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<br />,. <br /> <br />PROMISSORY NOTE <br /> <br />Date: ~-\7-~ <br /> <br />For value received, VILLA MONTGOMERY, L.P., a California <br />limited partnership (the ~Developer"), hereby promises to pay to <br />the REDEVELOPMENT AGENCY OF THE CITY OF REDWOOD CITY (the <br />~Agency"), or order, in United States currency, the principal sum <br />of Two Million Six Hundred Twenty-Seven Thousand Dollars <br />($2,627,000), plus the entire amount of the Fee Subsidy together <br />with interest thereon, if applicable, as provided below. <br /> <br />1. Disposi tion and Development Aareement. This <br />Promissory Note (~Note") is entered into in connection with and <br />pursuant to that certain Amended and Restated Disposition and <br />Development Agreement (the ~Agreement") by and between the Agency <br />and FIRST COMMUNITY HOUSING, INC., a California non-profit <br />corporation, dated March 31, 2005, which such Agreement has been <br />assigned to Developer. In the event of a conflict between the <br />provisions of this Note and the Agreement, the provisions of the <br />Agreement will govern. Capitalized terms used in this Note will <br />have the meanings set forth in the Agreement unless otherwise <br />defined herein. This Note is the ~Promissory Note" as defined in <br />the Agreement. <br /> <br />2. Securitv. As security for payment of this Note, the <br />Developer has granted to the Agency a deed of trust (~Deed of <br />Trust") on certain property located in the City of Redwood City and <br />the improvements thereon as more fully described in the Agreement <br />(the ~Property"), which Deed of Trust will be subordinate only to <br />such security instruments as are approved by the Agency in its sole <br />discretion. <br /> <br />3. Repavment Provisions. <br /> <br />a. Except as set forth below, this Note shall <br />accrue at three percent (3%) simple interest and shall be repaid on <br />an annual basis, from seventy percent (70%)the Project's Net Cash <br />Flow, defined herein as gross receipts less 1) actual operating <br />costs; 2) actual property taxes; 3) actual debt service costs; 4) <br />an annual reserve deposit of $35,000 per year (2005 $), escalated <br />at 3% per year; 5) a $15,000 annual tax credit partnership <br />management fee, escalated at 3% per year, until dissolution of the <br />partnership; 6) a $5,000 annual asset management fee, escalated at <br /> <br />1 <br /> <br />REDW\0006\DOC\024 <br />