; and (c) third, to the reduction of principal of this Note. All payments of principal under this Note shall be applied to the most remote principal installment then unpaid. Page 275 of 280 15070445.1 Bishop Street Studios L.P. Impact Fee Promissory Note Page 2 Accrued interest shall not be added to the principal balance of the Note; provided, however, upon an Event of Default and acceleration under Section 9.01 of the Deed of Trust, all accrued and unpaid interest shall be added to the principal amount of the Note and interest at the Default Rate shall accrue thereon. 5. Default Rate; Late Charge. Upon an Event of Default and acceleration under Section 9.01 of the Deed of Trust, the unpaid principal balance and all accrued interest thereon shall bear interest thereafter at the rate of the Default Rate, but if such interest rate exceeds the Maximum Rate, then such rate shall be reduced to the Maximum Rate. The term “Default Rate” means that Interest Rate plus five percent (5.00%) per annum. In addition, if any payment due under this Note is paid within ten (10) business days after Borrower received written notice of such failure to pay, Borrower shall pay a reasonable later or collection charge equal to five percent (5.00%) of the amount so unpaid. Lender and Borrower agree that the actual damages and costs sustained by Lender due to the failure to make timely payments would be extremely difficult to measure and that the charges specified in this paragraph represent a reasonable estimate by Borrower and Lender of a fair average compensation for such damages and costs. Such charges shall be paid by Borrower without prejudice to the right of Lender to collect any other amounts provided to be paid under this Note or any other agreement or, with respect to late payments, to declare an Event of Default. 6. Usury. Notwithstanding anything herein to the contrary, no provision contained herein shall require the payment or permit the collection of interest, including any fees and/or charges, in excess of the maximum non-usurious interest permitted by applicable law (“Maximum Rate”). If any interest in excess of the Maximum Rate is provided for, or shall be adjudicated to be so provided or, then Borrower shall not be obligated to pay interest to t he extent that it is in excess of the Maximum Rate and any excess interest which may have been collected shall be either applied as a credit against the then unpaid principal amount hereof or refunded to Borrower. 7. Event of Default. The occurrence of any one or more of the following shall constitute an “Event of Default” hereunder: a) Failure to Make Payment of Interest and Principal. Borrower fails to make any payment as described in this Note as of the Maturity Date. b) Failure to Make Other Payments. Borrower fails to make any payment due under the Note (other than interest and principal payments which are governed by subsection (a) above) within thirty (30) days of the date of written notice from Lender that such payment is due. c) Failure to Comply with Governing Documents. Borrower fails to comply in any material respect with the terms and conditions as set forth in this Note, the Deed of Trust, the Development Impact Fee Deferral Agreement, or the Affordable Housing Agreement between the Borrower and Lender/City dated as of the date hereof to provide affordable rental housing, Page 276 of 280 15070445.1 Bishop Street Studios L.P. Impact Fee Promissory Note Page 3 and does not cure such failure within thirty (30) days after written notice from Lender; provided, however, if such failure is not capable of cure within said thirty (30) day period, then if Borrower promptly undertakes action to cure such failure within the thirty (30) day period and thereafter diligently prosecutes such cure to completion within one hundred twenty (120) days after the date of the notice from Lender, then Borrower shall not be in default hereunder. 8. Remedies. If any Event of Default occurs under this Note or Deed of Trust, then the whole of the principal, interest and charges owing on this Note may be declared immediately due and payable and Lender may exercise all remedies under the Deed of Trust, or at law, in equity or otherwise, including the right to accelerate the payment of the principal, interest and charges owing hereunder and under the Deed of Trust. Borrower agrees to pay immediately upon demand all costs and expenses of Lender, including reasonable attorneys’ fees, if, after an Event of Default, it is necessary or desirable for Lender to retain services for collection or protection of Lender’s rights under this Note and the Deed of Trust, including but not limited to an attempt to have any stay or injunction prohibiting the enforcement of this Note or Deed of Trust lifted by any bankruptcy or other court. 9. Waiver of Presentment. Borrower and all persons liable or to be liable on this Note waive presentment, demand, notice of dishonor, notice of default, delinquency or acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, and notice of protest and nonpayment, grace, notice late charges and diligence in taking any action to collect amounts due to Lender under this Note or proceeding against any of the rights and interest in and to personal or real property, if any, securing payment of this Note. 10. No Waiver. Neither Lender’s acceptance of one or more installments following an Event of Default, nor any delay on the part of Lender in the exercise of any power or right under this Note or under the Deed of Trust, shall operate as a waiver thereof, and no single or partial exercise of any other power or right shall operate as a waiver thereof. 11. Miscellaneous. a) Applicable Law. This Note shall be governed by and construed in accordance with the laws of the State of California. Venue for any action or proceeding arising out of or in connection to this Note shall be the Superior Court for the County of San Luis Obispo. b) Severability of Provisions. Each provision of this Note shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Note is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Note which are valid. c) Interpretation. Unless otherwise specific, in computing any period of time described herein, the term “days” means calendar days, unless the final day of any designated period of time is not a “business day” (as defined below), in which case the period shall run until Page 277 of 280 15070445.1 Bishop Street Studios L.P. Impact Fee Promissory Note Page 4 the end of the next business day. A “business day” is any day that is not a Saturday, Sunday or legal holiday for national banks located in California. The last day of any period of time described herein shall be deemed to end at 5:00 p.m., Pacific Time. d) Headings. Headings in this Note are for convenience only and do not define or limit the scope of provisions of this Note. e) Notices. All notices to be given under this Note must be given in accordance with the Deed of Trust. 12. Relationship. At all times, the relationship of Lender and Borrower shall be that of creditor and debtor. The Lender shall not, in any event, be constructed or held to be a partner, joint venture, employee or associate of Borrower in the Conduct of Borrower’s business. Nothing in this Note shall be construed to establish such relationship. 13. Limitation on Recourse. Neither Borrower nor Borrower’s officers, partners, officers, directors, employees or agents nor their respective members, officers, partners, officers, directors, employees or agents shall be personally liable for the payment of principal, interest and other amounts which may become due and payable under the Note or the Deed of Trust or the Affordability Agreement. Except in the case of actual fraud or willful misconduct of any such person(s), the sole recourse of the Lender under this Note and Deed of Trust for repayment of the Note shall be the exercise of its rights against the Property. 14. Subordination. The indebtedness evidenced by this Note is and shall be subordinate in the right of payment to the prior payment in full of all amounts then due and payable (including, but not limited to, all amounts due and payable by virtue of any default or acceleration or upon maturity) with respect to the indebtedness evidenced by the Senior Financing Documents (as defined below) and any subsequent refinancings thereof. The payee and each subsequent holder of this Note shall be deemed, by virtue of such holder’s acquisition of this Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the subordinate or junior lender under the Senior Financing Documents. The “Senior Financing Documents” shall mean, collectively: (a) 15. Amendments. This Note may not be modified or amended except by an instrument in writing executed by Borrower and Lender. [Signature appears on the following page] Page 278 of 280 15070445.1 Bishop Street Studios L.P. Impact Fee Promissory Note Page 5 IN WITNESS WHEREOF, Borrower has executed the Promissory Note as of the date as first written above. BORROWER: [enter LP/ borrower entity]., a California limited partnership By: [enter managing general partner entity name], a California nonprofit public benefit corporation, its managing general partner By: [enter CEO name], CEO Page 279 of 280 15070445.1 Bishop Street Studios L.P. Impact Fee Promissory Note Page 6 EXHIBIT A [enter impact fee breakdown table here] Page 280 of 280 Adopt a Resolution and Introduce an Ordinance to Establish an Impact Fee Deferral Program for Eligible Affordable Housing Projects September 17, 2024 Staff Recommendation •Adopt Draft Resolution “A Resolution of the City Council of the City of San Luis Obispo, California, superseding Resolution No. 9903 (2007 Series) providing for the deferral of city-wide development impact fees for eligible affordable housing projects” •Introduce Draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, establishing a development impact fee deferral program for eligible affordable housing projects” •Authorize Community Development Director to approve applications for impact fee deferrals and execute agreements. The Director may refer approvals to City Council on an as-needed basis or concurrently with Affordable Housing Fund awards. Previous Council Action •In 1995 City Council adopted Resolution No. 8415 which waived development review fees for affordable housing units at the direction of the Community Development Director. •In 2000 City Council adopted Resolution No. 9131 to waive citywide development impact fees for affordable housing units in excess of inclusionary requirements or developed by non-profit housing corporations. •In 2007 City Council adopted Resolution No. 9903 which superseded previous resolution, to allow for development impact fee waivers for voluntary affordable housing units developed by private developers in addition to projects that exceed the number required to meet the City’s inclusionary requirements and projects by non-profit developers. Purpose of the Program •Impact fee deferrals help accelerate the production of below-market rate units, especially those constructed by affordable housing developers using tax credits. •Over the last decade, 300 units of housing across 8 projects have been constructed with the assistance of impact fee deferrals, totaling about $5 million in deferred fees. •These deferred fees have assisted in leveraging over $60 million in tax credit equity. Background •Current program allows the option for impact fees to be waived altogether •In practice, all impact fee deferrals granted by the City have been in the form of a loan to avoid the financial impact of lost fee revenue from waivers •Terms range from 30 to 55 years, with interest rates from 3 to 4 percent •Staff has identified the need to update the program through the draft ordinance and resolution Proposed Program Update •The proposed resolution and ordinance update the program for impact fee deferrals. •Eligible projects under the program include the following: •Rental housing projects that provide units in excess of the City’s Inclusionary Housing Requirements, to be rented to low, very low, extremely low, or acutely low income households •Rental housing projects that are restricted to lower, very low, extremely low, or acutely low-income households, and that are built, owned, and managed by a government agency or nonprofit housing organization. •Application, guidance, and procedures provided to interested developers Proposed Program Update •Removal of option to waive impact fees •Defines 20 year term of impact fee deferral loan, 3 percent simple fixed interest rate •Removal of provision applying impact fee waivers for ADUs in accordance with current state law Eligible Fees for Deferral •General Government Impact Fee •Police/Fire Base Fee •Parkland In-Lieu Fee •Parks and Recreation Development Impact Fee •Transportation Impact Fees Public Engagement •Staff consulted developers of affordable housing projects, who voiced their support for continued fee deferrals through the program established by the proposed ordinance and resolution. •Developers concurred with the 20 year term of impact fee loans, as well as the timeline of the application and conditions of the deferral agreement. •This item has been noticed in compliance with the City’s notification requirements. Consistency with Major City Goals and Programs •City’s Major City Goal for housing and homelessness •Housing Element Program 2.9 - Assist with the issuance of tax-exempt bonds, tax credit financing, loan underwriting or other financial tools to help develop or preserve at least 20 affordable units annually through various programs. •Housing Element Program 6.16 - Incentivize 20 affordable housing developments per year during the planning period consistent with SLOMC Affordable Housing Incentives. Environmental Review •The proposed resolution and draft Ordinance are exempt from the California Environmental Quality Act (CEQA) •Changes are not a "project" under Public Resources Code § 21065 •impact fee deferral program would not cause either a direct or reasonably foreseeable indirect physical change in the environment. •Every development project subject to a development impact fee deferral loan would be required to undergo applicable development review, including CEQA determinations or finding of exemption. Staff Recommendation •Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, superseding Resolution No. 9903 (2007 Series) providing for the deferral of city-wide development impact fees for eligible affordable housing projects” •Introduce a Draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, establishing a development impact fee deferral program for eligible affordable housing projects” •Authorize the Community Development Director to approve applications for impact fee deferrals and execute agreements. The Director may refer approvals to City Council on an as-needed basis or concurrently with Affordable Housing Fund awards.