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HomeMy WebLinkAbout8.1 First Time Home Buyer Programor 19 82 /ii � 111 DATE: TO: FROM: SUBJECT STAFF REPORT CITY COUNCIL September 2, 2014 Honorable Mayor and City Councilmembers CITY CLERK File #430 -60 Christopher L. Foss, City Manager " Update to the Guidelines for the Inclusionary Zoning Ordinance Regulations and First Time Homebuyer Loan Program Guidelines Prepared by Kim Obstfeld, Housing Consultant EXECUTIVE SUMMARY: The City Council will receive a report regarding the status of the City's below market rate home programs and First Time Homebuyer Loan Program and will consider proposed revisions to program procedures and requirements. The proposed changes are intended to improve the clarity and usability of program documents and address issues encountered in the ongoing administration of these programs. FINANCIAL IMPACT: None. RECOMMENDATION: Staff recommends that the City Council adopt the Resolution Approving the Updated Guidelines to the Inclusionary Zoning Ordinance Regulations, and First Time Homebuyer Loan Program Guidelines. Submitted By Community Development Director DESCRIPTION: BACKGROUND 'Reviewed By Assistant City Manager The City of Dublin operates an active affordable housing program. The Housing Division works closely with Planning staff and developers to facilitate the development of below market rate (BMR) units, provides ongoing administration and support for existing BMR units, and administers the City's First Time Homebuyer Loan Program (FTHLP). The Guidelines to the Inclusionary Zoning Ordinance Regulations describe requirements and procedures for the administration of BMR units. The Guidelines were last updated in 2009. Based on best practices among Bay Area communities and day -to -day experience in the Page 1 of 4 ITEM NO. 8.1 application of the Guidelines, City staff recommends an update to the Guidelines to improve readability and usability, and address ongoing implementation issues. Standards for the City's FTHLP are stated in the FTHLP Guidelines and Underwriting Standards. Both sets of guidelines were last updated in 2011. Similar to the Inclusionary Zoning Ordinance Regulations, City staff recommends an update to the FTHLP Guidelines to clarify standards and address implementation issues. PROPOSED PROGRAM REVISIONS Guidelines to the Inclusionary Zoning Ordinance Regulations Staff has reviewed the Guidelines and completed an update to improve formatting, clarify standards, and revise and add certain new requirements. Proposed changes to the Guidelines are shown in strikeout in the attached draft (Attachment 3). Key changes include the addition of a requirement for in- person consultations with BMR buyers, the addition of language that would allow the City to transfer its option to purchase BMR units, incorporation of a permanent rental policy regarding BMR units, and the addition of policies and procedures to address BMR units that are unable to resell. BMR Buyer Consultation Requirement The City currently requires in- person consultations for FTHLP recipients and buyers of homes with restricted second units, but does not require such meetings with BMR buyers. It is essential that potential BMR buyers have a clear understanding of the requirements and restrictions associated with BMR homeownership, including procedures for refinancing, procedures for obtaining approval /credit for eligible capital improvements, ongoing monitoring, and resale restrictions. The Guidelines have been revised to incorporate a mandatory in- person consultation with City staff upon confirmation of the household's qualification to purchase a BMR unit and ratification of a purchase contract. Consultations must be completed in order for staff to submit closing paperwork to the escrow officer. Veterans Preference The Guidelines currently establish a preference points system to be used to screen applicants for new BMR units. Currently, preference points are available to those who are employed in Dublin (for at least six months), are a public service employee in Dublin, are a resident of Dublin (for at least one year), are a senior aged 62 or older, are permanently disabled, have an immediate family member who is a Dublin resident (must have lived in Dublin for at least one year), or must move because their current housing is to be demolished or converted to a condominium. The draft Guidelines propose to add preference points for veterans. Veterans are defined as those who served in the active U.S. military, naval, or air service, and who were discharged or released therefrom under conditions other than dishonorable. Option to Transfer Purchase Rights Under the current Guidelines and Resale Restriction Agreement, the City has the option to purchase BMR units when the owner provides notice of intent to sell. The revised Guidelines and agreement would allow the City to transfer this right to purchase to an entity or organization of its choosing. For example, the City could elect to transfer its option to purchase to a nonprofit housing organization that serves a special needs population. While staff anticipates that the exercise of this option would be infrequent, it creates potential opportunities for much - needed affordable units for housing groups serving the Tri- Valley. There would be no negative impact to Page 2 of 4 the BMR home seller, who would receive no more than the restricted resale price, regardless of who purchases the unit. Ownership BMR Unit Rental Policy The Guidelines currently specify that for -sale BMR units must be owner - occupied. However, in 2008, the City Council approved a temporary policy to allow the rental of BMR units for owners who were unable to find a qualified buyer in depressed market conditions. This temporary policy was initially effective through August 2010 but was extended through August 2012 (approved via resolution in May 2010) and extended again through August 2014 (approved via resolution in August 2011). To accommodate occasional special circumstances, the Guidelines have been revised to include rental provisions for those who must temporarily relocate due to employment requirements, if the BMR owner is unable to sell, or for other reasons deemed acceptable by the Housing Division. Rental of ownership BMR units, when approved, is subject to the following conditions- 1 . The total rental period may not exceed 12 months. 2. The tenant must satisfy the income requirements and other BMR program qualification standards. 3. The rent may not exceed the maximum monthly rent, calculated annually by the Housing Division, based on a percentage of median income, or the BMR owner's total housing expenses, whichever is the lesser amount. 4. Ownership BMR Units Unable to Sell The Guidelines do not currently provide any guidance or provisions for ownership BMR units that are unable to attract a buyer. The Guidelines have been revised to include options for BMR owners in this situation. Following diligent marketing of the BMR unit for at least six months, one or more of the following alternatives may be offered to relieve the homeowner and facilitate the sale of the unit: 1. The BMR owner may rent the unit to a qualified household for up to 12 months. 2. The BMR unit may be sold to a household that does not meet the first -time homebuyer requirement but otherwise meets BMR program requirements. 3. The purchasing household may be allowed to forgo the Asset Test, provided that the household otherwise meets BMR program requirements. 4. The purchasing household may be allowed to exceed the maximum qualifying income level for the unit by up to 20 percent, provided that the household has an income of no more than 120 percent of the Area Median Income (for example, a BMR unit that is restricted for occupancy by low- income households (those earning at or below 80 percent of the Area Median Income) may be sold to a household earning no more than 100 percent of the Area Median Income). Situations will be reviewed on a case -by -case basis and alternatives will be offered as appropriate. First Time Homebuyer Loan Program Guidelines Page 3 of 4 Staff has reviewed the FTHLP Guidelines and corresponding Underwriting Standards and completed an update to improve formatting, clarify standards, and revise certain requirements. Proposed changes to the FTHLP Guidelines and Underwriting Standards are shown in strikeout in the attached draft (Attachment 4). Key changes include clearly stating that the City will not accept a position lower than second on the title to a property and that adjustable rate mortgages (ARMs) and loans with a balloon payment are not acceptable primary loan products. These changes are intended to protect the City's loan funds to ensure that funding remains available for future applicants. Position on Title The current FTHLP Guidelines and Standards allow layered financing but do not specify the City's requirements relating to position on title. The program materials have been updated to reflect that the City will not accept a position lower than second on the title for a property receiving FTHLP funds. The City's loan should fall immediately behind the first, primary loan for the purchase of the property. This requirement is applicable to purchasers buying either a BMR or market rate home. Acceptable First Loan Products The current FTHLP Guidelines and Standards allow a wide variety of primary loan products. To protect homebuyers and the City's program funds, the program materials have been revised to specify that ARMs and loans with a balloon payment are not acceptable when utilizing City loan funds. ATTACHMENTS: 1. Resolution adopting the updated Guidelines to the Inclusionary Zoning Ordinance Regulations and the First Time Homebuyer Loan Program Guidelines 2. Report Regarding the Status of the City of Dublin Affordable Housing Program 3. Draft Guidelines to the Inclusionary Zoning Ordinance Regulations 4. Draft First Time Homebuyer Loan Program Guidelines Page 4 of 4 RESOLUTION NO. XX - 14 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN * * * * * * * * * ** APPROVING AMENDMENTS TO THE GUIDELINES TO THE INCLUSIONARY ZONING REGULATIONS ORDINANCE AND FIRST TIME HOMEBUYER LOAN PROGRAM GUIDELINES. WHEREAS, a goal of the Housing Element is to expand housing opportunities for all segments of Dublin's population; and WHEREAS, accordingly, the City has adopted the Inclusionary Zoning Regulations ( "the Regulations "), set forth in Chapter 8.68 of the Dublin Municipal Code, which generally require developers of residential housing in excess of 19 units in the City of Dublin to set aside 12.5% of such units for very low -, low -, and moderate - income households, as defined; and WHEREAS, the City Council established the Guidelines to the Inclusionary Zoning Ordinance Regulations on June 1, 2004 to interpret the provisions of the Regulations and establish procedures and standards for the administration of units developed under the Regulations; and WHEREAS, the Guidelines to the Inclusionary Zoning Ordinance Regulations were amended by the City Council on December 2, 2008; and WHEREAS, the Guidelines to the Inclusionary Zoning Ordinance Regulations were amended on December 7, 2011 by the City Manager (in consultation with the Community Development Director) under the authority granted to the City Manager in City Council Resolution 211 -08; and WHEREAS, on March 21, 2006, the City Council approved a First Time Homebuyer Loan Program; and WHEREAS, on June 19, 2007 and March 1, 2011, the City Council approved amendments to the First Time Homebuyer Loan Program Guidelines to update practices and procedures; and WHEREAS, on September 2, 2014, the City Council received a report from Staff regarding recommended changes to the guidelines to improve the management and administration of the inclusionary and first time homebuyer loan programs; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin takes the following actions: 1. Adoption. a. These Guidelines to the Inclusionary Zoning Regulations Ordinance supersede the existing Guidelines to the Inclusionary Zoning Ordinance Regulations, which were adopted by the City Council on December 2, 2008 and amended by the City Manager on December 2, 2011; and b. These First Time Homebuyer Loan Program Guidelines supersede the existing First Time Homebuyer Loan Program Guidelines and Underwriting Guidelines, which were adopted by the City Council on March 1, 2011. 2. Effective Date. This resolution shall take effect immediately. ATTACHMENT 1 PASSED, APPROVED AND ADOPTED this 2nd day of September, 2014, by the following vote- AYES- NOES- ABSENT- ABSTAIN- ATTEST- City Clerk Mayor ATTACHMENT 1 CITY OF DUBLIN AFFORDABLE HOUSING PROGRAM REPORT Overview The City of Dublin operates an active affordable housing program. Housing and Human Services, a division of the Community Development Department, works closely with Planning staff and developers to facilitate the development of below market rate units (BMR units), provides ongoing administration and support for existing BMR units, and administers the City's First Time Homebuyer Loan Program. Below Market Rate Units BMR units that are monitored and administered by the City are developed under the City's Inclusionary Zoning Regulations (IZR). The IZR is intended to further the City's goal of creating an adequate supply of housing affordable to persons of all economic segments of the community. The IZR contributes to the attainment of this goal by increasing the production of residential units that are affordable to very low -, low -, and moderate - income households. The City's first IZR was adopted in 1996 (Ordinance 14 -96) and has since undergone several reviews and updates, most recently in 2008. From 1996 to 2002, the IZR was satisfied through the payment of in -lieu fees. While on -site unit construction and land dedication were offered as options, there was no unit construction requirement. In 2002, the ordinance was amended to require that at least half of required units be provided on site (with some exceptions). The on -site requirement has resulted in the provision of units in developments of different styles in neighborhoods across the city. Appendix A shows the location of BMR units by unit type —ownership units, secondary units, and rental units. Existing BMR Units As of April 2014, there have been 1,182 BMR units developed in Dublin. Among these, 76 percent (897 units) are rental units, 15 percent (174 units) are ownership units, and 9 percent (111 units) are rent - restricted second units. See Figure 1 for a chart showing the percentage of BMR units by type. Figure i. Percentage of BMR Units by Type Ownership Rental Second Unit Affordable Housing Program Report September 2, 2014 CITY OF DUBLIN Ownership Units There are 165 active ownership BMR units in the city (8 units have been lost due to foreclosure as discussed further below). Units are located in eight developments: The Terraces, Crossroads, Elan, Roxbury, Silvera, Willows, Cantara, and Tralee. See Appendix B for a map of existing ownership BMR units. Note the map shows all ownership BMR units that have been developed in Dublin, including the foreclosed units that are no longer active in the City's housing program. Age and Affordability Terms Figure 2 shows the number of ownership BMR units created per year since 2004, when the first affordable BMR units were occupied in the city. Numbers spiked in 2005 and 2007, when 44 and 43 BMR units were added, respectively. Following overall market trends, the production of BMR units dipped from 2008 to 2010 but increased annually from 2011 to 2013. 50 45 40 35 30 25 20 15 10 Figure 2. Ownership BMR Units by Year Occupied 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 The IZR was amended in 2008 to extend the affordability period for BMR units from 30 to 55 years. Thus, most new BMRs have a 55 -year affordability restriction, with the exception of The Terraces. Because the affordable housing agreement for The Terraces was recorded in 2002, prior to the amendment of the IZR, units at The Terraces are subject to a 30 -year affordability restriction. Affordability restrictions for existing BMR units will begin to expire in 2034. More recent units have restrictions that extend through 2068, and the 2 ownership BMRs at Cantara are affordable in perpetuity. Foreclosures The City's affordability restrictions do not survive foreclosure. Since the program's inception, 8 ownership BMR units have converted to market rate due to foreclosure (6 units in The Terraces and 2 in Elan). Unit Sizes As shown in Figure 3, approximately 47 percent (78 units) of ownership BMR units are one - bedroom homes. Another 26 percent (43 units) have two bedrooms, 15 percent (25 units) have three bedrooms, and 12 percent (19 units) have four bedrooms (note that this figure shows the percentage of ownership BMR units by number of bedrooms only for active BMR units, foreclosed units are not included). The larger homes (three and four bedrooms) are located in the Willows, Silvera Ranch, Roxbury, Crossroads, and Cantara developments. September 2, 2014 Affordable Housing Program Report Figure 3. Percentage of Ownership BMR Units by Number of Bedrooms 15% Affordability Levels 12% 26% ■ 1 bedroom ■2 bedrooms ■ 3 bedrooms ■4 bedrooms CITY OF DUBLIN Ownership BMR units are restricted for purchase and occupancy for households at specific income levels. As shown in Figure 4, the majority of ownership BMR units, 94 percent, are restricted for households earning at or below the moderate - income level, which is equivalent to 120 percent of the area median income (AMI). AMI is determined annually by county by the California Department of Housing and Community Development. The Alameda County AMI is $93,500 for 2014. The remaining 6 percent of ownership BMR units are restricted for low- income households (3 percent, or 5 units) and very low- income households (3 percent, or 5 units). Figure 4. Percentage of Ownership BMR Units by Income Category 14 94% Management and Monitoring Moderate Low Very Low City staff works closely with developer staff on the initial marketing and sale of new BMR units, works with homeowners through refinances and property improvements, and works with existing homeowners and potential Affordable Housing Program Report September z, 2014 3% 3% 11 1 14 94% Management and Monitoring Moderate Low Very Low City staff works closely with developer staff on the initial marketing and sale of new BMR units, works with homeowners through refinances and property improvements, and works with existing homeowners and potential Affordable Housing Program Report September z, 2014 CITY OF DUBLIN buyers on BMR resales. The City maintains correspondence with BMR homeowners throughout the affordability restriction period. City staff sends BMR homeowners an annual survey to verify occupancy and remind homeowners of their continued obligations to involve the City in any changes to the property or home financing. Rental Units As noted above, there are 897 active rental BMR units in Dublin. Units are located in 10 developments: Park Sierra (14 units), Archstone Apartments (2 units), The Groves at Fairway Ranch (535 family and senior units), Camilia Place (33 units), Eclipse at Dublin Station (30 units), Wicklow Square (26 units), Tralee (29 units), Wexford Way (129 units), Carlow Court (49 units), and Avalon (50 units). A 2009 state appellate court decision regarding a challenge to inclusionary zoning restrictions for rental developments (Palmer /Sixth Street Properties LP v. City of Los Angeles) has impacted the City's ability to implement zoning requirements as they relate to rental housing. Unless the City provides a financial or regulatory incentive for a rental housing project, the City can no longer establish maximum rental amounts to ensure that a unit is affordable. However, the City can still require that a certain percentage of units be rented to households at specific income levels. For this reason, BMR units at Avalon are not subject to maximum rent restrictions. Monitoring BMR rental units are managed, along with the market -rate units in a rental project, by an on -site manager or a management company. The City does not qualify or process individual applications or manage wait lists for BMR units. To ensure that units are managed in accordance with City standards, the City works with the developer /manager to establish a marketing and management plan when the project is developed and preparing for initial occupancy. The City then conducts annual monitoring to review the status and verify the eligibility of households occupying BMR units. For most properties, the City visits the site, tours units and the property as a whole, and reviews files to verify qualification records and tracking. Second Units In some instances, developers have been permitted to satisfy their inclusionary obligation by offering homes with restricted second units. A second unit is a residential unit with separate kitchen, sleeping, and bathroom facilities that is part of, an extension to, or detached from a principal detached single- family residence. Homes are sold to buyers at market rate, but the second unit on the property is subject to affordability restrictions if/when the owner opts to rent the unit. As noted above, there are 111 active rent - restricted second BMR units in the city. Units are located in nine developments: Biella, Calabria, Cantara, Cortona, Cortona II, Fiorano, Livorno, Maranello, and Schaefer Ranch. The first BMR second units were occupied in 2011. Owners of homes with restricted second units are not required to rent the second units, and most are not currently rented. As of April 2014, 3 restricted second units were rented to lower - income households. All BMR second units are restricted for occupancy by low- and very low- income households. Just over 80 percent are restricted for affordability to low- income households. BMR second units are restricted for affordability in perpetuity. If the second unit is rented at any point during the life of the home, it must be rented to a qualified lower - income household. Monitoring City staff works closely with developer staff on the initial marketing and sale of homes with BMR second units, works with homeowners through refinances, and works with existing homeowners and potential buyers on the resale of homes with BMR second units. The City maintains correspondence with BMR second -unit homeowners September 2, 2014 Affordable Housing Program Report CITY OF DUBLIN throughout the affordability restriction period. City staff sends BMR homeowners an annual survey to verify occupancy and remind homeowners of their continued obligations to involve the City in any changes to the property or home financing. Affordable Housing Program Report September a, 2014 CITY OF DUBLIN First Time Homebuyer Loan Program The City established a First Time Homebuyer Loan Program ( FTHLP) in 2006 and made funding available for the 2006 -2007 fiscal year. The FTHLP offers low- interest (3.5 %) deferred payment loans of up to 10% for market -rate properties and up to 15% for BMR units, with a maximum of $40,000. Since the onset of the program, the City has issued 57 loans, valued at a total of $1,982,649, to first -time homebuyer households. The average loan amount is $34,783. Since the program's inception, nine loans valued at $336,401 (in principal) have been repaid to the City. One loan, valued at $40,644, was lost due to foreclosure. The majority of loans (85 percent, or 47 loans) have been issued to lower- income households purchasing BMR units. Eight loans have been issued to borrowers for the purchase of market -rate units. Since the 2006 -2007, the number of loans issued per fiscal year has ranged from a low of two in 2009 -2010 to a high of 15 in 2007 -2008. As shown in Figure 5, loan values peaked along with the number of loans issued in 2007 -2008 at a total loan value of $469,456. $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Figure 5. Value of First Time Homebuyer Loans Issued Per Fiscal Year September 2, 2014 Affordable Housing Program Report �4N `LAN^ �4N �4N September 2, 2014 Affordable Housing Program Report CITY OF DUBLIN GUIDELINES TO THE INCLUSIONARY ZONING REGULATIONS ORDINANCE I 14 F -% �c III 11F_11.1R*0Z41670k11140k P 1 GUIDELINES Tn TUE INN i SIGN RY ZE)NING GRIDIN NGE REG ii nTinni INTRODUCTION 1 2 DEFINITION OF TERMS 3 3 GUIDELINES FOR DEVELOPERS 9 3.1 Overview of the-Inclusionary Zoning s Requirements 9 3.2 Deterfflining the Nuffiber and Size ef Ynits Required Inclusionary Zoning Process 9 3.3 Hew `e GaIE late the Inclusionary Obligation 11 3.3.1 Rounding 11 3.3.2 Portion of the Obligation That May be Satisfied • ith an in Lieu : F__ Must Be Constructed 11 3.3.3 1low to Calculate the AFneunt of the In -Lieu Fee Calculation 12 3.3.4 On -Site BMR Unit Requirements 12 3.4 Housing Agreements 14 3.5 Procedures for Initial Sale of BMR Units 16 3.5.1 Maximum Sale Price of BMR Units 16 3.5.2 The Marketing Plan for Ownership BMR Units 19 3.5.3 Application and Screening Process 19 3.6 Procedures for Initial Rental4BMR Units 23 3.6.1 The Management Plan for Rental BMR Units 23 3.6.2 Application and Screening Process 23 Calculating Maximum Rent 24 3.6.3 Annual Report and Monitoring 25 3 -6-.4 Annual Menitering by Git 25 4 BMR UNIT BUYER AND RENTER QUALIFICATIONS 27 4.1 Household Qualifications 27 4.1.1 BMR Unit Buyers 27 4.1.2 BMR Unit Renters 28 4.2 Description of Qualification Requirements 29 4.2.1 Household Size 29 Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 TABLE OF CONTENTS September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 4.2.2 Household Income 29 4.2.3 Credit Score 33 4.2.4 Preference Points 34 5 REQUIREMENTS FOR BUYERS OF BMR UNITS 37 5.1 BMR Unit Application and Purchase Procedures 37 5.2 In- Person Consultation 38 5.3 Homebuyer Education Program 38 5.4 Title and Loan Requirements 38 5.5 Financing Requirements 39 5.5.1 Acceptable Loan Products#er-to Purchase or Refinance+n of BMR Unit 39 5.5.2 Prohibited Loan Products and Unacceptable Mortgage Features 39 5.5.3 Down Payment 40 5.5.4 Down Payment Assistance 40 5.5.5 Debt to Income Ratio 40 5.5.6 First Mortgage Loan to Value Ratio 40 5.5.7 Closing Costs and Deposits 40 5.6 Recorded Documents (Resale Restriction Agreement and Performance Deed of Trust) that EaEh Buyer Mus 5igtt 40 5.6.1 Highlights of the Resale Restriction Agreement 40 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 43 6.1 Capital Improvements 43 6.1.1 Procedure for Receiving Requesting Approval of Capital Improvements 43 6.1.2 Vie# Eligible and Ineligible Capital Improvements 44 6.1.3 Special Assessments 47 6.1.4 Capital Improvements Minimum and Cap 47 6.1.5 Building Permits 47 6.2 Owner Occupancy Exception 47 September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations TABLE OF CONTENTS 6.3 Refinance Requirements 6.3.1 Refinance Procedure 6.4 Resale Procedure 6.4.1 Galeulating Restricted Resale Price Calculation 6.4.2 Fees Associated with the Selling of a BMR Unit 6.5 Units Unable to Resell 7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS 7.1 Purchase Process 7.2 Rental Requirements 7.3 Tenant Income Verification Reporting Recluireffients 7.4 Annual Reports 7.5 Management Responsibilities 7.6 Refinance Requirements 8 EXCEPTIONS AND APPEALS 8.1 Exception Requests 8.2 Appeals Procedure EXHIBITS Exhibit 1 Resale Restriction Agreement and Option to Purchase Exhibit 2 Performance Deed of Trust Exhibit 3 Sangple Application for InElusionary Unit Exhibit 5 Sangple Greelit Report Authorization and Release Exhibit 6 Excel Exhibit 7 State Spreadsheet to Calculate Gwnership Sale Prices Gaffafn4a I lousing Community Development Departrnent InEenge for Guidelines Exhibit 8 Gurfent of anel (2908) Alafneela County I lousing Autherity Utility Allowance Sheet Report for Rental Units Sample Marketing Plan RevenueServ+ee (IRS) Code 26 IJSG, Section 61 Exhffibit9 Annual Exhibit 34& Exhibit 11 ! Internal Exhibit 4+2- Exhibit 13 Reservation Sample Management Plan Instruffient 48 48 49 50 51 51 53 53 54 54 54 55 55 57 57 57 Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 iii TABLE OF CONTENTS Exhibit 5+4 Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations TABLE OF CONTENTS LIST OF TABLES Table 1. Required BMR Units by Income Category Table 2. Household Size Assumption for Maximum Sales Price Calculations Table 3. Required Marketing Plan Contents Table 4. Ownership BMR Unit Household Qualifications Table 5. Rental BMR Unit Household Qualifications Table 6. Allowable Household Size per BMR Unit Table 7. Income Limits per Income Category (2014) Table 8. Annual Income Calculations by Pay Frequency Table 9. Preference Points Table 10. Eligible and Ineligible Capital Improvements LIST OF FIGURES Figure 1. Inclusionary Zoning Process Figure 2. Initial BMR Unit Sale Process Figure 3. BMR Rental Process Figure 4. BMR Application and Purchase Process Figure 5. BMR Unit Refinance Process Figure 6. BMR Unit Resale Process Figure 7. BMR Secondary Unit Sale Procedure Figure 8. Exception Request Procedure Figure 9. Appeals Procedure LIST OF EXAMPLES Example 1. InclusionaryReqa+refnent Obligation Calculation Example 2. Treatment of Fractions in Calculating the Inclusionary Requirement Example 34. Determining the "Must- Build" Obligation Example 4-3. In -Lieu Fee Calculation Example 5. Rental below rnarket rate • nit Development BMR Unit Composition Example 6. BMR Unit Bedroom Requirements Example 7. BMR Unit Sales Price Calculation Example 8. Determining Income with Assets Example 9. Preference Points Calculation Example 10. Maximum Restricted Resale Price Calculation Guidelines to the Inclusionary Zoning Ordinance Regulations v 12 16 19 27 28 29 30 32 35 44 10 21 23 37 48 49 53 57 58 11 11 11 12 13 14 17 33 36 51 September 2, 2014 \ I \ 1 ■L- 1-IwJ111 \'IT���� ■■ 171\'\ �IZ�rJI�I \'I� \ \�tZ�J \'11 \'L���J\ \III \'I� \ \' \�� This document constitutes the Guidelines (these "Guidelines ") to the City's Inclusionary Zoning Regulations Ordinance (the "Ordinance ") set forth in Chapter 8.68 of the City's Municipal Cod . The City Council's purpose in adopting the Ordinance is to increase the diversity of housing prices /rents in the community and ensure that the range of prices /rents continues over time. The purpose of these Guidelines is to assist the layperson in interpreting the Ordinance. The Guidelines wi44 are intended to: A_assist developers early in the development process to ensure that Residential Development projects are sensitively designed from the beginning in compliance with the requirements of the Inclusionary Zoning Ordinance;- • T_ - a a"' e_ the Gttidelittes -wiff Iinform developers, management firms, and owners of BMR Units and BMR Secondary Units of the procedures for selling and renting BMR Units and BMR Secondary Units_ and. ,-.._t,-ermor the Gtti elit - _._.,, pprovide households interested in renting or purchasing a BMR Unit with an overview of the eligibility requirements, the application and screening process, the restrictions on ownership, and the procedures for reselling a BMR Unit. These Guidelines should be read in conjunction with the Ordinance. While every effort has been made to ensure that these Guidelines are consistent with the Ordinance, if there is any conflict between these Guidelines and the Ordinance, the terms of the Ordinance shall prevail. In addition, the provisions of a Housing Agreement or Resale Restriction Agreement (or like Agreement) recorded against a BMR Unit shall prevail over any general requirements of the Ordinance. Users of these Guidelines are encouraged to seek their own legal counsel to aid in understanding the requirements of the City's Inclusionary Program. For any general questions regarding the Guidelines, users may call the City's Housing Division at (925) 833 -6610. The effective date of these Guidelines is �attttary 2, September 2, 2014. The City will review and to the extent necessary, update these Guidelines annually. The Community Development Director may make interim revisions, interpretations, or clarifications to these Guidelines, provided that he or she considers the revision, interpretation, or clarification to be minor and consistent with the purposes of the Inclusionary Zoning Ordinance and the Guidelines. Any such revision, interpretation, or clarification shall not become effective until posted on the City's website. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 ., ., .. . . The purpose of these Guidelines is to assist the layperson in interpreting the Ordinance. The Guidelines wi44 are intended to: A_assist developers early in the development process to ensure that Residential Development projects are sensitively designed from the beginning in compliance with the requirements of the Inclusionary Zoning Ordinance;- • T_ - a a"' e_ the Gttidelittes -wiff Iinform developers, management firms, and owners of BMR Units and BMR Secondary Units of the procedures for selling and renting BMR Units and BMR Secondary Units_ and. ,-.._t,-ermor the Gtti elit - _._.,, pprovide households interested in renting or purchasing a BMR Unit with an overview of the eligibility requirements, the application and screening process, the restrictions on ownership, and the procedures for reselling a BMR Unit. These Guidelines should be read in conjunction with the Ordinance. While every effort has been made to ensure that these Guidelines are consistent with the Ordinance, if there is any conflict between these Guidelines and the Ordinance, the terms of the Ordinance shall prevail. In addition, the provisions of a Housing Agreement or Resale Restriction Agreement (or like Agreement) recorded against a BMR Unit shall prevail over any general requirements of the Ordinance. Users of these Guidelines are encouraged to seek their own legal counsel to aid in understanding the requirements of the City's Inclusionary Program. For any general questions regarding the Guidelines, users may call the City's Housing Division at (925) 833 -6610. The effective date of these Guidelines is �attttary 2, September 2, 2014. The City will review and to the extent necessary, update these Guidelines annually. The Community Development Director may make interim revisions, interpretations, or clarifications to these Guidelines, provided that he or she considers the revision, interpretation, or clarification to be minor and consistent with the purposes of the Inclusionary Zoning Ordinance and the Guidelines. Any such revision, interpretation, or clarification shall not become effective until posted on the City's website. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 2 DEFINITION OF TERMS As used in these Guidelines, the following terms shall be defined as follows: Administration Fees: • A $1,500 fee charged by the City to the BMR Unit Owner for all sales and re -sales of BMR Units; • An XW $826 fee charged by the City to the developer /property manager for the annual review of rental developments; • A $200 fee charged by the City to the BMR Unit Owner for requests to subordinate the Resale Restriction Agreement and /or Performance Deed of Trust or requests to refinance a BMR Unit. Fees may be adjusted from time to time by the City. Affordable Housing Agreement: An agreement between the developer and the City for an ownership Residential Development project which is recorded against the property containing the BMR Units; sets forth the developer's Inclusionary Obligation and the method by which the developer will comply with the requirements of the Ordinance; and requires, among other things, that the developer require purchasers of BMR Units to execute and record a Resale Restriction Agreement and Option to Purchase and Performance Deed of Trust. Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants: An agreement between the developer and the City for a rental Residential Development project which is recorded against the property containing the BMR Units; sets forth the developer's Inclusionary Obligation and the method by which the developer will comply with the requirements of the Ordinance; and requires, among other things, that the BMR Units are reserved for occupancy by Very Low -, Low -, and /or Moderate - Income households at rents affordable to such households for a period of not less than 55 years. Approved Capital Improvements: Capital improvements to BMR Units that have been approved by the City pursuant to the procedure set forth in Section 6.1. The cost of such improvements may be added to the resale price of the BMR Unit. Area Median Income or AMI: The Area Median Income adjusted for household size as published annually by the California Department of Housing and Community Development (HCD). Below Market Rate (BMR) Units: A Below Market Rate or BMR Unit is a unit that is reserved for rent or for sale to Very Low -, Low -, or Moderate - Income households. or `5° sere to 17a_.- or Moderate inea__ e hatts..h a! ft" BMR Units have restrictions recorded against them to ensure they remain affordable for a period as set forth in the Housing Agreement or Resale Restriction Agreement. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 2 DEFINITION OF TERMS Owner - occupied units are deemed affordable if the sales price results in annual Housing Expenses that do not exceed 35% of the maximum income level for Low- or Moderate - Income households, as applicable, adjusted for household size. BMR Unit Owner: A household that owns a BMR Unit. Ca1HFA: The California Housing Finance Agency. City: The City of Dublin. City Council: The legislative body of the City of Dublin. City Staff: An employee or designee of the City of Dublin responsible for actions related to the Ordinance or these Guidelines. Consent Agreement: An agreement between the City and a Qualified Household which authorizes the City to access and review the Qualified Household's credit reports or other personal or financial information to verify a Qualified Household's compliance with the Resale Restriction Agreement, the Ordinance, and these Guidelines. This agreement must be executed by purchasers of ownership BMR Units prior to the close of escrow. Domestic Partner: A legal or personal relationship between individuals who live together and share a common domestic life, but are not joined in a traditional marriage or a civil union as formalized through a local or state registry. First -Time Homebuyer: A person who has not owned any interest in real property during the three -year period prior to the date of the household's application to qualify for purchase of a BMR Unit, including without limitation, real property in which a household member's name appears on title regardless of whether the member's interest in such property results in a financial gain, such property is located in another state or country, or the member has occupied such property as his or her primary residence. If any person has had his or her name on title of a property, but the property was sold more than three years ago from the date of application, the person is considered a First -Time Homebuyer. Gross Household Income: All income, from whatever source derived, of all adult household members (18 years of age and older), whether or not such income is exempt from federal income tax. Refer to Section 4.2.2 for a list of income sources and exceptions. Stteh ineome ineludes, but is not limited to, the following* September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 2 DEFINITION OF TERMS *--All ittterest, dividends, attd royalties A A t•�111 \l \%1�11J11 S�Z 1lA Il Sllll�t �/ l�l�l�lR\ Jl�Il 1J 111n1�1/\ �1111R\ 11II11 J111wlr.l�lll \ / \ /ll�r.11llJ r.l t•�lRlli (These) Guidelines: These Guidelines to the Inclusionary Zoning Regulations. HCD: The California Department of Housing and Community Development. HOA: Homeowners Association. Homebuyer Education Workshop for Below Market Rate Buyers: A HUD - approved 8 -hour course designed to provide basic education specific to BMR Homebuyers. Refer to the City's website (www.dublin.ca.gov) for organizations that may offer this course. The date on the completion certificate for the class must be within six months of the date of application for a Belo_._ Market Rate BMR Unit. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 2 DEFINITION OF TERMS Housing Agreement: An Affordable Housing Agreement, an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants, or a Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants or other Agreement that relates to housing that may be adopted from time to time by the City. Housing Expenses: Principal, interest, private mortgage insurance, taxes, insurances, and HOA dues. HUD: The United States Department of Housing and Urban Development. Immediate Family Member: A mother, father, brother, sister, child, grandparent, or grandchild. Inclusionary Obligation: The number of BMR Units a developer is required to construct (or pay fees in lieu thereof) in a Residential Development project to comply with the Inclusionary Zoning Regulations. Inclusionary Zoning Regulations Ordinance: Chapter 8.68 of the City of Dublin Municipal Code. In -Lieu Fee: A fee paid by a developer in lieu of constructing BMR Units to satisfy up to 40% of its inclusionary obligation. Legal Resident: A citizen or other national of the United States or a qualified alien as defined by the Federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( "PRWORA "). Low Income: Total Household Income that is 501% to 80% of AMI, adjusted for actual household size. Management Plan: A plan required for rental Residential Developments that contains the information set forth in Section 3.6.1 of these Guidelines. Marketing Plan: A plan required for ownership Residential Developments that contains the information set forth in Section 3.5.2 of these Guidelines. Maximum Income: The maximum income for an income category (Very Low, Low, or Moderate Income) determined periodically by HCD based on AMI. See Section 4.2.2 of these Guidelines for Maximum Incomes. Moderate Income: Total Household Income that is 80 81% to 120% of AMI, adjusted for actual household size. Performance Deed of Trust: A deed of trust recorded against a BMR Unit by the City which secures a BMR Owner's compliance with the Resale Restriction Agreement and Option to Purchase. Preference Points: Points assigned to persons employed within the City of Dublin, public service employees working within the City of Dublin, Dublin residents, seniors (62 +), veterans, persons who are permanently disabled (with written verification from a physician or show receipt of SSI or SSDI), persons who are immediate family members of a Dublin resident, and persons who are required to relocate from a Dublin residence due to demolition of the residence or conversion of the residence from a rental to an ownership unit. Persons with Preference Points are given priority over other Qualified Households in the rental or purchase of a BMR Unit. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 2 DEFINITION OF TERMS Principal Residence: The place where a person resides on a substantially full -time basis during not less than 10 months per year. Children attending college and not living at home as their Principal Residence may not be counted as a household member. Priority List: A list that ranks Qualified Households based on the number of Preference Points received. Program: Activities related to the development, rental, sale, and occupation of BMR Units developed under the City's Inclusionary Zoning Regulations Ordinance. Qualified Household: Can include any group of persons, so long as such persons, when viewed as a whole, satisfy the eligibility requirements for a household. For an ownership BMR Unit or for a rental BMR Unit, a "qualified household" means a household that satisfies the requirements listed in Section 4 of these Guidelines. Resale Restriction Agreement and Option to Purchase, also known as "Resale Restriction Agreement ": An agreement between the City and a BMR Unit Owner that is recorded against the BMR Unit and, among other restrictions, requires that the unit to-remain affordable to Low- or Moderate - Income households usually for a period of 55 years or as outlined in the Housing Agreement, restricts the resale price of the BMR Unit, requires the BMR Unit Owner to notify the City upon refinancing, reselling, or changing the title of a BMR Unit, and provides the City with an option to purchase or transfer the BMR Unit upon the occurrence of certain events. Residential Development: Includes, without limitation, detached single - family dwellings, multiple - dwelling structures, groups of dwellings, condominium or townhouse developments, condominium conversions, cooperative developments, mixed -use developments that include housing units, and residential land subdivisions intended to be sold to the general public. Secondary Unit: A legal secondary dwelling unit that has been approved by the City and that is reserved for occupancy by Very Low -, Low -, or Moderate - Income households at rents affordable to such households. Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants: An agreement between the City and the owner of a Secondary Unit which is recorded against the property containing the Secondary Unit and requires, among other things, that the Secondary Unit be reserved for occupancy by Very Low -, Low -, or Moderate - Income households at rents affordable to stteh hottseholds for an amount of time specified in the Affordable Housing Agreement or Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants. Senior: A person 62 years of age or older for the purpose of qualifying for preference points. Special Assessment: A proportional fee charged to the BMR Unit Owner by an HOA to cover the cost of physical improvements to the entire building or common areas. Total Household Income: All Gross Household Income and assets received (as calculated pursuant to Section 4.2.2). Very Low Income: Total Household Income that is 50% or less of AMI, adjusted for actual household size. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 2 DEFINITION OF TERMS Veteran: A person who served in the active military, naval, or air service and who was discharged or released therefrom under conditions other than dishonorable, for the purpose of qualifying for Preference Points. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 3 GUIDELINES FOR DEVELOPERS 3.1 Overview of the-Inclusionary Zoning Process Requirements Residential Developments consisting of 20 residential units or more must comply with the Inclusionary Zoning Ordinance (Section 8.68.030.A). In general, the Ordinance requires that 12.5% of the units constructed in a Residential Development be reserved for occupancy by For Sale T tiit Low- and Moderate - Income households at t4 T o_._ ._ .o_..e ,hate l a in for -sale units or rettte4 at rriees affordable ter; Very Low -, Low -, and Moderate - Income households in rental units. Such restricted units are referred to as BMR Units (Section 8.68.030.A). In addition to these Guidelines, developers should thoroughly review the Inclusionary Zoning Regulations Ordinance (Chapter 8.68 of the City's Municipal Code). While the Ordinance requires that 12.5% of the units in the Residential Development be BMR Units, the Ordinance permits the developer to meet up to 40 .5% of this obligation by paying an In -Lieu Fee subject to approval by the City Council). Thus, there is a "must- build" requirement of -7-.560% of the BMR Units in the Residential Development, payment of att in 1:4ett Fee. BMR Units must remain affordable for a period of 55 years, through affordability restrictions recorded against the property. In addition, the Inclusionary Zoning Ordinance requires that BMR Units: • Be constructed concurrently with the market -rate units in the Residential Development; • Have a similar range of bedrooms to the market -rate units in the Residential Development; • Not be distinguished by design or materials from the market -rate units in the Residential Development; and • Be reasonably dispersed throughout the Residential Development. A developer may also satisfy its Inclusionary Obligation by dedicating land or constructing BMR Units off -site if the City Council makes the required findings. See Section 8.68.040 of the Inclusionary Zoning Regulations for alternate methods of complying with the requirements of the Ordinance. 3.2 Determining the Number and Size of Units Required Inclusionary Zoning Process Developers should address how to comply with the Inclusionary Obligation when Prior to submitting an application to the City for a Residential Development that includes 20 or more residential units., the de-veloref City Staff is available to discuss options for meeting the Inclusionary Obligation with developers. For example, if a developer intends to build only the minimum number of BMR Units and to pay an In -Lieu Fee for the remaining units, 1 lottsing staff can, for planning purposes, provide the developer with the preliminary number of BMR Units the developer would be required to build, the income levels and sizes of the required BMR Units, and the amount of the In -Lieu Fee under the then - current fee schedule. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 After a Residential Development application is submitted to the Community Development Department for review, a Project Review Committee (PRC) meeting is generally held. In this meeting, City Staff and interested agencies involved in the development process review the Residential Development and give preliminary comments to the developer. Prior to or following the {PRC} meeting, City Staff will send a letter to the developer indicating the developer's Inclusionary Obligation for the Residential Development as preliminarily proposed. A copy of this letter will also be directed to the City's Project Planner responsible for the Residential Development. The purpose of this letter is to provide the developer information on the Inclusionary Obligation as early as possible in the development process. The City recognizes that the Residential Development is likely to evolve over time and that the Residential Development will likely change prior to obtaining City entitlements. However, this information is provided early in the process as a service to the developer for planning purposes. The developer's final Inclusionary Obligation will be formalized in an Affordable Housing Agreement (or alternate satisfaction of the obligation as approved by the City Council) between the City and the developer, prior to the recordation of the first final map or the issuance of the first building permit, whichever occurs first, for the development. 3 GUIDELINES FOR DEVELOPERS Figure 1. Inclusionary Zoning Process 1. Conceptualize residential development and review Inclusionary Regulations 2. Contact City staff for questions or clarification, as needed 3. Submit a Residential Development application to the Community Development Department 4. Project Review Committee Meeting (respond to comments, as needed) 5. Inclusionary obligation letter (issued by the City to the developer) 6. Execute Affordable Housing Agreement or alternate satisfaction of obligation as approved by the City Council September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 10 3 GUIDELINES FOR DEVELOPERS 3.3 How to Calculate the Inclusionary Obligation Developers of residential projects subject to Section 8.68.030.A of the Inclusionary Zoning Ordinance must eotistruet meet an Inclusionary Obligation equivalent to 12.5% of the total number of proposed dwelling units , unless subject to an exception approved by the City Council. - Example 1 shows a sample calculation of the Inclusionary Obligation. Example 1. 1 nclusionary Requirement Obligation Calculation The developer proposes a 224 -unit subdivision. 12.5% of 224 is 28. The Inclusionary Obligation is 28 trr4ts of the erig+nal 224 total units proposed. 3.3.1 Rounding In making this calculation, any decimal fraction less than or equal to 0.50 is disregarded and a decimal fraction greater than 0.50 is construed as a unit.-T-wo An examples of the treatment of fractions in calculating the Inclusionary Obligation is shown in Example 2. Example 2. Treatment of Fractions in Calculating the Inclusionary Requirement The developer proposes a 316 -unit subdivision. 12.5% of 316 is 39.5. Rounding the decimal fraction down, the Inclusionary Obligation is 39 units of the original 316 total units proposed. 3.3.2 How to Calculate How Many Units Must Be Constructed and How Many Units of Portion of the Obligation That May be Satisfied with an in Lieu Fee.Must Be Constructed The Ordinance reauires that the developer provide 60% of the Inclusionary Obligation by constructing affordable units. The developer may permits a Deveiorer to opt to pay an In -Lieu Fee for up to -540% of its Inclusionary Obligation. 8.68.0302k sea. Using the saute examples scenarios from Figure Example 1 and-,T-igtrre Example 2, Example 3 illustrates the calculation of the number of BMR Units that must be constructed. Example 32. Determining the "Must- Build" Obligation Example 32.A The developer proposes a 224 -unit subdivision, for which the Inclusionary Obligation is 28 trots of the 224 proposed units. Must -Build (60 %) 60% of 28 units = 16.8 units The must -build obligation is 17 units. In -Lieu Fee Option (40 %) 40% of 28 units = 11.2 units The developer may pay an In -Lieu Fee for up to 11 units. Example 32.113 The developer proposes a 316 -unit subdivision, for which the Inclusionary Obligation is 39 units of the 316 units. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 11 3 GUIDELINES FOR DEVELOPERS Must -Build (60 %) 60% of 39 units = 23.4 units The must -build obligation is 23 units. In -Lieu Fee Option (40 %) 40% of 39 units = 15.6 units The developer may pay an In -Lieu Fee for up to 16 units. 3.3.3 How to Calculate the Amount of the In -Lieu Fee Calculation The amount of the In -Lieu Fee is set by Resolution of the City Council. Resolution No. 56 -02 provides that the In- Lieu Fee per BMR Unit is adjusted annually on July 1 to reflect the greater of the percentage change either in (a) the Bay Area Urban Consumer Price Index (CPI) as of February of each year, or (b) the United States Department of Housing and Urban Development (HUD) Fair Market Rent limits for the Oakland Primary Metropolitan Statistical Area (PMSA) that are in effect at the time. The fee as of July 1, 2098 2014, was $6127,061 per BMR Unit. The entire In -Lieu Fee amount for the Residential Development is due and payable upon issuance of the first building permit for the Residential Development or a time otherwise specified by City Council. Using the e�tai-ftp scenarios from Examples 1, 2, and 3, Figttfe 3 Example 4 illustrates the calculation of the amount of the In -Lieu Fee as of July 1, 2014. Example 43. In -Lieu Fee Calculation Example 43.A The developer proposes a 224 -unit subdivision. In -Lieu Fees may be paid for 11 units. 11 X $91 127,061 4is= $1,397,671 This ent6fe angeunt would be clue pfief to issuance of the first building perngit. Example 43.113 The developer proposes a 316 -unit subdivision. In -Lieu Fees may be paid for 16 units. 16 X $91,91 127,061 = $1,479,6 62,032,976 This entire afneunt would be due prier to issuance of the first building perfflit. 3.3.4 On -Site BMR Unit Requirements 3.3.4.1 How to Calculate How Many BMR Units Requirements Must Be Provided for Each by Income Level Pursuant to Section 8.68.030.B of the Inclusionary Zoning Ordinance, the BMR Units included in each Residential Development project must be allocated to Very Low -, Low -, and Moderate - Income households in the follov tt the manner described in Table 1. Table 1. Required BMR Units by Income Category Income Level For -Sale Units Rental Units Moderate 60% 50% Low 40% 20% Very Low — 30% September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 12 3 GUIDELINES FOR DEVELOPERS t 60'4 to moderate ; e heiiseh ia t 5004 to moderate ; e hei+seh ld t 4004 to low ; e he-Eiseh lds t 2004 f low ; e hei+seh lds 6ttee agar Iif the allocation calculations result in a decimal fraction, the rounding rules contained in Section 8.68.030.A and explained in Section 3.3.1.1, above, apply. In addition, if the allocation calculation results in fewer units than would otherwise be required; one additional unit should be allocated to the lowest income level with the decimal fraction closest to 0.50 (Section 8.68.030.13). F-igttre-4 Example 5 illustrates the calculation of the number of units that must be provided at each income level and how the rounding requirement is implemented. FIGURE4Example 5. Rental belew marleet rate unit Development BMR Unit Composition A Residential Rental Development includes 200 units. The Inclusionary Obligation is 25 BMR Units. The developer chooses to pay an In -Lieu Fee for 40% of the Inclusionary Obligation trrrits, which equals 10 units. The developer's must - build requirement (7-.560% of the BMR Units) is 15 BMR Units. The number of units per income category is calculated as follows: 0 of these 15 Units would need to be restricted for Moderate - Income households: 50% of 15 = 7.5 0 of these ' 5 Ynats would need to be restricted for Low- Income households, 20% of 15 = 3 0 of these 15 Ynats would need to be restricted for Very Low- Income households, 30% of 15 = 4.5 7 -7-n;- 4.5 =45 Since two of these numbers are fractions at exactly .5, the City of Bublin would require that the additional required unit must be provided in the lower- income category. Thus, In this exafniple the ineotne- unit income mix would be: 7 Moderate - Income units 3 Low - Income units 5 Very Low- Income units 3.3.4.2 How to .,_term:__ the _`BMR Unit Size Requirements The Ordinance requires that the same proportion of bedrooms be reflected in the BMR Units as are in the market - rate units. Gnee- again, Tthe rounding conventions described in Section 8.68.030.A and explained in Section 3.3.1, above, are used if the allocations result in decimal fractions. -Frgtrre Example 65 illustrates the determination of the number of BMR Units that must be provided at each unit size. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 13 3 GUIDELINES FOR DEVELOPERS Figure 5 Example 6. BMR Unit Bedroom Requirements A developer proposes a 200 -unit rental Residential Development and is paying In -Lieu Fees for 40% of the BMR Units. The must -build obligation is 15 units. The overall Residential Development includes: 50 one - bedroom units (25% of total) 100 two- bedroom units (50% of total) 50 three - bedroom units (25% of total) Therefore: 25% of the BMR Units are to be one - bedrooms 50% of the BMR Units are to be two- bedrooms 25% of the BMR Units are to be three - bedrooms To determine bedroom requirement per income category: If 5 of the units are Very Low- Income units, using the percentages above the requirement for bedrooms are: 25% of 5 = 1.25 one - bedroom units 50% of 5 = 2.5 two- bedroom units 25% of 5 = 1.25 three - bedroom units Therefore, the development would be required to provide: 1 one - bedroom unit 3 two bedroom units 1 three bedroom unit The same calculation is performed to determine the bedroom sizes of the Low- and Moderate - Income units. 3.3.4.3 How to Getermine the Location of BMR Units Within the Development The Inclusionary Zoning Ordinance requires that BMR Units be reasonably dispersed throughout the Residential Development. The purpose of this requirement is to avoid concentration of the BMR Units in a particular location within a development, effectively segregating them from the rest of the Residential Development. There are many ways in which to implement this requirement, and consultation with Community Development Department staff is recommended prior to developing the final site plan. . ._ .... ._ I Lill :. 3.4 Housing Agreements Section 8.68.50 of the Inclusionary Zoning Ordinance requires the developer to execute one of the following Housing Agreements with the City: Affordable Housing Agreement. An agreement between the developer and the City for a Residential Development project that includes ownership BMR Units (and potentially BMR Secondary Units). Such Agreements are recorded against the property on which the Residential Development is being constructed; set forth the developer's Inclusionary Obligation and the method by which the developer will September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 14 3 GUIDELINES FOR DEVELOPERS comply with the requirements of the Inclusionary Zoning Ordinance; and require, among other things, that the developer require purchasers of BMR Units to execute a Resale Restriction Agreement and Option to Purchase with the City. The Affordable Housing Agreement is effective until all of the In -Lieu Fees are paid; all of the BMR Units are constructed and sold; and all of the BMR Units are subject to a Resale Restriction Agreement. Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants. An agreement between the developer and the City for a Residential Development project that includes rental BMR Units. Such agreements are recorded against the property containing the BMR Units; set forth the developer's Inclusionary Obligation and the method by which the developer will comply with the requirements of the Inclusionary Zoning Ordinance; and require, among other things, that the BMR Units are reserved for occupancy by Very Low -, Low -, and /or Moderate - Income households at rents affordable to such households for a period of not less than 55 years. The two Housing Agreements described above set forth the legal requirements for certain tie Residential Development projects for compliance with the Inclusionary Zoning Ordinance. The Housing Agreements are recorded against the property on which the Residential Development is being constructed, run with the land, and survive transfer or sale of the land. If a developer executes a Housing Agreement for a particular Residential Development project but the project is not built and new entitlements are sought for the applicable property, the developer must execute a new Housing Agreement, which would replace the existing Agreement. Among other things, the Housing Agreements must contain the following information: 1. A description of how the developer will comply with its Inclusionary Obligation (whether through unit construction and /or payment of an In -Lieu Fee). 2. Whether the BMR Units will be ownership or rental units. 3. The number of BMR Units the developer will construct for each income category. 4. The size of the BMR Units the developer must construct for each income category. 5. Depending on the nature of the development, the timing of construction of the units to ensure that the BMR Units are constructed concurrently with the market -rate units. 6. If the development proposes ownership BMR Units, a requirement that the developer prepare and obtain City approval of a Marketing Plan, prior to issuance of any building permits in the Residential Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 15 ._ ._ -- - - - - -- - - -- -- - -- --- --- ---- - - -- - -- -- -- - - -- - -- - -- -- - - -- - The two Housing Agreements described above set forth the legal requirements for certain tie Residential Development projects for compliance with the Inclusionary Zoning Ordinance. The Housing Agreements are recorded against the property on which the Residential Development is being constructed, run with the land, and survive transfer or sale of the land. If a developer executes a Housing Agreement for a particular Residential Development project but the project is not built and new entitlements are sought for the applicable property, the developer must execute a new Housing Agreement, which would replace the existing Agreement. Among other things, the Housing Agreements must contain the following information: 1. A description of how the developer will comply with its Inclusionary Obligation (whether through unit construction and /or payment of an In -Lieu Fee). 2. Whether the BMR Units will be ownership or rental units. 3. The number of BMR Units the developer will construct for each income category. 4. The size of the BMR Units the developer must construct for each income category. 5. Depending on the nature of the development, the timing of construction of the units to ensure that the BMR Units are constructed concurrently with the market -rate units. 6. If the development proposes ownership BMR Units, a requirement that the developer prepare and obtain City approval of a Marketing Plan, prior to issuance of any building permits in the Residential Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 15 3 GUIDELINES FOR DEVELOPERS Development, indicating how the developer plans to sell the BMR Units. This requirement is discussed in additional detail in Section 3.5.2 below. 7. If the development proposes ownership BMR Units, there is a requirement that the developer require the purchasers of such units to execute a Resale Restriction Agreement or a Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants and a Performance Deed of Trust. A sample Resale Restriction Agreement is attached as Exhibit 1. A sample Performance Deed of Trust is attached as Exhibit 2. A sample Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants is attached as Exhibit 5. If the development proposes rental BMR Units, the developer is required to provide a Management Plan as described in Section 3.6.1 to the City for its approval and prepare the Annual Report described in Section 3.6.3. 3.5 Procedures for Initial Sale of BMR Units 3.5.1 Maximum Sale Price of BMR Units Pursuant to Section 8.68.020A.2 of the Inclusionary Zoning Ordinance, owner - occupied units are deemed affordable units if the sales price results in annual housing expenses that do not exceed 35% of the maximum income level for low- and moderate - income households, adjusted for household size. The maximum sale price for BMR for -sale units are rfiee is based on a designated income poi percentage that is intended to be affordable to a greater range of households in each applicable income category. • For Low - Income households (household income of between -5851 % and 80% of Area Median Income), the maximum sales price wottld be is determined based on a s1e` _` _9' -e-- -P' SO that total monthly housing payment would t ` e°_ a equivalent to 35% of one - twelfth of 70% of the AMI for Alameda County. • For Moderate - Income households (household income of between 81% and 120% of Area Median Income), the maximum sales price -vy;ottid i5e is determined based on a set at a level so that total monthly housing payment wouldttol� e °-eea equivalent to 35% of one - twelfth of 110% of the AMI. In addition, the maximum fix-e4 sales price is appf oaeh wottlel be based on the number of bedrooms in the home instead of the number of persons in the particular household. For example, if a developer is selling a two - bedroom unit, the sales price would be calculated under a 4te "number of bedrooms, plus one" rule for the assumed household size. itt eaelt ease The assumed household sizes €ef the folio-vvittg is based on the sizes of the residential units, as shown in Table 2. Table 2. Household Size Assumption for Maximum Sales Price Calculations Unit Size (Number of Bedrooms) Assumed Household Size (Number of Persons) 1 2 2 3 3 4 4 5 September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 16 3 GUIDELINES FOR DEVELOPERS The following assumptions belot are used to calculate the maximum sale price for BMR Units. Note, however, that a Qualified Household's actual Housing Expenses may differ from these assumptions. • Interest — Prevailing rate (fixed rate for 30 years), secondary market fixed rate, Fannie Mae or Freddie Mac, as determined by staff, on the date that is 30 days prior to the applicable application deadline. • Mortgage Term — fixed rate for up to 40 years. • Taxes — 1.25% of the estimated sale price of the unit. • Insurance — homeowners insurance. The cost of homeowners insurance may be calculated based on an estimate provided by the developer. (If the homeowners insurance is covered by an HOA structure, homeowners insurance need not be included, but it must be documented that the HOA will provide adequate insurance.) • PMI — private mortgage insurance. Because most BMR Unit buyers will have a down payment of 3.5 %, they will be subject to private mortgage insurance, which is estimated at 1.25% of the sale price of the unit. • Other — may include special assessments or fees for special assessment districts. • HOA dues, if any. -F� Example 7 shows how the sale price is calculated. Example 7. BMR Unit Sales Price Calculation (3- bedroom home for a 4- person Moderate - Income household) Price of home $373,500 Buyer's mortgage amount $360,428 Buyer's down payment amount (3.5 %) $13,073 Buyer's monthly costs Mortgage payment' $1,935 Property tax $389 Insurance $50 HOA $250 Mortgage insurance $375 Other $0 Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 17 3 GUIDELINES FOR DEVELOPERS Total monthly housing cost $2,999 Total annual housing cost $35,992 Buyer's annual income $102,850 Buyer's maximum monthly housing cost (35 %) $3,000 Buyer's maximum annual housing cost (35 %) $35,998 Percentage of AMI for housing costs above 35% 1. Assumes a 30 -year fixed rate loan at 5%. Interest rates fluctuate, and the current prevailing rate will be used at the time the BMR Unit sale price is being calculated. 2. For2014, the maximum income for a Moderate - Income household is $112,200 (120% ofAMI). As previously noted, the calculation is based on an assumption of income at 11096 forModerate- income households. � n� inn nn r � n� inn nn r o c�c nn , 2486.73 , +7- 2,369.73 2,369 43 _ 2,369 -.7-3 2,369 -,o 3$ 29,149-.5-5 September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 18 3 GUIDELINES FOR DEVELOPERS 3.5.2 The Marketing Plan for Ownership BMR Units Prior to the issuance of building permits for any ownership BMR Units, the developer must submit a Marketing Plan to the City for approval. The Marketing Plan must contain the €ollawi . components described in Table 3. Table 3. Required Marketing Plan Contents Component Description Narrative Summary A 1 -page narrative summary suitable for advertising the availability of the BMR Units on the City web page and other locations. The summary must include: • A description of the total number of BMR Units and market -rate units in the Residential Development; • The HOA dues for each BMR Unit; • The amenities included in the unit; and • Contact information for sales representatives (including a name, telephone number, address, and e -mail address). Application Process An explanation of the application process and the deadline for submitting applications. If the Explanation development is phased, the developer must establish deadlines for each phase of the development that includes BMR Units. Selection Process An explanation of the buyer selection process, including an explanation of the Preference Explanation Point system. Sales Training Timeline for the developer's sales staff to meet with the City's Housing staff to receive training Timelines on the sale selection and application process. Application Timelines Timelines for application submittals buyer selection. If the development is a phased project, information must be provided on the number of phases and the timelines for those phases. Marketing Materials Copies of materials that will be used to market the BMR Units. Application Packet The application packet must include: • Application for Inclusionary Unit • Disclaimer for BMR Units • Credit Authorization and Release • Signed Sample Resale Disclosure Statement • Required Supporting Documentation Steed Checklist • Highlights of Dublin Resale Restriction Agreement Written fef henge be igh confirfflatien of pre approval the which fnust validated thre Developer's preferred lender No marketing of the BMR Units shall begin until the developer has received written approval of the Marketing Plan from the City and the developer's sales staff has met with City Staff for training so that the sales staff understands and can explain the application process. 3.5.3 Application and Screening Process The developer must require each applicant to complete the application that has been approved by the City as part of the Marketing Plan and to provide the required supporting documentation by the deadline set forth in the Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 19 3 GUIDELINES FOR DEVELOPERS Marketing Plan. The developer should plan accordingly to ensure that applicants are not qualified more than 6 months before the move -in date for the unit. Complete a- Application packets should include at a minimum: 1. Complete application; 2. Income and asset documentation set forth in Section 4.2.2; 3. Reservation instrument showing the address, number of bedrooms, and sales price; 4. A loan pre - approval letter with a Good Faith Estimate and Truth in Lending Statement; 5. A signed Disclosure Statement (Exhibit F of the Resale Restriction Agreement); 6. A signed credit report authorization and release or other consent and verification letter; 7. Copy of tri -merge Credit Report; and 8. Evidence of 3.5% available funds to be used as a down payment. The developer must comply with the following process to sell the BMR Units (see Figure 2 for an overview): 1. Application Collection and Screening. Developer collects applications for the period of time set forth in the approved Marketing Plan. Developer screens applicants to determine whether they satisfy the requirements for Qualified Households set forth in Section 4.1.1. 2. Preference Points /Priority List. Developer sorts and ranks the Qualified Households based on the Preference Points and creates a Priority List with those applicants with the most Preference Points at the top, followed by all other applicants in descending order based on the number of Preference Points received. If more than one qualified applicant receives the same number of Preference Points or if some applicants receive no Preference Points, the developer will rank the Qualified Households based on other objective criteria outlined in its approved Marketing Plan. For example, the developer may date stamp all applications and, in the case of a tie, rank the Qualified Households based on who applied first, or the developer may choose to hold a lottery to break ties. However, whichever criteria the developer uses must be set forth in its approved Marketing Plan. Priority List and Application Packets Submittal. Developer completes the Priority List within 30 days of the application deadlin . Developer submits complete application packets of Qualified Households, (including supporting documentation) to the City within 45 days p &of the planned close of escrow. 4. City Review and Verification. The City reviews the application packets to verify the applicants are Qualified Households. The City will make every effort to review the applications within 7 working days of receiving a complete application packet. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 20 3 GUIDELINES FOR DEVELOPERS 5. Qualification /Disqualification. Once the City has verified that the applicant is a Qualified Household, the City will send the developer a conditional appreval qualification letter (or similar document) indicating the applicant's name and income level, the maximum sale price of the unit (see Section 3.5.1 for more detail on establishing the sale price), and any requirements that must be met before moving forward with the applicant. Gttee all the settd The conditional qualification letter (er is valid for 6 months from the date of the letter. A copy of the application packet, along with income verification for the household, will be retained by the City as proof of the buyer's qualification to purchase the BMR Unit. If the City determines that the applicant is not a Qualified Household, the City will send the developer an ineligibility letter. An applicant who has been deemed to be ineligible may not reapply for a period of one year from the date of the ineligibility letter. The developer bears the responsibility of ensuring that applicants are not qualified more than 6 months before a unit becomes available and closes escrow. Applicants must be requalified if occupancy is to take place more than 6 months from the date of the conditional qualification letter. Applicants may or may not qualify to purchase a BMR Unit upon requalification. In addition, the price of the BMR Unit may change upon requalification. If, upon requalification, an applicant does not qualify, it is the responsibility of the developer to notify the applicant. Conditional approvals are based on information -as supplied to the City by the developer or their agent. If there are any material changes to the Figure 2. Initial BMR Unit Sale Process 1. Complete Marketing Plan 2. Meet with City staff to discuss procedures and requirements 3. Market the availability of BMR Units 4. Collect and screen applications, establish a priority list based on preference points 5. Submit qualified applications to the City 6. City review and approval /disapproval (within 7 days of receipt of a complete application) 7. Execute purchase contract, open escrow, and provide the City with escrow information 8. City issues escrow instructions and meets with BMR Buyer 9. Escrow officer provides required documents for City review 10. City provides required documents to be signed at closing 11. Sale closes, documents are recorded financial conditions, marital status, employment status, or other information is made known prior to loan closing, the developer, their agent, or the lender must notify the City of Dublin in writing of these changes. The City expressly reserves the right to reverify the applicant(s) and may void or cancel this conditional approval or other approval at any time prior to the loan closing if material changes affect the qualification status of the buyer(s). Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 21 3 GUIDELINES FOR DEVELOPERS Qualification determinations may be appealed by the Beeeloper to the Goftttfttttt4Y 44e-velortftettt 4;)ireetvrin accordance with the procedures described in Section 8.2. The sale cannot proceed until all required documents are provided to the City and the developer receives a written qualification letter from the City. 6. Offer to Purchase /Purchase Agreement. The developer will offer the unit to Qualified Households based on the Priority List, offering the BMR Unit first to those applicants with the most Preference Points, then to other applicants in descending order. The developer and applicant will enter into a purchase agreement. A copy of the signed agreement must be provided to the City. 7. Escrow Instructions. The developer will provide the City with the name and address of the title company closing the sale and the name of the escrow officer. The City will prepare and send escrow instructions to the escrow officer. 8. Receipt of Documents. The escrow officer will submit the following documents to the City: • Completed and Signed Residential Loan Application; • Completed Truth in Lending Statement, Good Faith Estimate, and an estimated HUD -1 statement; • Completed, executed, and notarized Resale Restriction Agreement and Option to Purchase; and • Completed, executed, and notarized Performance Deed of Trust. 9. Compliance Review. Prior to the City sending the Resale Restriction Agreement and Option to Purchase and Performance Deed of Trust to the Title Company for signing, the City will review all final +atft documents for completeness and compliance with Program requirements with the ` ti 10. Prepare and Record Documents. When all documents have been received and are deemed to be in compliance with Program requirements, the City will prepare and send the Resale Restriction Agreement and Performance Deed of Trust to the escrow officer to be reviewed and signed by the BMR buyer. Once signed by the buyer, the escrow officer will send the original documents to the City. The City will rev ie- prepare the Request for Notice of Default for each of the buyer's loans and secure the signature of the City Manager or his /her designee on the necessary documents retttftt the loot do-t--- eats to the lettde_ The City will send the original signed Resale Restriction Agreement, Performance Deed of Trust, and Request(s) for Notice of Default to the escrow officer for recording. If at any time during the application, screening, or sale process, an applicant requires translation services, the developer shall provide such services at the developer's sole cost and expense. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 22 3 GUIDELINES FOR DEVELOPERS 3.6 Procedures for fnitial Rental e€BMR Units After the Housing Agreement is executed, and prior to the issuance of any building permits, the developer of a project that includes rental BMR Units must prepare and submit a Management Plan to the City of Dublin Housing Division for approval. After the Management Plan has been approved by the City, and prior to the rental of any units, the developer must screen, rank, and qualify eligible tenants and send a priority list to the City of Dublin's Housing Division. This should happen within 30 days, if possible. 4ft .1.1itio _ the _ t Co_ _ BNI r4tt t t t be .._1....1_x._,1 . Figure 3 provides an overview of the BMR Unit rental process. 3.6.1 The Management Plan for Rental BMR Units Prior to the issuance of building permits, the developer must submit a Management Plan to the City for its approval. The Management Plan must contain the following information: • A plan outlining how the management firm will market and maintain the rental BMR Units; • How the firm will maintain a waiting list for the BMR Units; • How the management firm will verify applicants' Total Household Income, both initially and annually; • Information on the units to be made available for publication on the City's website; • A contact telephone number; and Figure 3. BMR Rental Process 1. Complete Management Plan 2. Meet with City staff to discuss procedures and requirements 3. Market the availability of BMR Units 4. Collect and screen applications, establish a Priority List based on Preference Points 5. Offer BMR Units to qualified households based on the Priority List 6. Execute rental agreements 7. Establish and maintain a waiting list for BMR Units 8. Recertify household incomes annually and report to the City • The names of those individuals responsible for contact and communication with the City. 3.6.2 Application and Screening Process The management firm (which could be the owner or builder) is the entity that will be responsible for occupant selection and documentation of rental BMR Units. The management firm's leasing staff should be trained so the staff understands and can explain the rental application process to applicants. The management firm must require each applicant to complete and return to the management company a Rental BMR Unit Application packet. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 23 3 GUIDELINES FOR DEVELOPERS To lease the BMR Units, the developer /management company must do the following: 1. Collect applications for a given time period. 2. Screen applicants to determine whether they satisfy the requirements for Qualified Households set forth in Section 4.1.2. Sort and rank the applications of Qualified Households based on the Preference Points and produce a Priority List with those applicants with the most Preference Points at the top, followed by all other applicants in descending order based on the number of Preference Points received. If more than one applicant receives the same number of Preference Points or if some applicants receive no points, the developer will use other objective criteria set forth in the approved Management Plan to select occupants. For example, the management firm may date stamp all applicant applications and, in the event of a tie, offer the unit to the applicant that applied first, or the management firm may choose to hold a lottery to break ties. However, whichever criteria the management firm uses must be set forth in the approved Management Plan. 4. Complete the Priority List within 30 days of the application deadline and submittt4 to the City for approval. 5. Offer the BMR Units to applicants based on the Priority List, offering first to those applicants with the most points, then to other applicants in descending order. 6. Execute a Rental Agreement with the tenant that notifies the tenant that he or she may not sublease the unit and that annual certification is required. 7. Maintain applications with income verification and recertification for the City to review at annual on -site monitoring. Qualification determinations may be appealed by the developer in accordance with the procedures described in Section 8.2. .. .. - - - -- - . . .. . . .' :. : : September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 24 3 GUIDELINES FOR DEVELOPERS Unit Size (Nurnber o Bedroorns) Very Low Incorne (up to 5096 of AMI) Low erne (up to 6096 of AMI) Moderate 'neorne (up to 11096 of AMI) 9 ( ie) X19 $1,184 X889 IN-0111 �IIRNIII 0. RUN 0. &WINNER �IRW M. 0 L-I -I-N N—N-N NNNN i $i,953 $,i Unit Size (Nurnber o Bedroorns) Very Low Incorne (up to 5096 of AMI) Low erne (up to 6096 of AMI) Moderate 'neorne (up to 11096 of AMI) 9 ( ie) X19 $1,184 X889 i $i,953 $,i $2,314 -3 $i,i69 $1,699 $2 4 $i,263 $1,826 $2,778 3.6.3 Annual Report and Monitoring Pursuant to Section 8.68.050.B of the Inclusionary Zoning Ordinance, the management entity for the development must provide the City an annual report. The annual report must include the following information: • Total Household Income for the prior year for each BMR Unit; • Number of people residing in each BMR Unit; • Monthly rents charged and proposed to be charged for each BMR Unit; and • Vacancy of BMR Units during the previous year. The management firm must submit the report annually by October 31. City Staff will send a reminder letter to the management firm, with a copy of the Annual Report form for completion and certification, at leastee one months prior to the attttiversaf due date. The City may perform an annual site visit to monitor the records of all BMR Units. The City will provide at least two weeks' notice to the developer and /or management firm as to the date of the site visit. Files for all BMR Units must be made available for review at the request of the City. The purpose of the monitoring is to ensure compliance with the City's Inclusionary Zoning Ordinance, these Guidelines, and the City approved Management Plan. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 25 3 GUIDELINES FOR DEVELOPERS If, during the course of monitoring, a BMR Unit tenant household is found to no longer meet qualification guidelines due to an increase in income or change in household size, the household will not be required to move; however, the household will no longer be considered qualified for a BMR Unit and the rent may be increased to market -rate rent. The developer /landlord will then offer the next available unit with the same specifications (i.e., bathrooms and bedrooms) as a rent - restricted BMR rent restr to Unit. If a Residential Development is financed through a government program that has stricter occupant selection or occupant documentation requirements than the City, the City may elect to rely on those requirements and associated documentation and not require additional documentation. The City will require tenant income verification and restriction of the BMR Units for 55 years; however, the management firm may send to the City copies of the documentation that is required and produced for other monitoring agencies. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 26 4 BMR UNIT BUYER AND RENTER QUALIFICATIONS 4.1 Household Qualifications 4.1.1 BMR Unit Buyers A household is qualified to purchase a BMR Unit if it satisfies the folio-wits requirements stated in Table 4. Section 4.2 provides additional detail on certain requirements. Table 4. Ownership BMR Unit Household Qualifications Qualification Requirement Description Income The household's Total Household Income must not exceed the applicable Maximum Income set forth in Section 4.2.2. First -Time Homebuyer No member of the household may have owned any interest in real property during the three -year period prior to the household's BMR Unit application date. Owner Occupancy The household will occupy the unit as its Principal Residence within 30 days of the close of escrow on the unit. Size The household is of a size meeting the household size criteria set forth in Section 4.2.1. Homebuyer Education All title holders of the property must take a HUD approved or City approved 8 -hour homebuyer education workshop and receive a certificate of completion. The certificate of completion must be dated within 6 months of the date of application. Credit Score All applicants have a minimum FICO credit score of 620 (see Section 4.2.3). Residency /Citizenship The City will require all household members to be either a citizen or national of the United States or a qualified alien defined by the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). Loan Preapproval Homebuyers must be preapproved for a home loan that conforms to the requirements established in Section 5.5. Debt to Income Ratio Homebuyers' proposed debt (based on current liabilities and proposed housing payment) may not exceed a certain percentage (contact the City for the current maximum percentage). trrr , Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 27 4 BMR BUYER AND RENTER QUALIFICATIONS .. .. .. . Qualification determinations may be appealed . Refer to Section 8.2 for appeal procedures. Qualified Households with Preference Points will receive priority over other Qualified Households. For information on the application and screening process, see Section 3.5.3. Qualified households are subject to specific requirements and restrictions regarding BMR Unit financing and title and loan structure. Refer to Section 5 for procedures and regulations relating to ownership BMR Units. 4.1.2 BMR Unit Renters A household is qualified to rent a BMR Unit if it satisfies the €elle-vvrrrg requirements- shown in Table 5. Section 4.2 provides additional detail on certain requirements. Table 5. Rental BMR Unit Household Qualifications Qualification Requirement Description Household Income The household's Total Household Income must not exceed the applicable Maximum Income (see Section 4.2.2). Household Size The household must be of a size meeting the household size criteria set forth in Section 4.2.1. Residency /Citizenship All members of the household must be Legal Residents. Occupancy The household must occupy the unit as its Principal Residence within 30 days of executing the lease. Real Property Interest (not No member of the Qualifying Household must own any interest in any real property, allowed) including but not limited to, any dwelling unit, commercial real estate, or land. The names of all nondependent household members must appear on the lease for the BMR Unit. Qualified Households with Preference Points will receive priority over other Qualified Households. For information on the application and screening process, see Section 3.6.2. Qualification determinations may be appealed . Refer to Section 8.2 for appeal procedures. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 28 4 BMR BUYER AND RENTER QUALIFICATIONS 4.2 Description of Qualification Requirements 4.2.1 Household Size The size of the household is determined by the number of people liying in a household at the time of application. burr. To qualify for a BMR Unit, the size of a household must be compatible with the size of the unit being rented or purchased. The household size for each BMR Unit may not exceed two people for each bedroom and may not be less than one person per bedroom, unless otherwise permitted by special financing sources. Consult with the City of Dublin for further clarification. Table 6 contains the household size permitted for each BMR Unit based on the number of bedrooms. Table 6. Allowable Household Size per BMR Unit Unit Size (Number of Bedrooms) Household Size (Number of Persons) 0 (studio) 1 -2 1 1 -2 2 2 -4 3 3 -6 4 4 -8 4.2.2 Household Income 4.2.2.1 Maximum Total Household Income To be eligible for a BMR Unit, the applicant's Total Household Income must not exceed the applicable Maximum Income. Total Household Income means the household's Gross Household Income (see Section 4.2.2.2) plus assets calculated pursuant to Section 4.2.2.4. Maximum Income is determined pefioelieall annually by HCD based on Area Median Income. Below avt Table 7 shows the Maximum Incomes for Alameda County for 4908 2014. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 29 4 BMR BUYER AND RENTER QUALIFICATIONS Table 7. Income Limits per Income Category (2014) Income Household Size (Number of Persons) Category 1 2 3 4 5 6 7 8 Very Low $32,750 $37,400 $42,100 $46,750 $50,500 $54,250 $58,000 $61,750 Low $47,350 $54,100 $60,850 $67,600 $73,050 $78,450 $83,850 $89,250 Moderate $78,550 $89,750 $101,000 $112,200 $121,200 $130,150 $139,150 $148,100 Source: HCD State Income Limits for 2014 4.2.2.2 Gross Household Income Gross Household Income means all income from all adult household members (18 years of age and older) derived from all sources as provided in the Internal Revenue Code (Title 26, Subtitle A, Chapter 1, Subchapter B, Part I, Section 61), whether or not such income is exempt from federal income tax. Such income includes, but is not limited to, the following: • Compensation received from an employer • Compensation includes, but is not limited to, salary, overtime pay, and other pay • Other pay can include, but is not limited to compensation for special working conditions or one -time pay -out of unused vacation and sick leave • Alimony, spousal and child support • Cash • Pensions, if at an age where pension is being received as income • Public benefits including, but not limited to, CalWorks, SSI, and disability income • All interest, dividends, and royalties • Income derived from private businesses • Rental income • Income from pensions • Compensation for services rendered including fees, fringe benefits, commissions, tips, and bonuses • Stipend received for participation in a mentor, learning, or education opportunity September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 30 4 BMR BUYER AND RENTER QUALIFICATIONS • Gains from dealings in private and /or commercial property • Gambling winnings • Annuities, life insurance, and endowment contracts • Income from discharge of indebtedness • Gross partnership contributions or distributions • Income from an interest in an estate or trust Exceptions: 1. Gross Household Income does not include income earned by a household member who is between the ages of 18 and 26 and meets both of the following criteria: • Is claimed as a dependent of a household member on such member's federal income taxes; and • Is a full -time student (12+ units; school transcript must be provided). 2. Gross Household Income does not include payments to a household member from a governmental fund if all of the following requirements are satisfied: • The payments are based on the recipient's or the recipient's family's financial need; • The payments do not represent compensation for services rendered; and • The payments are part of a governmental housing subsidy program including, but not limited to, so- called Section 8 federal housing assistance payments. For purposes of determining Gross Household Income, each person 18 years of age or older must present the following: A complete set of federal and state income tax returns for the past three years, including all schedules (signed and dated) and W -2 forms (in the case where taxes have not been filed for any of the past three years, a letter of verification of non - filing from the Internal Revenue Service is required); • Four most recent and consecutive pay stubs; and Three recent and consecutive statements for all financial accounts, including, but not limited to, savings accounts, checking accounts, retirement accounts, 401(K) accounts, stock accounts, and another accounts held in the applicant(s) name(s), whether held individually or together. If a household member is self - employed, in addition to the information above, the member must submit profit and loss statements for the past three years (if applicable), and a current profit and loss statement for the year. 4.2.2.3 Income Calculation a. Wage and Salary. If an applicant is a full -time employee (usually 30 to 40 hours per week) or an employee with consistent regular hours or income, or income with overtime or adjustments as a regular part of their job, one of the folloveitt formulas listed belot in Seet3ett "a" Table 8 will be used to determine the applicant's salary. Bonuses, aft4 commissions, and limited overtime may be calculated into the annual income Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 31 4 BMR BUYER AND RENTER QUALIFICATIONS calculation. In the case of unclear income or income that is somewhat difficult to calculate, please contact the City. The City will make the final determination as to which Income Calculation formula to use. Table S. Annual Income Calculations by Pay Frequency Pay Frequency Annual Income Calculation Monthly Monthly income amount x 12 Twice Monthly Twice monthly income amount x 24 Biweekly Biweekly income amount x 26 Weekly Weekly income amount x 52 Hourly Hourly income x 40 (or whatever normal hours per week may be) x 52 a. Variable Income. For applicants who are part -time employees or employees with variable hours every pay period (or variable hours less than 40 hours per week), inconsistent income or hours, frequent overtime, bonuses and commissions, etc., their annual salary will be calculated using year -to -date income, plus the previous year's income (from same income source or employer), divided by the number of months reviewed (UP TO BUT NOT EXCEEDING 12 MONTHS) times 12 to arrive at their annual income. If there is no previous year income from the same employer, or the job was started mid -year, the current income year to date using the calculation explained in (a) above will be used. If an applicant works consistently 40 hours per week and has occasional or regular overtime, the calculation listed in (a) above will be used to calculate income. b. Inconsistent or Temporary Change in Income Due to a Temporary Circumstance. If an applicant has a temporary situation (7 months or less) that makes income calculation difficult, a Verification of Employment may be used to calculate the applicant's income based on a normal annual time period. Or, the income may be calculated based on the person's hourly rate times their normal working hours (as shown in item (a) above). c. Self- Employed or Non - Corporation. A self - employed applicant is also considered to have variable income. Gross annual income calculations will be based on the previous two years' net income shown on Schedule C of the federal income tax returns, plus net income before taxes from the applicant's signed, year -to -date Profit and Loss Statement, divided by the appropriate number of months (NOT TO EXCEED 12 MONTHS) times 12 to arrive at the annual income. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 32 4 BMR BUYER AND RENTER QUALIFICATIONS 4.2.2.4 Assets An asset test will be applied to all applicants to determine whether they satisfy the income requirements. If an applicant has assets that exceed $30,000, the following amounts will be added to the applicant's Gross Household Income to determine the household's Total Household Income: • 10% of all assets valued at between $30,001 and $130,000 • 30% of all assets valued over $130,000 The maximum assets allowed are $250,000. Households with assets in excess of $250,000 will be disqualified. Assets include, but are not limited to, cash, all savings and checking accounts, stocks, bonds, real estate, gifts, and other sources of money. Pensions and federally approved retirement savings accounts, such as IRAs, Roth IRAs, and 401Ks, are excluded; however, retired applicants who receive income from their retirement account must include such income as Gross Household Income on their application. -F4� Example 8 illustrates the calculation for determining income with assets-. Example 8. Determining Income with Assets Example 8.A A household of 3 earns $50,000 a year and has $150,000 in total household assets $150,000 — $30,000 = $120,000 (which is less than $130,000) 10% of $120,000 = $12,000 New total household income: $50,000 + $12,000 = $62,000 Example 8.B A household of 3 earns $50,000 a year and has $200,000 in total household assets $200,000 — $30,000 = $170,000 (which is more than $130,000) 10% of $130,000 = $13,000 30% of balance of $40,000 = $12,000 New total household income: $50,000 + $13,000 + $12,000 = $75,000 4.2.3 Credit Score For ownership BMR Units, a credit check will be conducted on all adults (other than dependents) in the household. Applicants must have sufficient creditworthiness to qualify. Creditworthiness means that: ESt lAA -id�l2 #+guest 1. All household individuals shall have a minimum of three years since Chapter 7 or Chapter 13 bankruptcy discharge date and /or foreclosure /short sale and evidence of reestablished credit is provided requife ; and Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 33 4 BMR BUYER AND RENTER QUALIFICATIONS 2. All persons appearing on the mortgage shall have a minimum FICO credit rating of 620 points from all three credit agencies. The rerresetttative etleelit seore is the middle seore of the three sets of rerositon� seofes Nvill be eotisidered and the lowest of the middle seores shall be the seore ttsed itt qualifying the hottsehOld (must be 620 of highery 4.2.3.1 Alternative Credit History Parameters Alternative Credit History is permitted with satisfactory references from a minimum of four trade lines and 12 months of satisfaetar consistent payment records. One of the trade lines must be a 12 -month verification of rent {VOR} history. 4.2.4 Preference Points Applicants for BMR Units will be screened by the developer or their designated party for initial eligibility based on the requirements set forth in Section 4. 1.1 (for ownership units) or Section 4.1.2 (for rental units). Qualified Households will then be ranked based on the number of Preference Points they receive. The Preference Point system set out in the Inclusionary Zoning Ordinance provides priority to certain households who are deemed to have a priority need for housing in Dublin. Prioritv erouns are shown in Table 9. those -ate penttattently disabled, are att immediate family membef of a Bttblitt resident, attelior atle being feqttitled to . Each household may only claim Preference Points once for any given category. The Ordinance provides that even if two persons in the household qualify for Preference Points for the same category, the points are only awarded for one person. For example, if a husband and wife are both employed in Dublin, the couple receives only 3 Preference Points for being employed in Dublin, or if the arrheattt lives with a famil . Similarly, if two seniors make up a household, they would be entitled to only 1 Preference Point. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 34 4 BMR BUYER AND RENTER QUALIFICATIONS Table 9. Preference Points Priority Points Proof Required Employed in Dublin for at least 6 3 Copy of first and most recent pay stub establishing length of months employment; or Letter from employer, on company letterhead, indicating continuous employment for the past six months; or If self - employed in Dublin, then the business must have a current City business license for at least 6 months at the time of application. Public service employee in 1 Copy of first and most recent pay stub establishing length of Dublin* additional employment; or Letter from employer, on company letterhead, indicating continuous employment for the past six months; or For a newly hired teacher at a State - accredited school, who will be working in Dublin, a copy of employment contract; and A letter from employer confirming employment and employer contact information. Has resided in Dublin for at least 3 Copy of two utility bills (PG &E or water), one from at least one year one year ago and one most recent utility bill both showing the applicant with a Dublin address; or Copy of a current rental agreement. Seniors (62 and over) 1 A valid State driver license; or A valid State identification card (with photo); or A valid passport. Permanently disabled 1 Doctor's note confirming that applicant is permanently disabled; or Other verification from a state agency establishing permanent disability status; or Verification of receipt of SSI or SSDI. Veteran 1 A military department record of service such as an original military service record or certified copy. The document must contain the length, time, and character of the service. Has an immediate family 1 Copy of two utility bills (PG &E or water), one from at least one year member who is a Dublin resident ago and one most recent utility bill both showing the immediate & who has continuously lived in family member with a Dublin address; or Dublin for at least one year ** Copy of the immediate family member's current rental agreement; and A copy of birth certificates for self and immediate family member, establishing relationship; or Other legal document establishing relationship. Must move because housing is to 1 Letter from apartment owner or management firm verifying the be demolished or converted to imminent condominium conversion or demolition of the unit; and condo Confirmation from the City's Community Development Department. *A public service employee is a person who is employed by a public ogencysuch as the City of Dublin, afire fighter or police officer assigned to work in Dublin, BART, DSRSD, or USPS working in Dublin. ** Immediate family is defined as a mother, father, brother, sister, child, grandparent, or grandchild currently living togetherfor 6 months or more. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 35 4 BMR BUYER AND RENTER QUALIFICATIONS -F4� Example 9 demonstrates how Preference Points are calculated. Example 9. Preference Points Calculation Example 9.A An applicant for a BMR Unit both lives in Dublin (for at least one year) and works in Dublin (for at least 6 months). This individual will receive the following points: Lives in Dublin 3 points Works in Dublin 3 points Total number of points 6 points Example 9.13 One member of an applicant household works in Dublin and is a schoolteacher. This household will receive the following points: Works in Dublin 3 points Public service employee 1 point Total number of points 4 points r� Resident „� P„i Zia: r� Senior- G4 -* --r. *---Gopy of two toility bills (PG &Ft of water), otte fi�oftt at least otte yeaf ago attd otte both immediate family 9ttblitt fttost t:eeettt tttility bill showing the membet: w4th a address; of September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 36 5 REQUIREMENTS FOR BUYERS OF BMR UNITS 5.1 BMR Unit Application and Purchase Procedures The following are the general steps for qualifying for and purchasing a BMR Unit (see Figure 4 for an overview): 1. Review qualification requirements. Potential BMR Unit buyers should review these Guidelines and confirm that they meet established qualification requirements (see Section 4). Pre - qualify with a lender. Potential BMR buyers should work with a lender of their choosing to get pre - qualified to purchase a home. Potential financing must meet the requirements described in Section 5.5. This will be necessary for preparing a complete application and will give the buyers a clear understanding of the amount of money they are eligible to borrow for a home purchase. 3. Homebuyer education. Potential BMR Unit buyers must complete an 8 -hour homebuyer education course (see Section 5.3). 4. Identify a BMR Unit. If eligible, potential buyers should identify and view BMR Units available for sale, including newly constructed units or resale units (most available BMR Units are listed on the City's website). 5. Prepare application package. When the BMR buyers find a BMR Unit that they would like to purchase, the potential buyers should work with the real estate agent or developer's sales staff to confirm eligibility, complete the application, and compile qualification materials. The complete application must be submitted to the City's Housing Division. Figure 4. BMR Application and Purchase Process 1. Review qualification requirements (see Section 4) 3. Pre - qualify for a home loan (see financing requirements in Section 5.5) 4. Complete homebuyer education class (see Section 5.3) 5. Identify a for -sale BMR Unit 6. City review of application and qualification determination (within 7 days) 7. Prepare and submit application package 8. City review and qualification, within 7 days of receipt of complete application 9. Execute purchase contract 10. New BMR buyer meets with the City 11. City receives required documents from escrow 12. City provides closing documents to escrow 6. City review and qualification determination. The City will make every effort to review the 13. New BMR buyer signs City agreements at close of application and qualification materials and escrow Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 37 5 REQUIREMENTS FOR BUYERS OF BMR UNITS determine program eligibility within 7 working days of receipt of a complete application. If approved, the City will send the developer or agent a conditional qualification letter (or similar document). The letter will be valid for 6 months from the issue date. Applicants who are determined to be ineligible will receive an ineligibility letter. Ineligible applicants may not reapply to purchase any BMR Unit for a period of one year from the date of the ineligibility letter. 7. Execute contract. Once the BMR buver household has confirmed eli¢ibility and received a conditional qualification letter from the City, the BMR buyer should execute a purchase contract with the seller. The agent should open escrow and provide escrow information to the City. The City will prepare escrow instructions and submit them to the escrow officer. 8. In- person consultation. Potential BMR buyers must schedule and complete an in- person consultation with City Staff (see Section 5.2). Sign paperwork. Following receipt of required paperwork from the escrow company, the City will prepare the Resale Restriction Agreement and Performance Deed of Trust for the BMR buyer to sign at closing (see Section 5.6). Once the BMR Unit buyer has signed, the paperwork will be delivered to the City for signature. The City will forward this paperwork as well as a request for notice of default on the BMR Unit buyer's loan to the escrow officer for recordation. 10. Monitoring and correspondence. The BMR Unit Owner must complete annual surveys to the City and should contact City Staff with any questions. The BMR Unit buyer must contact the City when considering a refinance, to request approval for any planned capital improvements (see Section 6. 1), and to notify the City of intent to sell. 5.2 In- Person Consultation All members of the BMR Unit buyer household must attend an in- person meeting with City Staff to discuss BMR Unit resale restrictions and ongoing requirements. Following issuance of a qualification letter, City Staff will work with the buyers to determine a mutually convenient meeting time. At the meeting, buyers will review and sign a disclosure statement. 5.3 Homebuyer Education Program Homebuyer(s) must successfully complete a City- approved Below Market Rate 8 -hour homebuyer education class prior to the close of escrow and must provide the City with evidence of completion. 5.4 Title and Loan Requirements All adult household members must appear as an owner or co -owner on the BMR Unit title and must co -sign for any purchase loan for the BMR Unit with the following exceptions: 1. Legal dependents of titleholders as claimed on the most recent tax return or legal minor children of titleholders. Spouses or domestic partners are not considered dependents. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 38 5 REQUIREMENTS FOR BUYERS OF BMR UNITS 2. Recent immigrants with insufficient credit history, defined as persons who have been in the United States for two years or less, as supported by entrance documentation or a sworn statement and lender documentation of the reason for loan denial, including a copy of the applicant's credit report. JOE 5.5 Financing Requirements All BMR Unit buyers must be able to secure a loan through a lending institution for a BMR Unit. For new BMR Units, At the time of appheertion, the developer may require that all applicants get pre - approval from the developer's preferred lender at the time of application. However, once an applicant receives approval to purchase a unit, applicants may use a lender of their choice, provided that the lender adheres to the City's Guidelines for acceptable loan products. 5.5.1 Acceptable Loan Products facto Purchase an&or Refinancetng -eta BMR Unit The City reserves the right to reject loan products if the City believes in its sole discretion that there is a stronger likelihood that the loan product would potentially result in loss of the BMR Unit due to the purchasers' inability to comply with the terms of the loan. DA 1W, . MA Following is ertt eltatftrie of a nonexclusive list of the loan products that may be acceptable to the City. The list is not intended to be exhaustive, and other loan products may be evaluated upon request. Acceptable First Mortgage Loan Products • Fixed mortgages up to 40 years • Maximum 100% combined loan to value 5.5.2 Prohibited Loan Products and Unacceptable Mortgage Features • Interest -only loans • Negative amortizing loans • Adjustable rate loans • Balloon payment loans • Some Llines of credit that exceed the resale price of the unit Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 39 5 REQUIREMENTS FOR BUYERS OF BMR UNITS • Stated income loans • Excessive points and fees (more than what is typical of the market at the time) 5.5.3 Down Payment The applicant is required to make a minimum down payment of at least 3.5% of the sales price. Funds must be placed into escrow prior to the close of escrow and must come from acceptable sources and be verified and properly documented per Federal Housing Administration guidelines. The 3.5% down payment may not be used toward closing costs. 5.5.4 Down Payment Assistance The City reserves the right to reject down payment assistance products if the City believes in its sole discretion that there is a stronger likelihood that the down payment assistance product would potentially result in loss of the BMR Unit due to the purchasers' inability to comply with the terms of the assistance. 5.5.5 Debt to Income Ratio A homebuyer's total debt to income ratio will be set from time to time by the City based on current financial or real estate market conditions. 5.5.6 First Mortgage Loan to Value Ratio Borrower must provide funds in an amount equal to a minimum of 3.5% of the purchase price for use as a down payment. The 3.5% must be applied to the purchase price so the combined loan to value ratio does not exceed 100 %. 5.5.7 Closing Costs and Deposits The buyer is responsible for all closing costs related to the purchase of the BMR Unit, including, but not limited to, title fees, escrow fees, and loan origination fees (approximately 2% to 3% of the purchase price). The 1lomebuyer may be "gifted" funds to pay for closing costs. The buyer may take advantage of other down payment assistance programs to assist with closing costs with the approval from the City. 5.6 Recorded Documents (Resale Restriction Agreement and Performance Deed of Trust) The Inclusionary Zoning Ordinance requires that all BMR Units be restricted for a period of 55 years. As a result, BMR Unit buyers must execute a Resale Restriction Agreement -Mth the £i and a Performance Deed of Trust. These documents must be signed by all title holders and recorded. 5.6.1 Highlights of the Resale Restriction Agreement The following list highlights some of the restrictions in the Resale Restriction Agreement. This list is not intended to be exhaustive. A sample Resale Restriction Agreement is provided in Exhibit 1. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 40 5 REQUIREMENTS FOR BUYERS OF BMR UNITS Principal Residence Requirement The unit must be owner - occupied and shall not be used as an investment or rental property. BMR Unit Owners are required to occupy the BMR Unit as their Principal Residence. BMR Owners are prohibited from renting their unit without prior written approval from the City. Refer to Section 6.2 for a discussion of circumstances in which a BMR Unit Owner may be approved to rent out a BMR Unit and related provisions. - - - - - 1111-k- - - - - - ci- i., IN VWNNWW�' Iri-e DT .. III .. ; ; .. ; - -- -- - - - ; - LIT' - - -. cif _ . , , . . .. : W IV_ - - -- - - ---- - - - - - -- ' - - ' - 11 Resale of BMR Unit The City of Dublin is not responsible for locating or providing qualified buyers for BMR Units; however, all potential buyers must be qualified by the City before the sale can proceed. BMR Unit Owners may only sell their units to a Qualified Household or to the City for a restricted price calculated pursuant to Section 6.4.1. A BMR Unit Owner must follow the requirements set forth in Section 6.4 when selling his or her unit. The City has the right of first refusal. Appreciation Share Upon the first sale of the BMR Unit after the end of the 55 -year term of the Resale Restriction Agreement, the owner must pay to the City an amount equal to 25% of the difference between the actual sale price and the adjusted resale price calculated pursuant to the formula set forth in Section 6.4.1. For example, if a unit was originally purchased for $200,000 (actual sale price) and at the end of 55 years sells for $500,000 (adjusted resale price), the equity in the unit is $300,000. The amount owed to the City would be 25% of the $300,000, or $75,000. Title Changes A BMR Unit Owner cannot make changes to the title on a BMR Unit without prior written approval from the City. BMR Unit Owners must request changes to title in writing before making any changes to the title to a BMR Unit and are responsible for all costs associated with adding or removing a person to or from the title. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 41 5 REQUIREMENTS FOR BUYERS OF BMR UNITS In the case of a change in the household makeup, due to either marriage, divorce, legal separation, death, or other occasion that will cause a person to move in or to vacate the BMR Unit, BMR Unit Owners should contact the City to ascertain how to add or remove names from the Resale Restriction Agreement and Performance Deed of Trust. City's Option to Purchase The City has the option to purchase a BMR Unit Owner's unit upon the occurrence of certain events, including, but not limited to, the sale of the BMR Unit, bankruptcy of the BMR Unit Owner, and foreclosure. The City may also choose to transfer its purchase option to an individual or organization of its choosing. A BMR Unit Owner must notify the City when it desires to sell its BMR Unit by submitting a Notice of Intent to Transfer (Exhibit B to the Resale Restriction Agreement) to the City. If the City decides not to purchase the unit, the City will send the BMR Unit Owner a letter, along with a packet of information that will assist the BMR Owner in finding another Qualified Household to purchase the unit. Refinancing BMR Units and Taking Cash Out In general, BMR Unit Owners may refinance their units only to take advantage of a new loan that benefits the BMR Unit Owner financially (e.g., a lower interest rate with lower monthly payments). BMR Unit Owners must contact the City in writing for prior written approval of all refinancing. Taking cash out of the unit is not allowed unless the cash will be used for Approved Capital Improvements as outlined in Section 6.1. Annual Survey /Monitoring Each year, the City of Dublin will monitor and require occupancy certification for all BMR Units. An annual survey will be mailed to the owner(s) of each BMR Unit, usually around the anniversary date of the purchase of the unit. Each owner must complete and return the survey along with qualifying documentation. Failure to return the survey and documentation could place the owner(s) in default of the Resale Restriction Agreement. In addition, pursuant to the Consent Agreement, the City may access and review the BMR Unit Owner's credit reports or other financial or personal information to verify the BMR Unit Owner's compliance with the Resale Restriction Agreement and these Guidelines. Estate Planning Upon the death of a BMR Unit Owner, the inheriting owner must notify the City of the BMR Unit Owner's death within 30 days of the date of the death and must sell the BMR Unit to a Qualified Household at a restricted resale price within 180 days (or longer if approved by the City due to market conditions) unless (i) the inheriting owner is the legal child or stepchild of the BMR Unit Owner; (ii) the City verifies that legal child or stepchild qualifies as a Qualified Household; and (iii) the legal child or stepchild signs a Resale Restriction Agreement and a Performance Deed of Trust. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 42 6 Requirements for Ownership and Resale of BMR Units 6.1 Capital Improvements BMR Unit Owners may make modifications to improve their home for maintenance and aesthetic purposes. For certain Approved Capital Improvements (i.e., permanent changes that improve the health, safety, or efficiency of the home), the adjusted resale price of the BMR Unit will be increased It is the responsibility of the BMR Unit Owner to keep cost and accounting records of all Approved Capital Improvements. 6.1.1 Procedure for ReceN— .— Requesting Approval of Capital Improvements In the exe e:..,...c reasonable diseretiott :ti accordance with regulations adopted by the City, from time to time the City will approve capital improvements that improve the health and safety conditions of a BMR Unit. To receive such approval, the BMR Unit Owner must: • Complete a Request for Capital Improvement form and submit the form along with etidettee to the Git showittE9, the pttt:pose and a cost estimate4-e�for the capital improvement(s); • Receive written approval from the City pjj2r to commencing any improvements; and • Submit documentation to the City within 30 days of completion of the improvements verifying that such improvements have been completed. Upon receipt of the request and estimate for capital improvements, City Staff will review the request for compliance with these Guidelines. The City will ate categorized requests into three distittet categories: (1) Eligible Capital Improvements; (2) Eligible Replacement and Repair; and (3) Ineligible Costs. A description of each category is provided in Section 6.1.2, below. - - - -- - - -- - - - - -- - - -- -- - - - - - - -- - - -- - - _ - - : : _ _ _ - - _ .!\ R. 11. /.l�ll�l�l�� \. /..l�iR /9.l�iJ IA./. /r.l��.�'1' /..��r......�• _ - IN;�'ll.tS..I.r.�..... • . - - - - The City will send a letter to the BMR Unit Owner approving or denying the sttbtnitted requested capital improvements within 30 days of original receipt. A copy of the letter will be maintained in the BMR Unit's file at the City of Dublin for ttse inclusion in the adjusted resale price calculation when the unit is resold. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 43 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS Once the City has approved the capital improvements, the BMR Unit Owner may 4tett proceed with the work, obtaining permits from the City Building Division, if applicable. Within 30 days of completion of the improvements and sign -off by the City Building Division, if applicable, the BMR Unit Owner must submit all of the following information: • A copy of the receipt /invoice for each eligible improvement; • Proof of payment, such as a cancelled check, bank account statement, or credit card bill; • A copy of the building permit, if required; and • A picture or pictures of the completed work. The City may, at its discretion, visit the job site to view the completed work. 6.1.2 List e# Eligible and Ineligible Capital Improvements Table 10 provides a nonexclusive list of example improvements that are eligible, partially eligible, and ineligible for capital improvement credit. Table 10. Eligible and Ineligible Capital Improvements September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 44 Eligible Capital Eligible Replacement and Ineligible Costs Improvements Repair Description Includes major structural Includes in -kind replacement Include cosmetic system upgrades, some new of existing amenities, repairs, enhancements, installations additions to the unit, and and general maintenance that with limited useful life spans, improvements related to keeps the property in good and nonpermanent fixtures. increasing the health, safety, working condition. and energy efficiency of the BMR Unit. Percentage Credited 100% 50% 0% Example Major electrical wiring system Electrical maintenance and Fireplace tile and mantel Improvements (lists are upgrade repairer, Decorative wall coverings or not exclusive) Major plumbing system Swipes hangings upgrade ©ut}ets Window treatments (blinds, Upgrade to double -paned Plumbing maintenance and shutters, curtains, etc.) windows repair, such as: Installed mirrors Fireplace glass screen s Shelving Room additions (if room Supply line Refinishing of existing addition meets the criteria for Sinks surfaces the household size) Flooring (tile, linoleum, carpet, Nonpermanent fixtures, such Installation of additional or hardwood) as: closets and walls Countertops Track lighting Alarm system Cabinets Deer kmobs, handles ard Removal of toxic substances Bathroom tile s such as asbestos, lead, or Bathroom vanity Portable appliances mold /mildew (refrigerator, microwave, Insulation Replacement of built -in stove /oven, etc.) Upgrade to Energy Star built- pg gy appliances, as follows: Installations with limited in appliances, as follows: Furnace useful life spans, such as: September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 44 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS .�.N-.iol.AIM. EL.i Mmullsi!!!mr!!lR.nrl.a�. r..nz lul..nl.�nl�lr.... �a �....�gu.ulgas�•� Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 45 Furnace Water heater Carpet Water heater Stove /range Painting of existing surfaces Stove /range Dishwasher Window glass Dishwasher Microwave hood Light bulbs Microwave hood Garbage disposal Windew sash Fireplace maintenance or in- kind replacement (gas) Heating system Lighting system (recessed) .�.N-.iol.AIM. EL.i Mmullsi!!!mr!!lR.nrl.a�. r..nz lul..nl.�nl�lr.... �a �....�gu.ulgas�•� Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 45 - -- - .. a :l�l�ga:Al:1.l...:l.r.�.'L.�:.: ifs..: 1. �... .L•..�.l.:l:..q�al.:.'1•�AZ..:. J .YA..J...�1.1:1.A1�.�wa�.:J.:l• i,:..�1.,�.::.: .�.N-.iol.AIM. EL.i Mmullsi!!!mr!!lR.nrl.a�. r..nz lul..nl.�nl�lr.... �a �....�gu.ulgas�•� Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 45 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS e T.,_sa_11._.1 ft September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 46 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 6.1.3 Special Assessments HOA- initiated Special Assessments are considered capital improvements and will be added to the resale price of the BMR Unit. In order to receive credit for Special Assessments, homeowners must submit the following documentation within 3 months of payment: • Invoice for Special Assessment; and • Proof of Payment, such as a cancelled check, bank account statement, or credit card bill. 6.1.4 Capital Improvements Minimum and Cap To be considered in the adjusted resale price, the initial cost of capital improvements must total $1,000 or more. In order to maintain the affordability of the BMR Unit for subsequent buyers, at the time of sale, the -moo€ -9ttblitt will e-mr all BMR Unit Owners may receive credit for Approved Capital Improvements up to a maximum of 5% of the adjusted resale price. 6.1.5 Building Permits It is the responsibility of the BMR Unit Owner to ascertain whether the work to be performed requires a City building permit and, if so, to obtain such permit. Any work that is done without a required permit will automatically be deemed ineligible as a capital improvement expense whether or not it fits within the definition of an Eligible Capital Improvement or Eligible Replacement and Repair. BMR Unit Owners may call the City of Dublin Building & Safety Division at (925) 833 -6620 to inquire about building permits. 6.2 Owner Occupancy Exception Ownership BMR Units are subject to an owner occupancy requirement. However, under the following circumstances, a BMR Unit Owner may be permitted to temporarily rent his or her unit to a Qualified Household (see Section 4.1.2 for renter qualifications) to alleviate one or more of the following specified hardships: • The BMR Unit Owner is unable to resell the unit as described in Section 6.5; • The BMR Unit Owner must temporarily relocate for employment purposes; or • The BMR Unit Owner must attend to personal health problems or the health problems of an immediate family member. The BMR Unit Owner must request and obtain advance written permission from the Citv to rent the BMR Unit before advertising the unit and selecting a qualified tenant. Once the request is approved and a qualified tenant is selected, the BMR Unit Owner must execute a rental agreement that clearly states: 1. That the term of the rental is for a limited period of time (not to exceed 12 months); Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 47 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 2. The monthly rental payment (set in accordance with the maximum monthly rent calculated in accordance with the Ordinance and published annually or the BMR Unit Owner's total monthly housing costs, whichever is less). 6.3 Refinance Requirements BMR Owners may refinance their units; however, financing terms are subject to the restrictions noted in Section 5.5, above, and the terms stated in the Resale Restriction Agreement. BMR Unit refinances are subject to an administrative fee. BMR Owners should contact Citv Staff for the current fee schedule. 6.3.1 Refinance Procedure BMR Unit Owners must comply with the following procedures when refinancing an ownership BMR Unit (see Figure 5 for an overview of the refinance process): 1. Inform the City. The BMR Owner must inform the City of his or her desire to refinance. Notification must be submitted in writing and must be accompanied by a copy of the BMR Unit Owner's most recent mortgage statement. Figure 5. BMR Unit Refinance Process 1. BMR Owner submits written request to refinance 2. City reviews the request and provides conditional authorization (within 7 working days) 3. BMR Unit owner works with a lender to secure a loan that meets City criteria and provides documentation to the City 4. City submits escrow instructions to the title company 2. City Review. The City will review the refinance request within 7 working days to verify that the proposed loan terms are in keeping with City 5. Title company provides required documentation requirements and terms outlined in the Resale Restriction Agreement. If the loan is found acceptable, the City will issue a conditional authorization letter to the BMR owner. The letter will outline documentation needed by the City, which typically includes a loan approval letter, good faith estimate, and truth in lending statement from a lender, as well as a preliminary title report, and appraisal. 6. City prepares and submits a Subordination Agreement to escrow 7. Subordination Agreement is signed and recorded 3. Document Preparation and Closing. Once all requested documents are received and deemed acceptable, City Staff will issue escrow instructions to the title company. The instructions will outline the final documents the City needs to prepare closing paperwork. Once received, the City will prepare and submit a Subordination Agreement to the title company to be reviewed and signed by the BMR Owner and bank. The documents will then be signed by the City and recorded. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 48 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 6.4 Resale Procedure A-ft BMR Unit Owners must comply with the following procedures when reselling an ownership BMR Unit (see Figure 6 for an overview of the resale process): 1. Inform the City. The owner must inform the City of his or her intent to sell the unit by filling out a Notice of Intent to Transfer (Exhibit B to the Resale Restriction Agreement) and submitting it, along with any letters from the City for Approved Capital Improvements, to the City. (The owner may still decide not to sell their unit after submitting these documents.) 4. City Option to Purchase /Consent to Transfer. The City may exercise its option to purchase the unit or transfer its right to purchase the unit to a designated entity. The City will make this determination and inform the BMR Unit Owner Figure 6. BMR Unit Resale Process 1. BMR Owner submits Notice of Intent to Transfer 2. (If the City elects not to excercise purchase or transfer option) City issues consent letter with and information packet (within 30 days of receipt of Notice of Intent) 3. BMR Unit Owner markets the unit for sale (through a realtor, if desired) 4. Submit potential buyer application package 5. City review of application and qualification determination (within 7 days) of its intent within 30 days of receipt of the Notice of Intent to Transfer. If the City opts not to 6. Once approved, execute a purchase contract purchase the unit or transfer its purchase option, the City will send the BMR Unit Owner a Conditional Consent to Transfer letter and a packet of information that will assist the BMR Unit Owner in finding another Qualified Household to purchase the unit. The Conditional Consent to Transfer letter is will be valid for 90 days from the date of the letter. The Gity -will ittfoft the ..-.__..f of and will include the Sible maximum restricted resale price of the unit (pursuant to the formula in Section 6.4.1) and any other conditions of sale follawittg receipt of the Notice of itttent to Tf atts r. The sale priee will be ealettlated pursttati to she ro.....ttla i_ Seet o_ 5. Marketing. The BMR Unit Owner must market the unit and pay all fees associated with the sale of the unit. The BMR Unit Owner may resell the BMR Unit through a BMR Resale Program conducted by a for - profit or nonprofit 7. Provide escrow information to the City 8. City issues escrow instructions 9. New BMR buyer meets with the City 10. City receives required documents from escrow 11. City provides closing documents to escrow 12. New BMR buyer signs City agreements at close of escrow Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 49 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS organization. If the seller uses a real estate agent, the agent must contact the City to €ice ott learn the requirements for listing the property, and proper eontaet informatio . 6. Potential Buyer Application. At least 30 days prior to the anticipated date of the close of escrow, the prospective buyer must submit the following documentation to City Staff for approval: a. The income documentation set forth in Section 4.2.2; b. Evidence of completion of a below market rate homebuyer education workshop; c. A loan pre - approval letter with Good Faith Estimate and Truth in Lending Statement; d. A signed Disclosure Statement (Exhibit F of the Resale Agreement); e. A signed Credit Authorization and Release Form, or similar document; h. Copy of tri -merge Credit Report; and i. Evidence of 3.5% available funds to be used as a down payment. 7. Potential Buyer Qualification. The City shall notify the owner within 7 working days of receipt of complete packet of documentation as listed above of its approval or disapproval of the prospective buyer. Execute Purchase Contract. The BMR Unit owner executes a purchase contract with the qualified buyer and open escrow. Provide a copy of the contract to the City along with the name, address, and phone number of the title company handling the transaction and the name of the escrow officer. 6.4.1 CalculatingRestricted Resale Price Calculation The resale price of a BMR Unit is dependent on AMI at the time of sale and the value of Approved Capital Improvements. The resale price is equal to: 1. The lowest of the (i) original price paid by the owner for the BMR Unit, increased by an amount equal to the original price multiplied by the percentage increase in AMI between the effective date of the Resale Restriction Agreement and the date the City receives the owner's Notice of Intent to Transfer (for instance, if the original price of the unit was $200,000 and the median income increases 2% between the effective date of the Resale Restriction Agreement and the date the City receives the owner's Notice of Intent to Transfer, the unit price will increase by 2 %, or $4,000 to $204,000); or (ii) the fair market value of the BMR Unit as determined by an appraiser approved in writing by the City; plus 2. The cost of Approved (in writing by the City) Capital Improvements; minus The cost to repair damage to the BMR Unit and to place the unit into saleable condition (the determination of what is considered damage to a unit will be determined by the City). Such items may include, but are not limited to, ripped or torn carpet, damage to kitchen or bathroom appliances or fixtures, broken light fixtures, broken or missing tiles and /or grout around tiles, or damage to floors; minus September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 50 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 4. The amount of all costs advanced by the City for the payment of mortgages, taxes, assessments, insurance premiums, HOA dues, and /or associated late fees, costs, penalties, interest, attorneys' fees, pest inspections, resale inspections, and other expenses related to the BMR Unit which the owner has failed to pay or has permitted to become delinquent. See Example 10 for a sample maximum restricted resale price calculation. Example 10. Maximum Restricted Resale Price Calculation A BMR Unit owner purchased her home in 2008 for $300,000 and would like to sell the unit in 2014. The BMR Unit owner received City approval to replace worn carpeting (eligible at 50% of total cost) for a credit of $2,000. The maximum restricted resale price is calculated as follows: Purchase price (2008) $300,000 Median income (2008) $86,100 Median income (2014) $93,500 Percentage change in median income 8.59% Increase in value $25,770 Approved Capital Improvement credits $2,000 Maximum Restricted Resale Price (2014) $327,770 6.4.2 Fees Associated with the Selling of a BMR Unit The BMR Unit Owner is responsible for all fees associated with the sale of the unit including, but not limited to, any real estate fees, and the City's Administration Fee of $1,500, which may be adjusted from time to time. 6.5 Units Unable to Resell The City may offer special consideration where the BMR Unit Owner has been unable to attract a buyer and at least one of the following conditions applies: • The BMR Unit Owner has a made a good faith effort to sell the BMR Unit for 6 or more months (effort may include but is not limited to posting the property listing on the Multiple Listing Service, holding open houses, and providing listing data for the City's web page); • The resale price for the BMR Unit is at or below current comparable market -rate units; or • Financing for the BMR Unit is unavailable due to pending litigation in the project or a ratio of rental to ownership housing units in the project that is unacceptable to lenders. On a case -by -case basis, upon request by the BMR Unit Owner, the City will consider granting one or more of the following exceptions on a one -time basis: 1. The BMR Unit Owner may rent the unit to a Qualified Household for a maximum of 12 months in keeping with the provisions of Section 6.2; 2. A one -time waiver of the first -time homebuyer qualification requirement for a potential BMR buyer; 3. A one -time waiver of the asset test for a potential buyer (potentially allowing a household that could pay in cash to purchase the BMR Unit); Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 51 6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 4. A one -time allowance to exceed the maximum qualifviniz income level for the potential BMR household by up to 20% of the maximum stated in the Resale Restriction Agreement for the unit, but not to exceed 120% of AMI at any time. BMR 'Unit Owners who are unable to sell and may seek an exception should contact Citv Staff for a consultation. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 52 7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS A BMR Secondary Unit is a legal secondary dwelling unit on an owner's property that has been approved by the City of Dublin as a rental BMR Unit for purposes of compliance with the Ordinance and that is reserved for occupancy by, and at affordable to, Very Low -, Low -, attd or Moderate - Income households. The City Council may approve such units as part of the developer's proposal for an alternate method of compliance with the Inclusionary Zoning Ordinance. The owner of a BMR Secondary Unit must sign a Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants, which will be recorded against the property contaitting the Secondary Unit and req , among other things, that the Seeondary Unit be reser-ted for oeettpattey- by- Very Low, Low , and Moderate irteame hottseholds for the length of the restrietions. The Agreement will remain in effect regardless of any sale, assignment, or transfer of the property, unless the Agreement is terminated by the City in writing. 7.1 Purchase Process Buyers and sellers of homes that include a BMR Secondary Unit must coordinate with the City during the purchase and sale process (see Figure 7 for an overview). Key steps are as follows: Initial Sale or Resale Notification. For the initial sale of homes with a restricted secondary unit, the developer must explain the rent restrictions associated with the secondary unit and provide potential buyers with a sample of the Secondary Unit Regulatory Agreement (see Exhibit S). At least 30 days prior the anticipated close of escrow, the developer must submit a completed contact sheet, a disclosure statement signed by the potential buyer, and a preliminary title report to the City. 2. Meeting with City Housing Division. Potential buyers of restricted secondary units must meet with City Staff to discuss the rental limitations and requirements associated with restricted secondary units and review the Secondary Unit Regulatory Agreement. At the meeting, buyers will review and sign a disclosure statement. For initial sales by the developer, the City will contact the potential buyer Figure 7. BMR Secondary Unit Sale Procedure 1. Receive Secondary Unit restriction information from the home seller 2. Enter into a purchase agreement 3. Meet with the City 4. City issues closing instructions to the escrow officer 5. Sign the Secondary Unit Regulatory Agreement at closing 6. Follow income restrictions if /when the unit is rented 7. Complete annual reports to the City Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 53 7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS upon receipt of the contact sheet from the developer to arrange the meeting. For resales, real estate agents or potential buyers should contact City Staff directly to arrange the meeting. 3. Escrow Instructions. Following the meeting with the potential buyers, the City will issue escrow instructions to the title officer who will facilitate the closing of the transaction. The instructions will clearly inform the title officer of documents the City will need to review prior to providing the Secondary Unit Regulatory Agreement. 4. Close of Escrow. Following receipt and satisfactory review of all documents requested in the escrow instructions, the City will provide the Secondary Unit Regulatory Agreement for execution at closing. 7.2 Rental Requirements If the owner rents the BMR Secondary Unit, the owner shall rent the unit to a Qualified Household (see Section 4.1.2). The rent eharged to he Qidahfied Household mttst not emeeed arte tnvvelfth (1/12) of 3096 of the apphea N!dxiF,ftttffl ifteoftle, adjusted for hattsehold site, less a tttility allowanee as speeifteel by the Hattsing Authority-of The owner shall ensure that all leases and contracts with tenants prohibit subleasing of the BMR Secondary Unit. 7.3 Tenant Income Verification Reporting Requireme Prior to a household's initial occupancy of a BMR Secondary Unit and on every anniversary thereafter, the owner or its authorized agent shall obtain from each household written documentation verifying each tenant's eligibility containing all of the following, including additional documentation as City may reasonably require: • Number of people in the household; and • Total Household Income. The owner or its authorized agent shall retain this documentation for not less than three years, and upon City's request, shall make the documentation available for inspection by the City and shall provide copies of the documentation to the City. The owner or its authorized agent may require each household to certify the verifying documentation. 7.4 Annual Report Owner shall submit an annual report to the City in conformity with the requirements of Section 8.68.050.B of the Inclusionary Zoning Ordinance, together with a certification that the property is in compliance with the requirements of the Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants. The annual report shall, at a minimum, include the following information: 1. The address of the BMR Secondary Unit; 2. The monthly rent charged and proposed to be charged; 3. The number of people residing in the unit; and 4. The Total Household Income of residents. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 54 7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS Upon the City's request, the owner shall ' provide the City a copy of the verifying documentation and such additional information as City may reasonably request from time to time in order to show compliance with the Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants. 7.5 Management Responsibilities The owner shall be responsible for all management functions with respect to the property, including without limitation the selection of tenants, certification and recertification of household income and eligibility, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. Except as the City may otherwise agree in writing, the City shall have no responsibility for management or maintenance of the property. The contracting of management services to a management entity shall not relieve owner of its primary responsibility for proper performance of management duties. 7.6 Refinance Requirements Owners of BMR Secondary Units must inform the City if they intend to refinance their home and are subject to an administrative fee for the City's review and preparation of the Subordination Agreement. The City and owner will follow a procedure similar to that outlined in Figure 5 and described in Section 6.3.1, except that BMR Secondary Units are not subject to the same financing restrictions as BMR Units. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 55 8 Exceptions and Appeals 8.1 Exception Reauests Any applicant believing that his /her situation warrants an Figure 8. Exception Request Procedure exception to any part of these Guidelines due to circumstances outside of his /her household's control, such 1. Review requirements and regulations as refugee status, special needs, or other hardships or special circumstances, may request an exception by submitting a written letter to the City prior to submitting an application of any kind. The exceptions request 2. Submit exceptions request letter to the Housing procedure is outlined in Figure 8. Division The exception reauest must snecifv which particular guideline or requirement the household cannot meet for reasons beyond their control or other valid reasons, and /or describe the household's unique circumstances which warrant one or more specific exceptions to be identified in the letter, referencing the he pa e(sg ) and section(s) of these Guidelines and /or application form related to the request. 3. Housing Division review and response (within 10 days) 4. If denied, submit an appeal, if desired (refer to Section 8.2) If the need for an exception arises while an application is I being reviewed, a request may be submitted at such time. If the need for an exception arises only after receipt of a determination letter issued by City Staff, an exception request shall be submitted as an appeal of such determination, according to the appeal process described in Section 8.2. Exceptions related to disabilities (reasonable accommodations) may be requested according to this procedure, with a brief description of the exception(s) needed due to the applicant's disability. Such requests will be handled in accordance with the City's reasonable accommodations policy and these Guidelines. The City will consider the requested exception and will provide a letter response within 10 calendar days, stating whether the requested exception can be granted in full or part and the reason for such decision. If denied, applicants may submit an appeal, as explained in Section 8.2. 8.2 Appeals Procedure Applicants may appeal any determination letter, including denial of a requested exception, by providing a written explanation of the reasons for their appeal, and any supporting evidence they wish to provide. The appeals procedure is outlined in Figure 9. Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 57 City Staff is not authorized to assist applicants in drafting appeal letters, nor in determining appropriate grounds for appeal or appropriate forms of supporting evidence, beyond advising them of the contents of these Guidelines, application forms, and other published program materials. Applicants may refer to these Guidelines and application forms and /or seek their own advisors /counsel for guidance in determining what types of documentation would be reasonable. The appeal shall be heard by the CommunitX Development Director. The appeal letter must be delivered by mail, e -mail, or personal delivery within 10 calendar days of issuance of the determination letter being appealed. The Community Development Director will review the appeal and make a determination within 10 calendar days. 8 EXCEPTIONS AND APPEALS Figure 9. Appeals Procedure 1. Receive determination letter from City 2. Prepare and submit an appeal letter to the Community Development Director (within 10 days of issuance of determination letter) 3. Community Development Director determination (within 10 days) If denied, the applicant may submit an appeal letter to the City Manager. The City Manager will review the appeal 4. If denied, submit appeal letter to the City Manager, and issue a determination within 10 calendar days or less if desired of receipt. Determinations by the City Manager shall be final. Unless the appellant opened escrow to purchase a BMR Unit prior to submittal of an appeal letter, no BMR Unit 5. City Manager determination (with 10 days) - final will be held or reserved for the applicant while an appeal is being considered, and offers from other prospective buyers may be accepted by seller(s) of BMR Unit(s) during this time. If the appellant is in escrow to purchase a BMR Unit, the City shall not issue any escrow instructions until a final determination regarding the appeal has been made, other than to inform the escrow officer that he /she may not close until further written notice from the Cii The City is not responsible for any actions of seller, lender, or other parties regarding the escrow during the appeal period which may jeopardize buyer's ability to purchase the BMR Unit. September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 58 CITY OF DUBLIN FIRST TIME HOMEBUYER LOAM PROGRAM GUIDELINES I 111F.11 :311111*47;U4167►1940kR Ill f►7 3 4 5 l INTRODUCTION DEFINITION OF TERMS LOAN TERMS 3.1 Overview of Loan Terms 3.2 Financing Requirements 3.2.1 Acceptable Primary Loan Products 3.2.2 Prohibited Primary Loan Products and Unacceptable Mortgage Features 3.2.3 Down Payment 3.3 Property Inspection Reports 3.4 Recorded Loan Documents 3.4.1 Loan Documents for Below Market Rate Homes 3.4.2 Loan Documents for Market Rate Homes 3.5 Equity Share 3.5.1 Below Market Rate Units 3.5.2 Market Rate Units HOUSEHOLD QUALIFICATIONS 4.1 Household Qualifications 4.2 Description of Qualification Requirements 4.2.1 Household Income 4.2.2 Credit Score 4.2.3 Homebuyer Education Program 4.2.4 Debt to Income Ratio 4.2.5 Preference Points PROCEDURES 5.1 Loan Application, Approval, and Funding Procedures 5.2 Pre - Qualification 5.3 BMR Unit Refinancing 5.4 Loan Payoffs EXCEPTIONS 3 7 7 8 8 8 8 8 9 9 9 9 9 9 11 11 12 12 15 15 15 16 18 18 19 19 20 21 Guidelines to the Inclusionary Zoning Ordinance Regulations September 2, 2014 TABLE OF CONTENTS EXHIBITS Exhibit 1 Sample Loan, Occupancy, Refinancing, and Resale Restriction Agreement with Option to Purchase (for loans on Below Market Rate homes) Exhibit 2 Sample Deed of Trust, Assignment of Rents, Fixture Filing, and Security Agreement (for loans on Below Market Rate homes) Exhibit 3 Sample Secured Promissory Note (for loans on Below Market Rate homes) Exhibit 4 Sample Loan and Equity Share Agreement (for loans on Market Rate homes) Exhibit 5 Sample Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement (for loans on Market Rate homes) Exhibit 6 Sample Secured Promissory Note (for loans on Market Rate homes) n7iffillifiWAV Table 1. Loan Terms and Requirements Table 2. Applicant Household Qualifications Table 3. Program Income Limits by Household Size (2014) Table 4. Annual Income Calculations by Pay Frequency Table 5. Preference Points LIST OF FIGURES Figure 1. Loan Application Process Figure 2. Loan Payoff Process Figure 3. Exception Request Procedure LIST OF EXAMPLES Example 1. Equity Share Calculation Example 2. Determining Income with Assets 7 11 12 14 17 18 20 21 10 15 September 2, 2014 Guidelines to the Inclusionary Zoning Ordinance Regulations 1 INTRODUCTION The City of Dublin (City) First Time Homebuyer Loan Program (Program, FTHLP) provides financial assistance, in the form of a deferred loan, to income - qualified first time buyers who wish to buy a home in the City. These FTHLP Guidelines (Guidelines) describe loan terms, eligibility requirements, and procedures. Users of these Guidelines are encouraged to seek their own legal counsel to aid in understanding the requirements of the FTHLP. For any general questions regarding the Program or these Guidelines, users may call the City's Housing Division at (925) 833 -6610. The effective date of these Guidelines is September 2, 2014. The City will review and, to the extent necessary, update these Guidelines annually. The City Manager may approve minor revisions, interpretations, or clarifications to these Guidelines. Any such revision, interpretation, or clarification shall become effective when posted on the City's website. Non - Discrimination All persons have the right to file a written application for a mortgage loan. An eligible Borrower is a person (or persons) who is obligated to the repayment of a loan by the signing of the note. Loans to corporations, partnerships, or syndications are not acceptable. We do not discriminate in granting or denying loans or in setting terms and conditions of a loan, with regard to race, color, age, religion, gender, marital status, sexual orientation, national origin, or ancestry of the Applicant; nor with regard to the racial or ethnic composition of the neighborhood, geographic areas surrounding the property or with regard to income derived from any public assistance program. First Time Homebuyer Loan Program Guidelines September 2, 2014 2 DEFINITION OF TERMS As used in these Guidelines, the following terms shall be defined as follows: Administration Fees: • A $1,500 fee charged by the City to the loan recipient for the underwriting, processing, and serving of the loan. A reimbursement fee charged by the City to the Applicant at the time of application for a credit report. The fee amount varies based on actual cost. Fees may be adjusted from time to time by the City. Applicant: A household that has submitted an application for a loan under the City's First Time Homebuyer Loan Program. Area Median Income (AMI): The Area Median Income adjusted for household size as published annually for Alameda County by the California Department of Housing and Community Development (HCD). Below Market Rate (BMR) Units: A Below Market Rate or BMR Unit is a unit that is reserved for sale to low- or Moderate - Income households. BMR Units have restrictions recorded against them to ensure they remain affordable for a set period of time. For additional information regarding BMR Units in the City, refer to the Guidelines to the Inclusionary Zoning Regulations Ordinance. Borrower: A household that has been approved for or has received an FTHLP loan. CaIHFA: The California Housing Finance Agency. City: The City of Dublin. City Council: The legislative body of the City of Dublin. City Staff: An employee or designee of the City of Dublin responsible for actions related to the Program or these Guidelines. First Time Homebuyer: A person who has not owned any interest in real property during the three -year period prior to the date of the household's loan application, including without limitation, real property in which a household member's name appears on the title regardless of whether the member's interest in such property results in a financial gain, such property is located in another state or country, or the member has occupied such property as his or her primary residence. If any person has had his or her name on the title of a property, but the property was sold more than three years ago from the date of application, the person is considered a First Time Homebuyer. First Time Homebuyer Loan Program Guidelines September 2, 2014 2 DEFINITION OF TERMS Gross Household Income: All income, from whatever source derived, of all adult household members (18 years of age and older), whether or not such income is exempt from federal income tax. Refer to Section 4.2.1 for a list of income sources and exceptions. Guidelines: These First Time Homebuyer Loan Program Guidelines. HCD: The California Department of Housing and Community Development. HOA: Homeowners Association. Homebuyer Class: A HUD, Fannie Mae, or City- approved course designed to provide basic education for First Time Homebuyers. Refer to the City's website (www.dublin.ca.gov /housing /fthlp) for organizations that may offer this course. The date on the completion certificate for the class must be within six months of the date of application for a Loan. Housing Expenses: Principal, interest, private mortgage insurance, taxes, insurances, and HOA dues. HUD: The United States Department of Housing and Urban Development. Immediate Family Member: A mother, father, brother, sister, child, grandparent, or grandchild. Legal Resident: A citizen or other national of the United States or a qualified alien as defined by the Federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Loan Committee: The Loan Committee is appointed from time to time by the City Manager and generally consists of senior staff from the City's Community Development and Finance Departments as well as a representative from the City Manager's office. The Loan Committee reviews loan applications and approves, conditionally approves, or denies loan applications. Decisions require a two- thirds vote. Maximum Income: The Maximum Income for the Moderate Income category determined periodically by HCD based on AMI. See Section 4.2.1 of these Guidelines for Maximum Incomes. Moderate Income: Total Household Income that is 81% to 120% of AMI, adjusted for actual household size. Preference Points: Points assigned to persons employed in the City of Dublin, public service employees working for the City of Dublin, Dublin residents, Seniors (62 +), Veterans, persons who are permanently disabled (with written verification from a physician or show receipt of Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI)), persons who are Immediate Family Members of a Dublin resident, persons who are required to relocate from a Dublin residence due to demolition of the residence or conversion of the residence from a rental to an ownership unit, and persons who are buying a foreclosed or Real Estate Owned (REO) home. Persons with Preference Points are given priority over other Qualified Households in the disbursement of loan funds. September 2, 2014 First Time Homebuyer Loan Program Guidelines 2 DEFINITION OF TERMS Principal Residence: The place where a person resides on a substantially full -time basis during not less than 10 months per year. Children attending college and not living at home as their Principal Residence may not be counted as a household member. Program: Activities related to the City of Dublin First Time Homebuyer Loan Program. Qualified Household: A "Qualified Household" means an Applicant household that satisfies the requirements listed in Section 4 of these Guidelines. Senior: A person 62 years of age or older for the purpose of qualifying for Preference Points. Total Household Income: All Gross Household Income and assets received (as calculated pursuant to Section 4.2.1). Veteran: A person who served in the active military, naval, or air service and who was discharged or released therefrom under conditions other than dishonorable, for the purpose of qualifying for Preference Points. First Time Homebuyer Loan Program Guidelines September 2, 2014 3 LOAN TERMS 3.1 Overview of Loan Terms The terms, requirements, and conditions for loans approved through the FTHLP are outlined in Table 1 and described further below. Table 1. Loan Terms and Requirements Term or Requirement Below Market Rate Homes Market Rate Homes Loan Amount Up to 15% of the purchase price, with a Up to 10% of the home purchase price, with maximum of $40,000. a maximum of $40,000. Interest Rate 3.5 %, simple interest Loan Term 30 year, deferred payment Repayment Repayment of principal and interest is due Repayment of principal and interest or upon the sale of the property, upon the equity share is due upon the sale of the formal filing and recording of a notice of property, payoff, or refinance of the first default, or the expiration of the loan term mortgage, upon the formal filing and (whichever is earliest). recording of a notice of default, or the expiration of the loan term (whichever is earliest). Equity Share Loans on BMR homes are subject to an Upon the events described in "Repayment" equity share provision only upon the first above, Borrowers of loans for market rate sale of the home following the expiration of properties are subject to a payment of the restricted affordability period. either accrued interest or equity share, whichever is greater. See Section 3.5 for a description of equity share. Prepayment Borrower(s) may prepay the Loan at any time without penalty (provided that the payment covers the principal as well as the accrued interest or equity share). Acceptable Primary See Section 3.2. Mortgages Position on Title /Layered The City must be in second position on title, behind only a primary mortgage. Borrowers Financing may utilize other assistance loans, but they must be subordinate to the City's FTHLP loan. Co- Signatories (not The loan shall contain no co- signatories. Only the approved Borrower's name(s) may be on allowed) the deed. Fees Applicants are subject to the following fees: Fee for a credit check, due at the time of application (reimbursement, based on actual cost). $1,500 fee for loan underwriting, processing, and servicing, due upon close of escrow. Use of Loan Funds Loan funds may be used for down payment assistance and to pay for non - recurring closing costs associated with the home purchase. Loans may not be used for repairs, room additions, or non real property purchases. Property Eligibility Properties must be located in the City of Dublin and may be a single - family home, condominium, or a manufactured home (subject to secondary market eligibility requirements). Inspection Reports The Applicant must provide home and pest inspection reports (see Section 3.3). First Time Homebuyer Loan Program Guidelines September 2, 2014 3 GUIDELINES FOR DEVELOPERS 3.2 Financing Requirements All Applicants must be able to secure a primary home loan through a lending institution. Applicants may use a lender of their choice, provided that the lender adheres to the City's Guidelines for acceptable loan products. Applicants must provide a pre - approval letter, truth in lending statement, and good faith estimate from their chosen lender at the time of application for a FTHLP loan. 3.2.1 Acceptable Primary Loan Products The City reserves the right to deny a loan or reject loan products for primary loans if the City believes in its sole discretion that there is a stronger likelihood that the loan product would potentially result in loss of loan funds due to the purchasers' inability to comply with the terms of the loan. Following is a nonexclusive list of the loan products that are generally acceptable to the City. The list is not intended to be exhaustive, and other loan products may be evaluated upon request. Acceptable Primary Mortgage Loan Products • Fixed mortgages up to 40 years • Maximum 100% combined loan to value 3.2.2 Prohibited Primary Loan Products and Unacceptable Mortgage Features The following loan products and mortgage features are generally unacceptable to the City: • Interest -only loans • Negative amortizing loans • Adjustable rate loans • Balloon payment loans • Lines of credit that exceed the resale price of the unit • Stated income loans • Excessive points and fees (more than what is typical of the market at the time) 3.2.3 Down Payment The Borrower is required to make a minimum down payment of at least 3.5% of the sales price. Funds must be placed into escrow prior to the close of escrow and must come from acceptable sources and be verified and properly documented per Federal Housing Administration guidelines. 3.3 Property Inspection Reports The Applicant must obtain and provide pest inspection and home inspection reports for the property from licensed professionals. The pest inspection report must confirm that the structure is sound and any noted pest infestations must be resolved as recommended in the report. The home inspection report must cover all major systems, including, but not limited to, electrical, plumbing, and drainage, as well as the foundation, paint, and September 2, 2014 First Time Homebuyer Loan Program Guidelines 3 GUIDELINES FOR DEVELOPERS appliances. Reports should be provided to the City as early as possible during the escrow period to ensure funding and a timely close of escrow. 3.4 Recorded Loan Documents The City will prepare and the Borrower will sign a set of documents that describe agreed -upon loan terms and ongoing Program requirements. These documents will be executed at the close of escrow and recorded on the property's title. City Staff will discuss the basic provisions of these documents with the Borrower(s) at the in- person consultation prior to the close of escrow; however, Borrowers should review these documents thoroughly prior to signing. 3.4.1 Loan Documents for Below Market Rate Homes Sample loan documents for FTHLP loans on BMR Units are provided in Exhibits 1, 2, and 3. Documents include the Loan, Occupancy, Refinancing, and Resale Restriction Agreement with Option to Purchase (Exhibit 1), Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement (Exhibit 2), and Secured Promissory Note (Exhibit 3). BMR Units are also subject to the provisions described in the Guidelines to the Inclusionary Zoning Regulations Ordinance. 3.4.2 Loan Documents for Market Rate Homes Sample loan documents for FTHLP loans on market rate units are provided in Exhibits 4, 5, and 6. Documents include the Loan and Equity Share Agreement (Exhibit 4), Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement (Exhibit 5), and Secured Promissory Note (Exhibit 6). 3.5 Equity Share 3.5.1 Below Market Rate Units BMR Units are not subject to an equity share provision upon resale or prepayment or in the occurrence of default; however, BMR Units must pay an equity share to the City upon the first sale of the property following the expiration of the restricted resale period. This requirement is described in the Guidelines to the Inclusionary Zoning Regulations Ordinance and in the Loan, Occupancy, Refinancing, and Resale Restriction Agreement with Option to Purchase (Exhibit 1). 3.5.2 Market Rate Units Upon the sale of the property, repayment of the loan (due to a refinance or as an optional prepayment), or the occurrence of any default event, the Borrower must pay the City the loan principal as well as the greater of the accrued simple interest or an equity share. The equity share is based on the amount of the FTHLP loan in proportion to the value of the property and the amount by which the property has increased in value, based on an appraisal or resale purchase contract. The calculation is described in detail in the Loan and Equity Share Agreement in Exhibit 4 and demonstrated in a sample calculation in Example 1. First Time Homebuyer Loan Program Guidelines September 2, 2014 3 GUIDELINES FOR DEVELOPERS Example 1. Equity Share Calculation The Borrower purchased a property for $400,000 and the City provided an FTHLP loan of $40,000. The loan amount ($40,000) is equivalent to 10% of the sale price. The Borrower sells the property 20 years later for $600,000. The property has appreciated by $200,000 ($600,000 - $400,000 = $200,000). The City portion of the increased value is 10 %, which equals $20,000 ($200,000 X 10% _ $20,000). If the $20,000 City share is greater than the accrued simple interest on the loan, the Borrower would owe the City a total of $60,000 ($40,000 in principal and $20,000 in equity share). September 2, 2014 First Time Homebuyer Loan Program Guidelines 10 4 HOUSEHOLD QUALIFICATIONS 4.1 Household Qualifications A household must meet the requirements stated in Table 2 to qualify for a Loan. Section 4.2 provides additional detail on certain requirements. Table 2. Applicant Household Qualifications Qualification Requirement Description Income The household's Total Household Income must not exceed the income limit set forth in Section 4.2.1. Assets The household may have no more than $250,000 in total assets, excluding pensions and federally approved pre -tax savings accounts. First -Time Homebuyer No member of the household may have owned any interest in real property during the three -year period prior to the household's BMR Unit application date. Owner Occupancy The household will occupy the unit as its Principal Residence within 30 days of the close of escrow on the unit. Homebuyer Education All title holders of the property must take a HUD or Fannie Mae - approved or City- approved First Time Homebuyer class and receive a certificate of completion. The certificate of completion must be dated within six months of the date of application. Credit All Applicants have a minimum FICO credit score of 620 (see Section 4.2.2) and must not have filed for bankruptcy in the last three years. Persons with records of deeds -in -lieu of foreclosure or judicial or non - judicial foreclosure are subject to a seven -year waiting period before they may be considered for an FTHLP loan. Residency /Citizenship All household members must be either a citizen or national of the United States or a qualified alien defined by the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Loan Preapproval Homebuyers must be preapproved for a home loan that conforms to the requirements established in Section 3.2. Debt to Income Ratio Homebuyers' proposed debt (based on current liabilities and proposed housing payment) may not exceed 45% of the household's monthly income (see Section 4.2.4). Applicant households may request exceptions to qualification requirements. Procedures for exception requests are described in Section 6. First Time Homebuyer Loan Program Guidelines September 2, 2014 11 4 APPLICANT QUALIFICATIONS 4.2 Description of Qualification Requirements 4.2.1 Household Income 4.2.1.1 Maximum Total Household Income To be eligible for a FTHLP loan, the Applicant's Total Household Income must not exceed the current Moderate - Income limit. Total Household Income means the household's Gross Household Income (see Section 4.2.1.2) plus assets calculated pursuant to Section 4.2.1.4. Maximum Income is determined annually by HCD based on Area Median Income. Table 3 shows the Maximum Incomes for Alameda County for 2014. Table 3. Program Income Limits by Household Size (2014) Household Size Income Limit 1 person $78,550 2 persons $89,750 3 persons $101,000 4 persons $112,200 5 persons $121,200 6 persons $130,150 7 persons $139,150 8 persons $148,100 Source: HCD State Income Limits for Moderote- Income Households, 2014 4.2.1.2 Gross Household Income Gross Household Income means all income from all adult household members (18 years of age and older) derived from all sources as provided in the Internal Revenue Code (Title 26, Subtitle A, Chapter 1, Subchapter B, Part I, Section 61), whether or not such income is exempt from federal income tax. Such income includes, but is not limited to, the following: • Compensation received from an employer. Compensation includes, but is not limited to, salary, overtime pay, and other pay • Other pay can include, but is not limited to, compensation for special working conditions or one -time pay -out of unused vacation and sick leave • Alimony, spousal, and child support • Cash • Pensions, if at an age where pension is being received as income • Public benefits including, but not limited to, CalWorks, SSI, and disability income • All interest, dividends, and royalties • Income derived from private businesses September 2, 2014 First Time Homebuyer Loan Program Guidelines 12 4 APPLICANT QUALIFICATIONS • Rental income • Income from pensions • Compensation for services rendered including fees, fringe benefits, commissions, tips, and bonuses • Stipend received for participation in a mentor, learning, or education opportunity • Gains from dealings in private and /or commercial property • Gambling winnings • Annuities, life insurance, and endowment contracts • Income from discharge of indebtedness • Gross partnership contributions or distributions • Income from an interest in an estate or trust Exceptions: 1. Gross Household Income does not include income earned by a household member who is between the ages of 18 and 26 and meets both of the following criteria: • Is claimed as a dependent of a household member on such member's federal income taxes. • Is a full-time student (12+ units; school transcript must be provided). Gross Household Income does not include payments to a household member from a governmental fund if all of the following requirements are satisfied: • The payments are based on the recipient's or the recipient's family's financial need. • The payments do not represent compensation for services rendered. • The payments are part of a governmental housing subsidy program including, but not limited to, Housing Choice Voucher (Section 8) federal housing assistance payments. For purposes of determining Gross Household Income, each person 18 years of age or older must present all of the following: A complete set of federal and state income tax returns for the past three years, including all schedules (signed and dated) and W -2 forms (in the case where taxes have not been filed for any of the past three years, a letter of verification of non - filing from the Internal Revenue Service is required). • Four most recent and consecutive pay stubs. Three recent and consecutive statements for all financial accounts, including, but not limited to, savings accounts, checking accounts, retirement accounts, 401(K) accounts, stock accounts, and another accounts held in the Applicant(s) name(s), whether held individually or together. If a household member is self - employed, in addition to the information above, the member must submit profit and loss statements for the past three years (if applicable), and a current profit and loss statement for the year. First Time Homebuyer Loan Program Guidelines September 2, 2014 13 4 APPLICANT QUALIFICATIONS 4.2.1.3 Income Calculation Wage and Salary. If an Applicant is a full -time employee (usually 30 to 40 hours per week) or an employee with consistent regular hours or income, or income with overtime or adjustments as a regular part of their job, one of the formulas listed in Table 4 will be used to determine the Applicant's salary. Bonuses, commissions, and limited overtime may be calculated into the annual income calculation. In the case of unclear income or income that is somewhat difficult to calculate, please contact the City. The City will make the final determination as to which income calculation formula to use. Table 4. Annual Income Calculations by Pay Frequency Pay Frequency Annual Income Calculation Monthly Monthly income amount x 12 Twice Monthly Twice monthly income amount x 24 Biweekly Biweekly income amount x 26 Weekly Weekly income amount x 52 Hourly Hourly income x 40 (or whatever normal hours per week may be) x 52 b. Variable Income. For Applicants who are part -time employees or employees with variable hours every pay period (or variable hours less than 40 hours per week), inconsistent income or hours, frequent overtime, bonuses and commissions, etc., their annual salary will be calculated using year -to -date income, plus the previous year's income (from same income source or employer), divided by the number of months reviewed (UP TO BUT NOT EXCEEDING 12 MONTHS) times 12 to arrive at their annual income. If there is no previous year income from the same employer, or the job was started mid -year, the current income year to date using the calculation explained in (b) above will be used. If an Applicant works consistently 40 hours per week and has occasional or regular overtime, the calculation listed in (b) above will be used to calculate income. c. Inconsistent or Temporary Change in Income Due to a Temporary Circumstance. If an Applicant has a temporary situation (seven months or less) that makes income calculation difficult, a verification of employment may be used to calculate the Applicant's income based on a normal annual time period. Or, the income may be calculated based on the person's hourly rate times their normal working hours (as shown in item (b) above). d. Self- Employed or Non - Corporation. A self - employed Applicant is also considered to have variable income. Gross annual income calculations will be based on the previous two years' net income shown on Schedule C of the federal income tax returns, plus net income before taxes from the Applicant's signed, year -to -date Profit and Loss Statement, divided by the appropriate number of months (NOT TO EXCEED 12 MONTHS) times 12 to arrive at the annual income. 4.2.1.4 Assets An asset test will be applied to all Applicants to determine whether they satisfy the income requirements. If an Applicant has assets that exceed $30,000, the following amounts will be added to the Applicant's Gross Household Income to determine the household's Total Household Income: September 2, 2014 First Time Homebuyer Loan Program Guidelines 14 4 APPLICANT QUALIFICATIONS • 10% of all assets valued at between $30,001 and $130,000 • 30% of all assets valued over $130,000 The maximum assets allowed are $250,000. Households with assets in excess of $250,000 will be disqualified. Assets include, but are not limited to, cash, all savings and checking accounts, stocks, bonds, real estate, gifts, and other sources of money. Pensions and federally approved retirement savings accounts, such as IRAs, Roth IRAs, and 401Ks, are excluded; however, retired Applicants who receive income from their retirement account must include such income as Gross Household Income on their application. Example 2 illustrates the calculation for determining income with assets. Example 2. Determining Income with Assets Example 2.A A household of 3 earns $50,000 a year and has $150,000 in total household assets $150,000 - $30,000 = $120,000 (which is less than $130,000) 10% of $120,000 = $12,000 New Total Household Income: $50,000 + $12,000 = $62,000 Example 2.13 A household of 3 earns $50,000 a year and has $200,000 in total household assets $200,000 - $30,000 = $170,000 (which is more than $130,000) 10% of $130,000 = $13,000 30% of balance of $40,000 = $12,000 New Total Household Income: $50,000 + $13,000 + $12,000 = $75,000 4.2.2 Credit Score A credit check will be conducted on all adults (other than dependents) in the household. Applicants must have sufficient creditworthiness to qualify. Creditworthiness means that: 1. All household individuals shall have a minimum of seven years since Chapter 7 or Chapter 13 bankruptcy discharge date and /or foreclosure or short sale and evidence of reestablished credit is provided. All persons appearing on the mortgage shall have a minimum FICO credit rating of 620 points from all three credit agencies. 4.2.3 Homebuyer Education Program Borrower(s) must successfully complete a HUD, Fannie Mae- or City- approved First Time Homebuyer class prior to the close of escrow and must provide the City with evidence of completion. The completion date must be within six months of the proposed date of loan funding. 4.2.4 Debt to Income Ratio Applicant(s) must have a debt to income ratio of no greater than 45 %. This is determined by calculating the Applicants monthly debt obligations, including (but not limited to) estimated monthly housing expenses, car payments, and other loan obligations and comparing it to the Applicants monthly Household Income. Student loan debt may be excluded from the monthly debt obligation calculation if the Applicant can provide documentation that repayment of the loan is deferred for a period of at least three years from the application date. First Time Homebuyer Loan Program Guidelines September 2, 2014 15 4 APPLICANT QUALIFICATIONS 4.2.5 Preference Points The Preference Point system provides priority to certain households who are deemed to have a priority need for housing in Dublin. Priority criteria are shown in Table 5. Loans may be approved for households who are not eligible for any Preference Points. Each household may only claim Preference Points once for any given category. Even if two persons in the household qualify for Preference Points for the same category, the points are only awarded for one person. For example, if a husband and wife are both employed in Dublin, the couple receives only 3 Preference Points for being employed in Dublin. Similarly, if two Seniors make up a household, they would be entitled to only 1 Preference Point. September 2, 2014 First Time Homebuyer Loan Program Guidelines 16 4 APPLICANT QUALIFICATIONS Table S. Preference Points Priority Points Proof Required Employed in Dublin for at least 6 3 Copy of first and most recent pay stub establishing length of months employment; or Letter from employer, on company letterhead, indicating continuous employment for the past six months; or If self - employed in Dublin, then the business must have a current City business license for at least 6 months at the time of application. Public service employee in 1 Copy of first and most recent pay stub establishing length of Dublin* additional employment; or Letter from employer, on company letterhead, indicating continuous employment for the past six months; or For a newly hired teacher at a state- accredited school, who will be working in Dublin, a copy of employment contract; and A letter from employer confirming employment and employer contact information. Has resided in Dublin for at least 3 Copy of two utility bills (PG &E or water), one from at least one year one year ago and one most recent utility bill both showing the Applicant with a Dublin address; or Copy of a current rental agreement. Seniors (62 and over) 1 A valid state driver license; or A valid state identification card (with photo); or A valid passport. Permanently disabled 1 Doctor's note confirming that Applicant is permanently disabled; or Other verification from a state agency establishing permanent disability status; or Verification of receipt of SSI or SSDI. Veteran 1 A military department record of service such as an original military service record or certified copy. The document must contain the length, time, and character of the service. Must move because housing is to 1 Letter from apartment owner or management firm verifying the be demolished or converted to imminent condominium conversion or demolition of the unit; and condo Confirmation from the City's Community Development Department. Foreclosed /REO Property 1 A sales contract showing that the bank is selling the property and has accepted the Applicant's purchase offer. *A public service employee is o person who is employed by o public agency such os the City of Dublin, o firefighter or police officer assigned to work in Dublin, BART, DSRSD, or LISPS working in Dublin. First Time Homebuyer Loan Program Guidelines September 2, 2014 17 5 Procedures 5.1 Loan Application, Approval, and Funding Procedures The following are the general steps for qualifying for and finalizing a loan (see Figure 1 for an overview): Review qualification requirements. Potential Applicants should review these Guidelines and confirm that they meet established qualification requirements (see Section 4). 2. Pre - qualify with a lender. Potential Applicants should work with a lender of their choosing to get pre - qualified to purchase a home. Potential financing must meet the requirements described in Section 3. This will be necessary for preparing a complete application and will give the buyers a clear understanding of the amount of money they are eligible to borrow for a home purchase. The City is available to speak with lenders to clarify Program terms and requirements. 3. Homebuyer education. Potential Applicants must complete a First Time Homebuyer Class (see Section 4.2.3) Figure 1. Loan Application Process 1. Review qualification requirements (see Section 4) 2. Pre - qualify for a primary home loan (see financing requirements in Section 3) 3. Complete a homebuyer education class (see Section 4.2.3) 4. Choose a home in Dublin and execute a purchase contract 5. Submit an FTHLP application 4. Execute a purchase contract. Potential Applicants 6. City review and qualification, within 10 days of should work with a real estate agent to find a receipt of complete application desirable home for sale in the City. Homes may be BMR Units (most available BMR Units are listed on the City's website) or market rate properties. 7. If qualified, meet with the City Prepare an offer and execute a purchase agreement on the home of your choosing. Submit a FTHLP Application. Prepare and 8. City provides escrow instructions and releases submit a complete FTHLP application packet to funds and submits loan documents when requirements are met the City's Housing Division. Be sure to include supporting documentation for income and asset verification (contact City Staff or view the City's website for an application package). The 9. Borrower signs City documents at close of escrow application should be submitted at least four weeks First Time Homebuyer Loan Program Guidelines September 2, 2014 18 5 REQUIREMENTS FOR BUYERS OF BMR UNITS prior to the scheduled close of escrow. City Staff /Loan Committee review and qualification determination. The City will make every effort to review the application and qualification materials and determine eligibility within 10 working days of receipt of a complete application. The application will be considered by City Staff in the Housing Division (to determine application completeness and basic qualification) and the City's Loan Committee. If approved, the City will send the Applicant a conditional approval letter. Applicants who are determined to be ineligible will receive a denial letter. 7. In- person consultation. All adult members of the approved Borrower household must schedule and complete an in- person consultation with City Staff to discuss loan terms, restrictions, and ongoing requirements. At the meeting, Borrowers will review and sign a truth in lending statement and a good faith estimate. Loan documents. Following completion of the consultation, City Staff will prepare escrow instructions and submit them to the escrow officer. The instructions will describe the documentation the City will need in order to prepare loan agreements and fund the loan. Documents will include (but may not be limited to) a title report, home and pest inspection reports, an appraisal, and documents regarding the primary loan. 9. Sign paperwork. Following receipt of required paperwork from the escrow company, the City will prepare the appropriate loan documents for the Borrower to sign at closing (see Section 3.4. Once the Borrower has signed, the paperwork will be delivered to the City for signature. The City will forward this paperwork as well as a request for notice of default on the Borrower's primary loan to the escrow officer for recordation. 10. Monitoring and correspondence. The Borrower must complete annual surveys to the City and should contact City Staff with any questions. Any default on the signed agreements may result in the City calling the loan due immediately. Borrowers must contact the City when contemplating a sale or refinance. 5.2 Pre - Qualification The City will accept applications for preliminary review and pre - qualification. This review will confirm that the Applicant meets the qualifications described in Section 4, with the exception of the debt -to- income ratio, which cannot be determined until the City is provided with an estimate of monthly housing costs for a specific home. Applications for pre - qualification are subject to costs to reimburse the City's direct cost to obtain a credit report. Pre - qualification applications are reviewed by City Staff in the Housing Division but are not reviewed by the Loan Committee. Following the review, City Staff will issue a letter of eligibility. Note that Program funding is limited and a letter of eligibility does not guarantee that funds will be available to the Applicant if /when they are requested. 5.3 BMR Unit Refinancing BMR Unit Borrowers may keep the FTHLP loan intact through a refinance, provided that the new loan meets City standards. BMR Unit Borrowers must notify the City of their intent to refinance and follow the refinance procedures outlined in the Guidelines to the Inclusionary Zoning Regulations Ordinance. First Time Homebuyer Loan Program Guidelines September 2, 2014 19 5.4 Loan Payoffs Market rate home Borrowers must pay off the FTHLP loan in the event of a refinance or resale and have the option to prepay the loan at any time. BMR Unit Borrowers must pay off the FTHLP loan in the event of a resale and have the option to pay off the loan during a refinance or may choose to prepay the loan at any time. An overview of the payoff process is outlined in Figure 2. 1. Provide notice and documentation. The Borrower must provide the City with the following: a. A written notification of the Borrower's intended action. b. A current property appraisal. c. The name and contact information of the escrow officer managing the transaction, as well as an escrow number. 5 PROCEDURES Figure 2. Loan Payoff Process 1. Notify the City of your intended action (refinance, resale, or prepayment) and required information 2. The City prepares a payoff demand and provides it to the escrow officer 3. Repayment funds are disbursed to the City at the close of the transaction 4. The City releases loan- related restrictions from the property 2. City prepares payoff demand. The City will calculate the accrued interest and equity share, if applicable, and prepare a payoff demand for the greater of the two. The equity share calculation is described in Section 3.5. The City will provide a copy of the payoff demand to the Borrower and submit the demand to the escrow officer. Funds disbursed to the City. The escrow officer will disburse repayment funds to the City as stated in the payoff demand upon the close of the transaction. 4. Release and reconveyance. The City will prepare appropriate documents to release the loan documents (as described in Section 3.4) from the property. September 2, 2014 First Time Homebuyer Loan Program Guidelines 20 6 Exceptions Any Applicant believing that his /her situation warrants an exception to any part of these Guidelines due to circumstances outside of his /her household's control, such as refugee status, special needs, or other hardships or special circumstances, may request an exception by submitting a written letter to the City prior to submitting an application of any kind. The exception request procedure is outlined in Figure 3. Figure 3. Exception Request Procedure 1. Review requirements and regulations 2. Submit exceptions request letter to the City The exception request must specify which particular guideline or requirement the household cannot meet for reasons beyond their control or other valid reasons, and /or describe the household's unique circumstances 3. City Staff (Housing Division and /or Loan which warrant one or more specific exceptions to be Committee) review and response (within 10 days) identified in the letter, referencing the page(s) and section(s) of these Guidelines and /or application form related to the request. Exceptions related to disabilities (reasonable accommodations) may be requested according to this procedure, with a brief description of the exception(s) needed due to the Applicant's disability. Such requests will be handled in accordance with the City's reasonable accommodations policy and these Guidelines. Exceptions will be considered by City Staff, including authorized persons in the Housing Division and /or members of the Loan Committee. The City will provide a letter response within 10 calendar days, stating whether the requested exception can be granted in full or part and the reason for such decision. First Time Homebuyer Loan Program Guidelines September 2, 2014 21 Exhibits EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE Recording requested by and when recorded mail to: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE W103.27383 Space above this line for Recorder's Use LOAN, OCCUPANCY, REFINANCING AND RESALE RESTRICTION AGREEMENT i WITH OPTION TO PURCHASE rya City of Dublin First -Time Homebuyer Program (Inclusionary Units) NOTICE: THIS DOCUMENT CONTAINS RESTRICTIONS ON THE USE, SALE AND REFINANCING OF THIS PROPERTY. This Loan, Occupancy, Refinancing and Resale Restriction Agreement with Option to Purchase (this "Agreement ") is entered into as of Date of Signing and Borrower(s) Name (collectively, "Owner ") regarding certain improved real property located at Property Address, Dublin, California 94568, and further described in Exhibit A attached hereto (the "Property "). RECITALS WHEREAS, to further its goal of creating affordable home ownership opportunities for low- and moderate - income persons and families, the City has initiated a First -Time Homebuyers Program (the "Program ") pursuant to which the City provides deferred payment loans to assist first -time buyers to purchase homes in the City of Dublin at a restricted below- market price; WHEREAS, Owner qualifies as an eligible low- or moderate - income purchaser under the Program, has certified that Owner intends to live in the Property as an owner occupant, and has agreed to maintain the Property as Owner's Principal Residence (as defined below); WHEREAS, pursuant to the Program (i) Owner will purchase the Property at a below- market price, and (ii) City will provide a low- interest, deferred payment loan (the "Loan ") to Owner upon the terms and conditions set forth herein. The Loan will be evidenced by a Secured Promissory Note executed by Owner and dated as of the date hereof (the "Note ") and secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by Owner, dated as of the date hereof, and recorded against the Property substantially concurrently herewith in the Official Records of Alameda County (the "Deed of Trust "); WHEREAS, in order to maintain and preserve the Property as housing affordable to low- and moderate - income households consistent with the goals of the Program, it is necessary to restrict the use and resale of the Property through imposition of the occupancy and resale restrictions set forth herein. These restrictions are intended to prevent initial and subsequent purchasers from using the Property for purposes incompatible with the Program and realizing unwarranted gains from sales of the Property at unrestricted prices. The restrictions set forth in this Exhibit 1_FTHLP BMR_LORRA -2013 Page 1 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE Agreement and the option granted to City hereby are intended to ensure that the Property is used, maintained and preserved as housing affordable to eligible low- and moderate - income purchasers; WHEREAS, in order to ensure the continued affordability of the Property, certain obligations of Owner and rights of City set forth herein survive repayment of the Loan. In order to secure such surviving obligations, the Deed of Trust shall not be reconveyed prior to the expiration of the resale restrictions set forth herein; WHEREAS, the Property constitutes a valuable community resource by providing decent, safe, and sanitary housing to persons and families of low- and moderate - income who otherwise would be unable to afford such housing. To protect and preserve this resource it is necessary, proper, and in the public interest for the City to administer the occupancy and resale controls consistent with the Program by means of this Agreement. NOW THEREFORE, in consideration of substantial economic benefits received by the Owner and the public purposes served by the Program, Owner and City agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below. Additional terms are defined in the text of this Agreement. "Adjusted Resale Price" is defined in Section 13.d. "Affordable Unit Cost' means the sale price that will result in a homeowner's annual Housing Expenses to not exceed 35% of the Maximum Qualifying Income Level, adjusted for Household Size Appropriate for the Unit. For purposes of this definition, "Housing Expenses" means principal, interest, property taxes, property and mortgage insurance, and homeowners' association dues. The "Maximum Qualifying Income Level" means: (a) for Moderate - Income Households - 120% of Area Median Income; and (b) for Low - Income Households — 80% of Area Median Income. "Area Median Income" means the area median income adjusted for household size as published annually by the California Department of Housing and Community Development ( "HCD ") for the County of Alameda pursuant to California Health and Safety Code Section 50093 or successor provision. "City Documents" means collectively, this Agreement, the Note, and the Deed of Trust. "Eligible Capital Improvements" is defined in Section 14. "Eligible Household" means a household whose gross annual income does not exceed One Hundred and Twenty percent (120 %) of the Area Median Income adjusted for household size as published by the California Department of Housing and Community Development ( "HCD ") for the County of Alameda/Federal Housing Administration (115% AMI) and who otherwise meets the requirements of the Program. "Event of Default' is defined in Section 23.1. "Household Size Appropriate for the Unit" shall mean one person for a studio, two person for a one - bedroom unit, three persons for a two- bedroom unit, four persons for a three - bedroom unit, and five persons for a four - bedroom unit. "Loan Term" means thirty (30) years commencing upon the date of the Note. "Option" is defined in Section 5. "Option Event' is defined in Section 6. Exhibit 1 —FTHLP BMR —LORRA -2013 Page 2 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE "Owner" is defined in the preamble to this Agreement. "Permitted Transfer" is defined in Section 4.3.1. "Principal Residence" means the place where a person resides on a substantially full -time basis during not less than ten (10) months per year. "Program" is defined in the Recitals. "Property" is defined in the preamble to this Agreement. "Resale Restrictions" means collectively, the restrictions upon the sale price of the Property as set forth in Sections 4.1, 4.3, 12 and 13 and the requirement that the Property may only be conveyed to an Eligible Household, a permitted transferee or the City as more particularly set forth in Section 4.1. "Term of the Resale Restrictions and Option" means in perpetuity/ 55 years/ 30 years commencing upon the date the unit was placed into service as an inclusionary unit (original owner's date of signing). "Transfer" is defined in Section 4.3. 2. Loan. City has agreed to provide a loan in the amount of loan amount written dollars ($00,000) (the "Loan ") upon the terms and conditions set forth in the City Documents to assist Owner to purchase the Property. Owner acknowledges that the City Documents provide for, among other requirements, owner - occupancy requirements, restrictions on assignment of the Loan, and restrictions on refinancing of the Property. As more particularly set forth herein and in the Note, the Loan terms include the following: (a) Interest Rate. Interest accrues on the principal balance of the Loan commencing upon the date of origination of the Note at the rate of three and one -half percent (3.5 %) simple interest per annum. (b) Loan Term; Due on Sale. The entire principal balance of the Loan together with all interest and other sums accrued pursuant to the City Documents is due and payable in full in one lump sum upon the earliest of: (i) the thirtieth (30th) anniversary of the date of the Note, (ii) the sale, or other transfer of the Property (other than as permitted pursuant to the City Documents), or (iii) the refinancing of any senior mortgage secured by the Property which results in "cash out" to Owner, or (iv) the occurrence of an Event of Default. (c) Due Upon Refinancing: The Loan is payable in full upon the refinancing of any mortgage secured by the Property in violation of the City Documents or upon the encumbrance of the Property in violation of the City Documents. Section 4.4 of this Agreement provides further information regarding restrictions on the refinancing and encumbrance of the Property. (d) Prepayment. The Loan may be prepaid in full at any time without penalty or premium provided that all interest and other sums payable pursuant to the City Documents are paid in full. The City's option to purchase the Property pursuant to this Agreement and the resale, occupancy and other restrictions set forth in this Agreement survive the repayment or prepayment of the Loan. (e) Occupancy and Resale Restrictions. The restrictions on the resale price of the Property, the occupancy restrictions, and City's option to purchase the Property (as more fully described below) shall Exhibit 1_FTHLP BMR_LORRA -2013 Page 3 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE continue for in perpetuity/ 55 years/ 30 years commencing upon the date the unit was placed into service as an inclusionary unit (original owner's date of signing), regardless of any prepayment or repayment of the Loan. 3. Owner Representations, Warranties and Covenants. Owner hereby represents, warrants and covenants that all of the following are true: (i) the financial and other information provided to City in order to qualify to purchase the Property is true and correct as of the Effective Date; (ii) Owner is a first time homebuyer as described in the City of Dublin First -Time Homebuyer Program Guidelines; and (iii) Owner will fully cooperate by promptly providing to the City all information requested by the City to assist in monitoring Owner's compliance with this Agreement. 3.1 Maintenance and Insurance Requirements 3.3.1 Maintenance. (1) The Owner shall maintain the Property, including landscaping, in good repair and in a neat, clean and orderly condition (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials. Owner will not commit waste or permit deterioration of the Property, and shall make all repairs and replacements necessary to keep the Property in good condition and repair. Failure by the Owner to maintain the Property shall constitute a default under this Agreement for which the City may exercise the remedies provided to City hereunder, including without limitation, the City Option to purchase the Property. (2) In the event that the Owner breaches any of the covenants contained in this Section 3.1 and such default continues for a period of ten (10) days after written notice from the City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the City with respect to landscaping and building improvements, then in addition to any other remedy City may have at law or in equity, City shall have the right to enter the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permitted (but is not required) to enter the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas, and to attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the City and /or costs of such cure, which amount shall be promptly paid by the Owner to the City, plus an administrative charge equal to fifteen percent (15 %) of the cost of such work upon demand. 3.3.2 Insurance. The Owner shall maintain a standard all risk property insurance policy equal to the replacement value of the Property (adjusted every five (5) years by appraisal, if requested by City) naming the City and its elected and appointed officers, officials, employees, representatives and agents as additional insureds. Additional insurance requirements are set forth in the Deed of Trust. The Owner shall provide the City with evidence of required insurance coverage upon City's request. Program Requirements. 4.1 Affordability Restrictions. Owner hereby covenants and agrees that during the Term of the Resale Restrictions and Option, the Property shall be sold or otherwise transferred only in accordance with the terms and conditions set forth herein and only to (i) Eligible Households at a price not to exceed the Adjusted Resale Price, (ii) a permitted transferee pursuant to Section 4.3.11 or (iii) the City pursuant to the exercise of the Option or otherwise in accordance with the terms hereof. Exhibit 1_FTHLP BMR_LORRA -2013 Page 4 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE 4.2 Principal Residence Requirement. Owner covenants and agrees that Owner shall occupy the Property as Owner's Principal Residence throughout the period of time that Owner owns the Property, and shall not rent or lease the Property or portion thereof during the Term of the Resale Restrictions and Option. Owner shall occupy the Property as Owner's Principal Residence within sixty (60) days of close of escrow for the Property. Owner shall be considered as occupying the Property as a Principal Residence if the Owner is living in the Property for at least ten (10) months out of each calendar year. Upon request of City made from time to time, Owner shall provide a written certification to the City, in form provided by City, that Owner is occupying the Property as Owner's Principal Residence and that Owner is not renting or leasing the Property to another party, and shall provide such documents and other evidence as City may reasonably request to verify compliance with the requirements of this Section. During the Term of the Resale Restrictions and Option, successor owners of the Property shall be obligated to use the Property as such successor's Principal Residence for the duration of the successor's ownership. 4.3 Restrictions on Transfer and Resale. Except as provided in Section 4.3.1, throughout the Term of the Resale Restrictions and Option, the Property may only be sold or otherwise conveyed only to Eligible Households at a price not to exceed the Adjusted Resale Price. As more particularly described in Section 13, the Adjusted Resale Price may not exceed the Affordable Unit Cost. There shall be no Transfer of the Property without City's certification that the transferee is an Eligible Household and that the Property is being transferred at a price not to exceed the Adjusted Resale Price. "Transfer" means any sale, assignment or transfer, voluntary or involuntary, of any interest in the Property. Any sale or other Transfer of the Property in violation of the requirements of this Section is prohibited and shall constitute an Event of Default and an Option Event entitling City to exercise its Option to purchase the Property. 4.3.1 Permitted Transfers. Provided that the transferee assumes, within 30 days following written request by City, all of Owner's duties and obligations under this Agreement pursuant to a written assumption agreement in a form acceptable to City, or at City's election, execution of an agreement substantially similar to this Agreement, the following transfers ( "Permitted Transfers ") of title to the Property, or of any estate or interest therein shall not trigger the exercise of the Option and shall not be considered Option Events: (i) a transfer by devise or inheritance to Owner's spouse or domestic partner following the death of Owner; (ii) a transfer by Owner to a spouse or domestic partner where the spouse or domestic partner becomes the co -owner of the Property; (iii) the transfer of title to a spouse as part of a divorce or marriage dissolution proceeding; and (iv) a transfer by Owner into an inter vivos trust in which the Owner is a beneficiary; provided however, in every case: (a) written notice of each such transfer shall be provided to City, and (b) Owner shall continue to occupy the Property as his or her principal place of residence (except where the transfer occurs pursuant to subsection (i) or (iii) above, in which event the transferee shall owner - occupy the Property). Notwithstanding any Permitted Transfer, the Option shall remain effective with respect to the Property for the duration of the Term of the Resale Restrictions and Option. For purposes of this section, "domestic partner" shall mean two unmarried people, at least eighteen (18) years of age, who have lived together continuously for at least one year and who are jointly responsible for basic living expenses incurred during their domestic partnership. Domestic partners may not be persons related to each other by blood or adoption such that their marriage would be barred in the state of California. For purposes of this section, an individual shall be considered a domestic partner of Owner upon presentation of an affidavit or other acceptable evidence by Owner to the City. 4.3.2 Inheritance. In the event a Transfer occurs by devise or inheritance due to death of the Owner, the administrator of the Owner's estate or the person inheriting the Property shall provide written notice to the City of the Owner's death within thirty (30) days of the date of death, and the following procedures shall apply: (i) If the person inheriting the Property (the "Inheriting Owner ") is the child or stepchild of the deceased Owner (an "Inheriting Child "), he or she shall provide the City with documentation that he or she is Exhibit 1_FTHLP BMR_LORRA -2013 Page 5 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE the child or stepchild of the deceased Owner together with income information, to be verified by the City, so that the City may determine if the Inheriting Child is an Eligible Household. If the Inheriting Child fails to provide required documentation of his or her relationship to the Owner or financial information, he or she shall be deemed not to qualify as an Inheriting Child and /or Eligible Household, as applicable. If the Inheriting Child qualifies as an Eligible Household, he or she shall succeed to the Owner's interest and obligations under this Agreement, the City Note, and the City Deed of Trust, and new documents shall be executed between the Inheriting Child and the City and recorded against the Property. If the Inheriting Child fails to qualify as an Eligible Household, he or she shall be required to Transfer the Property to an Eligible Household at a price not exceeding the Adjusted Resale Price, pursuant to the procedures set forth in this Agreement and the City may exercise its Option; provided however, the Inheriting Child may occupy the Property for up to twelve (12) months provided that the Inheriting Child remains in compliance with the requirements of this Agreement and the Deed of Trust. (ii) If the Inheriting Owner is not the child or stepchild of the deceased Owner, he or she shall Transfer the Property to an Eligible Purchaser at a price not exceeding the Adjusted Resale Price, pursuant to the procedures set forth in this Agreement, and the City may exercise its Option. In this event, the Inheriting Owner shall provide the City with a Notice of Intent to Transfer within sixty (60) days of the date of death of the Owner. (iii) Failure of an Inheriting Owner to follow the procedures and file the notices described in this Section 4.3.2 shall constitute an Event of Default under this Agreement, and the City may then exercise any of the remedies set forth in this Agreement or available to City under law or equity, including, without limitation, exercise of the City Option. 4.3.3 Changes to Title. Notwithstanding Sections 4.3.1 and 4.3.2 above, Owner shall obtain City's written approval prior to making any changes to the title of the Property, including but not limited to, the addition or deletion of the names of any person to or from title to the Property. 4.4 Restrictions on Financing Secured by Property. Owner shall permit no mortgage, deed of trust or other security instrument to be recorded against the Property other than the following: (i) a fixed rate conventional mortgage with a term of up to 30 years, (ii) any California Housing Finance Agency ( °CalHFA ") product; (iii) the City Documents, (iv) other loan products approved by City, and (v) encumbrances permitted pursuant to Sections 4.4.1 through 4.4.3. 4.4.1 Initial Financing. Owner's aggregate purchase money financing for the Property ( "Initial Financing ") shall not exceed an amount equal to one hundred percent (100 %) of the Base Resale Price calculated as provided in Section 12. 4.4.2 Junior Loans. Mortgage loans or equity lines of credit junior in lien priority to the Deed of Trust are not permitted, except when expressly approved by the City in writing. The City shall only approve junior mortgage loans or equity lines of credit as follows: i. the loan or equity line of credit does not cause the Property's loan to value ratio (calculated by comparing the total debt secured by the Property to the Adjusted Resale Price of the Property ) to exceed 100 %. ii. the proceeds of such loan or equity line of credit are used only for Eligible Capital Improvements; and iii. the total outstanding balance of principal and any accrued interest on all loans secured by the Property does not exceed the Adjusted Resale Price. Exhibit 1_FTHLP BMR_LORRA -2013 Page 6 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE In the event that the encumbrance of the Property by a junior mortgage results in "cash out" to Owner in violation of this Agreement, the Loan shall be due and payable. 4.4.3 Restrictions on Refinancing. Any prepayment and refinance of the Initial Financing shall not be permitted unless expressly approved by the City in writing, and the City may approve such refinancing only if all of the following conditions are met: i. the refinance reduces Owner's interest rate and monthly payments of principal and interest on the Initial Financing or shall be used to finance Eligible Capital Improvements; ii. the refinance does not cause the principal amount of all debt secured by the Property to exceed the then outstanding balance (plus refinancing and closing costs) of the Initial Financing plus the cost of any Eligible Capital Improvements that shall be made by Owner; iii. the refinance does not result in Owner receiving any cash from the refinance except for Eligible Capital Improvements; iv. the refinance does not cause the Property's loan to value ratio (calculated by comparing the total debt secured by the Property to the Adjusted Resale Price of the Property) to exceed 100% if the Owner does not receive any cash from the refinance or 97% if the Owner receives cash from the refinance for Eligible Capital Improvements. V. the total outstanding balance of principal and any accrued interest on all loans secured by the Property does not exceed the Adjusted Resale Price. In the event that the refinancing of any senior mortgage secured by the Property results in "cash out" to Owner in violation of this Agreement, the Loan shall be due and payable. For purposes of this Section 4.4, the Adjusted Resale Price shall be calculated by the City pursuant to Section 13 of this Agreement as of the earlier of (a) the date on which the deed of trust or mortgage securing the new mortgage is filed for recordation in the Official Records of the County of Alameda, or (b) the date the City receives Notice of Intent to Transfer pursuant to Section 7.1) 5. Grant of Option to Purchase; Assignment of Option. Owner hereby grants to the City an option ( "Option ") to purchase the Property at the Adjusted Resale Price upon the occurrence of an Option Event, subject to the terms and conditions contained herein. The City may assign the Option to another government entity, a non - profit affordable housing provider, or a person or family who qualifies as an Eligible Household. The assignment of the Option shall not extend any time limits contained herein with respect to the Option exercise period or the period within which the Property must be purchased following exercise of the Option. 6. Events Giving Rise to Right to Exercise Option. The City shall have the right to exercise the Option upon the occurrence of any of the following events (each, an "Option Event "): (a) Receipt of a Notice of Intent to Transfer; (b) Any actual, attempted or pending sale, conveyance, transfer, lease or other attempted disposition of the Property or of any estate or interest therein, except as provided in Section 4.3.1; Exhibit 1_FTHLP BMR_LORRA -2013 Page 7 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE (c) Any actual, attempted or pending encumbrance of the Property, including without limitation by mortgage, deed of trust, judgment lien, mechanics lien, or tax or other lien, except as provided in Section 4.4 and the subsections thereof; (d) Recordation of a notice of default and /or notice of sale pursuant to California Civil Code section 2924 (or successor provisions) under any deed of trust or mortgage with a power of sale encumbering the Property; (e) Commencement of a judicial foreclosure proceeding regarding the Property; (f) Execution by Owner of any deed in lieu of foreclosure transferring ownership of the Property; (g) Commencement of a proceeding or action in bankruptcy, whether voluntary or involuntary, pursuant to Title 11 of the United States Code or any other bankruptcy statute, or any other insolvency, reorganization, arrangement, assignment for the benefit of creditors, receivership or trusteeship, concerning the Owner; or (h) The occurrence of an Event of Default as described in Section 23.1. Notice of Intended Transfer; Consent to Transfer; Exercise of Option. 7.1 Notice of Intent to Transfer. If Owner desires to sell, convey, transfer, lease, encumber or otherwise convey the Property or any estate or interest therein (other than pursuant to Sections 4.3.1, 4.4.1 through 4.4.3), Owner shall deliver written notice to City of such intent ( "Notice of Intent to Transfer ") by certified mail not less than 45 days prior to the date of such proposed sale, conveyance, transfer, lease, encumbrance or disposition. The Notice of Intent to Transfer shall state the street address of the Property, Owner's full name or names, the address and telephone number at which Owner may be contacted if not at the Property; and shall be delivered personally or deposited in the United States mail, postage prepaid, certified- return receipt requested, addressed to the City of Dublin, 100 Civic Plaza, Dublin, California 94568, Attn: Housing Division. The Notice of Intent to Transfer shall be in substantially the form attached hereto as Exhibit B or such substitute form in use by City at such time. In the case of a proposed sale of the Property to an identified prospective purchaser, the Owner shall submit to the City, together with the Notice of Intent to Transfer, a copy of the prospective purchaser's income certification, and all other information reasonably requested by City to establish that the prospective purchaser is an Eligible Household, in a form approved by the City, along with the income certification to be provided to any lender making a loan to the prospective purchaser, a copy of the proposed sales contract and all related documents setting forth the terms of sale, the name of the title company and escrow information. The City or its authorized designee may require the prospective purchaser to provide documentation evidencing and supporting the income and other financial information contained in the certifications. 7.2. Notice of Exercise. Upon the occurrence of any Option Event, the City may exercise its Option by delivering, within the time period specified in Section 7.4, notice ( "Notice of Exercise ") to Owner of City's intent to exercise the Option. The Notice of Exercise may be in the form attached hereto and incorporated herein as Exhibit C or in such other form as the City may from time to time adopt. The Notice of Exercise shall be delivered by deposit in the United States mail, postage prepaid, first - class, addressed to Owner at the Property, or at such other address as may be indicated on the Notice of Intent to Transfer, and delivery shall be deemed effective five (5) calendar days following the date of deposit. If the Option Event relates to the potential foreclosure of a mortgage, then the City shall also deliver the Notice of Exercise to the mortgagee or beneficiary under such mortgage, at such mortgagee's or beneficiary's address of record in the Official Records of Alameda County and the City shall not complete the purchase of the Property if the default is cured within the time periods permitted by law. Exhibit 1_FTHLP BMR_LORRA -2013 Page 8 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE 7.3 Notice of Consent to Transfer. If the Option Event involves a transfer of the Property and the City does not exercise the Option, the City may consent to the transfer ( "Consent to Transfer ") provided all of the following requirements are satisfied: (i) the proposed purchaser qualifies as an Eligible Household; (ii) the sale of the Property is at a price not to exceed the Adjusted Resale Price; (iii) the proposed purchaser executes a Disclosure Statement in the form attached hereto as Exhibit D or such other form or forms as may be promulgated by the City; (iv) the proposed purchaser executes an agreement substantially similar to this Agreement in a form approved by the City and such substitute agreement is recorded in the Official Records of Alameda County concurrently with the close of escrow for the sale of the Property (provided however, the Term of the Resale Restrictions and the Option will be for that portion of such term remaining as of the date of close of escrow for the sale of the Property to the prospective purchaser); (v) if the proposed purchaser will be obtaining a Program loan, the proposed purchaser executes and delivers a promissory note in form approved by City and the proposed purchaser executes a deed of trust substantially in the form of the Deed of Trust in a form approved by the City and such deed of trust is recorded concurrently with the close of escrow for the sale of the Property; and (vi) if the proposed purchaser will not be obtaining a Program loan, the proposed purchaser executes a Performance Deed of Trust in form provided by City and such Performance Deed of Trust is recorded concurrently with the close of escrow for the sale of the Property. The Performance Deed of Trust will secure the performance of the resale, refinancing, and occupancy restrictions set forth herein, the other obligations of the Property owner, and the obligation for payment of the City's Equity Share in connection with the first sale of the Property following the expiration of the Term of the Resale Restrictions and Option. If the prospective purchaser (i) fails to qualify as an Eligible Household, or (ii) fails to execute and deliver any of the required documents specified above within the time period set forth in the Consent to Transfer, then the Consent to Transfer shall expire, and the City may, at its option, either notify Owner of the disqualification, thereby entitling Owner to locate another purchaser who qualifies as Eligible Household, or City may exercise the Option, as if no Consent to Transfer had been delivered. 7.4 Time Period for Notice. The City shall deliver a Consent to Transfer, if applicable, not later than thirty (30) days after the date that it receives notification of an Option Event. The City shall deliver a Notice of Exercise, if applicable, on or before the date which is the later to occur of the following: (i) thirty (30) days after the date that the City receives notification of an Option Event or (ii) fifteen (15) days after a Consent to Transfer has expired; provided, however, that if the City delivers a Notice of Exercise to Owner upon occurrence of an Option Event described in Paragraphs 3.c.iv, 3.c.v, or 3.c.vi, the City shall deliver the Notice of Exercise on or before sixty (60) days after the date that the City receives notice of the Option Event, and the City or its assignee shall close escrow for the purchase of the Property no later than 90 days after the date the City receives notification of such Option Event, unless extended by mutual agreement of Owner and the City. For purposes of computing commencement of the delivery periods, the City shall be deemed to have received notification of an Option Event on the date of delivery of a Notice of Intent to Transfer, pursuant to the terms of Paragraph 17 below or on the date it actually receives notice of default, summons and complaint or other pleading, or other writing specifically stating that an Option Event has occurred. The City shall have no obligation to deliver a Notice of Exercise or Consent to Transfer, and the applicable time period for exercise of the Option shall not commence to run, unless and until the City has received notification of an Option Event in the manner specified in this subparagraph. If there is a stay or injunction imposed by court order precluding the City from delivering its Consent to Transfer or Notice of Exercise within the applicable time period, then the running of such period shall cease until such time as the stay is lifted or the injunction is dissolved and the City has been given written notice thereof, at which time the period for delivery of a Consent to Transfer or Notice of Exercise shall again begin to run. 7.5 No Waiver. If the City in its sole discretion determines not to exercise the Option in any particular instance, or fails to deliver a Notice of Exercise or Consent to Transfer within the time periods set forth in Section 7.4, such determination or failure shall not affect City's rights to exercise the Option upon the occurrence of any future Option Event. Exhibit 1_FTHLP BMR_LORRA -2013 Page 9 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE 7.6 Payment of Excess Sale Proceeds. 7.6.1 Upon Sale in Violation of Agreement. If Owner sells or otherwise transfers the Property in violation of the price restrictions set forth herein, and if City chooses not to exercise its Option, then City shall be entitled to receive from Owner without any deduction, offset or recoupment, one hundred percent (100 %) of the difference (the "Excess Sale Proceeds ") between (a) the actual sales price net of reasonable and customary real estate commissions paid (such commissions not to exceed six percent (6 %) of the actual sales price), and (b) the Adjusted Resale Price, calculated as of the earlier of (i) the date of close of escrow for the sale of the Property to the third party, or (ii) the date the City receives Notice of Intent to Transfer pursuant to Section 7.1. This amount shall be a debt of Owner to City and shall be evidenced by the Note in addition to all other sums payable pursuant to the Note, and shall be secured by the Deed of Trust. Owner acknowledges that City shall have no obligation to reconvey the Deed of Trust or this Agreement unless and until the Excess Sale Proceeds are paid to City. City shall use the Excess Sale Proceeds for affordable housing programs. The Owner acknowledges that the formula used to determine the amount of the Excess Sale Proceeds is intended to cause Owner to receive the same or less net sale proceeds from the unrestricted sale of the Property as Owner would have received if the Property had been sold to an Eligible Household at the price permitted pursuant to this Agreement. 7.6.2 Upon Foreclosure. If the Property is sold at a foreclosure sale and the proceeds of such sale are distributed to Owner, any surplus of proceeds remaining after payment of the senior liens and encumbrances on the Property shall be distributed as follows: that portion of the surplus up to, but not to exceed, the net amount Owner would have received pursuant to Sections 12 and 13 had the City exercised its Option on the date of such sale shall be distributed to Owner, and the balance of such surplus, if any, shall be distributed to the City. 8. Right to Reinstatement. If the Option Event is the recordation of a notice of default, then the City shall be deemed to be Owner's successor in interest under California Civil Code Section 2924c (or successor section) solely for purposes of reinstatement of any mortgage on the Property that has led to the recordation of the notice of default. As Owner's deemed successor in interest, the City shall be entitled to pay all amounts of principal, interest, taxes, assessments, homeowners' association fees, insurance premiums, advances, costs, attorneys' fees and expenses required to cure the default. If the City exercises the Option, then any and all amounts paid by the City pursuant to this Section shall be treated as Adjustments to the Base Resale Price for the Property, as defined in Section 13, below. 9. Inspection of Property. After receiving a Notice of Intent to Transfer or delivering a Notice of Exercise, the City shall be entitled to inspect the Property one or more times prior to the close of escrow to determine the amount of any Adjustments to the Base Resale Price. Before inspecting the Property, the City shall give Owner not less than forty -eight (48) hours written notice of the date, time and expected duration of the inspection. The inspection shall be conducted between the hours of 9:00 a.m. and 5:00 p.m., Monday through Friday, excluding court holidays, unless the parties mutually agree in writing to another date and time. Owner shall make the Property available for inspection on the date and at the time specified in the City's request for inspection. 10. Escrow. Promptly after delivering a Notice of Exercise, the City shall open an escrow with a title company of City's choosing. Close of escrow shall take place on the date which is the later to occur of the following: (a) sixty (60) days after a Notice of Exercise has been delivered, or (b) ten (10) days after Owner has performed all acts and executed all documents required for close of escrow; provided however, if the City exercises the Option upon the occurrence of an Option Event described in Sections 6(d) — (f) close of escrow shall take place no later than 90 days after the date the City receives notification of such Option Event. Prior to the close of escrow, the City shall deposit into escrow, the Adjusted Resale Price and all escrow fees and closing costs to be paid by City. Commissions (not to exceed 6% of the actual sales price), costs and title insurance premiums shall be paid pursuant to the custom and practice in the County of Alameda at the time of the opening of escrow, or as may otherwise be provided by mutual Exhibit 1 —FTHLP BMR —LORRA -2013 Page 10 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE agreement. Owner agrees to perform all acts and execute all documents reasonably necessary to effectuate the close of escrow and transfer of the Property to the City. 11. Proceeds of Escrow; Removal of Exceptions to Title. Prior to close of escrow, Owner shall cause the removal of all exceptions to title to the Property that were recorded after the Effective Date with the exception of (i) non - delinquent taxes for the fiscal year in which the escrow closes, which taxes shall be prorated as between Owner and City as of the date of close of escrow, (ii) quasi - public utility, public alley, public street easements, sidewalks, and rights of way of record, and (iii) such other liens, encumbrances, reservations and restrictions as may be approved in writing by City ( "Permitted Exceptions "). The purchase price deposited into escrow by the City shall be applied first to the payoff of the permitted encumbrances (as described in Section 4.4 and the subsections thereof) recorded against the Property in order of lien priority, and thereafter to the payment of Owner's share of escrow fees and closing costs. Any amounts remaining after the purchase price has been so applied, if any, shall be paid to Owner upon the close of escrow. If the purchase price is insufficient to satisfy all liens and encumbrances recorded against the Property, the Owner shall deposit into escrow such additional sums as may be required to remove such liens and encumbrances. In the event that the City agrees to proceed with close of escrow prior to the date that Owner has caused all exceptions to title other than Permitted Exceptions to be removed, then Owner shall indemnify, defend and hold City harmless from any and all costs expenses or liabilities (including attorneys' fees) incurred or suffered by City that relate to such exceptions and their removal from title to the Property. 12. Base Resale Price. Prior to adjustment pursuant to Section 13 the base resale price ( "Base Resale Price ") of the Property shall be the lesser of: (a) Indexed Value. The Indexed Value of the Property means the original price paid by the Owner for acquisition of the Property which the Parties agree is the sum of sale amount written dollars ($000,000) (the "Base Price "), increased (but not decreased) by an amount, if any, equal to the Base Price multiplied by the percentage increase in the Area Median Income between the Effective Date and the date that the City receives notification of an Option Event. (b) Fair Market Value. The Fair Market Value of the Property means the value of the Property as determined by a qualified appraiser, certified by the State of California, selected and paid for by Owner and approved in writing by the City. Nothing in this Section shall preclude the Owner and the City from establishing the Fair Market Value by mutual agreement instead of by appraisal. 13. Adjustments to Base Resale Price. Subject to the Affordable Unit Cost restriction described in subsection (d) below, the Base Resale Price shall be increased or decreased, as applicable, by the following adjustment factors ( "Adjustments "): (a) Capital Improvements. An increase for Eligible Capital Improvements (as defined in Section 14) made to the Property, but only if the amount of such improvements has been previously approved in writing by the City after Owner has submitted original written documentation of the cost to the City for verification. The amount of the Adjustment shall equal the original cost of any such Eligible Capital Improvements. (b) Damage. A decrease by the amount necessary to repair damage to the Property, if any, and to place the Property into saleable condition as reasonably determined by the City upon City's exercise of its Option hereunder, including, without limitation, amounts attributed to cleaning; painting; replacing worn carpeting and draperies; making necessary structural, mechanical, electrical and plumbing repairs; and repairing or replacing built -in appliances and fixtures. Owner covenants to, at Owner's expense, maintain the Property in the same condition as in existence on the date of City's Notice of Exercise, reasonable wear and tear excepted. Exhibit 1_FTHLP BMR_LORRA -2013 Page 11 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE (c) Advances by the City. A decrease in an amount equal to the sum of all costs advanced by the City for the payment of mortgages, taxes, assessments, insurance premiums, homeowner's association fees and /or associated late fees, costs, penalties, interest, attorneys' fees, pest inspections, resale inspections, fixing violations of applicable building, plumbing, electric, fire, or other codes, and other expenses related to the Property, which Owner has failed to pay or has permitted to become delinquent. (d) Adjusted Resale Price Not to Exceed Affordable Unit Cost. The Base Resale Price as adjusted by the factors set forth in this Section 13, is herein referred to as the "Adjusted Resale Price." Notwithstanding any other provision hereof to the contrary, in no event shall the Adjusted Resale Price exceed the Affordable Unit Cost. 14. Eligible Capital Improvements. In the exercise of reasonable discretion in accordance with the Guidelines to the Inclusionary Ordinance Regulations adopted by the City from time to time, the City will approve capital improvements that will improve adverse health and safety conditions. To receive such approval, the Owner must submit evidence to the City showing the purpose and cost of the capital improvements. If the City approves the capital improvements they shall be deemed "Eligible Capital Improvements." 15. Priority of this Agreement and Effectiveness of the Option. (a) Recordation. This Agreement shall be recorded in the Official Records of Alameda County on or as soon as practicable after the Effective Date. The Option shall have priority over any subsequent sale, conveyance, transfer, lease, or other disposition or encumbrance of the Property, or of any estate or interest therein, and in the event of exercise of the Option by City, the City shall take the Property subject only to Permitted Exceptions. As further described in Section 16, the exercise of the Option by the City at any time and from time to time shall not extinguish the Option or cause a merger of the Option into any estate or other interest in the Property, and the Option shall continue to exist and be effective with respect to the Property against any and all subsequent owners exercisable by City in accordance with the terms and conditions hereof. (b) Request for Notice of Default. The City shall file a Request for Notice of Default for recordation in the Official Records of Alameda County promptly upon execution of this Agreement (see Exhibit E). (c) Subordination. The City agrees that in order to assist qualified purchasers to secure purchase money financing for the acquisition of the Property, the City will enter into a subordination agreement with a senior purchase money lender to subordinate this Agreement under such terms as the City and the senior purchase money lender shall negotiate. Any subordination agreement to be executed by City shall include notice and cure rights for City regarding any defaults in the mortgage to which the City is subordinating. 16. Survival of Option Upon Transfer. (a) In General. The City's right to exercise the Option shall survive any transfer of the Property by Owner. Each transferee, assignee or purchaser of the Property during the Term of the Resale Restrictions and Option shall be required to assume the obligations hereunder or to execute an agreement substantially in the form of this Agreement; provided however, any such new agreement shall specify that the term of the Option and the resale, refinancing and other restrictions set forth herein shall endure for the number of years remaining in the Term of the Resale Restrictions and Option as of the date of any such transfer, assignment, or sale. The City may exercise the Option at any time during the Term of the Resale Restrictions and Option upon the occurrence of an Option Event, regardless of whether the Property is owned, possessed or occupied by (i) an Exhibit 1_FTHLP BMR_LORRA -2013 Page 12 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE Eligible Household, (ii) a successor, transferee, assignee, heir, executor, or administrator of an Eligible Household, including a debtor -in- possession, debtor or trustee pursuant to Title 11 of the United States Code, or (iii) any person owning, possessing or occupying the Property who does not meet the eligibility criteria established by the City under the Program. Notwithstanding the foregoing, the Option shall not survive (a) the sale and transfer of the Property to a third -party purchaser under a judicial or non - judicial foreclosure or a deed -in -lieu of foreclosure pursuant to a mortgage or deed of trust recorded against the Property senior in priority to this Agreement, provided that the City has received timely notice of such Option Event and has failed to either reinstate the mortgage or deed of trust or complete the purchase of the Property pursuant to the exercise of the Option prior to the date of the foreclosure sale, or (b) the recordation of an instrument conveying Owner's interest in the Property to the City or its assignee. (b) CaIHFA Mortgages. If Owner has acquired the Property using financing secured by a mortgage held by the California Housing Finance Agency (CaIHFA), then the Option shall automatically terminate if title to the Property is transferred by a foreclosure conducted on behalf of CaIHFA or by a deed -in -lieu of such foreclosure, or if the insured mortgage is assigned to CaIHFA, provided that the City has received timely notice of such Option Event (which notice may include a notice of default recorded pursuant to California Civil Code Section 2924 or successor provision). 17. Voidable Transfers. Any actual or attempted sale, conveyance, transfer or other disposition of the Property or of any estate or interest therein, in violation of the terms and conditions of this Agreement, shall be voidable at the election of the City. 18. Limits on Liability. In no event shall the City become liable or obligated in any manner to Owner by reason of the assignment of this Agreement or the Option, nor shall City be in any way liable or obligated to Owner for any failure of the City's assignee to consummate a purchase of the Property or to comply with the terms of this Agreement or the Option, or any escrow instructions or agreement for the purchase of the Property. 19. Insurance Proceeds and Condemnation Awards. If the Property is destroyed and insurance proceeds are distributed to Owner instead of being used to rebuild the Property, or, in the event of condemnation, if the proceeds thereof are distributed to Owner, any surplus of proceeds remaining after payment of the senior liens and Permitted Encumbrances shall be distributed as follows: that portion of the surplus up to, but not to exceed, the net amount Owner would have received pursuant to Sections 12 and 13 had the City exercised its Option on the date of the destruction or the condemnation valuation date shall be distributed to Owner, and the balance of such surplus, if any, shall be distributed to the City. 20. Covenants Running with the Land. A. Owner hereby subjects the Property to the covenants and restrictions set forth in this Agreement. Owner hereby declares its express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon all parties having any interest in the Property throughout the Term of the Resale Restrictions and Option. Each and every contract, deed, lease or other instrument covering, conveying or otherwise transferring the Property or any interest therein, as the case may be, shall conclusively be held to have been executed, delivered and accepted subject to this Agreement regardless of whether the other party or parties to such contract have actual knowledge of this Agreement. B. The Owner and the City hereby declare their understanding and intent that: (i) the covenants and restrictions contained in this Agreement shall be construed as covenants running with the land pursuant to California Civil Code Section 1468 and not as conditions which might result in forfeiture of title by Owner; (ii) the burden of the covenants and restrictions set forth in this Agreement touch and concern the Property in that the Owner's legal interest in the Property may be rendered less valuable thereby; and (iii) the benefit of the covenants and restrictions Exhibit 1_FTHLP BMR_LORRA -2013 Page 13 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE set forth in this Agreement touch and concern the land by enhancing and increasing the enjoyment and use of the Property by Eligible Households who may purchase the Property, the intended beneficiaries of such covenants and restrictions. C. All covenants and restrictions contained herein without regard to technical classification or designation shall be binding upon Owner for the benefit of the City and such covenants and restrictions shall run in favor of such parties for the entire period during which such covenants and restrictions shall be in force and effect, without regard to whether the City is an owner of any land or interest therein to which such covenants and restrictions relate. 21. Owner's Acknowledgement of Resale Restriction. Owner hereby acknowledges and agrees that: A. Owner hereby subjects the Property to certain restrictions, and limits the price for which Owner may sell the Property and the persons to whom Owner may sell the Property. The resale price limitations, and other provisions contained in this Agreement, restrict the full benefits of owning the Property; Owner may not enjoy the same economic or other benefits from owning the Property that Owner would enjoy if this Agreement did not exist. B. Absent the provisions of the Program and the provisions of this Agreement, the Property could not be made available to Eligible Households, including Owner, at an affordable price. C. Owner has read and understands all of the provisions of this Agreement. Owner accepts and agrees to the provisions of this Agreement and understands that this Agreement (including without limitation the effectiveness of the Resale Restrictions and the City's Option) will remain in full force in perpetuity despite any Transfer of the Property. D. OWNER UNDERSTANDS THAT THE DETERMINATION OF THE MAXIMUM AFFORDABLE RESALE PRICE OF THE PROPERTY TO AN ELIGIBLE HOUSEHOLD CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INCREASES IN MEDIAN INCOME, MORTGAGE INTEREST RATES, PROPERTY TAXES AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED AND THAT THE SALES PRICE PERMITTED HEREUNDER MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS AGREEMENT. OWNER FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE SALES PRICE OF THE PROPERTY THE PRIMARY OBJECTIVE OF THE CITY AND THIS AGREEMENT IS TO PROVIDE HOUSING TO ELIGIBLE HOUSEHOLDS AT AFFORDABLE HOUSING COST. THE MAXIMUM RESTRICTED RESALE PRICE WILL ALMOST CERTAINLY BE LESS THAN OTHER SIMILAR PROPERTIES THAT HAVE NO RESTRICTIONS. *initialed by Owner(s)* 22. Equity Share Payable Upon First Transfer After Expiration of Restrictions and Option. The restrictions set forth in this Agreement and the Option shall remain in effect for a period of fifty -five (55) years commencing on the Effective Date. Notwithstanding the expiration of such conditions at the end of such term, upon the first transfer of the Property occurring after the expiration of the Term of the Resale Restrictions and Option, Owner (or Owner's successor in interest) shall pay to City an amount (the "City's Equity Share ") equal to twenty -five percent (25 %) of the difference between (a) the actual sales price net of reasonable and customary real estate commissions paid (such commissions not to exceed six percent (6 %) of the actual sales price), and (b) the Adjusted Resale Price as determined for the date of the expiration of the Term of the Resale Restrictions and Option. The City 's Equity Share shall be paid to the City concurrently with close of escrow for the sale of the Property, or upon Owner's receipt of the sale proceeds, whichever shall first occur. The requirement to pay the City's Equity Share shall survive the expiration Exhibit 1_FTHLP BMR_LORRA -2013 Page 14 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE of the Term of the Resale Restrictions and Option. Following completion of a sale and payment of the City's Equity Share in compliance with this Section 22, this Agreement shall terminate, and City shall release and reconvey this Agreement. 23. Default and Remedies. 23.1 Events of Default. The following shall constitute the occurrence of an Event of Default hereunder, and shall entitle City to exercise the Option or to pursue any other remedy provided herein or at law or in equity: (i) Owner's failure to use the Property as Owner's Principal Residence; (ii) The sale, conveyance, or other transfer of the Property (including a foreclosure sale) if the remaining ownership interest of the Owner in the Property is less than fifty percent (50 %), except as provided in Section 4.3.1. (iii) A default occurs under the terms of a senior deed of trust and such default is not cured within sixty (60) days following the recordation of notice of default under the senior deed of trust. (iv) Owner refinances the Property in violation of this Agreement. (v) Owner fails to observe or perform any covenant, condition, or agreement to be observed or performed by Owner pursuant to the City Documents, including but not limited to failure to pay indebtedness, failure to pay property taxes, or failure to maintain insurance, and such breach remains uncured beyond the expiration of any applicable cure period. 23.2 Specific Performance. Owner acknowledges that any breach in the performance of its obligations under this Agreement shall cause irreparable harm to the City. Owner agrees that the City is entitled to equitable relief in the form of specific performance, including without limitation, upon City's exercise of the Option, and that an award of damages shall not be adequate to compensate the City for Owner's failure to perform according to the terms of this Agreement. 23.3. Other Remedies. City shall be entitled to pursue any other remedy provided for at law or equity, all of which shall be cumulative, including without limitation, the acceleration of the Note, and the pursuit of any remedy available pursuant to the City Documents, including foreclosure of the Deed of Trust. 24. Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Party in accordance with this Section. All such notices shall be sent by: a. personal delivery, in which case notice shall be deemed delivered upon receipt; b. certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (2) business days after deposit, postage prepaid in the United States mail; c. nationally recognized overnight courier, in which case notice shall be deemed delivered one (1) day after deposit with such courier; or d. facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission thereof. Exhibit 1_FTHLP BMR_LORRA -2013 Page 15 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE City: City of Dublin c/o Housing Division 100 Civic Plaza Dublin, California 94568 Owner: Borrower(s) Mailing Address Dublin, CA 94568 25. General Provisions. a. Attorneys' Fees. If either party initiates legal proceedings to interpret or enforce its rights under this Agreement, the prevailing party in such action shall be entitled to an award of reasonable attorneys' fees and costs in additions to any other recovery to which it is entitled under this Agreement. b. No Joint Venture; No Third -Party Beneficiary. No joint venture or other partnership exists or is created between the Parties by virtue of this Agreement. Except as expressly stated herein, this Agreement is not intended to benefit any third party. C. Successors; Assignment. This Agreement shall inure to the benefit of and shall be binding upon the parties to this Agreement and their respective heirs, executors, administrators, successors and assigns. City shall have the right to assign any or all of its rights and obligations under this Agreement without the consent of Owner. d. Entire Agreement; Amendment. This Agreement together with the Note and the Deed of Trust constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes any and all other prior negotiations, correspondence, understandings and agreements with respect thereto. There are no representations, promises, agreements or other understandings between the parties relating to the subject matter of this Agreement that are not expressed herein. This Agreement may be modified only by an instrument in writing executed by the parties or their respective successors in interest. e. Survival; No Merger. All of the terms, provisions, representations, warranties and covenants of the parties under this Agreement shall survive the close of escrow of any sale of the Property and shall not be merged in any deed transferring the Property. f. Authority and Execution. Each party represents and warrants that it has full power and authority to enter into this Agreement and to undertake all of its obligations hereunder, that each person executing this Agreement on its behalf is duly and validly authorized to do so. g. Severability. The invalidity or unenforceability of any term or provision of this Agreement shall not impair or affect the remainder of this Agreement, and the remaining terms and provisions hereof shall not be invalidated but shall remain in full force and effect. h. Waiver; Modification. No waiver or modification of this Agreement or any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver or modification shall be offered or received in evidence in any proceeding, arbitration, or litigation between the parties arising out of or affecting this Agreement or the rights or obligations of any party hereunder, unless such waiver or modification is in a duly executed writing. The provisions of this section may not be waived except as herein set forth. A waiver or breach of any covenant, condition or provision of this Agreement shall not be deemed a waiver of any other covenant, condition or provision hereof. Exhibit 1_FTHLP BMR_LORRA -2013 Page 16 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE i. Construction. The section headings and captions used in this Agreement are for convenience of reference only and shall not modify, define, limit or amplify any of the terms or provisions hereof. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties have prepared it. j. Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California. k. Time of the Essence. Time is of the essence in this Agreement as to each provision in which time is an element of performance. I. Further Assurances. Each party will, upon reasonable request of the other party, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such further instruments and documents as may be reasonably necessary in order to fulfill the intent and purpose of this Agreement. M. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, and all which together shall constitute one and the same instrument. SIGNATURES ON FOLLOWING PAGE Exhibit 1_FTHLP BMR_LORRA -2013 Page 17 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ATTEST: City Clerk OWNER(S): Borrower CITY: City of Dublin, a California municipal corporation City Manager SIGNATURES MUST BE NOTARIZED Exhibit 1_FTHLP BMR_LORRA -2013 Page 18 Rev 812013 EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE NOTARY ACKNOWLEDGEMENT [To be inserted] Exhibit 1_FTHLP BMR_LORRA -2013 Notary Acknowledgment EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE CERTIFICATE OF ACCEPTANCE (Pursuant to Government Code §27281) This is to certify that the interest in real property conveyed by the Resale Restriction Agreement and Option to Purchase dated Date of signing from Borrowers to the City of Dublin, a California municipal corporation, is hereby accepted by the undersigned office or agent on behalf of the City of Dublin pursuant to authority conferred by the Resolution No. 24 -87 dated April 13, 1987; and the grantee consents to recordation thereof by its duly authorized officer. Dated: City Manager Attest: City Clerk Exhibit 1_FTHLP BMR_LORRA -2013 City Certificate of Acceptance EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE EXHIBIT A LEGAL DESCRIPTION [Insert Here] Exhibit 1_FTHLP BMR_LORRA -2013 Exhibit A: Legal Description EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE EXHIBIT B FORM OF NOTICE OF INTENT TO TRANSFER To: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk Date: Re: Notice of Intent to Transfer Pursuant to the terms of the Resale Restriction Agreement and Option to Purchase, dated date of signing, the undersigned Owner(s), Borrower(s), hereby give(s) notice of his /her /their intent to transfer the property located at Property Address, Dublin, California 94568 (the "Property "). Owner may be contacted at the Property or at the following address: Telephone: Email: If applicable: The proposed transfer of the Property is to the following person(s): Name: Address: Telephone: The proposed transfer is (check one): u Sale u Other Specify: Owner(s) signature(s): Signature Print Name Signature Print Name Exhibit 1 FTHLP BMR LORRA -2013 Exhibit B: Notice of Intent to Transfer EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE EXHIBIT C FORM OF NOTICE OF EXERCISE Date: To (Owner /Transferee): Address: Re: Notice of Exercise The City of Dublin (" City ") hereby gives notice that it is exercising its option to purchase the real property located at Property Address, Dublin, California 94568. The option has been granted to the City pursuant to the Loan, Occupancy, Refinancing and Resale Restriction Agreement with Option to Purchase executed by and between Owner and the City dated as of Date of Signing and recorded on as Instrument No. 201XXXXXXX (the City has assigned its option to purchase the real property to ). An escrow for the purchase will be opened with Dated: Title Company. CITY OF DUBLIN By: Its: Exhibit 1 FTHLP BMR LORRA -2013 Exhibit C: Notice of Exercise EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE EXHIBIT D FORM OF DISCLOSURE STATEMENT THERE ARE RESTRICTIONS ON THE SALE AND REFINANCING OF THE PROPERTY YOU ARE BUYING. EXCEPT FOR A TRANSFER OF THE PROPERTY TO THE CITY OF DUBLIN ( "CITY ") FOLLOWING EXERCISE OF CITY'S OPTION TO PURCHASE, THIS PROPERTY MAY ONLY BE SOLD TO AN "ELIGIBLE HOUSEHOLD" AT A PRICE NOT TO EXCEED THE ADJUSTED RESALE PRICE WHICH IS CAPPED AT AN "AFFORDABLE UNIT COST." THIS MEANS THAT YOU MAY NOT SELL THE PROPERTY FOR MARKET VALUE TO WHOMEVER YOU LIKE. IN ADDITION, THIS PROPERTY IS REQUIRED TO BE OWNER - OCCUPIED AND MAY NOT BE LEASED OR RENTED TO THIRD PARTIES. THESE RESTRICTIONS WILL BE IN EFFECT UNTIL 30 years/ 55 years from original owner's signing date or perpetually. ANY SALE OF THE PROPERTY IN VIOLATION OF THE RESTRICTIONS SET FORTH IN THE LOAN, OCCUPANCY, REFINANCING AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE ( "RESALE RESTRICTION AGREEMENT ") WHICH HAS BEEN RECORDED AGAINST THE PROPERTY, SHALL BE VOIDABLE AT THE ELECTION OF THE CITY, AND SHALL ENTITLE THE CITY TO EXERCISE ITS OPTION TO PURCHASE THE PROPERTY. TO DETERMINE WHO AN ELIGIBLE HOUSEHOLD IS, AND WHAT THE ADJUSTED RESALE PRICE AND AFFORDABLE UNIT COST ARE, YOU SHOULD CONTACT THE HOUSING DIVISION OF THE CITY OF DUBLIN. YOU SHOULD READ THE RESALE RESTRICTION AGREEMENT. YOU MAY OBTAIN A COPY FROM THE CITY OF DUBLIN OR FROM THE ESCROW COMPANY. YOU SHOULD ALSO BE AWARE THAT A DEED OF TRUST HAS BEEN RECORDED AGAINST THE PROPERTY TO ENSURE COMPLIANCE WITH THE RESALE RESTRICTION AGREEMENT. YOU MAY OBTAIN COPIES OF THE DEED OF TRUST FROM THE CITY OF DUBLIN OR FROM THE ESCROW COMPANY. IN CONNECTION WITH THE PURCHASE OF THIS PROPERTY, YOU WILL BE REQUIRED TO ASSUME THE OWNER'S OBLIGATIONS UNDER THE RESALE RESTRICTION AGREEMENT OR TO EXECUTE A SUBSTANTIALLY SIMILAR DOCUMENT. I HAVE READ THE FOREGOING AND I UNDERSTAND WHAT IT MEANS. Borrower Borrower Exhibit 1 FTHLP BMR LORRA -2013 Exhibit D: Disclosure Statement EXHIBIT 1. LOAN, OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE EXHIBIT E FORM OF REQUEST FOR NOTICE OF DEFAULT Recording requested by and when recorded mail to: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE §§6103,27383 Escrow Number: Loan Number: (Space Above This Line For Recorder's Use Only) REQUEST FOR NOTICE UNDER SECTION 2924b CIVIL CODE In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. 201XXXXXXX recorded concurrent herewith in the Official Records of Alameda County, California, and describing land therein as Address, Dublin, California 94568: (See attached legal description) Executed by Owner(s), as Trustor, in which Bank is named as Lender, with Trustee as Trustee, and Beneficiary as Beneficiary, be mailed to the City of Dublin, 100 Civic Plaza, Dublin, California 94568, Attn.: City Manager City Manager NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY TO THE ADDRESS CONTAINED IN THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A NEW REQUEST MUST BE RECORDED. Exhibit 1_FTHLP BMR_LORRA -2013 Exhibit E: Request for Notice of Default EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Recording requested by and when recorded mail to: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE § §6103, 27383 Space above this line for Recorder's (Or I)& DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING AND SECURITY AGREEMENT \ City of Dublin First -Time Homebuyer Program �tt'' (Inclusionary Units) THERE ARE RESTRICTIONS ON THE USE OF THE PROPERTY ENCUMBERED BY THIS DEED OF TRUST. THERE ARE LIMITATIONS ON THE EXTENT TO WHICH THIS PROPERTY MAY BE ENCUMBERED BY JUNIOR FINANCING AND UPON TRUSTOR'S RIGHTS TO REFINANCE EXISTING MORTGAGES. THE SALE OF THIS PROPERTY IS LIMITED TO INCOME- ELIGIBLE HOUSEHOLDS AT A RESTRICTED PRICE PURSUANT TO THE CITY OF DUBLIN FIRST -TIME HOMEBUYER PROGRAM. CERTAIN OBLIGATIONS OF THE TRUSTOR SURVIVE THE REPAYMENT OF THE LOAN SECURED BY THIS INSTRUMENT. This Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement ( "Deed of Trust ") is made as of DATE ( "Effective Date ") by BORROWER (collectively, "Trustor ") to TITLE COMPANY (the "Trustee ") whose business address is TITLE COMPANY ADDRESS for the benefit of The City of Dublin a municipal corporation ( "Beneficiary "). WHEREAS, Trustor is the owner of the real property located at PROPERTY ADDRESS in the City of Dublin, Alameda County, California, 94568 and more particularly described in Exhibit A attached hereto and incorporated herein; WHEREAS, to assist Trustor in the acquisition of such property, Beneficiary provided a low- interest, deferred payment loan in the original principal amount of LOAN AMOUNT 001100 Dollars ($00.00) (the "Loan ") funded by Beneficiary's First -Time Homebuyer Program; WHEREAS, in connection with the Loan, Trustor and Beneficiary entered into a Loan, Occupancy, Refinancing and Resale Restriction Agreement with Option to Purchase dated as of the Effective Date and recorded in the Official Records of Alameda County substantially concurrently herewith (the "Resale Restriction Agreement "), and Trustor executed and delivered to Beneficiary a Secured Promissory Note dated as of the Effective Date (the "Note "); and FTH BMR DEED—SAMPLE Page 1 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT WHEREAS, among other provisions, the Resale Restriction Agreement provides that (i) the Property may be sold only to an Eligible Household at a restricted affordable price (as such terms are defined in the Resale Restriction Agreement, (ii)Trustor and subsequent owners of the Property are obligated to use the Property as their Principal Residence (as defined in the Resale Restriction Agreement); (iii) there are restrictions on the ability of Trustor and subsequent Property owners to encumber and refinance the Property; (iv) Beneficiary has an option to purchase the Property upon the occurrence of specified events, including without limitation, the occurrence of an Event of Default under the Resale Restriction Agreement or the receipt of a Notice of Intent to Transfer the Property (as defined in the Resale Restriction Agreement); and (v) an equity share is payable to Beneficiary upon the first sale or other conveyance of the Property following the expiration of the term of the resale price restrictions. NOW THEREFORE, to secure repayment of the Loan and the full and timely performance of Trustor's obligations under the Note and the Resale Restriction Agreement, it is agreed as follows. 1. Grant in Trust. Trustor, in consideration of the indebtedness herein recited and the trust herein created, hereby irrevocably and unconditionally grants, transfers, conveys and assigns to Trustee in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all of Trustor's right, title and interest now held or hereafter acquired in and to the following: (a) all of that certain real property located at PROPERTY ADDRESS in Dublin, California in the County of Alameda and the State of California, which is more particularly described in Exhibit A, attached hereto and incorporated herein by this reference(the "Land "); (b) all buildings, improvements and fixtures now or hereafter erected on the Property and all replacements and additions thereto ( "Improvements "); (c) all easements, rights of way, appurtenances and other rights used in connection with the Property or as a means of access thereto ( "Appurtenances "); (d) all fixtures now or hereafter attached to or used in and about the Property or the Improvements or hereafter located or constructed on the Property, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the Improvements in any manner ( "Fixtures and Equipment "); and (e) all leases, subleases, licenses and other agreements relating to use or occupancy of the Property ( "Leases ") and all rents or other payments which may now or hereafter accrue or otherwise become payable to or for the benefit of Trustor ( "Rents ") (whether or not such Leases and Rents are permitted pursuant to the Resale Restriction Agreement). All of the above - referenced Property, Improvements, Appurtenances, Fixtures and Equipment, Leases and Rents are herein referred to collectively as the "Property." 2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of all of the following (the "Secured Obligations "): (i) all present and future indebtedness evidenced by the Note (including all principal, interest, shared appreciation and all other amounts payable pursuant to the Note) and all amendments, modifications, extensions and renewals of the Note; (ii) all present and future obligations of Trustor set forth in this Deed of Trust or in the Resale Restriction Agreement; (iii) all additional present and future obligations of Trustor to Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iv) all modifications, supplements, amendments, renewals, and extensions of any of the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary's interests under this Deed of Trust. Certain obligations set forth in the Resale Restriction Agreement survive the repayment of the Note, and this FTH BMR DEED—SAMPLE Page 2 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Deed of Trust secures such surviving obligations, which include, without limitation: the restrictions upon resale price and refinancing set forth in the Resale Restriction Agreement, and the obligation to pay an equity share payment to Beneficiary upon the first sale of the Property following the expiration of the resale price restrictions set forth in the Resale Restriction Agreement. 3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Subject to the prohibition on the lease or rental of the Property as set forth in the Resale Restriction Agreement, Beneficiary hereby confers upon Trustor a license to collect and retain such rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys' fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary's right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and /or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land and Improvements, Beneficiary shall not be deemed to be a "mortgagee in possession," shall not be responsible for performing any obligation of the lessor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it , and unless due solely to the willful misconduct or gross negligence of Beneficiary, shall not be responsible for any dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property. 4. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the Uniform Commercial Code ( "UCC ") with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of Alameda County and shall also operate from the date of such filing as a fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the UCC. The full name of Trustor and the mailing address of Trustor are set forth in Section 9.7 of this Deed of Trust. TRUSTOR REPRESENTATIONS, WARRANTIES AND COVENANTS FTH BMR DEED—SAMPLE Page 3 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT 5.1. Trustor's Estate. Trustor represents and covenants that Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property. Trustor agrees to warrant and defend generally the title of the Property against all claims and demands subject to any declarations, easements, or restrictions listed in the schedule of exceptions to coverage in any title insurance policy insuring Beneficiary's interest in the Property. 5.2 Repayment of Sums Owed under Note and Resale Restriction Agreement. Trustor will promptly pay to Beneficiary when due all sums payable under the Note and the Resale Restriction Agreement, including all principal, interest and other sums payable thereunder. 5.3 Performance of Covenants. Trustor will observe and perform all of Trustor's covenants and agreements set forth in the Resale Restriction Agreement, the Note, this Deed of Trust and all other instruments secured by the Property. 5.4 Maintenance of the Property. Trustor agrees (a) to keep the Property in good repair and in decent, safe, sanitary, tenantable condition and repair and permit no waste thereof; (b) not to commit or suffer to be done or exist on or about the Land any condition causing the Property to become less valuable; (c) to repair, restore or rebuild promptly any buildings or improvements on the Land that may become damaged or be destroyed while subject to the lien of this Deed of Trust; (d) to comply with all applicable laws, ordinances and governmental regulations affecting the Property or requiring any alteration or improvement thereof, and not to suffer or permit any violations of any such law, ordinance or governmental regulation, nor of any covenant, condition or restriction affecting the Property; and (e) not to initiate or acquiesce in any change in any zoning or other land use or legal classification which affects any of the Property without the Beneficiary's written consent. If there arises a condition in contravention of this Section, and if the Trustor has not cured such condition within thirty (30) days after receiving a Beneficiary notice of such a condition, then in addition to any other rights available to the Beneficiary, the Beneficiary shall have the right (but not the obligation) to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property to recover its cost of cure. 5.5 Appear and Defend. Trustor shall appear in and defend any action or proceeding purporting to affect the Property or the rights or powers of the Beneficiary or Trustee, and shall pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which the Beneficiary or Trustee may appear, and in any suit brought by the Beneficiary to foreclose this Deed of Trust. 5.6 Charges; Liens. Trustor shall pay prior to delinquency all taxes, assessments, and other charges, fines, and impositions affecting the Property directly to the payee thereof. Upon request of Beneficiary, Trustor shall promptly furnish to Beneficiary copies of all notices of such amounts due and shall promptly furnish to Beneficiary receipts evidencing all such payments made. Trustor shall pay when due each obligation secured by or reducible to a lien, charge or encumbrance which now does or later may encumber or appear to encumber all or part of the Property or any interest therein, whether or not such lien, charge or encumbrance is or would be senior or subordinate to this Deed of Trust. Trustor shall not be required to pay any tax, charge or assessment so long as Trustor is actively contesting its validity in good faith and by appropriate legal proceedings which will operate to prevent the enforcement of the lien or forfeiture of the FTH BMR DEED—SAMPLE Page 4 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Property or any part thereof. Trustor shall post security for the payment of such contested claims as may be requested by the Beneficiary. 5.7 Insurance. Trustor shall keep the Land and the Improvements insured by a standard all -risk property insurance policy in an amount equal to the replacement value of the Property with loss payable to the Beneficiary. The insurance carrier providing such insurance shall be licensed to do business in the State of California and may be chosen by Trustor, subject to approval by Beneficiary. All insurance policies and renewals thereof will be in a form acceptable to the Beneficiary, and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lien and the Beneficiary as their interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive thirty (30) days advance written notice of the cancellation, expiration or termination or any material change in the coverage afforded by any of the insurance policies required under this Section. Unless otherwise permitted by the Beneficiary in writing, insurance proceeds, subject to the rights of the holder of any senior lien, will be applied to restoration or repair of the Property damaged. If the Property is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to Trustor that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Property or to pay amounts due under the Resale Restriction Agreement and the Note. If the Property is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Property prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition, subject to the rights of the holder of any senior lien. Renewal policies and any replacement policies, together with premium receipts satisfactory to the Beneficiary, shall be delivered to the Beneficiary at least thirty (30) days prior to the expiration of existing policies. Neither Trustee nor the Beneficiary shall by reason of accepting, rejecting, approving or obtaining insurance incur any liability for the existence, nonexistence, form or legal sufficiency of such insurance, or solvency of any insurer for payment of losses. 5.8 Use of Property. Trustor shall not permit or suffer the use of any of the Property for any purpose other than as a single family residential dwelling. IT IS MUTUALLY AGREED THAT: 6.1. Protection of Beneficiary's Security. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Beneficiary's interest in the Property, including, but not limited to, eminent domain, insolvency, code FTH BMR DEED—SAMPLE Page 5 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT enforcement, arrangements or proceedings involving a bankrupt or decedent, foreclosure of any mortgage secured by the Property or sale of the Property under a power of sale of any instrument secured by the Property, then Beneficiary, at Beneficiary's option, upon notice to Trustor, may make such appearance, disburse such sums and take such action as is necessary to protect Beneficiary's interest, including, but not limited to, the purchase of insurance, disbursement of reasonable attorney's fees and entry upon the Property to make repairs. Any amounts disbursed by Beneficiary pursuant to this Section, with interest thereon, shall become additional indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and Beneficiary agree to other terms of payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting payment thereof, and shall bear interest from the date of disbursement at the highest rate permissible under applicable law. Nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. 6.2 Inspection. Beneficiary or its agent may make or cause to be made reasonable entries upon and inspections of the Property. Beneficiary shall give Trustor notice at the time of or prior to any such inspection specifying reasonable cause for the inspection 6.3 Awards and Damages. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (a) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (b) any damage to or destruction of the Property or any part thereof by insured casualty, and (c) any other injury or damage to all or any part of the Property, are hereby assigned to and shall be paid to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any such sums and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall determine at its option. The Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for its disposition. Application of all or any part of the amounts collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. If the Property is abandoned by Trustor, or if, after notice by Beneficiary to Trustor that the condemnor offers to make an award or settle a claim for damages, Trustor fails to respond to Beneficiary within thirty (30) days after the date such notice is mailed, Beneficiary is authorized to collect and apply the proceeds, at Beneficiary's option, either to restoration or repair of the Property or to the sum secured by this Deed of Trust. 6.4 Prohibition on Transfers of Interest. With the exception of the transfers permitted pursuant to Section 6.9 below, if all or any part of the Property or an interest therein is sold or transferred by Trustor without Beneficiary's prior written consent, Beneficiary may, at Beneficiary's option, declare all sums secured by this Deed of Trust to be immediately due and payable. If Beneficiary exercises such option to accelerate, Beneficiary shall mail Trustor notice of acceleration in accordance with Sections 7.2 and 9.7 hereof. Such notices shall provide a period of not less than 30 days from the date the notice is mailed within which Trustor may pay the sums declared due. If Trustor fails to pay such sums prior to the expiration of such period, Beneficiary may, without further notice or demand on Trustor, invoke any remedies permitted by Section 7.2(a) hereof. FTH BMR DEED—SAMPLE Page 6 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT 6.5 Sale or Forbearance. No sale of the Property, forbearance on the part of Beneficiary or extension of the time for payment of the indebtedness hereby secured shall operate to release, discharge, waive, modify, change or affect the liability of Trustor either in whole or in part. 6.6 Beneficiary's Rights to Release. Without affecting the liability of any person for payment of any indebtedness hereby secured (other than any person released pursuant hereto), including without limitation any one or more endorsers or guarantors, and without affecting the lien hereof upon any of the Property not released pursuant hereto, at any time and from time to time without notice: (a) Beneficiary may in its sole discretion: (i) release any person now or hereafter liable for payment of any or all such indebtedness, (iii) extend the time for or agree to alter the terms of payment of any or all of such indebtedness, and (iii) release or accept additional security for such indebtedness, or subordinate the lien or charge hereof; and (b) Trustee, acting pursuant to the written request of the Beneficiary, may reconvey all or any part of the Property, consent to the making of any map or plot of the Land, join in granting any assessment thereon, or join in any such agreement of extension or subordination. 6.7 Reconveyance. Upon payment of all sums secured by this Deed of Trust, Beneficiary shall request Trustee to reconvey the Property and shall surrender this Deed of Trust and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty and without charge to the person or persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. The recitals in the reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. 6.8 Requirement of Owner - Occupancy. Trustor shall occupy the Property as Trustor's principal place of residence in accordance with the Resale Restriction Agreement. 6.9 Permitted Transfers. The following transfers shall not be deemed to be a default hereunder: (a) The transfer of the Property to the surviving joint tenant by devise, descent or operation of the law, on the death of a joint tenant. (b) A transfer of the Property where the spouse or domestic partner of Trustor becomes a co- owner of the Property. (c) A transfer of the Property resulting from a decree of dissolution of marriage, legal separation or from an incidental property settlement agreement by which the spouse of Trustor becomes an owner of the Property. (d) A transfer to an inter vivos or living trust in which the Trustor is and remains the beneficiary of the trust and the occupant of the Property. (e) A sale, conveyance, or other transfer when following such sale, conveyance or transfer, the original Trustor retains ownership of at least 50% of the Property. (f) A transfer to an Eligible Household (as defined in the Resale Restriction Agreement) in accordance with Section 4.3.1 of the Resale Restriction Agreement. FTH BMR DEED—SAMPLE Page 7 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT EVENTS OF DEFAULT 7.1 Events of Default. Any one or more of the following events shall constitute a default under this Deed of Trust: (a) Failure to use the Property as Trustor's Principal Residence in violation of the Resale Restriction Agreement; (b) The sale, conveyance, or other transfer of the Property (including a foreclosure sale), if following such sale, conveyance or transfer, Trustor's remaining ownership interest in the Property is less than fifty percent (50 %), except as provided in Section 6.9. (c) A event of default arises under any other loan secured by the Property and such default remains uncured following the expiration of any applicable cure period. (d) Trustor encumbers or refinances the Property in violation of the Resale Restriction Agreement. (e) Trustor fails to observe or perform any other covenant, condition, or agreement to be observed or performed by Trustor pursuant to the Note, the Resale Restriction Agreement or this Deed of Trust, including without limitation, the failure to pay any sum due pursuant to any such document. (f) Trustor declares bankruptcy or makes an assignment of assets for the benefit of creditors. 7.2 Acceleration and Sale. (a) Default; Remedies. Upon Trustor's breach of any covenant or agreement of Trustor under the Note, the Resale Restriction Agreement or this Deed of Trust (including without limitation, Trustor's encumbrance or refinancing of the Property in violation of the foregoing agreements) Beneficiary shall mail notice to Trustor as provided in Section 9.7 hereof specifying: (i) the nature of the breach; (ii) the action required to cure such breach; (iii) a date no less than thirty (30) days from the date the notice is mailed to Trustor by which such breach must be cured; and (iv) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the Loan and the sale of the Property. The notice shall further inform Trustor of Trustor's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Trustor to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Beneficiary at Beneficiary's option may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale; (b) commence an action to foreclose this Deed of Trust as a mortgage; and (c) pursue any other remedy permitted under California law. Beneficiary shall be entitled to collect from the Trustor, or from the proceeds of the sale of the Property, all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. FTH BMR DEED—SAMPLE Page 8 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT (b) Trustor's Right to Reinstate. Notwithstanding Beneficiary's acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of the judgment enforcing this Deed of Trust if: (1) Trustor pays Beneficiary all sums which would be then due under this Deed of Trust and the Note, had no acceleration occurred; (2) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, remedies including, but not limited to, reasonable attorneys' fees; and (3) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary's interest in the Property and Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. (c) Sale. After delivery to Trustee of a Notice of Default and Demand for Sale and after the expiration of such time and the giving of such notice of default and sale as may then be required by law, and without demand on Trustor, Trustee shall sell the Property at the time and place of sale fixed by it in said notice of sale, at public auction to the highest bidder for cash in lawful money of the United States of America, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Any person, including Trustor, Trustee or the Beneficiary, may purchase at such sale. Upon such sale by Trustee it shall deliver to such purchaser its deed conveying the Property so sold, but without any covenant or warranty expressed or implied. The recitals in such deed of any matters or facts shall be conclusive proof of their truthfulness. Upon sale by Trustee and after deducting all costs, expenses and fees of Trustee, Trustee shall apply the proceeds of sale to the payment of the indebtedness hereby secured, including without limitation the indebtedness evidenced by the Note, any advances made or costs or expenses paid or incurred by Beneficiary under this Deed of Trust, any indebtedness evidenced by any other instrument hereby secured, and all other sums then secured hereby, including without limitation, payment of interest, Excess Sale Proceeds and an equity share as provided in the Resale Restriction Agreement and the Note, in such order as the Beneficiary shall direct; and then the remainder, if any, shall be paid to the person or persons legally entitled thereto. (d) Assignment of Rents; Appointment of Receiver; Beneficiary in Possession. Upon acceleration under Section 7.2(a) or abandonment of the Property, Beneficiary (in person, by agent or by judicially appointed receiver) shall be entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property (if any) including those past due. All rents collected by Beneficiary or the Receiver shall be applied first to payment of the costs of management of the Property and collection of rents including, but not limited to, receiver's fees, premiums on receiver's bonds and reasonable attorney's fees, and then to the sums secured by this Deed of Trust. Beneficiary and the receiver shall be liable to account only for those rents actually received. The provisions of this paragraph and Section 7.2(a) shall operate subject to the claims of prior lien holders. 7.3 Remedies Cumulative; No Waiver. No exercise of any right or remedy by the Beneficiary or Trustee hereunder shall constitute a waiver of any other right or remedy herein contained or provided by law, and no delay or forbearance by the Beneficiary or Trustee in exercising any such right or remedy hereunder shall operate as a waiver thereof or preclude the exercise thereof in any continued or subsequent default FTH BMR DEED—SAMPLE Page 9 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT hereunder. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 7.4 Trustee Substitution. The irrevocable power to appoint a substitute trustee or trustees hereunder is hereby expressly granted to the Beneficiary, to be exercised at any time hereafter, without specifying any reason therefore, by filing for record in the office where this Deed of Trust is recorded a deed of appointment, and said power of appointment of successor trustee or trustees may be exercised as often as and whenever the Beneficiary deems advisable. The exercise of said power of appointment, no matter how often, shall not be deemed an exhaustion thereof, and upon recording of such deed or deeds of appointment, the trustee or trustees so appointed shall thereupon, without further act or deed of conveyance, succeed to and become fully vested with identically the same title and estate in and to the Property hereby conveyed and with all the rights, powers, trusts and duties of the predecessor in the trust hereunder, with the like effect as if originally named as trustee or as one of the trustees. 8. SUBORDINATION. This Deed of Trust shall be subordinate to the liens of the senior deeds of trust to be recorded against the Property, and any deed of trust held by the California Housing Finance Agency. MISCELLANEOUS PROVISIONS 9.1 Successors and Assigns. The covenants and agreements contained in this Deed or Trust shall bind, and the benefit and advantages hereunder shall inure to, the respective heirs, executors, administrators, successors and assigns of the parties; provided however, nothing in this Section is intended to or shall modify any restrictions on assignment set forth herein or in the Note or Resale Restriction Agreement. As used herein, the words "the Beneficiary" means the present Beneficiary or any future owner or holder, including a pledgee of the indebtedness secured hereby. 9.2 Headings; Gender, Number. The captions and headings used in this Deed of Trust are inserted only for convenience of reference and in no way define, limit, or describe the scope or intent of this Deed of Trust, or of any particular provision thereof, or the proper construction thereof. Wherever used, the singular number shall include the plural, and the plural the singular, and the use of any gender shall be applicable to all genders. 9.3 Approvals in Writing. Except as otherwise specifically provided herein, whenever any approval, notice, direction, consent, request or other action by the Beneficiary is required or permitted under this Deed of Trust, such action shall be in writing. 9.4 Joint and Several Obligations. If more than one person has executed this Deed of Trust as Trustor, the obligations of all such persons hereunder shall be joint and several. 9.5 Severability. If any provision of this Deed of Trust shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in anyway be affected or impaired thereby. FTH BMR DEED—SAMPLE Page 10 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT 9.6 Indemnification. Trustor agrees to indemnify, defend (with counsel approved by Beneficiary) and hold the Beneficiary, its elected and appointed officers, officials, agents and employees ( "Indemnitees ") harmless from and against any and all losses, damages, claims, actions, demands, judgments, penalties, costs and expenses (including reasonable attorneys' fees) and liabilities (all of the foregoing, collectively "Claims ") which the Indemnitees may sustain or suffer directly or indirectly as a result of or arising in connection with (i) Trustor's failure to perform any obligations as and when required by the Note, the Resale Restriction Agreement, or this Deed of Trust, (ii) the failure at any time of any of Trustor's representations and warranties made in connection with the Loan to be true and correct, or (iii) any action or omission by Indemnitees in connection with this Deed of Trust, except to the extent any such Claim arises due to the gross negligence or willful misconduct of Indemnitees. 9.7 Notices. Except for any notice required under applicable law to be given in another manner (a) any notice to Trustor provided for in this Deed of Trust shall be given by mailing such notice by certified mail directed to the Property Address or any other address Trustor designates by notice to Beneficiary as provided herein; and, (b) any notice to Beneficiary shall be given by certified mail, return receipt requested, to Beneficiary's mailing address stated herein or to such other address as Beneficiary may designate by notice to Trustor as provided herein. Any notice provided for in this Deed of Trust shall deem to have been given to Trustor or Beneficiary when given in the manner designated herein. Beneficiary: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Treasurer Trustor: BORROWER MAILING ADDRESS Dublin, CA 94568 9.8 Beneficiary Statement. Beneficiary may collect a fee for furnishing the beneficiary statement in an amount not to exceed the amount as provided by Section 2943 of the Civil Code of California. 9.9 Governing Law. This Deed of Trust shall be governed by the laws of the State of California. IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above. TRUSTOR BORROWER FTH BMR DEED—SAMPLE Page 11 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT SIGNATURES MUST BE NOTARIZED. FTH BMR DEED—SAMPLE Page 12 of 12 Rev 32011 EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT NOTARY ACKNOWLEDGMENT [Insert Here] EXHIBIT 2. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Exhibit A: LEGAL DESCRIPTION [Insert here] EXHIBIT 3. SECURED PROMISSORY NOTE NOTICE TO BORROWER: THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING USE OF THE PROPERTY, REFINANCING, AND ASSUMPTIONS c-ir tai tar � 1 i I +�11. SECURED PROMISSORY NOTE City of Dublin First -Time Homebuyer Program (Inclusionary Units) Loan No.: # #-## Borrower Property Address Dublin, California 94568 Loan Amount: $00.00 Together with Excess Sale Proceeds and Equity Share Date: Date FOR VALUE RECEIVED, the undersigned, Borrower as appear on deed (collectively, "Borrower ") promises to pay to THE CITY OF DUBLIN, a municipal corporation ( "Lender ") at 100 Civic Plaza, Dublin, California 94568, or such other place as Lender may from time to time designate by written notice to Borrower, in lawful money of the United States, the principal sum of Loan Amount Written 001100 Dollars ($00.00), together with simple interest accruing at the rate of three and one -half percent (3.5 %) per annum from the date of this Note until paid in full, plus (i) any amount payable to Lender pursuant to Section 7.6 of the Resale Restriction Agreement (defined below) and (ii) any amount payable to Lender pursuant to Section 22 of the Resale Restriction Agreement. This Secured Promissory Note (this "Note ") is secured by that certain Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement (the "Deed of Trust ") dated as of the date hereof, executed by Borrower and recorded against the Property (defined below) in the Official Records of Alameda County. In addition to securing Borrower's obligation to repay the sums payable pursuant to this Note, the Deed of Trust secures Borrower's obligations set forth in that certain Loan, Occupancy, Refinancing and Resale Restriction Agreement with Option to Purchase (the "Resale Restriction Agreement ") dated as of the date hereof, executed by Borrower and Lender, and recorded against the Property. 1. Purpose of Loan. Borrower is purchasing the residential real property located at Property Address in the City of Dublin, Alameda County, California (the "Property ") as more particularly described in Exhibit A of the Deed of Trust. Lender has provided a loan in the principal amount of this Note (the "Loan ") to Borrower pursuant to Lender's First -Time Homebuyer Program. The Resale Restriction Agreement restricts the resale price of the Property and provides that Borrower is obligated to pay Excess Sale Proceeds (as defined in Section 7.6 of the Resale Restriction Agreement) to Lender if the Property is sold at a price greater than the restricted price. The Resale Restriction Agreement also provides that upon the first sale of the Property following the expiration of the resale price restrictions, a share of the appreciation (the "City's Equity Share ") as defined in Section 22 of the Resale Restriction Agreement) is payable to Lender. This Note evidences FTH BMR PROMISSORY NOTE SAMPLE 4- Rev 312011 EXHIBIT 3. SECURED PROMISSORY NOTE Borrower's obligation to pay to Lender: (i) the principal sum of this Note and the interest accrued thereon, (ii) any Excess Sale Proceeds owed to Lender pursuant to Section 7.6 of the Resale Restriction Agreement, and (iii) any City's Equity Share payable by Borrower pursuant to Section 22 of the Resale Restriction Agreement. 2. Loan Repayment. The entire outstanding principal balance of this Note, together with accrued interest and all other sums due hereunder, shall be due and payable in full in one lump sum upon the earliest to occur of: (i) the thirtieth (30th) anniversary of the date of this Note, (ii) the sale, transfer, lease or encumbrance of all or any interest in the Property (other than as permitted pursuant to the Deed of Trust and the Resale Restriction Agreement), (iii) the refinancing of any senior mortgage secured by the Property or the encumbrance of the Property with junior financing which results in "cash out" to Borrower in excess of the cost of Eligible Capital Improvements approved by City in accordance with the Resale Restriction Agreement, or (iv) the occurrence of an Event of Default. 3. Due on Sale; Restrictions on Refinancing and Assumption. This Note is payable in full upon sale or refinancing of the Property (except as permitted pursuant to the Resale Restriction Agreement), and may not be assumed except under the limited circumstances set forth in Section 4.3.1 of the Resale Restriction Agreement. 4. Events of Default; Acceleration of Payment. An Event of Default permitting Lender to declare all sums payable hereunder (including, as applicable, any Excess Sale Proceeds and the City's Equity Share) immediately due and payable and to exercise all remedies available to Lender pursuant to the Resale Restriction Agreement and the Deed of Trust shall arise upon the occurrence of any of the following: (a) Borrower fails to use the Property as Borrower's Principal Residence in accordance with the Resale Restriction Agreement; (b) The sale, transfer, conveyance, lease or encumbrance of the Property in violation of the Resale Restriction Agreement or the Deed of Trust; (c) An event of default arises under any other loan secured by the Property and such default remains uncured following the expiration of any applicable cure period; (d) Borrower refinances the Property in violation of the Resale Restriction Agreement; (e) Borrower fails to pay when due any sum payable pursuant to this Note and such failure remains uncured fifteen (15) days beyond the due date for such payment; or (f) An Event of Default arises under the Deed of Trust or the Resale Restriction Agreement and remains uncured beyond any applicable cure period. 5. Default Rate of Interest. Upon the occurrence of an Event of Default, the interest rate payable hereunder shall increase to the rate of ten percent (10 %) per annum commencing upon the date of such Event of Default. FTH BMR PROMISSORY NOTE SAMPLE -2- Rev 312011 EXHIBIT 3. SECURED PROMISSORY NOTE 6. Application of Payments. All payments received on account of this Note shall be applied first to accrued interest, next to the reduction of principal, and the remainder shall be applied to Excess Sale Proceeds and City's Equity Share (to the extent applicable). 7. Attorney's Fees. Borrower agrees to pay all costs and expenses, including reasonable attorney's fees, which Lender may incur in the collection or enforcement of this Note, whether or not suit is filed. 8. No Offset; Borrower's Waivers. Borrower hereby waives any rights of offset it now has or may hereafter have against Lender, its successors and assigns, and agrees to make the payments called for hereunder in accordance with the terms of this Note. Borrower hereby waives diligence, presentment, protest, and demand, and notice of protest, notice of dishonor and notice of nonpayment of this Note, and expressly waives any rights to be released by reason of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waives the right to plead any and all statutes of limitation as a defense to any demand on this Note. 9. Notices. Except as may be otherwise specified herein, any approval, notice, direction, consent, request or other action by the Lender shall be in writing and shall be communicated to the Borrower at the address of the Property, or at such other place or places as the Borrower shall designate to the Lender in writing, from time to time, for the receipt of communications from the Lender. Mailed notices shall be deemed delivered and received five (5) working days after deposit in the United States mail in accordance with this provision. Lender: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Treasurer Borrower: Borrower Mailing Address Dublin, CA 94568 10. Prepayment. Borrower may prepay this Note in full at any time without premium or penalty, so long as Borrower pays the entire outstanding principal balance together with the interest accrued thereon and all other sums payable hereunder. 11. Governing Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 12. Severability. If any provision of this Note shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in anyway be affected or impaired thereby. 13. No Waiver by Lender; Remedies Cumulative. No waiver of any breach, default or failure of condition under the Note, the Resale Restriction Agreement, or the Deed of Trust shall be FTH BMR PROMISSORY NOTE SAMPLE -3- Rev 312011 EXHIBIT 3. SECURED PROMISSORY NOTE implied from Lender's failure or delay in declaring a default or exercising any of Lender's rights or remedies with respect to such breach, default or failure, or from any previous waiver of any similar or unrelated breach, default or failure, nor shall acceptance by Lender of any payment hereunder constitute a waiver of Lender's right to require prompt payment of any remaining amounts owed. Without limiting the generality of the foregoing, Lender's failure or delay in declaring any amount due hereunder shall not constitute a waiver of Lender's right to declare such sum due for the same or any subsequent event that triggers Borrower's payment obligations hereunder. Any waiver of any term or provision of the Note, the Resale Restriction Agreement, or the Deed of Trust, or any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. The rights and remedies of the parties hereunder are cumulative, and the exercise or failure to exercise one or more of such rights or remedies by either party shall not preclude the exercise by it, at the same time or different times, of any right or remedy for the same default or any other default. 14. Joint and Several Obligations. If this Note is executed by more than one person as Borrower, the obligations of each shall be joint and several. 15. Assignment by Lender; Successors and Assigns. Lender may assign its rights to receive the proceeds under this Note to any person or entity, and upon notice to Borrower of such assignment, all payments shall be made to the assignee. The promises and agreements herein contained shall bind and inure to the benefit of, as applicable, the respective heirs, executors, administrators, successors and assigns of the parties; provided however, Borrower may not assign this Note without Lender's written consent except in accordance with the Resale Restriction Agreement and the Deed of Trust. 16. Entire Agreement; Amendments in Writing. This Note, together with the Resale Restriction Agreement and the Deed of Trust sets forth the entire understanding and agreement of Borrower and Lender with respect to the subject matter hereof. Any amendment to this Note must be in writing signed by both Lender and Borrower. 17. Non - liability for Negligence, Loss or Damage. Borrower acknowledges and agrees that the relationship between Borrower and Lender is solely that of borrower and lender, and that Lender neither undertakes nor assumes any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on or inform Borrower of the quality, adequacy or suitability of the Property or any other matter. Lender owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction, or any condition of the Property, and Borrower agrees that neither Borrower nor any of Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against Lender for any loss, damage or other matter arising out of or resulting from any condition of the Property. FTH BMR PROMISSORY NOTE SAMPLE -4- Rev 312011 EXHIBIT 3. SECURED PROMISSORY NOTE Executed as of the date first written above. BORROWER Borrower Date FTH BMR PROMISSORY NOTE SAMPLE -5- Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT Recording requested by and when recorded mail to: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE § §6103, 27383 Space above this line for Recorder's Use LOAN AND EQUITY SHARE AGREEMENT City of Dublin First -Time Homebuyer Program (Market -Rate Units) NOTICE TO BORROWER: THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING USE OF THE PROPERTY, REFINANCING, AND ASSUMPTIONS This Loan and Equity Share Agreement (this "Agreement ") is entered into as of Date, ( "Effective Date ") by and between the City of Dublin, a municipal corporation ( "City ") and Borrower(s) (collectively, "Borrower ") regarding certain improved real property located at Property Address, Dublin, California 94568 and further described in Exhibit A attached hereto (hereinafter the "Property "). RECITALS WHEREAS, to further its goal of creating affordable home ownership opportunities for first -time homebuyers whose household income does not exceed 120% of the Alameda County median income, the City has initiated a First -Time Homebuyer Program (the "Program "), pursuant to which City provides deferred payment loans to assist first -time buyers to purchase a home in the City of Dublin; WHEREAS, Borrower qualifies as an Eligible Homebuyer under the Program, has certified that Borrower intends to live in the Property as an owner occupant, and has agreed to maintain the Property as Borrower's Principal Residence (as defined below); WHEREAS, City has agreed to provide a loan to Borrower upon the terms and conditions set forth herein which loan shall be evidenced by a Secured Promissory Note executed by Borrower and dated as of the date hereof (the "Note ") and secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by Borrower, dated as of the date hereof, and recorded substantially concurrently herewith in the Official Records of Alameda County (the "Deed of Trust "); and WHEREAS, in order to fulfill the goals of the Program and maintain the City's ability to assist first - time homebuyers, it is necessary to restrict the use of the Property and under certain circumstances, to require payment of an equity share upon resale of the Property. These restrictions are intended to prevent purchasers from using the Property for purposes incompatible with the Program. The terms and conditions Exhibit 4_FTHMR_Loan- and- Equity -Agmt -1- Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT set forth in this Agreement are intended to ensure that the Program loan is used for housing affordable to Eligible Homebuyers. NOW THEREFORE, in consideration of the benefits received by the Borrower and the public purposes served by the Program, Borrower and City agree as follows. 1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below. Additional terms are defined in the Recitals and text of this Agreement. (a) "Borrower" is defined in the preamble to this Agreement. (b) "Eligible Homebuyer" means a homebuyer whose income does not exceed One Hundred and Twenty percent (120 %) of the Area Median Income adjusted for household size as published by the California Department of Housing and Community Development ( "HCD") for the County of Alameda /Federal Housing Administration (115% AMI) and who otherwise meets the requirements of the Program. Trust. (c) "City Documents" means collectively, this Agreement, the Note and the Deed of (d) "Program" is defined in the Recitals. (e) "Property" is defined in the preamble to this Agreement. (f) "Principal Residence" shall mean the place where the Borrower resides on a substantially full -time basis, for not less than ten (10) months per calendar year. 2. Loan Terms. City has agreed to provide a loan in the amount of amount dollars ($00,000) (the "Loan ") upon the terms and conditions set forth in the City Documents to assist Borrower to purchase the Property. Borrower acknowledges that the City Documents provide for, among other requirements, owner - occupancy requirements, restrictions on assignment of the Loan, and a requirement that under certain circumstances, Borrower shall pay to City a share of appreciation of the Property. As more particularly set forth herein and in the Note, the Loan terms include the following: (a) Interest Rate. Interest shall accrue on the principal balance of the Loan commencing upon the date of origination of the Note at the rate of three and one -half percent (3.5 %) simple interest per annum. As set forth in Section 5 below, Borrower shall be obligated to pay the greater of the accrued interest or the Equity Share. (b) Repayment; Due on Sale or Refinancing. The entire principal balance of the Loan together with all interest and other sums accrued pursuant to the City Documents (including without limitation, the Interest or Equity Share payable pursuant to Section 5) shall be due and payable in full upon the date (the "Due Date ") which is the earliest of: (i) the thirtieth (30th) anniversary of the date of the Note, (ii) the sale, transfer, lease or encumbrance of all or any interest in the Property (other than as permitted pursuant to the Deed of Trust and this Agreement), (iii) the occurrence of an Event of Default, or (iv) the refinancing or repayment in full of any senior mortgage secured by the Property. Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT (c) Term of this Agreement. This Agreement shall continue in effect until the entire principal balance of the Loan together with all interest and other sums accrued pursuant to the City Documents (including without limitation, the Interest or Equity Share payable pursuant to Section 5) is paid in full. (d) Prepayment. The Loan may be prepaid in full at any time without penalty or premium provided that all sums payable pursuant to the City Documents are paid in full, including without limitation, the Interest or Equity Share payable pursuant to Section 5. 3. Borrower Representations, Warranties and Covenants. Borrower hereby represents, warrants and covenants that all of the following are true: (i) the financial and other information provided to City in order to qualify to purchase the Property is true and correct as of the Effective Date; (ii) Borrower shall occupy the Property as his or her principal place of residence throughout the period during which the Loan is outstanding, (iii) Borrower is a first -time homebuyer as described in the City of Dublin First -Time Homebuyer Program Guidelines; and (iv) Borrower will fully cooperate by promptly providing to the City all information requested by the City to assist in monitoring Borrower's compliance with this Agreement. 4. Occupancy of Property. Borrower covenants and agrees that Borrower shall occupy the Property as Borrower's principal place of residence throughout the term of the Loan, and shall not rent or lease the Property or portion thereof during the term of the Loan. Borrower shall be considered as occupying the Property as Borrower's principal residence if Borrower is living in the Property for at least ten (10) months out of each calendar year. Borrower shall annually provide a written certification to the City, in form provided by City, that Borrower is occupying the Property as Borrower's principal place of residence and that Borrower is not renting or leasing the Property to another party, and shall provide such documents and other evidence as City may reasonably request to verify compliance with the requirements of this Section. 5. Equity Share or Interest. On the Due Date (as defined in Section 2(b)), in addition to repaying the principal amount of the Loan, Borrower shall pay the greater of: (i) simple interest accruing on the outstanding principal balance of the Loan at the rate of three and one -half percent (3.5 %) per year commencing upon the date of the Note and continuing until paid in full; or (ii) an equity share calculated in accordance with the formula set forth below (the "Equity Share "). Interest for any partial year during the term of the Note shall be calculated on the basis of a 365 -day year. The Equity Share shall be considered contingent interest on the principal amount of the Loan. The Equity Share shall be equal to the sum resulting from dividing the original principal amount of the Loan by the Original Purchase Price and then multiplying that percentage by the Appreciation Amount. "Original Purchase Price" means the purchase price paid by Borrower to purchase the Property. The parties agree that the Original Purchase Price equals the sum of amount dollars ($000,000). "Fair Market Value" means the greater of: (a) the contract sale price or the actual price paid for the Property (whichever is greater) by a bona fide third party purchaser in an arms length transaction, or (b) the fair market value of the Property as determined by an appraiser certified and licensed by the State of California, selected by Borrower and approved by City. Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT "Appreciation Amount" means the amount calculated by subtracting the Original Purchase Price and the Cost of Eligible Capital Improvements (as defined in Section 5.1) from the Fair Market Value. As an illustration, if the Original Purchase Price was $400,000 and the principal amount of the Loan was $40,000, then the percentage of appreciation that the Borrower would owe would be $400,000 divided by $40,000 = 10 %. If upon resale the Fair Market Value of the Property is $600,000 and the Cost of Eligible Capital Improvements is $25,000, then the Appreciation Amount would be $600,000 minus $25,000 minus $400,000 = $175,000. The Equity Share payable by the Borrower would 10% of $175,000 = $17,500. 5.1 Eligible Capital Improvements. For purposes of calculating the Equity Share pursuant to Section 5, the "Cost of Eligible Capital Improvements" means the original actual cost of capital improvements made to the Property (i.e., improvements that add to the value of the home, prolong its useful life, or adapt it to new uses) only if (i) the work to install or construct the capital improvements has been performed with and pursuant to all required permits, and (ii) the cost of the capital improvements has been verified by City in writing no later than sixty (60) days following completion of the work. City agrees that it shall issue such written verification to Borrower within ten (10) business days following City's receipt of all reasonably required documentation including copies of permits and proof of payment for the construction or installation of the capital improvements. Exhibit B attached hereto includes a list of capital improvements that will be accepted by City. Borrower may wish to consult Internal Revenue Service Publication 523 (2006) for additional information regarding capital improvements. 6. Assignment. The City may assign any or all of its rights and obligations under this Agreement, the Note, or the Deed of Trust, to any person or entity without the consent of Borrower, and after such assignment, references to the City herein shall be references to the assignee. Borrower may not assign any of its rights or obligations under this Agreement, the Note, or the Deed of Trust to any person or entity without the express prior written consent of the City. 7. Subordination /CaIHFA Held Mortgage. This Agreement shall be subordinate to the lien of any purchase money deed of trust recorded contemporaneously herewith and any deed of trust recorded against the Property for the benefit of the California Housing Finance Agency. City agrees that in order to assist qualified purchasers to secure purchase money financing for the acquisition of the Property, the City will enter into a subordination agreement with a senior purchase money lender to subordinate this Agreement under such terms as the City and the senior purchase money lender shall negotiate. Any subordination agreement to be executed by City shall include notice and cure rights for City regarding any defaults in the mortgage to which the City is subordinating. 8. Default and Remedies. An Event of Default shall arise hereunder upon the occurrence of any of the following: (a) Borrower's representations made in this Agreement or in Borrower's application for the Loan are determined to be materially false or misleading. (b) Borrower fails to use the Property as Borrower's Principal Residence; Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT (c) The sale, conveyance, or transfer of the Property (including a sale under a deed of trust in the event of foreclosure) if following such sale, conveyance or transfer, Borrower's remaining ownership interest in the Property is less than fifty percent (50 %) except as permitted pursuant to Section 6.9 of the Deed of Trust. (d) An event of default arises under any other loan secured by the Property and such default remains uncured following the expiration of any applicable cure period; (e) Borrower fails to pay when due any sum payable pursuant to the Note or this Agreement, and such failure remains uncured fifteen (15) days beyond the due date for such payment; (f) A lien is recorded against the Property other than the lien of a bona fide first mortgage loan or junior loan approved by City; (g) An Event of Default arises under the Deed of Trust or the Note and remains uncured beyond any applicable cure period; or (h) Borrower declares bankruptcy or makes an assignment of assets for the benefit of creditors. Upon the occurrence of an Event of Default, City may exercise any remedies available under law or in equity, including without limitation, any or all of the following, none of which shall be an exclusive remedy: (a) Declare the Loan immediately due and payable without further demand and accelerate payments due under the Note; (b) Invoke the power of sale under the Deed of Trust; (c) Apply to a court of competent jurisdiction for such relief at law or in equity as may be appropriate; and (d) Declare a default under the Note and Deed of Trust and pursue all City remedies under such documents. 9. Notices. Except as otherwise specified in this Agreement, all notices required to be sent pursuant to this Agreement shall be made by personal delivery or by deposit in the United States mail, first - class, postage prepaid, and shall be deemed to have been delivered and received on the date of personal delivery or five (5) days after deposit in the mail, if sent to the following address: City: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: Housing Division Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT Borrower: Name Mailing Address Dublin, CA 94568 10. Attorneys' Fees. If either party initiates legal proceedings to interpret or enforce its rights under this Agreement, the prevailing party in such action shall be entitled to an award of reasonable attorneys' fees and costs in additions to any other recovery to which such party is entitled under this Agreement. 11. Nonliability for Negligence, Loss or Damage. Borrower acknowledges and agrees that the relationship between Borrower and City is solely that of a borrower and the administrator of a loan program, and that City neither undertakes nor assumes any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on or inform Borrower of the quality, adequacy or suitability of the Property or any other matter. City owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction, or any condition of the Property, and Borrower agrees that neither Borrower nor any of Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against City for any loss, damage or other matter arising out of or resulting from any condition of the Property. 12. Governing Law. This Agreement shall be construed in accordance with and be governed by the laws of the State of California. 13. Severability. If any provision of this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in anyway be affected or impaired thereby. 14. No Waiver; Remedies Cumulative. No waiver of any breach, default or failure of condition under the City Documents, shall be implied from City's failure or delay in declaring a default or exercising any of City's rights or remedies with respect to such breach, default or failure, or from any previous waiver of any similar or unrelated breach, default or failure. Any waiver of any term or provision of the City Documents must be made in writing and shall be limited to the express written terms of such waiver. The rights and remedies of the parties hereunder are cumulative, and the exercise or failure to exercise one or more of such rights or remedies by either party shall not preclude the exercise by it, at the same time or different times, of any right or remedy for the same default or any other default. 15. Joint and Several Obligations. If this Agreement is executed by more than one person as Borrower, the obligations of each shall be joint and several. 16. Entire Agreement; Amendments in Writing. This Agreement, together with the Note and the Deed of Trust sets forth the entire understanding and agreement of Borrower and City with respect to the subject matter hereof. Any amendment to this Agreement must be in writing signed by both City and Borrower. SIGNATURES ON NEXT PAGE Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ATTEST: City Clerk BORROWER Borrower CITY City of Dublin, a California municipal corporation City Manager SIGNATURES MUST BE NOTARIZED. Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT NOTARY ACKNOWLEDGMENT [Insert Here] Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT EXHIBIT A: LEGAL DESCRIPTION [Insert here] Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 4. LOAN AND EQUITY SHARE AGREEMENT EXHIBIT B: EXAMPLES OF CAPITAL IMPROVEMENTS (Based upon Internal Revenue Service Publication 523.) Improvements. These add to the value of the home, prolong its useful life, or adapt it to new uses. The cost of additions and other improvements is added to the owner's basis in the property. Examples. Putting a recreation room or another bathroom in an unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving an unpaved driveway are improvements. An addition to the house, such as a new deck, a sunroom, or a new garage, is also an improvement. The following chart lists some other examples of improvements Additions Heating & Air Conditioning Bedroom Heating system Bathroom Central air conditioning Deck Furnace Garage Duct work Porch Central humidifier Patio Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence Retaining wall Sprinkler system Swimming pool Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system lumbing eptic system /ater heater oft water system Itration system nterior mprovements 3uilt -in appliances Citchen modernization - looring Nall -to -wall carpeting nsulation oors pes and duct work Improvements no longer part of home. The adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Exhibit 4_FTHMR_Loan- and- Equity -Agmt Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Recording requested by and when recorded mail to: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE § §6103, 27383 Space above this line for Recorder's Use DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING AND SECURITY AGREEMENT City of Dublin First -Time Homebuyer Program (Market -Rate Units) THERE ARE RESTRICTIONS ON THE USE OF THE PROPERTY ENCUMBERED BY THIS DEED OF TRUST. THERE ARE LIMITATIONS ON THE EXTENT TO WHICH THIS PROPERTY MAY BE ENCUMBERED BY JUNIOR FINANCING AND UPON TRUSTOR'S RIGHTS TO REFINANCE EXISTING MORTGAGES THIS DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING AND SECURITY AGREEMENT ( "Deed of Trust ") is made as of Date of signing ( "Effective Date ") by Borrower(s) Name (collectively, "Trustor ") to City of Dublin (the "Trustee ") whose business address is 100 Civic Plaza, Dublin, California 94568, for the benefit of THE CITY OF DUBLIN a municipal corporation ( "Beneficiary "). WHEREAS, Trustor is the owner of the real property located at Property Address in the City of Dublin, Alameda County, California, and more particularly described in Exhibit A attached hereto and incorporated herein; WHEREAS, to assist Trustor in the acquisition of such property, Beneficiary provided a deferred payment loan in the original principal amount of Loan Amount Written dollars ($00,000) (the "Loan ") funded by Beneficiary's First -Time Homebuyer Program; WHEREAS, in connection with the Loan, Trustor and Beneficiary entered into a Loan and Equity Share Agreement dated as of the Effective Date and recorded in the Official Records of Alameda County substantially concurrently herewith (the "Loan Agreement ") and Trustor executed and delivered to Beneficiary a Secured Promissory Note dated as of the Effective Date (the "Note "); WHEREAS, among other provisions, the Loan Agreement provides that during the term of the Loan: (i)Trustor is obligated to use the Property as Trustor's Principal Residence (as defined in the Loan Agreement); (ii) there are restrictions on Trustor's ability to encumber the property and to refinance the existing loans secured thereby; and (iii) upon repayment of the Loan and upon the occurrence of specified Exhibit 5_FTHMR_Deed -of -Trust -1- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT events, Trustor is obligated to pay to Beneficiary a sum equal to the greater of interest accrued on the Loan or an Equity Share (as defined in the Loan Agreement). NOW THEREFORE, to secure repayment of the Loan and the full and timely performance of Trustor's obligations under the Note and the Loan Agreement, it is agreed as follows. 1. Grant in Trust. Trustor, in consideration of the indebtedness herein recited and the trust herein created, hereby irrevocably and unconditionally grants, transfers, conveys and assigns to Trustee in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all of Trustor's right, title and interest now held or hereafter acquired in and to the following: (a) all of that certain real property located at Property Address in Dublin, California in the County of Alameda and the State of California, which is more particularly described in Exhibit A, attached hereto and incorporated herein by this reference (the "Land "); (b) all buildings, improvements and fixtures now or hereafter erected on the Property and all replacements and additions thereto ( "Improvements "); (c) all easements, rights of way, appurtenances and other rights used in connection with the Property or as a means of access thereto ( "Appurtenances "); (d) all fixtures now or hereafter attached to or used in and about the Property or the Improvements or hereafter located or constructed on the Property, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the Improvements in any manner ( "Fixtures and Equipment "); and (e) all leases, subleases, licenses and other agreements relating to use or occupancy of the Property ( "Leases ") and all rents or other payments which may now or hereafter accrue or otherwise become payable to or for the benefit of Trustor ( "Rents ") (whether or not such Leases and Rents are permitted pursuant to the Loan Agreement). All of the above - referenced Property, Improvements, Appurtenances, Fixtures and Equipment, Leases and Rents are herein referred to collectively as the "Property." 2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of all of the following (the "Secured Obligations "): (i) all present and future indebtedness evidenced by the Note (including all principal, interest, shared appreciation and all other amounts payable pursuant to the Note) and all amendments, modifications, extensions and renewals of the Note; (ii) all present and future obligations of Trustor set forth in this Deed of Trust or in the Loan Agreement; (iii) all additional present and future obligations of Trustor to Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iv) all modifications, supplements, amendments, renewals, and extensions of any of the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary's interests under this Deed of Trust. 3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Subject to the prohibition on the lease or rental of the Property as set forth in the Loan Agreement, Beneficiary hereby confers upon Trustor a license to collect and retain such rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and Exhibit 5_FTHMR_Deed -of -Trust -2- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys' fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary's right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and /or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land and Improvements, Beneficiary shall not be deemed to be a "mortgagee in possession," shall not be responsible for performing any obligation of the lessor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it , and unless due solely to the willful misconduct or gross negligence of Beneficiary, shall not be responsible for any dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property. 4. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the Uniform Commercial Code ( "UCC ") with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of Alameda County and shall also operate from the date of such filing as a fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the UCC. The full name of Trustor and the mailing address of Trustor are set forth in Section 9.7 of this Deed of Trust. 5. TRUSTOR REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 Trustor's Estate. Trustor represents and covenants that Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property. Trustor agrees to warrant and defend generally the title of the Property against all claims and demands subject to any declarations, easements, or restrictions listed in the schedule of exceptions to coverage in any title insurance policy insuring Beneficiary's interest in the Property. 5.2 Repayment of Sums Owed under Note and Loan Agreement. Trustor will promptly pay to Beneficiary when due all sums payable under the Note and the Loan Agreement, including all principal, interest and shared appreciation required by the Note. The Note contains the following provisions concerning payment of interest and shared appreciation: [On the Due Date], in addition to repaying the principal amount of this Note, Borrower shall pay the greater of: (i) simple interest accruing on the outstanding principal balance of the Loan at the rate of three and one -half percent (3.5 %) per year commencing upon the date of this Note until Exhibit 5_FTHMR_Deed -of -Trust -3- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT paid in full ( "Interest "); or (ii) an equity share calculated in accordance with the formula set forth below (the "Equity Share "). Interest for any partial year during the term of this Note shall be calculated on the basis of a 365 -day year. The Equity Share shall be considered contingent interest on the principal due hereunder. The Equity Share shall be equal to the sum resulting from dividing the original principal amount of the Loan by the Original Purchase Price and then multiplying that percentage by the Appreciation Amount. "Original Purchase Price" means the purchase price paid by Borrower to purchase the Property. The parties agree that the Original Purchase Price equals the sum of Sale Amount Written dollars ($000,000). "Fair Market Value" means the greater of: (a) the contract sale price or the actual price paid for the Property (whichever is greater) by a bona fide third party purchaser in an arms length transaction, or (b) the fair market value of the Property as determined by an appraiser certified and licensed by the State of California, selected by Borrower and approved by Lender. "Appreciation Amount" means the amount calculated by subtracting the Original Purchase Price and the Cost of Eligible Capital Improvements (as defined in Section 5.1 of the Loan Agreement) from the Fair Market Value. As an illustration, if the Original Purchase Price was $400,000 and the principal amount of the Loan was $40,000, then the percentage of appreciation that the Borrower would owe would be $400,000 divided by $40,000 = 10 %. If upon resale the Fair Market Value of the Property is $600,000 and the Cost of Eligible Capital Improvements is $25,000, then the Appreciation Amount would be $600,000 minus $25,000 minus $400,000 = $175,000. The Equity Share payable by the Borrower would 10% of $175,000 = $17,500. 5.3 Performance of Covenants. Trustor will observe and perform all of Trustor's covenants and agreements set forth in the Loan Agreement, the Note, this Deed of Trust and all other instruments secured by the Property. 5.4 Maintenance of the Property. Trustor agrees (a) to keep the Property in good repair and in decent, safe, sanitary, tenantable condition and repair and permit no waste thereof; (b) not to commit or suffer to be done or exist on or about the Land any condition causing the Property to become less valuable; (c) to repair, restore or rebuild promptly any buildings or improvements on the Land that may become damaged or be destroyed while subject to the lien of this Deed of Trust; (d) to comply with all applicable laws, ordinances and governmental regulations affecting the Property or requiring any alteration or improvement thereof, and not to suffer or permit any violations of any such law, ordinance or governmental regulation, nor of any covenant, condition or restriction affecting the Property; and (e) not to initiate or acquiesce in any change in any zoning or other land use or legal classification which affects any of the Property without the Beneficiary's written consent. If there arises a condition in contravention of this Section, and if the Trustor has not cured such condition within thirty (30) days after receiving a Beneficiary notice of such a condition, then in addition to any other rights available to the Beneficiary, the Beneficiary shall have the right (but not the obligation) to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property to recover its cost of cure. Exhibit 5_FTHMR_Deed -of -Trust -4- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT 5.5 Appear and Defend. Trustor shall appear in and defend any action or proceeding purporting to affect the Property or the rights or powers of the Beneficiary or Trustee, and shall pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which the Beneficiary or Trustee may appear, and in any suit brought by the Beneficiary to foreclose this Deed of Trust. 5.6 Charges; Liens. Trustor shall pay prior to delinquency all taxes, assessments, and other charges, fines, and impositions affecting the Property directly to the payee thereof. Upon request of Beneficiary, Trustor shall promptly furnish to Beneficiary copies of all notices of such amounts due and shall promptly furnish to Beneficiary receipts evidencing all such payments made. Trustor shall pay when due each obligation secured by or reducible to a lien, charge or encumbrance which now does or later may encumber or appear to encumber all or part of the Property or any interest therein, whether or not such lien, charge or encumbrance is or would be senior or subordinate to this Deed of Trust. Trustor shall not be required to pay any tax, charge or assessment so long as Trustor is actively contesting its validity in good faith and by appropriate legal proceedings which will operate to prevent the enforcement of the lien or forfeiture of the Property or any part thereof. Trustor shall post security for the payment of such contested claims as may be requested by the Beneficiary. 5.7 Insurance. Trustor shall keep the Land and the Improvements insured by a standard all - risk property insurance policy in an amount equal to the replacement value of the Property with loss payable to the Beneficiary. The insurance carrier providing such insurance shall be licensed to do business in the State of California and may be chosen by Trustor, subject to approval by Beneficiary. All insurance policies and renewals thereof will be in a form acceptable to the Beneficiary, and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lien and the Beneficiary as their interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive thirty (30) days advance written notice of the cancellation, expiration or termination or any material change in the coverage afforded by any of the insurance policies required under this Section. Unless otherwise permitted by the Beneficiary in writing, insurance proceeds, subject to the rights of the holder of any senior lien, will be applied to restoration or repair of the Property damaged. If the Property is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to Trustor that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Property or to pay amounts due under the Loan Agreement and the Note. If the Property is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Property prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition, subject to the rights of the holder of any senior lien. Exhibit 5_FTHMR_Deed -of -Trust -5- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Renewal policies and any replacement policies, together with premium receipts satisfactory to the Beneficiary, shall be delivered to the Beneficiary at least thirty (30) days prior to the expiration of existing policies. Neither Trustee nor the Beneficiary shall by reason of accepting, rejecting, approving or obtaining insurance incur any liability for the existence, nonexistence, form or legal sufficiency of such insurance, or solvency of any insurer for payment of losses. 5.8 Use of Property. Trustor shall not permit or suffer the use of any of the Property for any purpose other than as a single family residential dwelling. 6. IT IS MUTUALLY AGREED THAT: 6.1. Protection of Beneficiary's Security. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Beneficiary's interest in the Property, including, but not limited to, eminent domain, insolvency, code enforcement, arrangements or proceedings involving a bankrupt or decedent, foreclosure of any mortgage secured by the Property or sale of the Property under a power of sale of any instrument secured by the Property, then Beneficiary, at Beneficiary's option, upon notice to Trustor, may make such appearance, disburse such sums and take such action as is necessary to protect Beneficiary's interest, including, but not limited to, the purchase of insurance, disbursement of reasonable attorney's fees and entry upon the Property to make repairs. Any amounts disbursed by Beneficiary pursuant to this Section, with interest thereon, shall become additional indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and Beneficiary agree to other terms of payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting payment thereof, and shall bear interest from the date of disbursement at the highest rate permissible under applicable law. Nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. 6.2 Inspection. Beneficiary or its agent may make or cause to be made reasonable entries upon and inspections of the Property. Beneficiary shall give Trustor notice at the time of or prior to any such inspection specifying reasonable cause for the inspection 6.3 Awards and Damages. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (a) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (b) any damage to or destruction of the Property or any part thereof by insured casualty, and (c) any other injury or damage to all or any part of the Property, are hereby assigned to and shall be paid to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any such sums and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall determine at its option. The Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for its disposition. Application of all or any part of the amounts collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. If the Property is abandoned by Trustor, or if, after notice by Beneficiary to Trustor that the condemnor offers to make an award or settle a claim for damages, Trustor fails to respond to Beneficiary within thirty (30) days after the date such notice is mailed, Beneficiary is Exhibit 5_FTHMR_Deed -of -Trust -6- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT authorized to collect and apply the proceeds, at Beneficiary's option, either to restoration or repair of the Property or to the sum secured by this Deed of Trust. 6.4 Prohibition on Transfers of Interest. With the exception of the transfers permitted pursuant to Section 6.9 below, if all or any part of the Property or an interest therein is sold or transferred by Trustor without Beneficiary's prior written consent, Beneficiary may, at Beneficiary's option, declare all sums secured by this Deed of Trust to be immediately due and payable. If Beneficiary exercises such option to accelerate, Beneficiary shall mail Trustor notice of acceleration in accordance with Sections 7.2 and 9.7 hereof. Such notices shall provide a period of not less than 30 days from the date the notice is mailed within which Trustor may pay the sums declared due. If Trustor fails to pay such sums prior to the expiration of such period, Beneficiary may, without further notice or demand on Trustor, invoke any remedies permitted by Section 7.2(a) hereof. 6.5 Sale or Forbearance. No sale of the Property, forbearance on the part of Beneficiary or extension of the time for payment of the indebtedness hereby secured shall operate to release, discharge, waive, modify, change or affect the liability of Trustor either in whole or in part. 6.6 Beneficiary's Rights to Release. Without affecting the liability of any person for payment of any indebtedness hereby secured (other than any person released pursuant hereto), including without limitation any one or more endorsers or guarantors, and without affecting the lien hereof upon any of the Property not released pursuant hereto, at any time and from time to time without notice: (a) Beneficiary may in its sole discretion: (i) release any person now or hereafter liable for payment of any or all such indebtedness, (iii) extend the time for or agree to alter the terms of payment of any or all of such indebtedness, and (iii) release or accept additional security for such indebtedness, or subordinate the lien or charge hereof; and (b) Trustee, acting pursuant to the written request of the Beneficiary, may reconvey all or any part of the Property, consent to the making of any map or plot of the Land, join in granting any assessment thereon, or join in any such agreement of extension or subordination. 6.7 Reconveyance. Upon payment of all sums secured by this Deed of Trust, Beneficiary shall request Trustee to reconvey the Property and shall surrender this Deed of Trust and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty and without charge to the person or persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. The recitals in the reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. 6.8 Requirement of Owner - Occupancy. Until such time as all sums payable pursuant to the Note are paid in full, Trustor shall occupy the Property as Trustor's principal place of residence in accordance with the Loan Agreement. 6.9 Permitted Transfers. The following transfers shall not be deemed to be a default hereunder: (a) The transfer of the Property to the surviving joint tenant by devise, descent or operation of the law, on the death of a joint tenant. (b) A transfer of the Property where the spouse or domestic partner of Trustor becomes a co- owner of the Property. Exhibit 5_FTHMR_Deed -of -Trust -7- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT (c) A transfer of the Property resulting from a decree of dissolution of marriage, legal separation or from an incidental property settlement agreement by which the spouse of Trustor becomes an owner of the Property. (d) A transfer to an inter vivos or living trust in which the Trustor is and remains the beneficiary of the trust and the occupant of the Property. (e) A sale, conveyance, or other transfer when following such sale, conveyance or transfer, the original Trustor retains ownership of at least 50% of the Property. 7. EVENTS OF DEFAULT 7.1 Events of Default. Any one or more of the following events shall constitute a default under this Deed of Trust: (a) Failure to use the Property as Trustor's Principal Residence in violation of the Loan Agreement; (b) The sale, conveyance, or other transfer of the Property (including a foreclosure sale), if following such sale, conveyance or transfer, Trustor's remaining ownership interest in the Property is less than fifty percent (50 %), except as provided in Section 6.9. (c) An event of default arises under any other loan secured by the Property and such default remains uncured following the expiration of any applicable cure period. (d) Trustor encumbers or refinances the Property in violation of the Loan Agreement. (e) Trustor fails to observe or perform any other covenant, condition, or agreement to be observed or performed by Trustor pursuant to the Note, the Loan Agreement or this Deed of Trust, including without limitation, the failure to pay any sum due pursuant to any such document. (f) Trustor declares bankruptcy or makes an assignment of assets for the benefit of creditors. 7.2 Acceleration and Sale. (a) Default; Remedies. Upon Trustor's breach of any covenant or agreement of Trustor under the Note, the Loan Agreement or this Deed of Trust (including without Iimitation,Trustor's encumbrance or refinancing of the Property in violation of the foregoing agreements), Beneficiary shall mail notice to Trustor as provided in Section 9.7 hereof specifying: (i) the nature of the breach; (ii) the action required to cure such breach; (iii) a date no less than thirty (30) days from the date the notice is mailed to Trustor, by which such breach must be cured; and (iv) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the Loan and the sale of the Property. The notice shall further inform Trustor of Trustor's right to reinstate after acceleration and the right to bring a court action to Exhibit 5_FTHMR_Deed -of -Trust -8- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT assert the nonexistence of a default or any other defense of Trustor to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Beneficiary at Beneficiary's option may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale; (b) commence an action to foreclose this Deed of Trust as a mortgage; and (c) pursue any other remedy permitted under California law. Beneficiary shall be entitled to collect from the Trustor, or from the proceeds of the sale of the Property, all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. (b) Trustor's Right to Reinstate. Notwithstanding Beneficiary's acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of the judgment enforcing this Deed of Trust if: (1) Trustor pays Beneficiary all sums which would be then due under this Deed of Trust and the Note, had no acceleration occurred; (2) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, remedies including, but not limited to, reasonable attorneys' fees; and (3) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary's interest in the Property and Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. (c) Sale. After delivery to Trustee of a Notice of Default and Demand for Sale and after the expiration of such time and the giving of such notice of default and sale as may then be required by law, and without demand on Trustor, Trustee shall sell the Property at the time and place of sale fixed by it in said notice of sale, at public auction to the highest bidder for cash in lawful money of the United States of America, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Any person, including Trustor, Trustee or the Beneficiary, may purchase at such sale. Upon such sale by Trustee it shall deliver to such purchaser its deed conveying the Property so sold, but without any covenant or warranty expressed or implied. The recitals in such deed of any matters or facts shall be conclusive proof of their truthfulness. Upon sale by Trustee and after deducting all costs, expenses and fees of Trustee, Trustee shall apply the proceeds of sale to the payment of the indebtedness hereby secured, including without limitation the indebtedness evidenced by the Note, any advances made or costs or expenses paid or incurred by Beneficiary under this Deed of Trust, any indebtedness evidenced by any other instrument hereby secured, and all other sums then secured hereby, including without limitation, interest and shared appreciation as provided in the Note and Loan Agreement, in such order as the Beneficiary shall direct; and then the remainder, if any, shall be paid to the person or persons legally entitled thereto. (d) Assignment of Rents; Appointment of Receiver; Beneficiary in Possession. Upon acceleration under Section 7.2(a) or abandonment of the Property, Beneficiary (in person, by agent or by judicially appointed receiver) shall be entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property (if any) including those past due. All rents collected by Beneficiary or the Receiver shall be applied first to payment of the costs of management of the Property and collection of rents including, but not limited to, receiver's fees, premiums on receiver's bonds and reasonable attorney's fees, and then to the sums secured by this Deed of Trust. Beneficiary and the Exhibit 5_FTHMR_Deed -of -Trust -9- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT receiver shall be liable to account only for those rents actually received. The provisions of this paragraph and Section 7.2(a) shall operate subject to the claims of prior lien holders. 7.3 Remedies Cumulative; No Waiver. No exercise of any right or remedy by the Beneficiary or Trustee hereunder shall constitute a waiver of any other right or remedy herein contained or provided by law, and no delay or forbearance by the Beneficiary or Trustee in exercising any such right or remedy hereunder shall operate as a waiver thereof or preclude the exercise thereof in any continued or subsequent default hereunder. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 7.4 Trustee Substitution. The irrevocable power to appoint a substitute trustee or trustees hereunder is hereby expressly granted to the Beneficiary, to be exercised at any time hereafter, without specifying any reason therefore, by filing for record in the office where this Deed of Trust is recorded a deed of appointment, and said power of appointment of successor trustee or trustees may be exercised as often as and whenever the Beneficiary deems advisable. The exercise of said power of appointment, no matter how often, shall not be deemed an exhaustion thereof, and upon recording of such deed or deeds of appointment, the trustee or trustees so appointed shall thereupon, without further act or deed of conveyance, succeed to and become fully vested with identically the same title and estate in and to the Property hereby conveyed and with all the rights, powers, trusts and duties of the predecessor in the trust hereunder, with the like effect as if originally named as trustee or as one of the trustees. 8. SUBORDINATION. This Deed of Trust shall be subordinate to the lien of any purchase money deed of trust recorded contemporaneously herewith and any deed of trust held by the California Housing Finance Agency. 9. MISCELLANEOUS PROVISIONS 9.1 Successors and Assigns. The covenants and agreements contained in this Deed or Trust shall bind, and the benefit and advantages hereunder shall inure to, the respective heirs, executors, administrators, successors and assigns of the parties; provided however, nothing in this Section is intended to or shall modify any restrictions on assignment set forth herein or in the Note or Loan Agreement. As used herein, the words "the Beneficiary" means the present Beneficiary or any future owner or holder, including a pledgee of the indebtedness secured hereby. 9.2 Headings; Gender, Number. The captions and headings used in this Deed of Trust are inserted only for convenience of reference and in no way define, limit, or describe the scope or intent of this Deed of Trust, or of any particular provision thereof, or the proper construction thereof. Wherever used, the singular number shall include the plural, and the plural the singular, and the use of any gender shall be applicable to all genders. 9.3 Approvals in Writing. Except as otherwise specifically provided herein, whenever any approval, notice, direction, consent, request or other action by the Beneficiary is required or permitted under this Deed of Trust, such action shall be in writing. 9.4 Joint and Several Obligations. If more than one person has executed this Deed of Trust as Trustor, the obligations of all such persons hereunder shall be joint and several. Exhibit 5_FTHMR_Deed -of -Trust -10- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT 9.5 Severability. If any provision of this Deed of Trust shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in anyway be affected or impaired thereby. 9.6 Indemnification. Trustor agrees to indemnify, defend (with counsel approved by Beneficiary) and hold the Beneficiary, its elected and appointed officers, officials, agents and employees ( "Indemnitees ") harmless from and against any and all losses, damages, claims, actions, demands, judgments, penalties, costs and expenses (including reasonable attorneys' fees) and liabilities (all of the foregoing, collectively "Claims ") which the Indemnitees may sustain or suffer directly or indirectly as a result of or arising in connection with (i) Trustor's failure to perform any obligations as and when required by the Note, the Loan Agreement, or this Deed of Trust, (ii) the failure at any time of any of Trustor's representations and warranties made in connection with the Loan to be true and correct, or (iii) any action or omission by Indemnitees in connection with this Deed of Trust, except to the extent any such Claim arises due to the gross negligence or willful misconduct of Indemnitees. 9.7 Notices. Except for any notice required under applicable law to be given in another manner (a) any notice to Trustor provided for in this Deed of Trust shall be given by mailing such notice by certified mail directed to the Property Address or any other address Trustor designates by notice to Beneficiary as provided herein; and, (b) any notice to Beneficiary shall be given by certified mail, return receipt requested, to Beneficiary's mailing address stated herein or to such other address as Beneficiary may designate by notice to Trustor as provided herein. Any notice provided for in this Deed of Trust shall deem to have been given to Trustor or Beneficiary when given in the manner designated herein. Beneficiary: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Treasurer Trustor: Borrower Mailing Address Dublin, CA 94568 9.8 Beneficiary Statement. Beneficiary may collect a fee for furnishing the beneficiary statement in an amount not to exceed the amount as provided by Section 2943 of the Civil Code of California. 9.9 Governing Law. This Deed of Trust shall be governed by the laws of the State of California. Exhibit 5_FTHMR_Deed -of -Trust -11- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT above. IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written TRUSTOR Borrower SIGNATURES MUST BE NOTARIZED. Exhibit 5_FTHMR_Deed -of -Trust -12- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT NOTARY ACKNOWLEDGMENT [Insert Here] Exhibit 5_FTHMR_Deed -of -Trust -13- Rev 312011 EXHIBIT 5. DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING, AND SECURITY AGREEMENT Exhibit A: LEGAL DESCRIPTION [Insert here] Exhibit 5_FTHMR_Deed -of -Trust -14- Rev 312011 EXHIBIT 6. SECURED PROMISSORY NOTE NOTICE TO BORROWER: THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING USE OF THE PROPERTY, REFINANCING, AND ASSUMPTIONS col I 1rr 19 '2 SECURED PROMISSORY NOTE r�"i�. � 8 � City of Dublin First -Time Homebuyer Program l_ (Market Rate Units) Loan No.: ## Borrower Property Address Dublin, CA 94568 Loan Amount: $00,000 Together with Excess Sale Proceeds and Equity Share Date: Date FOR VALUE RECEIVED, the undersigned, Borrower(s) (collectively, "Borrower ") promises to pay to THE CITY OF DUBLIN, a municipal corporation ( "Lender ") at 100 Civic Plaza, Dublin, California 94568, or such other place as Lender may from time to time designate by written notice to Borrower, in lawful money of the United States, the principal sum of amount dollars ($00,000) together with the greater of Interest or Equity Share, each as defined below. This Secured Promissory Note (this "Note ") is secured by that certain Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement (the "Deed of Trust ") dated as of the date hereof, executed by Borrower and recorded against the Property (defined below) in the Official Records of Alameda County. In addition to securing Borrower's obligation to repay the sums payable pursuant to this Note, the Deed of Trust secures Borrower's obligations set forth in that certain Loan and Equity Share Agreement ( "Loan Agreement ") dated as of the date hereof, executed by Borrower and Lender, and recorded against the Property. 1. Purpose of Loan. Borrower is purchasing the residential real property located at Property Address in the City of Dublin, Alameda County, California (the "Property ") as more particularly described in Exhibit A of the Deed of Trust. Lender has provided a loan in the principal amount of this Note (the "Loan ") to Borrower pursuant to Lender's First -Time Homebuyer Program. This Note evidences Borrower's obligation to pay to Lender: (i) the principal sum of this Note, and (ii) the greater of Interest or the Equity Share determined pursuant to Section 3 of this Note. 2. Loan Repayment. The entire outstanding principal balance of this Note, together with the greater of Interest or Equity Share, and all other sums due hereunder, shall be due and payable in full in one lump sum upon the date (the "Due Date ") which is the earliest to occur of: (i) the thirtieth (30th) anniversary of the date of this Note, (ii) the sale, transfer, lease or encumbrance of all or any interest in the Property (other than as permitted pursuant to the Deed of Trust and the Loan Agreement), (iii) the refinancing or repayment in full of any senior mortgage secured by the Property, or (iv) the occurrence of an Event of Default. Exhibit 6_FTHMR_Promissory_Note -1- Rev 312011 EXHIBIT 6. SECURED PROMISSORY NOTE 3. Equity Share and Interest. On the Due Date (as defined in Section 2), in addition to repaying the principal amount of this Note, Borrower shall pay the greater of: (i) simple interest accruing on the outstanding principal balance of the Loan at the rate of three and one -half percent (3.5 %) per year commencing upon the date of this Note until paid in full ( "Interest "); or (ii) an equity share calculated in accordance with the formula set forth below (the "Equity Share "). Interest for any partial year during the term of this Note shall be calculated on the basis of a 365 -day year. The Equity Share shall be considered contingent interest on the principal due hereunder. The Equity Share shall be equal to the sum resulting from dividing the original principal amount of the Loan by the Original Purchase Price and then multiplying that percentage by the Appreciation Amount. "Original Purchase Price" means the purchase price paid by Borrower to purchase the Property. The parties agree that the Original Purchase Price equals the sum of amount dollars ($000,000). "Fair Market Value" means the greater of: (a) the contract sale price or the actual price paid for the Property (whichever is greater) by a bona fide third party purchaser in an arms length transaction, or (b) the fair market value of the Property as determined by an appraiser certified and licensed by the State of California, selected by Borrower and approved by Lender. "Appreciation Amount" means the amount calculated by subtracting the Original Purchase Price and the Cost of Eligible Capital Improvements (as defined in Section 5.1 of the Loan Agreement) from the Fair Market Value. As an illustration, if the Original Purchase Price was $400,000 and the principal amount of the Loan was $40,000, then the percentage of appreciation that the Borrower would owe would be $400,000 divided by $40,000 = 10 %. If upon resale the Fair Market Value of the Property is $600,000 and the Cost of Eligible Capital Improvements is $25,000, then the Appreciation Amount would be $600,000 minus $25,000 minus $400,000 = $175,000. The Equity Share payable by the Borrower would 10% of $175,000 = $17,500. 4. Due on Sale; Restrictions on Refinancing and Assumption. This Note is payable in full upon sale or refinancing of the Property, and may not be assumed except under the limited circumstances set forth in Section 6.9 of the Deed of Trust. 5. Events of Default; Acceleration of Payment. An Event of Default permitting Lender to declare all sums payable hereunder immediately due and payable and to exercise all remedies available to Lender pursuant to the Loan Agreement and the Deed of Trust shall arise upon the occurrence of any of the following: (a) Borrower fails to use the Property as Borrower's Principal Residence in accordance with the Loan Agreement; (b) The sale, conveyance, or transfer of the Property (including a sale under a deed of trust in the event of foreclosure) if following such sale, conveyance or transfer, Borrower's remaining ownership interest in the Property is less than fifty percent (50 %) except as permitted pursuant to Section 6.9 of the Deed of Trust; Exhibit 6_FTHMR_Promissory_Note -2- Rev 312011 EXHIBIT 6. SECURED PROMISSORY NOTE (c) An event of default arises under any other loan secured by the Property and such default remains uncured following the expiration of any applicable cure period; (d) Borrower refinances the Property in violation of the Loan Agreement; (e) Borrower fails to pay when due any sum payable pursuant to this Note and such failure remains uncured fifteen (15) days beyond the due date for such payment; or (f) An Event of Default arises under the Deed of Trust or the Loan Agreement and remains uncured beyond any applicable cure period. 6. Default Rate of Interest. Upon the occurrence of an Event of Default, the interest rate payable hereunder shall increase to the rate of ten percent (10 %) per annum commencing upon the date of such Event of Default. 7. Application of Payments. All payments received on account of this Note shall be applied first to accrued Interest or the Equity Share, as applicable, and the remainder shall be applied to the reduction of principal. 8. Attorney's Fees. Borrower agrees to pay all costs and expenses, including reasonable attorney's fees, which Lender may incur in the collection or enforcement of this Note, whether or not suit is filed. 9. No Offset; Borrower's Waivers. Borrower hereby waives any rights of offset it now has or may hereafter have against Lender, its successors and assigns, and agrees to make the payments called for hereunder in accordance with the terms of this Note. Borrower hereby waives diligence, presentment, protest, and demand, and notice of protest, notice of dishonor and notice of nonpayment of this Note, and expressly waives any rights to be released by reason of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waives the right to plead any and all statutes of limitation as a defense to any demand on this Note. 10. Notices. Except as may be otherwise specified herein, any approval, notice, direction, consent, request or other action by the Lender shall be in writing and shall be communicated to the Borrower at the address of the Property, or at such other place or places as the Borrower shall designate to the Lender in writing, from time to time, for the receipt of communications from the Lender. Mailed notices shall be deemed delivered and received five (5) working days after deposit in the United States mail in accordance with this provision. Lender: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Treasurer Borrower: Borrower Mailing Address Dublin, CA 94568 Exhibit 6_FTHMR_Promissory_Note -3- Rev 312011 EXHIBIT 6. SECURED PROMISSORY NOTE 11. Prepayment. Borrower may prepay this Note in full at any time without premium or penalty, so long as Borrower pays the entire outstanding principal balance together with the greater of accrued Interest or the Equity Share as determined pursuant to Section 3 and all other sums payable hereunder. 12. Governing Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 13. Severability. If any provision of this Note shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 14. No Waiver by Lender; Remedies Cumulative. No waiver of any breach, default or failure of condition under the Note, the Loan Agreement, or the Deed of Trust shall be implied from Lender's failure or delay in declaring a default or exercising any of Lender's rights or remedies with respect to such breach, default or failure, or from any previous waiver of any similar or unrelated breach, default or failure, nor shall acceptance by Lender of any payment hereunder constitute a waiver of Lender's right to require prompt payment of any remaining amounts owed. Without limiting the generality of the foregoing, Lender's failure or delay in declaring any amount due hereunder shall not constitute a waiver of Lender's right to declare such sum due for the same or any subsequent event that triggers Borrower's payment obligations hereunder. Any waiver of any term or provision of the Note, the Loan Agreement, or the Deed of Trust, or any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. The rights and remedies of the parties hereunder are cumulative, and the exercise or failure to exercise one or more of such rights or remedies by either party shall not preclude the exercise by it, at the same time or different times, of any right or remedy for the same default or any other default. 15. Joint and Several Obligations. If this Note is executed by more than one person as Borrower, the obligations of each shall be joint and several. 16. Assignment by Lender; Successors and Assigns. Lender may assign its rights to receive the proceeds under this Note to any person or entity, and upon notice to Borrower of such assignment, all payments shall be made to the assignee. The promises and agreements herein contained shall bind and inure to the benefit of, as applicable, the respective heirs, executors, administrators, successors and assigns of the parties; provided however, Borrower may not assign this Note without Lender's written consent except in accordance with the Loan Agreement and the Deed of Trust. 17. Entire Agreement; Amendments in Writing. This Note, together with the Loan Agreement and the Deed of Trust sets forth the entire understanding and agreement of Borrower and Lender with respect to the subject matter hereof. Any amendment to this Note must be in writing signed by both Lender and Borrower. 18. Nonliability for Negligence, Loss or Damage. Borrower acknowledges and agrees that the relationship between Borrower and Lender is solely that of borrower and lender, and that Lender neither undertakes nor assumes any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on or inform Borrower of the quality, adequacy or suitability of the Property or any other matter. Lender owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction, or any condition of the Property, and Borrower agrees that neither Borrower nor Exhibit 6_FTHMR_Promissory_Note -4- Rev 312011 EXHIBIT 6. SECURED PROMISSORY NOTE any of Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against Lender for any loss, damage or other matter arising out of or resulting from any condition of the Property. Executed as of the date first written above. BORROWER Borrower Exhibit 6_FTHMR_Promissory_Note -5- Rev 312011