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EXHIBIT 10.92
REGULATORY AGREEMENT FOR U.S. Department of Housing
MULTIFAMILY HOUSING PROJECTS and Urban Development
OFFICE OF HOUSING
FEDERAL HOUSING COMMISSIONER
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Under Sections 207,220,221(d)(4), 231 and 232, Except Nonprofits
Project No. 121-22032-ALF/REF
Mortgagee: RED MORTGAGE CAPITAL, INC.
Amount of Mortgage Note: $11,369,500.00 Date: December 12, 2000
Mortgage: Recorded: State: California County: Contra Costa
Date: December 12, 2000
Concurrently Herewith Book __ Page __
Originally endorsed for insurance under Section 232 pursuant to Section
223(f) of the National Housing Act, as amended.
This Agreement entered into this 12th day of December, 2000, between ARV
VALLEY VIEW, L.P., a California limited partnership whose address is 245 Fischer
Avenue, Suite D-1, Costa Mesa, California 92626, their successors, heirs, and
assigns (jointly and severally, hereinafter referred to as Owners) and the
undersigned SECRETARY OF HOUSING AND URBAN DEVELOPMENT and his successors
(hereinafter referred to as Secretary).
In consideration of the endorsement for insurance by the Secretary of
the above described note or in consideration of the consent of the Secretary to
the transfer of the mortgaged property or the sale and conveyance of the
mortgaged property by the Secretary, and in order to comply with the
requirements of the National Housing Act, as amended, and the Regulations
adopted by the Secretary pursuant thereto, Owners agree for themselves, their
successors, heirs and assigns, that in connection with the mortgaged property
and the project operated thereon and so long as the contract of mortgage
insurance continues in effect, and during such further period of time as the
Secretary shall be the owner, holder or reinsurer of the mortgage, or during any
time the Secretary is obligated to insure a mortgage on the mortgage property:
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1. Owners, except as limited by paragraph 17 hereof, assume and
agree to make promptly all payments due under the note and
mortgage.
2. (a) Owners shall establish or continue to maintain a reserve
fund for replacements by the allocation to such reserve fund in
a separate account with the mortgagee or in a safe and
responsible depository designated by the mortgagee, concurrently
with the beginning of payments towards amortization of the
principal of the mortgage insured or held by the Secretary of an
amount equal to $8,453.17 per month unless a different date or
amount is approved in writing by the Secretary. Said monthly
deposit consists of $4,978.84 for Realty and $3,496.83 for
Non-Realty. In addition, the Owner has made an initial deposit
to the fund of $235,728. Such fund, whether in the form of a
cash deposit or invested in obligations of, or fully guaranteed
as to principal by, the United States of America shall at all
times be under the control of the mortgagee. Disbursements from
such fund, whether for the purpose of effecting replacement of
structural elements and mechanical equipment of the project or
for any other purpose, may be made only after receiving the
consent in writing of the Secretary. In the event that the owner
is unable to make a mortgage note payment on the due date and
that payment cannot be made prior to the due day of the next
such installment or when the mortgagee has agreed to forgo
making an election to assign the mortgage to the Secretary based
on a monetary default, or to withdraw an election already made,
the Secretary is authorized to instruct the mortgagee to
withdraw funds from the reserve fund for replacements to be
applied to the mortgage payment in order to prevent or cure the
default. In addition, in the event of a default in the terms of
the mortgage, pursuant to which the loan has been accelerated,
the Secretary may apply or authorize the application of the
balance in such fund to the amount due on the mortgage debt as
accelerated.
(b) Where Owners are acquiring a project already subject to an
insured mortgage, the reserve fund for replacements to be
established will be equal to the amount due to be in such fund
under existing agreements or charter provisions at the time
Owners acquire such project, and payments hereunder shall begin
with the first payment due on the mortgage after acquisition,
unless some other method of establishing and maintaining the
fund is approved in writing by the Secretary.
3. Real property covered by the mortgage and this agreement is
described in Exhibit A attached hereto.
(This paragraph 4 is not applicable to cases insured under
Section 232).
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5. (a) If the mortgage is originally a Secretary-held purchase money
mortgage, or is originally endorsed for insurance under any
Section other than Sections 231 or 232 and is not designed
primarily for occupancy by elderly persons, Owners shall not in
selecting tenants discriminate against any person or persons by
reason of the fact that there are children in the family.
(b) If the mortgage is originally endorsed for insurance under
Section 221, Owners shall in selecting tenants give to displaced
persons or families an absolute preference or priority of
occupancy which shall be accomplished as follows:
(1) For a period of sixty (60) days from the date of
original offering, unless a shorter period of
time is approved in writing by the Secretary,
all units shall be held for such preferred
applicants, after which time any remaining
unrented units may be rented to non-preferred
applicants;
(2) Thereafter, and on a continuing basis, such
preferred applicants shall be given preference
over non-preferred applicants in their placement
on a waiting list to be maintained by the
Owners; and
(3) Through such further provisions agreed to in
writing by the parties.
(c) Without the prior written approval of the Secretary not more
than 25% of the number of units in a project insured under
Section 231 shall be occupied by persons other than elderly
persons.
(d) All advertising or efforts to rent a project insured under
Section 231 shall reflect a bona fide effort of the Owners to
obtain occupancy by elderly persons.
6. Owners shall not without the prior written approval of the
Secretary:
(a) Convey, transfer, or encumber any of the mortgaged property,
or permit the conveyance, transfer or encumbrance of such
property.
(b) Assign, transfer, dispose of, or encumber any personal
property of the project, including rents, or pay out any funds
except from surplus cash, except for reasonable operating
expenses and necessary repairs.
(c) Convey, assign, or transfer any beneficial interest in any
trust holding title to the property, or the interest of any
general partner in a partnership owning the property, or any
right to manage or receive the rents and profits from the
mortgaged property.
(d) Remodel, add to, reconstruct, or demolish any part of the
mortgaged property or subtract from any real or personal
property of the project.
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(e) Make, or receive and retain, any distribution of assets or
any income of any kind of the project except surplus cash and
except on the following conditions:
(1) All distributions shall be made only as of and
after the end of a semiannual or annual fiscal
period, and only as permitted by the law of the
applicable jurisdiction;
(2) No distribution shall be made from borrowed
funds, prior to the completion of the project or
when there is any default under this Agreement
or under the note or mortgage;
(3) Any distribution of any funds of the project,
which the party receiving such funds is not
entitled to retain hereunder, shall be held in
trust separate and apart from any other funds;
and
(4) There shall have been compliance with all
outstanding notices of requirements for proper
maintenance of the project.
(f) Engage, except for natural persons, in any other business or
activity, including the operation of any other rental project,
or incur any liability or obligation not in connection with the
project.
(g) Require, as a condition of the occupancy or leasing of any
unit in the project, any consideration or deposit other than the
prepayment of the first month's rent plus a security deposit in
an amount not in excess of one month's rent to guarantee the
performance of the covenants of the lease. Any funds collected
as security deposits shall be kept separate and apart from all
other funds of the project in a trust account the amount of
which shall at all times equal or exceed the aggregate of all
outstanding obligations under said account.
(h) Permit the use of the dwelling accommodations or nursing
facilities of the project for any purpose except the use which
was originally intended, or permit commercial use greater than
that originally approved by the Secretary.
7. Owners shall maintain the mortgaged premises, accommodations and
the grounds and equipment appurtenant thereto, in good repair
and condition. In the event all or any of the buildings covered
by the mortgage shall be destroyed or damaged by fire or other
casualty, the money derived from any insurance on the property
shall be applied in accordance with the terms of the mortgage.
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8. Owners shall not file any petition in bankruptcy or for a
receiver or in insolvency or for reorganization or composition,
or make any assignment for the benefit of creditors or to a
trustee for creditors, or permit an adjudication in bankruptcy
or the taking possession of the mortgaged property or any part
thereof by a receiver or the seizure and sale of the mortgaged
property or any part hereof under judicial process or pursuant
to any power of sale, and fail to have such adverse actions set
aside within forty-five (45) days.
9. (a) Any management contract entered into by Owners or any of
them involving the project shall contain a provision that, in
the event of default hereunder, it shall be subject to
termination without penalty upon written request by the
Secretary. Upon such request Owners shall immediately arrange to
terminate the contract within a period of not more than thirty
(30) days and shall make arrangements satisfactory to the
Secretary for continuing proper management of the project.
(b) Payment for services, supplies, or materials shall not
exceed the amount ordinarily paid for such services, supplies,
or materials in the area where the services are rendered or the
supplies or materials furnished.
(c) The mortgaged property, equipment, buildings, plans,
offices, apparatus, devices, books, contracts, records,
documents, and other papers relating thereto shall at all times
be maintained in reasonable condition for proper audit and
subject to examination and inspection at any reasonable time by
the Secretary or his duly authorized agents. Owners shall keep
copies of all written contracts or other instruments which
affect the mortgaged property, all or any of which may be
subject to inspection and examination by the Secretary or his
duly authorized agents.
(d) The books and accounts of the operations of the mortgaged
property and of the project shall be kept in accordance with the
requirements of the Secretary.
(e) Within sixty (60) days following the end of each fiscal year
the Secretary shall be furnished with a complete annual
financial report based upon an examination of the books and
records of mortgagor prepared in accordance with the
requirements of the Secretary, prepared and certified to by an
officer or responsible Owner and, when required by the
Secretary, prepared and certified by a Certified Public
Accountant, or other person acceptable to the Secretary.