THIS DOCUMENT IS RECORDED FOR THE BENEFIT OF SAN MATEO COUNTY AND IS EXEMPT FROM FEE PER GOVERNMENT CODE SECTIONS 27383 AND 6103.

WHEN RERECORDED MAIL TO:

For Clerk Use Only

SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE

Covenant And agreement

Regarding Affordability Restrictions

for La Terrazza at Colma Station

Preamble

This Covenant and Agreement (‘Covenant’) is dated March 8, 2005, and is made by and between Colma Apartment Associates, L.P. (“Developer”), the San Mateo County Transit District (“SamTrans”), and the County of San Mateo (the “County”) with regard to real property situated in the unincorporated portion of the County of San Mateo, State of California, commonly known as La Terrazza at Colma Station, and more particularly described in Exhibit A hereto (the “Property”). Developer, SamTrans and the County, collectively referred to as the “Parties,” hereby agree that the use of the Property is to be restricted as set forth in this Covenant.

ARTICLE I

STATEMENT OF FACTS

1.01. The Property, totaling approximately 2.1 acres is more particularly described and depicted in Exhibit “A” attached hereto and incorporated herein by this reference. The property may further be described as San Mateo County Assessor’s Parcel Nos.: 008-122-010, -020, -030, -070, -110, and -120.

1.02. SamTrans is the current fee owner of the Property. Developer has entered into a 75-year lease of the Property with SamTrans, a memorandum of which lease is recorded at 2002-209987 (the “Master Ground Lease”). Pursuant to the Master-Ground Lease, Developer may exercise certain rights of ownership over the Property for the entire term of the Master Ground Lease.

1.03. Developer has received approval to develop a 153-unit residential rental apartment project on the Property.

1.04. In accordance with the requirements of Colma BART Station Area Plan Policy 2.13 and the San Mateo County Density Bonus Ordinance (Ord. Code Section 7900-7907), as a condition of approval of said 153-unit residential project (the “Project”), Developer is required to and has agreed to provide 31 unit(s) of long-term affordable rental housing.

1.05. The Parties desire to enter into a written agreement that will provide for the construction of said 31 affordable housing unit(s) and their restriction to use as affordable rental housing units.

1.06. This Covenant shall be recorded to run with the Property.

ARTICLE II

DEFINITIONS

2.01. Qualified Tenant. “Qualified Tenant” means an individual of family whose income does not exceed the household income levels for eligibility for an Affordable Housing Unit, as such levels are generally described in Section 7901 of the San Mateo County Density Bonus Ordinance, and more specifically described in Exhibit B attached hereto.

2.02. Affordable Unit. “Affordable Unit” means a residential rental unit, within the Project, that is designated as being subject to the Maximum Rental Rate as set forth in Section 3.02.

2.03. Owner. As used hereinafter, “Owner” means and includes: (a) Developer and its successors in interest under the Master Ground Lease, and their successors in interest, including heirs and assigns, who at any time hold an interest in or to, including a leasehold or other possessory interest, all or any portion of the Property; and (b) but only in the event of termination of the Master Ground Lease, SamTrans and its successsors in interest in the Property, and their successors in interest in the Property, including heirs and assigns, who at any time hold title to or an interest in all or any portion of the property. This Covenant is binding on SamTrans, Developer and any and all successors in interest to either of them, as to all or any part of the Property. Accordingly, this Covenant is binding on all Owners.

2.04. Density Bonus Ordinance. “San Mateo County Density Bonus Ordinance” means Ordinance Code Sections 7900–7907, as enacted on November 7, 1995, and as may be thereafter amended by the Board of Supervisors.

2.05. General Definitions. The definitions contained in Section 7901 of the San Mateo County Density Bonus Ordinance shall apply throughout this Covenant.

ARTICLE III

DEDICATION AND RESTRICTIONS

3.01. Agreement. Developer, in fulfillment of its obligation to provide 31 unit(s) of affordable housing as a condition for the approval of the Project, hereby agrees not to rent or otherwise cause or allow to be occupied any Affordable Unit except to eligible tenants at or below the Maximum Rental Rates as established under Section 3.02, below.

3.02. Maximum Rental Rate. The Maximum Rental Rate applicable to an Affordable Unit shall be established by the highest rental rate determined by the annual adjustment based on the Department of Housing and Urban Development (HUD) Very Low Income (50% area median income) limits with adjustments for family size. Owner shall prohibit any person, family or household who has not been determined to be an qualified tenant at the time of taking possession of an Affordable Unit from renting or occupying any Affordable Unit and shall cause any such person or family to vacate any Affordable Unit so rented or occupied contrary to these restrictions. Owner shall comply with all laws and regulations applicable to Affordable Units.

3.03. Designation of Affordable Units. Owner agrees to provide, within the Project, the number and types of Affordable Units as described in Exhibit B attached hereto and incorporated herein by this reference.

3.04. Construction of Affordable Units. All Affordable Units shall meet the standards set forth in Section 7905 of the San Mateo County Density Bonus Ordinance.

3.05. Certification of Income; Qualified Tenants. Developer has prepared and proposed the tenant certification and selection process attached hereto as Exhibit C. The Parties find that to be a fair and equitable selection process that assures the selection of qualified tenants for the Affordable Units. Accordingly, the process described in Exhibit C is adopted by the Parties as the tenant certification and selection process for the Affordable Units.

3.06. Recertification of Income; Continued Availability at Restricted Rental Rate. On an annual basis according to a schedule set by the County, Owner shall submit a report (the “Annual Report”) to the County Department of Housing that contains with respect to each Affordable Unit, the type of Affordable Unit and the rental rate and income and household size of the occupants and any other relevant information requested by the County, including information useful in determining tenant eligibility. The Annual Report shall be based on information supplied by the tenant or occupant of each Affordable Unit in a certified statement executed yearly by the tenant on a form provided or previously approved by the County. In order to verify the information provided, County shall have the right to inspect the books and records of Owner and its rental agent or bookkeeper upon reasonable notice.

3.07. Re-designation of Affordable Units. Notwithstanding the provisions of Exhibit B and Section 3.03, above, if at the time of recertification, a tenant’s household income exceeds the target income for that unit by more than 140% of the tenant’s income at current certification, the Owner may increase the rent payable by such tenant, provided that within 60 days of such rent increase, Owner designates a unit determined by the County to be equivalent within the Project as an Affordable Unit and rents such unit to the next qualified tenant at the applicable Affordable Unit rental rate.

3.08. Termination of Unit Lease. If, at the time of recertification, a tenant’s household income exceeds the target income for that unit by more than 140% of the tenant’s income at current certification, then (provided Owner does not proceed with that tenant as set forth in Section in 3.07 above) the tenant’s lease for the unit as an Affordable Unit shall terminate six (6) months after the date of attempted recertification, provided, however, that:

a.

The tenant shall have the right of first refusal for any available unit within the Project unit of a comparable size that is not designated as an Affordable Unit. This right shall begin upon the date of attempted recertification and shall expire 30 days after date of attempted recertification, and

b.

If the eligible tenant provides to the Owner additional evidence that establishes income eligibility prior to the expiration of the eligible tenant’s lease, then the eligible tenant’s lease as to the Affordable Unit shall not be so terminated.

3.09. Monitoring Fee. For each affordable rental unit provided under this agreement, the Owner shall pay an annual monitoring fee each year for the term of required affordability. The amount of the County’s initial monitoring fee for the years 2005 and 2006 shall not exceed $50 per affordable unit per year. Then, starting in 2007, the amount of the per unit annual monitoring fee shall be set by the Board of Supervisors, and starting in 2008 may be adjusted annually as necessary to cover only the County’s actual costs to monitor the affordable units. In no event will the adjusted fee exceed the original $50 adjusted by the Consumer Price Index (CPI).

ARTICLE IV

TERM OF COVENANT

4.01. Restrictions to Run with the Land. This Covenant sets forth provisions, covenants, restrictions, and conditions (collectively referred to as “Affordability Restrictions”), subject to which the Property and every portion thereof shall be improved, held, used, occupied, leased, sold, hypothecated, encumbered, and/or conveyed. Each and every Affordability Restriction: (a) runs with the land pursuant to California Civil Code Section 1468; (b) inures to the benefit of and passes with each and every portion of the Property, (c) is for the benefit of, and is enforceable by the County and (d) is imposed upon the entire Property unless expressly stated as applicable only to a specific portion thereof.

4.02. Binding upon Owners/Occupants. This Covenant binds all Owners of the Property, their heirs, successors, and assignees, and the agents, employees, and lessees of the Owners, heirs, successors, and assignees.

4.03. Maintenance of Long-term Affordability. Owner agrees to maintain the Affordable Units as described herein as Affordable Units continuously for a period not less than fifty-five (55) years from the recording date of this Covenant. Accordingly, this Covenant shall last and run with all portions of the Property for no less than 55 years from the date of recordation hereof, and shall automatically continue thereafter as a restriction on the Property, until and unless the County, or the then-current fee owner of the portion of the Property in question, records a notice that this Covenant is terminated as to that portion of the Property described in said notice.

4.04. Conveyance of Property. The Owner shall provide notice to the County not later than thirty (30) days after any conveyance of any ownership interest in the Property (excluding mortgages, liens, and other non-possessory encumbrances) or any conveyance of an interest in the Master Ground Lease. The County shall not, by reason of this Covenant, have authority to approve, disapprove, or otherwise affect any proposed conveyance, except as may otherwise be provided by law, by administrative order, or by a specific provision of this Covenant.

4.05. No Inconsistent Arrangements. Owner shall not execute any other agreement with provisions contradictory to or in opposition to the provisions hereof, and that, in any event, with respect to the matters contained herein, this Covenant is controlling as to the rights and obligations between the Owner, the County and their respective successors.

ARTICLE V

NON-DISCRIMINATION

5.01. Non-discrimination Covenant. Each Owner covenants and agrees for itself, its successors, assigns and any successor in interest to the Property that, unless otherwise permitted by law, there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, family status (minor children or no minor children), national origin, ancestry or disability in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the Owner or any person claiming under or through Owner, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees on the Property.

5.02. Non-discrimination Provisions in Other Documents. All deeds, leases or contracts made with respect to the sale, lease, sublease, transfer, use, occupancy tenure or enjoyment of the Property, improvements thereon, or any part of said Property or improvements shall contain or be subject to the non non-discrimination and nonsegregation clause and covenant contained in Section 5.01 above.

ARTICLE VI

ENFORCEMENT

6.01. Enforcement. Violation or breach of this Covenant or any of the Affordability Restrictions, shall be subject to enforcement by the County, which enforcement shall include all available mechanisms, including without limitation, the filing of civil or criminal actions or the imposition of fines, as may be permitted by law.

6.02. Excess Rent. In the event that and to the extent that Owner receives rents or other payments from the operation of the Affordable Units in excess of what Owner is permitted to charge and receive pursuant to this Covenant, after thirty (30) days notice by County to Owner, Owner agrees and covenants to pay to the County the full amount of such excess, including statutory interest thereon, for all periods prior to and during the 30-day notice period on demand by the County. The Owner agrees and intends that the payment of such excess, absent other remedies described in this Covenant to ensure for the term hereof that rents or other payments do not exceed those Owner is permitted to charge and receive pursuant to this Covenant, shall not alone be an adequate remedy to accomplish the purposes of this Covenant.

6.03. All Remedies Available and Cumulative. In the event of any breach of any of the covenants or restrictions set forth herein (a “Default”), the County shall have the right to exercise all its rights and remedies, and to maintain any action at law or suits in equity or other real property proceedings, including without limitation, specific performance, to enforce the covenants and restrictions and the curing of any breach or violation thereof. No delay in enforcing the provisions hereof as to any breach or violation shall impair, damage or waive the right of the County to enforce the provisions hereof in the future for any continuing or new breach or violation of any of the covenants or restrictions contained in this Agreement. All rights and remedies, including without limitation those set forth in Sections 6.01 and 6.02 above, of any party legally entitled to enforce this Agreement shall be cumulative and the exercise of any such right or remedy shall not impair or prejudice and shall not be a waiver of the right to exercise any other such rights and remedies.

6.04. Assignment of Rights to Enforce Affordability Restrictions. To the extent permitted by law, Owner hereby assigns to County all rights to enforce the Affordability Restrictions set forth herein.

6.05. Lien Holders’ Remedies. The provisions of this Covenant do not limit the right of any obligee to exercise any of its remedies for the enforcement of any pledge or lien upon the Project; provided, however, that in the event of any foreclosure, under any mortgage, deed of trust or other lien or encumbrance, or a sale pursuant to any power of sale included in any such mortgage or deed of trust, or in the case of a deed in lieu of foreclosure, the purchaser (or other transferee) and their successors in interest and assigns and the Project shall be, and shall continue to be, subject to all of the covenants and restrictions, including the Affordability Restrictions, set forth in this Covenant.

ARTICLE VII

MISCELLANEOUS

7.01. No Dedication Intended. Nothing set forth in this Covenant shall be construed to be a gift or dedication, or offer of a gift or dedication, of the Property, or any portion thereof to the general public or anyone else for any purpose whatsoever.

7.02. Department References. All references to the Department of Housing include successor agencies/departments or other successor entity.

7.03. Recordation. The Covenanter shall record this Covenant, with all referenced Exhibits, in the County of San Mateo within ten (10) days of the Covenanter’s receipt of a fully executed original.

7.04. Notices. All notices, demand, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given and received when delivered by hand or, if mailed, three (3) business days after deposit in the mail, postage prepaid, certified or registered mail, return receipt requested, and addressed to County at:

Director, San Mateo County Housing Department

262 Harbor Boulevard, Building A

Belmont, CA 94002

and to other Parties at:

DEVELOPER

Colma Apartment Associates, L.P.

1600 W. Campbell Avenue, Suite 201

Campbell, CA 95008

SAMTRANS

San Mateo County Transit District

1250 San Carlos Avenue

P.O. Box 3006

San Carlos, CA 94070

Any party may change its address or the individual to whose attention a Notice is to be sent by giving written Notice in compliance with this section.

7.05. Severability. If any provision of this Covenant, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable, or void, the remainder of this Covenant and such provisions as applied to other persons, places, and circumstances shall remain in full force and effect.

7.06. Hold Harmless. The Owner shall indemnify and save harmless the County, its officers, agents, employees and servants from all claims, suits, or actions of every name, kind and description, brought for, or on account of, injuries to or death of any person, or damage to property of any kind whatsoever and to whomsoever belonging, including but not limited to, the concurrent active or passive negligence of the County, its officers, agents or employees and servants, resulting from the performance of any work required by this covenant of the Owner provided that this shall not apply to injuries or damage for which County has been found in a court of competent jurisdiction to be solely liable by reason of its own negligence or willful misconduct.

The duty of the Owner to indemnify and save harmless, as set forth herein, shall include the duty to defend as set forth in Section 2778 of the California Civil Code.

7.07. Relationship of Parties. It is expressly understood that the Developer is an independent contractor and that no agency, employee or other relationship is intended to be established by this agreement.

7.08. Amendments. Subject to applicable laws and ordinances, the County and its successors and assigns, on the one hand, and the then-current Owner, on the other, shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants or restrictions, including the Affordability Restrictions, contained in this Covenant without the consent of any tenant, lessee, easement holder or licensee, but consent shall be required from any mortgagee, trustee or beneficiary under a deed of trust. This Covenant shall not be amended, modified or terminated except upon the written consent of the County and upon the recordation of an amendment hereto duly executed and acknowledged by the then current Owner.

7.09. Governing Law. This Covenant shall be governed by and construed in accordance with the law of the State of California.

IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have affixed their hands.

COUNTY OF SAN MATEO

By:

President, Board of Supervisors
San Mateo County

Date:

ATTEST:

By:

Clerk of Said Board

DEVELOPER

SAMTRANS

Colma Apartment Associates, L.P.

San Mateo County Transit District

Developer’s Signature

SamTrans’ Signature

Date:

Date: