Case5:10-cv-01087-JW Document1 Filed03/15/10 Page1 of 65 1 SHELLEY S. BUCHANAN Attorney t Law 2 912 Cole Street, PMB #120 "k San Francisco, CA 94117 3 State Bar Number 178779 R` MA ' s 5 zDrO Tel. (415) 566-3526 o^HgRD 4 email 4buch na sh [email protected]^RmE^NO^srR ► CTaCI^^ &-r 5 CgUF^NIq Attorney for Plaintiffs 6 FRANCISCAN MOBILE HOME OWNERS FOR JUSTICE; ROSENDO QUINIQURQ; RORY MORDINOIA; 7 ROBERT QUINN; SANDRA HOLMAN and MAMIE ZHU B ^ R 9 IN THE UNITED STATES DISTRICT COURT 10 FOR THE NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 FRANCISCAN MOBILE HOME OWNERS C) Vase Nol. 0 OR 13 FOR JUSTICE; ROSENDO QUINIQUINI; ) 7 RORY MORDiNOIA; ROBERTQ UINN • COMPLAINT FOR DAMAS, ^*s 14 SANDRA HOLMAN; and MAMIE ZHU, } RESTITUTION, INJUNCTIVE RELIEF, And on behalf of all others similarly situated, } DISSOLUTION OF CORPORATION, 15 ) SPECIFIC PERFORMANCE Plaintiffs, ) DEMAND FOR JURY TRIAL 16 ) vs. } CLASS ACTION 17 ) LINC HOUSING CORPORATION; ) 1. Securities & Exchange Act of 1934, 18 CORPORATE FUND FOR HOUSING; ) Section 10(b), Rule 10(b)(5) LINC FRANCISCAN LIMITED PARTNERSHIP; ) 2. Fraud and Deceit 19 FRANCISCAN PARK, LLC; ) 3. Conspiracy to Commit Fraud HUNTER JOHNSON; FRANCISCAN )4, Negligent Misrepresentation 20 HOUSING CORPORATION; ) 5. Breach of Fiduciary Duty RICHARD BERGER; ) 6. Breach of Contract 2 1. DALY CITY HOUSING DEVELOPMENT ) 7. Negligence FINANCE AGENCY; PACIFIC WEST ) 8. Unfair Competition Law, Bus. & Prof. 22 MANAGEMENT; FRANCISCAN ACQUISITION ) Code § 17200 et seq. CORPORATION; DAVID KENYON; and ) 9. Involuntary Dissolution of Corporation, 23 DOES 1 through 50, Inclusive, ) Corp. Code § § 6510 et seq. 10. Constructive Trust 24 Defendants. ) 11. Specific Performance 12. Elder Abuse, W & Inst. Code § 15610 25 ) 13. Violation of Health & Safety Code § 34377.6 26 ) 27 28 1. Complaint for Damages, Restitution, Iniunctive Relief, Dissolution of Corporation and Specific Performance; Demand for Jury Trial
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Case5:10-cv-01087-JW Document1 Filed03/15/10 Page1 of 65
1 SHELLEY S. BUCHANANAttorney t Law
2 912 Cole Street, PMB #120 "kSan Francisco, CA 94117
3 State Bar Number 178779 R` MA's 5 zDrOTel. (415) 566-3526 o^HgRD
4 email4buch na sh [email protected] ^RmE^NO^srR►CTaCI^^ &-r5 CgUF^NIqAttorney for Plaintiffs
6 FRANCISCAN MOBILE HOME OWNERS FOR JUSTICE;ROSENDO QUINIQURQ; RORY MORDINOIA;
7 ROBERT QUINN; SANDRA HOLMAN and MAMIE ZHU
B ^ R
9 IN THE UNITED STATES DISTRICT COURT
10 FOR THE NORTHERN DISTRICT OF CALIFORNIA
11 SAN FRANCISCO DIVISION
12FRANCISCAN MOBILE HOME OWNERS C) Vase No l. 0 OR
13 FOR JUSTICE; ROSENDO QUINIQUINI; ) 7RORY MORDiNOIA; ROBERTQ UINN •COMPLAINT FOR DAMAS, ^*s
14 SANDRA HOLMAN; and MAMIE ZHU, } RESTITUTION, INJUNCTIVE RELIEF,And on behalf of all others similarly situated, } DISSOLUTION OF CORPORATION,
15 ) SPECIFIC PERFORMANCEPlaintiffs, ) DEMAND FOR JURY TRIAL
16 is a nonprofit public benefit corporation that was organized under the laws of the State of
17 California on July 15, 2002. Pursuant to the First Amended and restated Articles of
18 Incorporation field September 5, 2003, the corporation is empowered to own real property and
19 to have members as provided in the bylaws.
20 97. Plaintiffs are informed and believe and on that basis alleged that Defendant FHC is
21 nothing but a sham entity to enable Defendant Johnson and Defendant Linc to appear to Park
22 Residents that they have an interest in the Park. However, Defendant Johnson is the President
23 and Defendant Berger of the City of Daly City is the Secretary and there are no Park members
2 4 who are officers or on the board of directors.
25 98. California Corporations Code section 6410(b)(5) authorizes involuntary dissolution
26 of a nonprofit public benefit corporation when those in control of the corporation have been
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28 28.
Complaint for Damages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance; Demand for JuryTrial
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page29 of 65
1 guilty of or have knowingly countenanced persistent and pervasive fraud, mismanagement or
2 abuse of authority or persistent unfairness toward any member or the corporation's property is
3 being misapplied or wasted by its directors or officers.
4 99. All of the Park residents should have membership interests in Defendant FHC or
S alternatively at a minimum all of the initial "participating tenants" who agreed to a $90-$100
6 rent increase at the inception should have been granted membership interests in Defendant
7 FHC. In fact, the title to the Park has never been transferred to Defendant FHC and
8 Defendants Johnson, Line and Berger have made no effort to obtain a determination letter from
9 the Internal Revenue Service or the Franchise Tax Board that Defendant FHC is a 501(c)(3)
10 tax-exempt entity that would be qualified to hold title to the Park. Furthermore, membership
11 interests have never been offered to any residents of the Park. Plaintiffs have standing under
12 the Corporations Code to seek involuntary dissolution of Defendant FHC since Defendants'
13 fraudulent conduct has prevented them from benefitting from the voting rights they would have
14 obtained if they had been given membership interests in the nonprofit entity that would own
15 the Park as initially promised by Defendants.
16 100. Defendant FHC should be ordered dissolved and it should be ordered to cease
17 doing business and to cease holding meetings.
18 TENTH CAUSE OF ACTION
19 (Constructive Trust)
20 101. Plaintiffs incorporate and reallege each of the foregoing paragraphs as though
21 fully set forth herein and further alleges as follows.
22 102. By reason of the fraudulent and otherwise wrongful manner in which the
23 Defendants, or any of them, obtained their alleged right, claim or interest in and to the property
24 comprising the Park, Defendants and each of them, have no legal or equitable right, claim or
25 interest therein, but instead Defendants and each of them are involuntary trustees holding said
26 property and profits therefrom in constructive trust for Plaintiffs individually and on behalf of
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28 29.
Complaint for Damagcs, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance; Demand for JuryTrial
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page30 of 65
1 all others similarly situated, with the duty to convey the same to Plaintiffs forthwith.
2 103. Plaintiffs, individually and on behalf of all others similarly situated, claim a
3 present right to title and possession of the real property comprising the Park.
4 ELEVENTH CAUSE OF A TION
5 (Specific Performance)
6 104. Plaintiffs incorporate and reallege each of the foregoing paragraphs as though
7 fully set forth herein and further alleges as follows.
8 105. Plaintiffs seek and order enforcing the terms of the Cooperation Agreement
9 attached hereto as Exhibit `B" and fully incorporated herein by reference such that the Park is
10 transferred to an entity qualified under Internal Revenue Code section 501(c)(3) as a tax-
11 exempt nonprofit owned by the Park residents to hold title to and operate the Park for the
12 benefit of the Park residents. Plaintiffs seek an order that due to the wrongful conduct of
13 Defendants Johnson, Linc, Line Franciscan L.P., Franciscan Park, LLC, or Pacific West
14 Management that they have no further involvement or management over any aspect of the
15 Park.
16 TWELFTH CAUSE OF ACTION
17 (Financial Elder Abuse - California Welfare and Institutions Code § 15610.30)
18 106. Plaintiffs incorporate and reallege each of the foregoing paragraphs as though fully
19 set forth herein and further alleges as follows.
20 107. Many of the Park residents are elderly and are over the age of 65.
21 108. As alleged above, Defendants' fiscal abuse and failure to abide by the rent and
22 occupancy controls set forth in the Regulatory Agreement have caused the elderly Park residents
23 to suffer financial injury and emotional distress. Defendants' conduct was done with malice,
24 oppression, fraud and recklessness within the meaning of Welfare and Institutions Code section
25 15657.
26 109. As a legal and proximate result of the acts and omissions alleged herein, Plaintiffs
27
28 30.
Complaint forDamages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance, Demand for JuryTrial
Case5:1 0-cv-01 087-JW Document1 Filed03/15/10 Page31 of 65
1 have incurred damages as alleged in Paragraph 41, above.
2 THIRTEENTH CAUSE OF ACTION
3 (Violation of California Health and Safety Code § 34377.6)
4 110. Plaintiffs incorporate and reallege each of the foregoing paragraphs as though
5 fully set forth herein and further alleges as follows.
6 111. California Health & Safety Code section 34377.6 requires the Defendant Daly City
7 Housing Development Finance Agency to promptly invcstigate complaints concerning violations
8 of the restrictions imposed pursuant to Section 34377.2, and make a report to the complaining
9 party on whether the violation existed and whether it persists, and if it persists, what action the
10 authority will take to remedy the violation. When the authority determines that a violation exists,
21 whether determined upon an investigation of a complaint or on its own motion, the authority
I12 shall take all appropriate action, including necessary legal action, to promptly eliminate the
i13 violation.
0 4 112. Defendant Daly City Housing Development Finance Agency and Defendant Berger
15 who is head of said Agency have received repeated complaints from Plaintiffs and others
I16 concerning violations of the restrictions imposed pursuant to Section 34377.2, but have failed to
17 take any action.
18 113. Plaintiffs and each of them have been aggrieved by violations of the restrictions
19 imposed pursuant to Section 34377.2 and they seek a judicial remedy pursuant to section 34377.2
20 which authorizes a private right of action without regard to whether a complaint has been made
21 to the agency or whether the agency is then taking any action to remedy the violation.
22 114. As a legal and proximate result of the acts and omissions alleged herein, Plaintiffs
23 have incurred damages as alleged in Paragraph 41, above.
24 WHEREFORE, Plaintiffs pray for relief against Defendants, and each of them, as set
25 forth below:
26 1. Certifying this action to proceed as a class action pursuant to Federal Rules of Civil
27
28 31.
Complaint for Damages. Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance; Demand for JuryTrial
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page32 of 65
1 Procedure 23 and designating Plaintiffs as the representatives of the Class and their legal
2 counsel as counsel for the Class;
3 2. Compensatory and general damages according to proof;
4 3. Special damages according to proof;
5 4. Restitution according to proof,
6 5. Injunctive relief;
7 6. For a declaration that Defendants hold the Park as constructive trustees for the
8 benefit of Plaintiffs, individually and on behalf of all others similarly situated;
9 7. Order dissolving corporate entity as to Defendant FHC;
10 8. Appointment of a receiver;
11 9. Order enforcing the terms of the Cooperation Agreement to transfer the Park to an
12 entity qualified under Internal Revenue Code section 501(c)(3) as a tax-exempt nonprofit
13 owned by the Park residents to hold title to and operate the Park for the benefit of the Park
14 residents and removing Defendants Johnson, Line, Line Franciscan L.P., Franciscan Park,
15 LLC, and Pacific West Management from the management and operation of the Park;
16 10. Order enforcing the rent and occupancy restrictions of the regulatory agreement;
17 IL Prejudgment interest at the maximum legal rate;
18 12. Punitive and exemplary damages according to proof;
19 13. Costs of suit;
20 14. Reasonable attorney's fees;
21 15. Order cancelling 2002 Series "D" bonds; and
22 16. Such other and further relief as the court deems proper.
23
24 DATED: March 15-,2010^A.L ♦L 'i -
25 LLEY S.: UC "FV AN,Attorney for • laintifts,
26 FRANCISCAN MOBILE HOMEOWNERS FOR JUSTICE, et al.
27
28 32.
Complaint for Damages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance; Demand for 3uryTrial
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page33 of 65
1 DEMAND FOR JURY TRIAL
2
3 Plaintiffs, FRANCISCAN MOBILE HOME OWNERS FOR JUSTICE, ROSENDO
4 QUINIQUINI, RORY MORDINOIA, ROBERT QUINN, SANDRA HOLMAN, and MAMIE
5 ZHU hereby demand a jury trial as provided by Rule 38(a) of the Federal Rules of Civil
5 Procedure.
7 DATED: March rJ , 2010
84A-A,A.A HELLEY BUC AN,
Attorney for '' lainti s,
9 FRANCISCAN MOBILE HOMEOWNERS FOR JUSTICE, et al.
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28 33.
Complaint for Damages, Restitution, injunctive Relief, Dissolution of Corporation and Specific Performance, Demand for JuryTrial
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page34 of 65
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page35 of 65
DOG a `-,02-07595004J18J2002 11:55A AG Fee-127.00
Page 1 of 41Recorded In Official RecDrds
County of San ratevRECORDING REQUESTED by Marren SlocumAND WHEN RECORDED MAIL TO.' posessar —Count yy ^ Cierk—Recorder
Recorded 8y NORTH AMERICAN TITLE
KUTAK ROCK LLP717 17th StreetSuite 2900Deriver, CO 80202Attention- Scott H. Bees:
REGULATORY AGREEMENTAND DECLARATION OF RESTRICTIVE COVENANTS J
by and among
DALY CITY HOUSING DEVELOPMENT FINANCE AGENCY,as Issuer
UNION BANK OF CALIFORNIA, N.A.,as Trustee
and
LILAC FRANCISCAN LIMITED PARTNERSHIP,as Borrower
Relating to:
S37,13 5,00 37,965.000
Dal y City Housing Development Finance Agency Daly City Housing Development Finance AgencyMobile Home Park Senior Revenue Bonds Mobile Home Park Subordinate Revenue Bonds
(Franciscan Mobile Home Park Acquisition Project) (Franciscan Mobile Home Park Acquisition Project)Series 2002A Series 20028
$1 l,535,QOQ S1 .923.00bDaly City Housing Development Finance Agency Daly Cite Housing Development Finance Agency
Mobile Home Park Third Tier Revenue Bonds Mobile Home Park Fourth Tier RevCntte Bonds
(Franciscan Mobile Home Park Acquisition Project) (Franciscan Mobile Home Paris Acquisition Project)Series 2002C Series 1002D
Dated as of April 1. 2002
f1Z-R329l,.13
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page36 of 65
"City" rneans the City of Daly City, California.
"City Fee" means an annual fee equal to S33,411.25,
"Coutvy- means the County of San Mateo, California.
"Irzcorize Certification" means the income Computation and Certification attached heretoas Exhibit B.
"hlediat7 income far the Area" means the median gross income for the Area asdetermined by the Secretary of the Treasury (which detemiination is required by the Code to beconsistetlt with determinations of the area median gross income under section 8 of the UnitedStates Housing Act of 1937, or, if such program is terminated, under such program as in effectimmediately before such termination).
'wonzparticiparing Residents" means those residents of the Project who are notParticipating Residents.
"Parcel" means the Cypress Abbey Parcel or the Podesta Parcel, as the context requires.
"Participaring Residents" means those residents of the Project who, on or prior to thedate of issuance of the Bonds, have entered into new leases with the Borrower for their Spaceswhich, provides in part that such. residents agree to a higher monthly rent not to exceed $I00 permonth.
"Program Adminish-aror" means the Program Administrator appointed under theAdministration Agreement, which initially shall be Rosenow Spevacek Group Inc.
"Prog,-am Administramor's Fee" means the administrative fee of the ProgramAdministrator set forth in the Administration Agreement.
"Qualified Project Period" means the longer of 30 years front the date hereof or the termof the Bonds; provided such period is subject to extension in accordance with Section 5(g)hereof.
OuuliTed Residents" means Very Low Income Residents.
"Qualified Space' means a Very Low Income Space.
"Space" means a mobile home space within the Cypress Abbey Parcel and, so long as theBorrower has an interest, either leasehold, purchase option or outer ownership interest, in thePodesta Parcel, the Podesta Parcel upon which a mobile home may be placed.
"Tax Ccr'tificate" paeans the certificate as to arbitrage of the issuer and Borrower, datedas of the Closing Date, with respect to the Bonds_
"leery , Loiti Income Residents" means individuals or families xvith an Adjusted Incomewhich does not exceed the amount promulgated by the U.S. Department of Housing and Urban
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page37 of 65
Development for eery low income households for the Area as adjusted for household size as setforth below. In no event, however, will the occupants of a Space be considered to be Very LowIncome Residents if all the occupants are students, as defined in Section 151(c)(4) of the Code,as such may be amended, no one of which is entitled to file a joint federal income tax return.Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time studentduring each of five calendar months during the calendar year in which occupancy of the unitbegins at an educational organization which normally maintains a regular faculty and curriculumand normally has a regularly enrolled body of students in attendance or is an individual pursuinga full-time course of institutional on-farm training under the supervision of an accredited agent ofsuch an educational organization or of a state or political subdivision thereof "Household Size"Adjustment for L = 70%; Adjustment for 2 = 80%; Adjustment for 3 = 90%; Adjustment for 4= 100%; Adjustment for 5 = 108%; Adjustment for 6 = 116%; Adjustment for 7 = 1240/0;Adjustment for 8 = 132%; and assuming one person will occupy a recreational vehicle, twopeople will occupy a single-wide mobile home, and three persons will occupy a multisectionalmobile home. In adjusting rents for household size as described in Section 5(a) herein. it shall beassumed that one person will occupy a studio mobile home, two persons will occupy a one-bedroom mobile home, three persons will occupy a two-bedroom mobile home ; four persons wi11occupy a three-bedroom mobile home and five persons will occupy a four-bedroom mobilehome.
"Very Loin Income Spaces" means the Spaces in the Project designated for occupancy byVery Low Income Residents pursuant to Section 5(a) of this Regulatory Agreement.
Such teens as are not defined herein shall have the meanings assigned to them in theIndenture. Unless the context clearly requires otherwise, as used in this Regulatory Agreement,words of the masculine. feminine or neuter gender shall be construed to include each othergender v,,hen appropriate and words of the singular number shall be construed to include theplural number, and vice versa, when appropriate. This Regulatory Agreement and all the termsand provisions hereof shall be construed to effectuate the purposes set forth herein and to sustainthe validity hereof The defined terms used in the preamble and recitals of this RegulatoryAgreement have been included for convenience of reference only, and the meaning, constructionand interpretation of all defined terms shall be determined by reference to this Section 1notwithstanding any contrary definition in the preamble or recitals hereof. The titles andheadings of the sections of this Regulatory Agreement have been inserted for convenience ofreference only, and are not to be considered a part hereof and shall not in any way modify orrestrict any of the terms or provisions hereof or be considered or given any effect in construingthis Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question ofintent shall arise.
Section 2. Representations and Warranties ^of the Borrower. The Borrower herebyrepresents, as of the date hereof, and covenants, warrants and agrees as follows:
(a) The Borrower has incurred a substantial binding obligation to acquire theProiect pursuant to which the Borrower is obligated to expend at least 5% of the principalamount of the Bonds.
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page38 of 65
formed all such acts and work necessary to cure the default, Pursuant to such right ofthe Issuer shall be permitted (but is not required) to enter upon the Project and
perform all acts and work necessary to protect, maintain and preserve the improvementsand landscaped areas on the Project, and to attach a lien on the Project, or to assess theProject, in the amount of the expenditures arising from such acts and work of protection,maintenance and preservation by the Issuer and/or costs of such cure, including a 15%administrative charge, which amount shall be promptly paid by the Borrower to theIssuer, upon written demand.
(f) To the extent financially feasible, the Borrower shall use good faith effortsto either purchase the Podesta Parcel or extend or renew the existing lease for the PodestaParcel prior to the stated expiration date thereof. The Borrower shall notify the Issuer inwriting upon the earlier of (i) at least twelve months prior to the stated expiration date ofsuch lease setting forth the current state of negotiations with respect to the Podesta Parcelor (ii) at least thirty days prior to entering into a purchase contract or new lease withrespect to the Podesta ParceI setting forth the basic terms contained therein. Issuer mayrequest periodic updates as to progress initiated or made in securing ownership or longertenancy as to the Podesta Parcel during the term of this Agreement.
(g) The increased rent contained in the ]eases of the Participating Residentswill not exceed $90 per month. The Borrower shall honor the existing leases of theNonparticipating Residents. Future increases in rent by the Borrower shall beimplemented only in compliance with such leases. To the extent a NonparticipatingResident desires to enter into a new lease on terms substantially the same as the leaseswith Participating Residents, the Borrower shall negotiate with such NonparticipatingResidents to enter into such new lease on terms substantially the same as such leases withthe Participating Residents. Future increases in rent may be subject to local mobilehomerunt control ordinances and administration.
(h) The Borrower shall apply amounts on deposit in t)e Rental AssistanceFund to reduce rents on Qualified Spaces occupied by Very Low Income Residents or, hithe alternative, to purchase mobile homes for sale within the Project in order to preservehousing for Very Low Income Residents. The Borrower shall notify in writing theProgram Adminisuator and the Issuer at least once each calendar year (and in no eventlater than January 31 of each year commencing January 3I, 2D03) with respect to themanner in which such funds have been applied during the prior calendar year to reduccsuch rents. In addition, the Borrower agrees to use good faith efforts to implement aprogram, if and to the extents funds are available therefor, to purchase mobile horneslocated on Qualified Spaces that are far sale within the Project in order to permit suchSpaces to retain their designation as Qualified Spaces. The Borrower, with the assistanceOf the Issuer if applicable, shall use good faith efforts to apply for grants and low, interestrate loans that may be available to implement such a program.
Section S. Qualified Residents. Pursuant to the requirements of the Code and the Act.the Borrower hereby represents, as of the date hereof, and warrants, covenants and agrees asfollows:
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page39 of 65
(a) During the Qualified Project Period:
0) not less than 20% of the Spaces in the Project shall be designatedas Very Low Income Spaces and shall be continuously occupied by Very LowIncome Residents. The monthly rent charged for one-half of the Very LowIncome Spaces (i.e., -10°% of the Spaces) shall be not greater than the lesser of (x)the monthly rent permitted under any lease then in effect and any restrictionsunder applicable law or (y) the amount calculated as follows:
. (A) Where a Very Low income Resident is both the registeredand legal owner of the mobile home and is not making mortgage paymentsfor the purchase of that mobile home, the total rental charge for occupancyof the Space (excluding a reasonable allowance for other related housingcosts determined at the time of acquisition of the Project by the Borrowerand excluding any supplemental rental assistance from the State, thefederal government, or any other public agency to the Very Low IncomeResident or on behalf of the Space and the mobile home) shall not exceed1/12 of 30% of 50% of Median Income for the Area, adjusted forhousehold size. Calculated as a monthly rent which does not exceed theamount produced by (I) beginning with the Median Income for the Area(which figure, as established by the U.S. Department of Housing andUrban Development assumes a four-person household), (II) establishingthe number of persons in the Space for purposes of this calculation usingthe assumed standard household sizes set forth in definitions, Fiery LoxIncome Residents, (III) multiplying by the relevant Family SizeAdjustment Factor, (IV) multiplying by 50%, (V) multiplying by 30%.and (VI) dividing by twelve.)
- (B) Where a Very Low Income Resident is the registeredowner of die mobile home and is making mortgage payments for thepurchase of that mobile home, the total rental charge for occupancy of theSpace (excluding any charges for utilities and storage and excluding anysupplemental rental assistance from the State, the federal government, orany other public agency to the Very Low Income Resident or on behalf ofthe Space and mobile home), shall not exceed 1112 of 15% of 50% ofMedian Income for the Area, as adjusted for household size. Calculated asa monthly rent which does not exceed the amount produced by (I)beginning with the Median Income for the Area (which figure, asestablished by the U.S. Department of Housing and Urban Developmentassumes a four-person household), (1I) establishing the number of personsin the Space for purposes of this ca[culation using the assumed standardhousehold sizes set forth in definitions, Yery Low Income Residents, (III)multiplying by ' the relevant Family Size Adjustment f= actor, (IV)multiplying by 50%, (V) multiplying by 15%, and (VI) dividing bytwelve.)
0243296.13
JllJJJll^1lJlJ11llJl1l1 111 1 Jill
ia4 /160200
2 l ie 5A
AG P&ID&7 12 of 41
Case5:1 0-cv-01087-JW Document1 Filed03/15/10 Page40 of 65
(C) Where a Very Low Income Resident rents both the mobilehotre and the Space occupied by the mobile home, the total rentalpayments paid by the Very Low Income Resident on the mobile home andthe Space occupied by the mobile home (excluding any supplementalrental assistance from the State, the federal government, or any otherpublic agency to that Very Low Income Resident or on behalf of thatSpace and mobile home) shall not exceed 17:2 of 30% of 50% of MedianIncome for the Area adjusted for household size. Calculated as a monthlyrent which does not exceed the amount produced by (1) beginning with theMedian Income for the Area (which figure, as established by the U.S.Department of Housing and Urban Development assumes a four-personhousehold), (II) establishing the number of persons in the Space forpurposes of this calculation using the assumed standard houselold sizesset forth in definitions, Very L", Income Residents, (III) multiplying bythe relevant Family Size Adjustment Factor, (IV) multiplying by 50%, (V)multiplying by 30%, and (VI) dividing by twelve.)
The monthly rent charged for the remaining one-half of the Very Low IncomeSpaces (i.e., 10% of the Spaces) shall not be greater than as set forth above in clauses(A), (B) and (C); provided however that the Borrower shall in all such cases consideronly the rent for the Spaces (and not any other payments, including without limitation,rent for the mobile home or any mortgage payments) in determining the maximummonthly rental to be charged regardless of whether the Very Low Income Resident ismaking mortgage payments or renting both the Space and the mobile home.
(b) In the event a recertification of such tenant's income in accordance withSection 5(d) below demonstrates that such tenant no longer qualifies as a QualifiedResident the Space occupied by such Resident shall continue to be treated as a QualifiedSpace unless and until any Space in the Project thereafter is occupied by a new tenantother than a Qualified Resident. Moreover, a Space previously occupied by a QualifiedResident and then vacated shall be considered occupied by a Qualified Resident untilreoccupied, other than for a temporary period, at which time the character of the Spaceshall be redetermined. In no event shall such temporary period exceed 31 days.Notwithstanding anything herein to the contrary, if at any time the number of QualifiedResidents falls below the number required by subparagraph (a)(i) of this Section, the nextavailable vacant Space shall be rented to a Qualified Resident.
(c) Immediately prior to a Qualified Resident's occupancy of a QualifiedSpace (or prior to the Closing Date with respect to Very Low Income Spaces previouslyoccupied), the Borrower will obtain and maintain on file an Income Certification fromeach Qualified Resident occupying a Qualified Space, dated immediately prior to theinitial occupancy of such Qualified Resident in the Project (or prior to the Closing Datein the case of existing Very Low Income Residents). In addition, the Borrowerwillprovide such further information as may be required in the future by the State ofCalifornia, and by the Act, as the same may be amended from time to tin ge, as requestedby the Issuer or the Program Administrator. The Borrower shall verify that the incomeprovided by an applicant with respect to a Space to be occupied after the Closing Date is
Case5:1 0-cv-01 087-JW Document1 Filed03/15/10 Page41 of 65
accurate by taking one or more of the following steps as a part of the verification process:(i) obtain a federal income tax return for the most recent tax year; (ii) obtain a writtenverification of income and employment from applicant's current .employer; (iii) if anapplicant is unemployed or did not file a tax return for the previous calendar year, obtainother verification of such applicant's income reasonably satisfactory to the Issuer orProgram Administrator; or (iv) such other informations as may be reasonably requested bythe issuer or Program Administrator.
Within 10 days after the last day of each calendar quarter during the term of thisRegulator) , Agreement commencing with the quarter ending June 30, 2002, the Borrowershall advise the Program Administrator or in the absence of a Program Administrator, theIssuer, of the status of the occupancy of the Project by delivering to the ProgramAdministrator or the Issuer, as the case may be, a Certificate of Continuing ProgramCompliance; provided, however, with the prior written approval of the Issuer or theProgram Administrator, as the case may be, such Certificate need be filed onlysemi-annually. Copies of the most recent Income Certifications for Qualified Residentscommencing or continuing occupancy of a Qualified Space shall be made available to theIssuer or the Program Administrator upon request.
(d) On the first anniversary date of the issuance of the Bonds, and on eachanniversary date thereafter, the Borrower shall certify the income of the occupants ofsuch Qualified Spaces by obtaining a completed Income Certification based upon thecurrent income of each occupant of the Space. The Borrower shall verify the income oftenants in connection with any such recertification. In the event the recertificationdemonstrates that such household 's income exceeds 140% of the income at which suchhousehold would qualify as Qualified Residents, such household will no longer qualify asa Qualified Resident, and the Borrower either (i) will designate another qualifying Tenantand Space in the Protect as a Qualified Resident and a Qualified Space, respectively; or(ii) will rent the next available vacant Space to one or more Qualified Residents.
(e) The Borrower will maintain complete and accurate records pertaining tothe Qualified Spaces, and will permit any duly authorized representative of the Issuer, theProgram Administrator, the Trustee (who shall have no duty to inspect), the Departmentof the Treasury or the Internal Revenue Service to inspect during normal business hoursand with prior notice the books and records of the Borrower pertaining to the Project,including those records pertaining to the occupancy of the Qualified Spaces.
(0 Each lease pertaining to a Qualified Space occupied after the Closing Dateshall contain a provision to the effect that the Borrower has relied on the IncomeCertification and supporting information supplied by the Qualified Resident indetermining qualification for occupancy of the Qualified Space, and that ally materialmisstatement in such certification (whether or not intentional) may be cause forimmediate termination of such lease. Each lease will also contain a provision that failureto cooperate with the annual recertification process reasonably instituted by the Borrowerpursuant to Section 5(d) above will disqualify the Space as a Qualified Space and providegrounds for termination of the lease. The Borrower agrees to provide to the Program
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Administrator and the Issuer, a copy of the form of application and lease to be providedto prospective Qualified Residents and any arnendments thereto.
(g) In the event, despite Borrower's exercise of best efforts to comply with theprovisions of Section 5 of this Regulatory Agreement, the Borrower shall have been outof compliance with any of. the restrictions of Section 5 hereof relative to QualifiedResidents, for a period in excess of six months, then at the sole option of the Issuer theterm of the Regulatory Agreement shall be automatically extended for the period ofnoncompliance rlpon written notice to the Borrower, the Program Administrator and theTrustee from the Issuer, such extension to relate to the Qualified Spaces and QualifiedResidents as to which such noncompliance relates.
Section 6. Tax Status of the Tax-Exempt Bonds. The Borrower and the Issuer eachhereby represent, as of the date hereof, and warran ts. covenants and agrees that:
(a) it will not knowingly take or permit, or omit to take or cause to be taken,as is appropriate, any action that would adversely affect the exclusion from gross incomefor federal income tax purposes of the interest on the Tax-Exempt Bonds or theexemption from California personal income tax or the interest on the Bonds and, if itshould take or permit, or omit to take or cause to be taken, any such action, it will take alllawful actions necessary to rescind or correct such actions or omissions promptly uponobtaining knowledge thereof;
(b) it will take such action or actions as may be necessary, in the writtenopinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, to complyfully with the Act and all applicable rules, rulings, policies, procedures; Regulations orother official statements promulgated, proposed or made by the Department of theTreasury or the Internal Revenue Service to the extent necessary to maintain theexclusion from gross income for federal income tax purposes of interest on the Tax-Exempt Bonds; and
(c) it will file of record such documents and take such other steps as arenecessary, in the written opinion of Bond Counsel filed with the issuer, the Trustee andthe Borrower, in order to ensure that the requirements and restrictions of this RegulatoryAgreement will be binding upon all owners of the Project, including, but not lirrmited to.the execution and recordation of this Regulatory Agreement in the real property recordsof the County.
The Borrower hereby covenants to include the requirements and restrictions contained inthis Regulatory Agreement in any document transferring any interest in the Project (other thanleases of Spaces in the Project to individual tenants) to another person to the end that suchtransferee has notice of, and is bound by, such restrictions, and to obtain the agreement from anytransferee to abide by all requirements and restrictions of this Regulatory Agreement.
Section 7. Modification of Spcdal Tax Covenants. The Borrower, the Trustee and theIssuer hereby agree as follows:
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EDIT "B"
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Franciscan County Club Mobile Home ParkCooperation and Advisory Agreement
This Cooperation and Advisory Agreement (the "Agreement") is made between LINCFranciscan Limited Partnership, a California Limited Partnership, ("LINC Franciscan"),LINC Housing Corporation, a California Public Benefit Corporation, ("LINC") and theFranciscan Acquisition Committee, an Unincorporated Association, ("FAC°) dated as ofApril 18, 2002,
Whereas, on April 18, 2002 LiNC Franciscan purchased the existing leasehold interestin the Franciscan Country Club Mobile Home Park (the "Park") and the fee simpleinterest in a portion of the Park with the proceeds of certain bonds (the "Bonds") issuedby the Daly City Housing Development Finance Agency (the "Agency"); and,
Whereas, the documents related to the Bonds, (collectively the "Financing Documents"),impose certain affordability requirements on the owner of the Park; and,
Whereas, the ability of LINC Franciscan to purchase its interest in the Park andsubsequently transfer it to another organization which qualifies for tax-exempt financingwith resident-homeowner representation is predicated on LiNC's experience andfinancial stability; and,
Whereas, FAC represents the homeowner residents of the Park; and
Whereas, LINC, LINC Franciscan and FAC all desire to enable the residents of the Parkto participate in the governance of the Park and the establishment of park policies,budgets, and community guidelines; and
Whereas, it is the intent of the parties to create, through this Agreement, a managementstructure for the Park to cover budget, capital improvements, community guidelines, andthe selection of the Property Manager, that is first established upon LINC Franciscan'sacquisition of the Park, and preserved upon transfer of the Park to a subsequent entity,where such management decisions are made with input from LINC, FACrepresentatives, and City representative(s) as set out below.
It is therefore agreed:
1. LINC, LINC Franciscan, and FAC will endeavor to form a 501(cx3) non-profitcorporation to be known as Franciscan Housing Corporation (FHC). in the eventthis name is not available, another similar name shall be chosen.
Z The FHC by-laws shall provide that FHC shall have seven (7) directors, three (3)of which shall be appointed by FAC, three (3) of which shall be appointed byLINC, and one (1) of which shall be appointed by the City of Daly City and shallbe an elected, management or appointed official of the City. The term of officefor directors and term-limits (if any) shall be described in the by-laws of FHC. Tothe extent required for iRS approval of the 501(c)(3) status of the FHC, thenumber of resident directors or their voting rights, or both, may be reducedsubject to the approval as to any such restructure by the City of Daly City and the
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Franciscan Country Club Mobile Home Park Cooperation AgreementApril 18, 2002Page 2
FAC. FAC acknowledges that in order to qualify for 501(c)(3) status and thusassume ownership of the Park from LINC Franciscan, the ability of residents ofthe Park to serve as directors of FHC or otherwise participate in the managementof the Park may be restricted or limited.
3. FAC agrees that it will continue to be an association of resident-owners with thepurpose of promoting and protecting the general welfare of the residents andowners of mobile homes within the Park. Only those households that both ownand occupy a home in the Park will be eligible for voting membership in FAC.FAC will hold Park-wide elections of its directors in a time and manner specifiedin its by-laws. Such elections shall be monitored by a quallfied, neutral third-party entity. FAC will determine a process for selecting their appointments to theFHC Board of Directors and amend its by-laws to describe and require thisprocess as well as owner-occupancy membership. FAC shall provide FHC andLILAC Franciscan with a written certification of both the election and theappointments.
4. The director representative of the City of Daly City shall be that person as theDaly City City Manager so informs the FAC, LINC Franciscan and, if applicable,FHC. The City of Daly City representative director may change, unrestricted byterm, and shall be as designated by the City Manager, subject to the limitationset forth in paragraph 2 above.
5. This agreement shall serve as ZINC Franciscan's non-revocable commitment totransfer the Park to FHC upon receipt by FHC of Federal and State tax-exemptstatus, including without limitation receipt of a determination letter from theInternal Revenue Service that FHC qualifies as a 501(c)(3) corporation with thepurpose of owning the Park. LILAC Franciscan and LINC shall pursue formationand tax exemption with reasonable diligence. Transfer shall be subject toapprovals by the City, the Agency and meeting each of the requirements for suchtransfer as detailed in the Financing Documents.
6. In the event that conditions prevent the establishment of FHC as a 501(c)(3)corporation meeting the necessary approvals and requirements as described inparagraph 5 above, LINC Franciscan and FAC each shall use its best efforts toaffect the intent of this agreement through the entity that holds title to the Park.
7. FAC shall establish a Resident Advisory Committee (RAC) to review and adviseHNC Franciscan on such issues as operating budgets, capital improvements,community guidelines, selection and performance of the Property Manager, andother items, as may be deemed appropriate. In addition, the City shall have theright to appoint an elected, management or appointed official of the City toParticipate with RAC (the "City Representative'. LINC Franciscan shall provideRAC and the City Representative with budget, program, financial information andsuch other information as may be reasonably requested by RAC and the CityRepresentative. LINO Franciscan shall also meet with the RAC and the City
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Franciscan Country Club Mobile Horne Park Cooperation AgreementApril 18, 2002Page 3
Representative at least quarterly (and more often, as may be reasonablyrequested by RAC) and give serious consideration to RAC recommendations. Inproviding and considering advice, RAC and LILAC Franciscan shall be mindful ofrequirements to operate, maintain; and control the Park in accordance with theterms of the Financing Documents and in accordance with all applicable law. TheRAC shall continue to provide advice to FHC after transfer of the Park to FHC,and in the event it is not possible to make such transfer, to LINC Franciscanthroughout its ownership of the Park.
8. Upon the transfer of the Park to FHC, LILAC shall be retained to provide assetmanagement services under a separate agreement that shall run for the term ofthe Bonds. LINC shall receive compensation equal to 1.5% of the gross rentalreceipts of the Park as specified in the Financing Documents. CommunityHousing Management Services, a LINC affiliate, shall be the initial PropertyManager.
9. Upon repayment of the Bonds and any other financing related to the Park, andupon request by a majority of the households in the Park, LINC irrevocablycommits to relinquish Its right to appoint its three (3) directors of FHC.Replacement directors shall be selected by the remaining four (4) directors.
10.Current rules and regulations shall remain in effect until changed. Newcommunity guidelines supplanting the existing rules and regulations will beestablished jointly with LINC Franciscan and FAC.
11.FAC will use its best efforts to obtain the cooperation of all residents of the Parkin providing information required to document compliance with the FinanceDocuments. FAC will convene regular meetings of all residents to disseminateinformation and report on progress. Copies of documents shall be provided tothe City of Daly City upon request and without cost to the City.
12.The operation of the Park will be consistent with a regulatory agreement and theIndenture, included as part of the Financing Documents specifying affordabilityand other obligations arising from the utilization of tax-exempt financing for theacquisition by LINC Franciscan of the Park.
13.Rents shall be increased in accordance with the contingent lease amendment forthose residents of the Park who have signed the contingent lease amendment,and consistent with existing rental agreements or leases for those who have notsigned the contingent lease agreement.
14.Approximately 363 homeowners have executed contingent lease amendmentsthat become effective upon acquisition of the mobilehome park by LINC or itsaffiliate. These contingent lease amendments provide for a $90 per monthincrease in rents, then a stabilized rent for a period of five years, then increasesas necessary to maintain the park, pay the financing and maintain reserves. In
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Franciscan Countfy Club Mobile Home Park Cooperation AgreementApril 18, 2002Page 4
the event that homeowners wish to execute such leases after close of escrow forpurchase of the park the monthly increase shall be $100. The rent increase inthe contingent lease amendment will commence in the first month afteracquisition of the park. If a homeowner signs a contingent lease amendmentafter close of escrow for purchase of the park, that homeowner shall be requiredto pay a lease commencement fee equal to the difference between the rentalready paid by such homeowner or his or her predecessor, and the increasedrent under the lease amendment (using the $100 per month starting increase).For instance, if three months have accrued, the homeowner would pay $300upon execution of the lease amendment to "catch up" to those executing prior toacquisition.
Rents under the existing, non-amended leases will increase over time. The"Buy-in" amount for homeowners signing the lease amendments will bemeasured from the actual rent paid to the rent that would have been paid underthe lease amendment had it been signed. After July 1, 2002, any homeownersigning a lease amendment hereunder shall pay no less than $500 at the time ofsigning the lease amendment, even if the cumulative rents under the "old lease"have exceed those under the lease amendment.
15.New leases will be available to all residents who signed up for the contingentlease amendment and will be for a term of up to 34 years if they so desire, or ifon the Podesta property, for the balance of the Podesta lease term, but not Inexcess of 34 years if the Podesta lease term is extended beyond that period.
16.Leases will require owner occupancy except in certain hardship cases and willprovide for the minimum income certification required for ensuring:
a. Compliance with the Financing Documents:b. Property tax exemption for the Park;c. Compliance with the Park Rules and Regulations.
17-No sub-leases will be permitted except in the case of hardship. Hardship will. bedefined as:
a. Illness or unemployment of a family/household member with a loss ofincome that mattes it impossible to pay housing costs existing prior tosuch illness or unemployment; or
b. A transfer of employment more than 100 miles from the Park.
18.Hardship subleases shall be for a maximum of one year, but may be reviewedand renewed for one additional year.
19.New long-term leases will remain in effect upon any sale or transfer of the Parisand, upon transfer of a home, will be fully assumable by a qualified buyer of thathome in the Park. Long-term leases shall also be assumable by heirs of theHomeowner-Lessee, provided they meet all regular requirements for owner-
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Franciscan Country Club Mobile Home Park Cooperation AgreementApril 18, 2002Page 5
occupancy. Should an heir not choose to live in the Park, the long-term leaseshall remain in effect upon the sale of the home to a qualified buyer.
20.No legal resident of the Park shall be displaced because of their income levelabsent some other breach of lease or rules such as a failure to pay rent whendue or falsifying income certification information.
21.Park Management Staff are employees of the Property Manager. As such, theywill not expect to receive direction or supervision from resident directors of FHCor FAC and they will not follow such direction or supervision if it is given.
22-The primary point of contact between residents and the Park Management is tobe the resident manager. In the event a resident is dissatisfied with the residentmanager's actions, an appeal should be directed to the resident manager'ssupervisor by telephone or in person. Further appeals shall be in writing anddirected first to the local or regional manager of the Property Manager, then tothe President of ZINC. 'If, following this procedure, the resident is stilldissatisfied, a written appeal may be directed to the Chairman of the Board ofFHC who will convene a grievance committee of Directors to consider the matter.
23.This Agreement may be amended from time to time by unanimous mutualagreement of all parties. Although not a party to this Agreement, no amendment.modification or cancellation of any portion or all of this Agreement, or otherchange to this Agreement can be made without the prior written consent of theCity of Daly City to the extent such amendment, modification or change affectsthe -City of Daly City or any of its rights herein, as expressed through acommunication from the Daly City City Manager, which consent shall not beunreasonably withheld and shall be deemed to have been given if not recelvedwithin 10 days of receipt by the City of such proposed amendment, modificationor change.
24. LINC and LiNC Franciscan shall each be bound by the actions of the other in allmatters related to management of the Park.
25.As long as homes in the park meet the requisite standards under state and citycodes, they can continue to be sold in place. New homes proposed to beinstalled in the Park shall be subject to Park standards as established from timeto time.
26. Reference to The City" or "City of Daly City" within this Agreement does notestablish the City of Daly City as an owner of any interest in the Park, or in anycomponent part, facility, or unit of the Paris. Neither does such reference reflectthe City's participation in routine policies, daily management decisions, orpractices of the parties to this Agreement, the Paris Manager, or any employeesor representatives of the Park, LINC, LILAC Franciscan, the FAC, the proposedFHC, or any other such entity. The parties to this Agreement, jointly and
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Franciscan Country Club Mobile Home Park Cooperation AgreementApril i 8, 2002Page 6
severally, agree to indemnify and defend the City of Daly City, its officers andemployees, from and against all claims and legal actions, costs, penalties andfines, damages and liabilities arising from operating, management and injuryrelating to any activity concerning the Park. Such duty to indemnify and defendextends to claims for civil rights violations, actual or threatened release ordischarge of hazardous materials, claims of negligence or willful misconduct.
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F anciscan Country Club Mobile Home Park Cooperation AgreementI 1K 2002
ge 7
Agreed
LIN F antis -n t mimed PartnershipBy L Housing Corporation,Its General PartnerBy Hunter L. JohnsonIts President,
wn.i4LIN H ► .ing orporationBy Hunter L_ JohnsonIts President
Francocan A q lsitian mmitteeSy Don TullIts President
02.112516.03
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EXHIBIT "C"
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page52 of 65
^^PR CARL.E, MACKIE, POWER & Ross LLP
ATTORNEYS
IGn 8 SruFEr. Su'TE 400 TEL: (707) 526-4700
SANTA ROS I , CA g IFORNIA A5CIFAX: (747) 526-4707
October 21, 2005
Office of the Attorney GeneralCharitable Trusts Section300 South Spring Street, 5"' FloorLos Angeles, CA 90013-1230
Re: Corporate Fund for Housin^a Califon iaNQU-ProEt Public Benefit Cor uatian
Dear Sir:
Introducti ort
This firm represents Corporate Fund for Housing, a California non-profit public benefitcorporation (the "Corporation'. The Corporation acurrently owns six (6) multifamily residentialrental developments in California. - TheCorporation is proposing, to sell . f ve (5) of thesedevelopments as described below.
This letter and .its enclosures represents notice to the Attorney General pursuant toCalifornia Corporations Code section 5913.
Background to the Transactions
The Corporation currently owns six (6) residential rental developments in Cali forma brief detailsof which are as follows:
• A 149 unit senior apartment complex located at 23750 Highland Valley Road, DiamondBar, California (the "Diamond Bar Project");
• A 201 unit senior apartment complex located at 3200 South Street, Lakewood, California(the "Lakewood Project");
• An 85 unit senior apartment complex located at 2500 Damien Avenue, La Verne,California (the "La Veme Proj ect'O;
• A 241 unit senior apartment complex at 1024 Royal Oaks Drive, Monrovia, California(the "Monrovia Project');
Case5:10-cv-01087-JW Document1 Filed03/15/10 Page53 of 65
LCMPR E
CARLE, MACKIF, POWER &- Ross L[.P
A multifamily residential apartment complex located at 2894 East Tahquitz Canyon Way,Palm Springs, California (the "Tahquitz Praject'^; and
• A 169 unit senior apartment complex located at 12251 Washington Boulevard, Whittier,California (the "Whittier Project").
The Corporation plans to sell all of these projects apart from the Tahquitz Project.
The construction of the five s} develo znents that ate, corporation is glami - g to1z_........sell the "Sale Projects'^ was_ftanccdJn..15194.b_y.._tbe net_proceeds of certain bonds issued bythe California Statewid5_Cgmw nines IlcyeJQpment.Authority_&e "Bonds"fir In__^nnectionwith the sale to defease ,and/gr retire the Bonds.
The Board of Directors has concluded that the Sale Projects are too over-leveraged tocoFn `o' jy allow the Corporation to coninut to the anticipated capital improvements that areanticipated and that therefore it would be in the best interests of the Corporation to dispose of theSale Projects. The aggregate sale price of the Sale Projects is $79,000,000. After allowing fordefeasance and/or retirement of the Bonds and closing costs, the Corporation expects to netapproximately $5,000,000.
Details of the Transactions
The details of the transactions are as follows:
Sale Project Sale Price Buyer
Diamond Bar $14,400,000 1315 Meadows, L.P., a California.limited partnership.
Lakewood $18,600,000 3200 Lakewood L.P., a Californialimited partnership
La Verne $ 7,800,000 Jagdish Varna and Usha K. Varnahusband and wife as communityproperty as to an undivided 509/vinterest and Ahmed M. Hassan andMagda A. Hassan husband andwife as community property as toan undivided 50% interest, as
tenants in common.Monrovia $22,700,044 10214 Royal Oaks L.P., a California
limited partnership.Whittier $15,500,000 1315 Meadows, L.P., a California
limited partnership.
With regard to those transactions, please note the following;
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CMPR]CARLL, MACKIE, POWER & ROSS LIT
• The buyers of the Diamond Bar-Project, the Lakewood Project, the Monrovia Project andthe Whittier Project are aff entities ultimately controlled by Robert Korda;
• All of the buyers of the Sale Projects are for-profit parties;
• In each case the sale price is payable in cash in tall on closing;
• In each case the sale price exceeds the appraised market value of each of the Sale Projectsassuming a for-profit buyer; and
• Closing is scheduled to occur on November 18, 2005.
Enclosed with this letter you will find copies of the following:
• 'Audited Financial Statements of the Corporation for the year ending December 31, 2004;• Unaudited financial statements of the Corporation for the nine months ending September
30,2005;• Resolutions of the Board of Directors of the Corporation authorizing the transactions.• The Restated Articles of Incorporation of the Corporation;• The organizational documents for each of the Buyers that are entities (we will forward
certified copies as soon as these are available); and• Letters dated March 4, 2004, confirming the appraised market value of each of the Sale
.Projects.
Should you require any additional information, please do not hesitate to contact me. In themeantime please return the duplicate copy of this Ietter with a date stamped confirmation ofreceipt in the enclosed reply paid envelope.
Yours sincerely,
S imam Inman
cc Hunter Johnson, Corporate Fund for Housing
3
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Simon R. IamanCarle, Mackie, Power & Ross LLP100 B Street, Suite 400Santa Rosa, CA 95401
RE: Corporate Fund For Housing
Dear Mr. Inman:
This will acknowledge receipt of your notice of the sale of substantially all assets of theabove referenced California nonprofit public benefit corporation pursuant to CaliforniaCorporation Code section 5913
This letter is neither an approval nor disapproval of the proposed transaction, and thisOffice reserves the right under Corporations code section 5250 to investigate fwther to determinewhether the above corporation has complied with the charitable trusts upon WN ch it holds itsassets.
Sincerely,
(
ADRIENNE W. WA SInvestigative Auditor
For BILL LOCKYERAttomey General
cc: Registry of Charitable Trusts
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RESOLUTIONS OF THE BOARD OF DIRECTORS OF CORPORATE FUND FORHOUSING, A CALIFORNIA NONPROFIT PjJWIC BENEFIT CORPORATION
AUTHORIZING THE CORPORATION TO DISPOSE OFCERTAIN REAL ESTATE PROJECTS
At a meeting of the Board of Directors of Corporate lend for Housing, a CaliforniaNonprofit Public Benefit Corporation (the "Corporation") duly convened and held on August i I,2005, the Board of Directors resolved as follows:
WHEREAS, the Corporation is presently the owner of six residential rental developmentslocated in California in the cities of Diamond Bar, Lakewood, La Verne, Monrovia, Whittier andPalm Springs and Whittier (collectively the "Projects'');
WHEREAS, in connection with the refinancing of the acquisition and construction of theProjects located in Diamond Bar, Lakewood, La Verne, Monrovia and Whittier (collectively the"Sale Projects") the net proceeds of certain bonds issued the California Statewide CommunitiesDevelopment Authority (the "Bonds') were advanced to the Corporation;
WHEREAS, the Corporation intends to sell the Sale Projects aad-Ap Vthe tuetPMceeds._of sale towatds.defeasance and/or retirement of the Bonds.
WHEREAS, the Board of Directors of the Corporation deems it to be in the best interestof the Corporation to sell the Sale Projects and to defense and/or retire the Bonds.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the Corporationhereby approve and authorize the Sale of the Sale Projects and the defeasance and/or retirementof the Bonds (collectively the "Transactions"), and the consummation of the transactionscontemplated thereby are in all respects approved and authorized; and,
RESOLVED FURTHER., that the Executive Committee of the Board of Directors ., ishereby authorized and directed:
(i) to approve or authorize the approval of any and all necessary documents,agreements, certificates or other instruments in connection with the Transactions ("TransactionDocuments");
(ii) to authorize or approve the engagement by the Corporation of such professionaladvice and assistance as is deemed necessary for the purposes of the Transactions;
(iii) to authorize officers of the Corporation to execute, and deliver any and allTransaction Documents on the Corporation's behalf;
(iv] to authorize or approve any and all other acts as the Executive Committee in itssole discretion may deem necessary or ,appropriate to effect the Transactions on such terms andconditions as the Executive Committee may determine; and
C_MCCUMEE—ISR1nman1l.DCALS—I\Temp\CM geya 9-11-45 5 Smsom Sale Auftdoc
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(v) to authorize or appzove the performance of all of the Corporation's obligations inconnection with the Transactions.
I `"
RESOLVED FURTHER, that any acts on behalf oft:he Corporation by the ExecutiveCommittee or any officers, employees or agents of the Corporation in connection with theTransactions occurring before this date are hereby ratified and approved by the Corporation:
The undersigned, as Assistant Secretary of the Corporation, hereby certifies that theBoard ofDirectors of the Corporatioti unanimously passed and adopted these resolutionseffective on August 11, 2005.
Hunter Johnson, Assistant Secretary
C;.WCUWE -1^SRinmau\LOCAL-,- I\TMp1CFH R®o S-1 l-05 5 acasons Sale Amb.doc
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E)KMU "D"
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COMMUNITY REDEVELOPMENT AGENCYCITY OF PALM SPRINGS, CALIFORNIA
MINUTESWEDNESDAY, NOVEMBER 19, 2008
City Hall Council Chamber
CALL TO ORDER: Chair Pougnet called the meeting to order at 6,40 p.m.
ROLL CALL:PRESENT: Agency Member Hutcheson, Agency Member Weigel, Vice Chair
Foat, and Chair Pougnet.ABSENT: Agency Member Mills.ALSO PRESENT: Executive Director Ready, Agency Attorney Holland, and Assistant
Secretary Thompson.
PUBLIC COMMENT:
ROGER EVERSHED, commented on the Tahquitz Court Apartments, Item RA2., andrecommended approval Of the modifications and assignment of the regulatoryagreement
1. PUBLIC HEARINGS: (Joint Public Hearing with the City Council)
I.S. AMENDMENT NO. 1 TO DISPOSITION AND DEVELOPMENTAGREEMENT NO. A0470C WITH SANTIAGO SUNRISE VILLAGEMOBILE HOME PARK CORPORATION FOR AGENCY ASSISTANCEIN THE AMOUNT OF $153,700, FOR LAUNDRY AND OFFICEFACILITIES AT SUNRISE VILLAGE MOBILE HOME PARK LOCATEDAT 9500 EAST SAN RAFAEL ROAD:ACTION: 1) Continue the Public Hearing to December 3, 2008, with nopublic testimony; and 2) Direct the City ClerldAssistant Secretary to frost aNotice of Continued Public Hearing. Motion Agency MemberHutcheson, seconded by Agency Member Weigel and unanimouslycarried 4-0 an a roll call vote.
AYES; Agency Member Hutcheson, Agency Member Weigel, ViceChair Foat, and Chair Pougnat.
NOES: None.ABSENT: Agency Member Mills.
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Ci#y of Palm SpringsCornmix ty Redevelopment AgencyNovember 19, 2008Page 2
RA, COMMUNITY REDEVELOPMENT AGENCY.,
RA1. APPROVAL OF MINUTES;ACTION: Approve the Community Redevelopment Agency Minutes OfOctober 1, 2008, and November 5, 2008. Motion Agency MemberWalgei, seconded by Agency Member Hutcheson and unanimouslycarried 4-0 on a roll call vote.
AYES: Agency Member Hutcheson, Agency Member Weigel, ViceChair coat, and Chair Pougnet.
NOES: None..ABSENT: Agency Member Mills.
The Community Redevelopment Agency continued at 6:56 p.m., and the City of PalmSprings Housing Authority convened for a Joint Meeting.
RA2. MODIFICATION OF REGULATORY AGREEMENT, ASSIGNMENT ANDASSUMPTION OF LOAN DOCUMENTS, FREDDIE MAC RIDER TO THEREGULATORY AGREEMENT AND A SUBORDINATION AGREEMENTBY AND BETWEEN THE COMMUNITY REDEVELOPMENT AGENCYOF THE CITY OF PALM SPRINGS AND CORPORATE FUND FORHOUSING, D.B.A., LINC HOUSING CORPORATION, TO ASSIGN THEAGREEMENT TO TAHQUITZ ASSOCIATES, LP, AND 13Y THEHOUSING AUTHORITY OF THE CITY OF PALM SPRINGS ANDCORPORATE FUND FOR HOUSING, D.B.A., LINC HOUSINGCORPORATION, TO ALLOW FOR THE TRANSFER OF THE nom/PROPERTY TO A PARTNERSHIP THAT IS NOT A S01C(3) 1GORGANIZATION FOR THE TAHQUITZ COURT APARTMENTS AT2800, 2890, 2900 and 2980 EAST TAHQUITZ CANYON WAY:ACTION: 1) [Community Redevelopment Agency] Adopt ResolutionNo. 1369 , "A RESOLUTION OF THE COMMUNITY REDEVELOPMENTAGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA,APPROVING A MODIFICATION OF THE REGULATORY AGREEMENT,ASSIGNMENT AND ASSUMPTION OF LOAN DOCUMENTS, FREDDIEMAC RIDER TO THE REGULATORY AGREEMENT AND ASUBORDINATION AGREEMENT BETWEEN THE COMMUNITYREDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS ANDCORPORATE FUND FOR HOUSING, D.13.A., LINCHOUSINGCORPORATION, TO ASSIGN THE AGREEMENT TO TAHQUITZASSOCIATES, LIP, FOR THE TAHQUITZ COURT APARTMENTS AT2800, 2890, 2900, and 2990 EAST TAHQUITZ CANYON WAY;" 2)[Housing Authority] Adopt Resolution No. 34, "A RESOLUTION OF THEHOUSING AUTHORITY OF THE CITY OF PALM SPRINGS,CALIFORNIA. APPROVING AN AMENDMENT TO A REGULATORYAGREEMENT AND DECLARATION OF COVENANTS AND
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Clty of Palm SPrfnxCommunity Redevelopment AgencyNovember 19, 2006Page 3
RESTRICTIONS BETWElrN THE HOUSING AUTHORITY OF THE CITYOF PALM SPRINGS AND CORPORATE FUND FOR HOUSING, D.B.A.,LINO HOUSING CORPORA7iON, TO ALLOW FOR THE TRANSFER OFTHE PROPERTY TO A PARTNERSHIP THAT IS NOT A 501C(3)ORGANI77-ATION FOR THE TAHQUiTZ COURT - APARTMENTSLOCATED AT 2800, 2$90, 2900 AND 2990 EAST TAHQUITZ CANYONWAY;" and 3} Authorize the Executive Director to execute all necessarydocumer ts_ A0501 C. Motion Agency Member Weigel, seconded byAgency Member Hutcheson and unanimously carried 40 on a roilcall vote.
AYES: Agency Member Hutcheson, Agency Member Weigel, ViceChair Foat, and Chair Pougnet
NOES: None.ABSENT: Agency Member Mills.
ADJOURNMENT: The Community Redevelopment Agency adjoumed at 6:57 p.m.
APPROVED BY A MOTION OF THE CITY OF PALM SPRINGS COMMUNITYREDEVELOPMENT AGENCY THIS 3RD DAY OF DECEMBER, 2008.
ATTEST:STEPHEN P. POUGNET, CHAIR
JAMES THOMPSON, Qf Y CLERK
03
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EXIIISIT "E"
68/1612009 SUNCase5:10-cv-01087-JW Document1 Filed03/15/10 Page63 of 65 i^or3 /o3a
1 2:34 F
Law Office of
Dwo G. KENYON -
OwD G. KFNym 7200 Redwood 91vd., Site 404 • Novafo, CA 94945FRFOERIGI M. CHAWA&W Telephone (415) 992-1968 • Fax (415) 892-1716 • E-mil: I.awkenyon @col.com
i
March 27, 2002
Residents of the Franciscan
Dear Residents:
You are receiving with this letter a notice of rent increase from CWS, theoperators of the park, telling you of the annual jacretase that occurs on July 1 st, per youroriginal Lease. This increase is not the one that many of you have agreed to pay if ZINCHousitig is able to purchase th= park for your benefit.
We are having some difficulty and delays with the purchase. It will not occurbefore April 1 ° The primary problem is that certain restrictions have been planed on thebonds that have made them, difficult to sell. For now, you should assinne that thetransaction will close in April and that those who have signed the Lease Amendment willbegin paying the $90 increase in May.
When the Acquisition transaction is completed, those who have signed the Lease "-Amendment will pay only the agreed-upon $90/month increase. Ever if the transactioncloses after July 1 m% youi CWS increase will be superseded by the LILAC $90 increase,And your total rent increase will amount tD $901month. Those who did not sign the LeaseAmendment will receive the emnual, CWS increase, per your original Lease.
For those efyou who have not yet signed a Lease Amendment agreeing to pay$90 more per montb if the Acquisition is successful, it is not too Iate. The $90 inmwsewill be valid up to -the closing of the aransacdon, after which time the increase will bePro-rated but not less than $100 per month.
Sincerely
David G. Kenyon
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EXHIBIT "F"
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ship: Cooperative Acquires Seal Beach Trader PAr. _r i
On Friday, October 30th, The Loftin Firm LLP successfully assisted Seal Beach Shores, Inc, in acquiring theSeal Beach Trailer Park from the Seal Beach Affordable Housing Corporation, making the community a resi-dent owned mobilehome park. Seal Beach Shores, Inc. is the first resident owned corporation to have acquireda mobilehome home park from another entity organized as a 501(c)(3) nonprofit corporation and is itself a 501(c)(3) nonprofit corporation.
The deal included Seal Beach Shores assuming all underlying financing in place on the Park, including Cityissued bond financing, Califomia Department of Housing and Community Development ("HCD" ), Mobile-home Park Resident Ownership Program financing and other loan and grant money from the RedevelopmentAgency of the City of Seal Beach. The cooperative relationship development between Seal Beach AffordableHousing Corporation and its affiliated entity LILAC Housing Corporation, the City of Seal Beach, HCO, SealBeach Shores, the bond issuers and all attorneys is a testament to a collective desire to see a communitythrough the entire process of becoming resident owned.
Seal Beach Shores, as a limited equity housing cooperative, will provide residents within the mobilehome parkan opportunity to own a piece of the corporation that owns the park, an opportunity to regulate their own com-munity and their lives overall and to continue the protection for residents from unnecessary rent increases. Theprocess took many years to complete, but the residents are ecstatic about the opportunity and over 81 % of theresidents have opted to become members of the cooperative.
Ariel R. Bedell, a partner with The Loftin .Firm LLP stated that "Without the tenacity of the residents and thefull cooperation of everyone involved, the dream of resident ownership would not have occurred." Such testa-ment was reiterated by Ken Williams, Secretary of Seal 13 each Shores, Inc-, who stated that after the closing onFriday, residents were celebrating throughout the weekend and they are very thankful to Seal Beach Afford-able Housing Corporation, LILAC Housing Corporation, the City of Seal Beach and HCD for their respectiveparticipation, assistance, guidance and professionalism.
The Loftin Firm LLP has converted over 80 mobilehome parks to resident ownership a^pFR _ 11 rrriia,
representing park owners, residents and govemment agencies in the process. ^;'w £ R
For additional information regarding the conversion of the Seal B- ^, y 'ark to residett F^please contact either Ariel Bedell with The Loftin Firm at 76Q:E, or Ken Wil2iarrts.:vsrlt 13Shores at 562.397.0999..• . _:"! r'