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Land Disposition, Development and Loan Agreement 2017-0160027
RECORDING REQUEST BY: CITY OF POWAY WHEN RECORDED MAIL TO - CITY CLERK CITY OF POWAY P O BOX 789 POWAY CA 92074-0789 155211211884197.8 DOC# 2017-0160027 1111111 IIIII I IIII II III IIII 111111 IIIII IIII I IIIII IIIII II011111111111111 Apr 10, 2017 03:01 PM OFFICIAL RECORDS Ernest J. Dronenburg, Jr., SAN DIEGO COUNTY RECORDER FEES: 5321.00 PAGES. 103 (This space for Recorder's Use) LAND DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT BETWEEN POWAY HOUSING AUTHORITY AND VILLA DE VIDA POWAY, L.P Dated as of October 4, 2016 11-053 TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND EXHIBITS .3 Section 1 I Definitions. .3 Section 1.2 Exhibits. 12 ARTICLE 2. PREDISPOSITION REQUIREMENTS ... 13 Section 2.1 Conditions Precedent to Conveyance of Property 13 Section 2.2 Governmental Approvals. .... 13 Section 2.3 Review and Approval of Design and Construction Documents. 13 Section 2.4 Financing Proposal and Financing Plan. ... 15 Section 2.5 Tax Credit Reservation, Financing. 17 Section 2.6 Other Approved Financing. ..... 17 Section 2.7 Other Governmental Approvals. ............. 19 Section 2.8 Management Plan and Procedures. 19 Section 2.9 Construction Contract. .20 Section 2.10 Construction Bonds. .20 Section 2.11 Insurance. .21 Section 2.12 Property Inspection. .21 Section 2.13 Resident Selection Plan. .21 ARTICLE 3 DISPOSITION OF PROPERTY .21 Section 3.1 Sale and Purchase. .21 Section 3.2 Purchase Price. .22 Section 3.3 Opening Escrow ... .22 Section 3 4 Close of Escrow .22 Section 3.5 Condition of Title. .23 Section 3.6 Condition of Property .24 Section 3 7 Costs of Escrow and Closing. .26 ARTICLE LOAN PROVISIONS •26 Section 4 1 Loan Amount. .26 Section 4.2 Interest. .26 Section 4.3 Use of Authority Loan. .27 Section 4 4 Security; Subordination of Regulatory Agreement. .27 Section 4.5 Repayment Schedule. .28 Section 4.6 Conditions Precedent to Disbursement of Authority Loan. .29 Section 4 7 Reports and Accounting of Residual Receipts. .31 Section 4.8 Developer Fee. .32 Section 4 9 Assumption. .33 Section 4 10 Non -Recourse. .33 Section 4 11 Assignment of Collateral Documents. .34 ARTICLE 5 CONSTRUCTION OF IMPROVEMENTS .35 Section 5 1 Construction Pursuant to Plans. .35 Section 5.2 Change in Construction of Improvements. .35 Section 5.3 Commencement of Improvements. .35 Section 5 4 Completion of the Improvements. .35 1552\12k 1884197 9 TABLE OF CONTENTS (Continued) Pape Section 5.5 Equal Opportunity .36 Section 5.6 Compliance with Applicable Law; Prevailing Wage Requirement. .36 Section 5.7 Progress Report. .37 Section 5.8 Construction Responsibilities. ......... .37 Section 5.9 Mechanics Liens, Stop Notices, and Notices of Completion. .38 Section 5 10 Inspections. .... .38 Section 5 11 Financing; Revisions to Plan. .39 Section 5 12 Information. .39 Section 5 13 Records. .39 Section 5 14 Relocation. ........ .39 Section 5 15 Bid Package. 40 Section 5 16 Financial Accounting and Post -Completion Audits. 40 ARTICLE 6. ONGOING DEVELOPER OBLIGATIONS 40 Section 6.1 Applicability 40 Section 6.2 Use. 41 Section 6.3 Maintenance. 41 Section 6.4 Taxes and Assessments. 42 Section 6.5 Mandatory Language in All Subsequent Deeds, Leases and Contracts. ..... 42 Section 6.6 Hazardous Materials. 43 Section 6.7 Management Agent; Periodic Reports. 45 Section 6.8 Approval of Management Plan Modifications. 46 Section 6.9 Resident Services Plan and Resident Services Budget. 47 Section 6.10 Insurance Requirements. 47 Section 6.11 Audits. 49 Section 6.12 Safety Conditions. 49 Section 6.13 Notice of Litigation. ..... .50 ARTICLE 7 ASSIGNMENT AND TRANSFERS .50 Section 7 1 Definitions. .50 Section 7.2 Purpose of Restrictions on Transfer .50 Section 7.3 Prohibited Transfers. ... .51 Section 7 4 Permitted Transfers. .51 Section 7.5 Effectuation of Certain Permitted Transfers. .52 Section 7.6 Other Transfers with Authority Consent. .53 ARTICLE 8. DEFAULT AND REMEDIES ... ... .53 Section 8.1 General Applicability .53 Section 8.2 No Fault of Parties. .53 Section 8.3 Fault of Authority .54 Section 8.4 Fault of Developer .54 Section 8.5 Remedies. .56 Section 8.6 Right of Reverter .56 Section 8.7 Option to Repurchase, Reenter and Repossess. .57 1552\12\1894197.8 TABLE OF CONTENTS (Continued) Pape Section 8.8 Acceleration of Note. .58 Section 8.9 Right to Cure at Developer's Expense. .58 Section 8.10 Delivery of Collateral Documents. .58 Section 8.11 Rights of Mortgagees. .58 Section 8.12 Remedies Cumulative. .58 Section 8.13 Waiver of Terms and Conditions. .59 ARTICLE 9 SECURI'T'Y FINANCING AND RIGHTS OF HOLDERS .59 Section 9 1 No Encumbrances Except for Development Purposes. .59 Section 9.2 Holder Not Obligated to Construct. .59 Section 9.3 Notice of Default and Right to Cure. .60 Section 9 4 Failure of Holder to Complete Improvements. .60 Section 9.5 Right of Authority to Cure. .60 Section 9.6 Right of Authority to Satisfy Other Liens. .60 Section 9 7 Holder to be Notified. .61 ARTICLE 10 GENERAL PROVISIONS .61 Section 10 1 Notices, Demands and Communications. .61 Section 10.2 Non -Liability of Public Officials, Employees and Agents. .61 Section 10.3 Forced Delay .62 Section 10.4 Inspection of Books and Records. .62 Section 10.5 Title of Parts and Sections. .62 Section 10.6 General Indemnification. .62 Section 10.7 Applicable Law .63 Section 10.8 No Brokers. .63 Section 10.9 Severability .63 Section 10 10 Legal Actions, Venue. .63 Section 10.11 Binding Upon Successors. .63 Section 10 12 Parties Not Co -Venturers. .64 Section 10 13 Time of the Essence. .64 Section 10 14 Action by the Authority .64 Section 10 15 Representations and Warranties. .64 Section 10 16 Entry by the Authority .66 Section 10.17 Operating Memoranda, Implementation Agreements. .66 Section 10.18 Amendments. .67 Section 10.19 Multiple Originals; Counterparts. .67 Section 10.20 Complete Understanding of the Parties. .67 1552\12\I 883197.8 TABLE OF CONTENTS (Continued) Page EXHIBITS Exhibit A. Legal Description of the Property Exhibit B Development Schedule Exhibit C. Scope of Development Exhibit D• Financing Proposal Exhibit E: Form of Authority Regulatory Agreement Exhibit F Form of Authority Promissory Note Exhibit G. Form of Authority Deed of Trust Exhibit FI Form of Notice of Affordability Restrictions on Transfer of Property Exhibit I Form of Grant Deed Exhibit J Memorandum of DDLA iv 1552112\1884197,8 DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (Villa De Vida) This Disposition, Development and Loan Agreement (the "Agreement") is entered into as of October 4, 2016 (the "Effective Date"), by and between the Poway Housing Authority, a public body, corporate and politic (the "Authority"), acting in its capacity as housing successor under California Health and Safety Code Section 34176, to the dissolved Poway Redevelopment Agency (the "Former Agency"). a public body, corporate and politic. and Villa de Vida Poway. L.P., a California limited partnership (the "Developer"), with reference to the following facts, understandings and intentions of the parties: RECITALS A These Recitals refer to and utilize certain capitalized terms that are defined in Article I of this Agreement. The Parties intend to refer to those definitions in connection with the use of capitalized terms in these Recitals. B. The City Council of the City of Poway (the "City Council") adopted the Redevelopment Plan for the Paguay Redevelopment Project Area (the "Project Area") on December 13, 1983 by Ordinance No. 117, as amended by Ordinance No. 415 on June 15, 1993, Ordinance No. 439 on December 13, 1994, Ordinance No. 593 on December 2, 2003, Ordinance No. 605 on August 3, 2004, Ordinance No. 611 on October 26, 2004, Ordinance No. 641 on July 18, 2006, and as further amended by Ordinance No. 657 on July 12, 2007 (as amended from time to time, the "Redevelopment Plan"). The Redevelopment Plan affects and controls the development and use of all real property located within the Paguay Redevelopment Project Area within the City of Poway, California, (the "City") as more particularly described and set forth in the Redevelopment Plan. The goals for the Redevelopment Plan include alleviation of blighting conditions and the stimulation of economic development and affordable housing activities in the Project Area and the community C. On January 17, 2012, and pursuant to Health and Safety Code Section 34173, the City Council declared that the City would act as successor agency (the "Successor Agency") to the former Poway Redevelopment Agency (the "Dissolved RDA") effective February 1, 2012, but elected not to retain the housing assets and functions previously performed by the Dissolved RDA and instead. pursuant to Health and Safety Code Section 34176(b)(3), selected the Authority to retain the housing assets and functions previously performed by the Dissolved RDA. D On February 1 2012, pursuant to Health and Safety Code Section 34176(b)(3) and 34177(8), the Successor Agency transferred to the Authority the housing functions and assets of the Dissolved RDA. E. The Authority. as housing successor, owns that certain real property generally located at 12341 Oak Knoll Road, Poway, California, located within the Project Area. as further described in the attached Exhibit A and incorporated herein by this reference (the "Property"). 1552"2%1984197.8 Pursuant to this Agreement, the Authority desires to convey the Property to the Developer and the Developer desires to develop the Property with a fifty-four (54) unit affordable permanent supportive housing development (the "Improvements"). F The Property has been identified as a "housing asset" pursuant to California Health and Safety Code Section 34176, and the Oversight Board of the Successor Agency as well as the California Department of Finance have approved of such identification. The Former Agency previously acquired the Property utilizing funds from the Former Agency's low and moderate housing fund established pursuant to Section 33334.2 of the California Health and Safety Code. G. Subject to the terms and conditions of this Agreement, the Authority will transfer a fee interest in the Property to the Developer and will make the Authority Loan to the Developer which will be funded with money from the Authority's Low and Moderate Income Housing Asset Fund established pursuant to California Health and Safety Code Section 34176(d). The property is a "housing asset" as such term is defined in Health and Safety Code Section 34176 and was approved to transfer to the Authority under the Housing Asset Transfer List approved by the Department of Finance on August 31, 2012. H. The Developer intends to finance the remainder of the costs of the development of the Improvements with public and private sources as more particularly set forth in Exhibit D attached to this Agreement, which provides the Developers Financing Proposal for the anticipated financing of the development costs as of the Effective Date, including an estimate of the sources and uses of funds for the construction of the Improvements. I. The City Council and the Authority Board have each conducted a duly noticed public hearing on this Agreement pursuant to Section 33433 of the California Health and Safety Code, and the Authority intends to covey the Property in its capacity as housing successor and as permitted under Section 33433 of the California Health and Safety Code. 1 The Authority has determined that the Developer has the necessary expertise, skill and ability to carry out the commitments set forth in this Agreement and that this Agreement is in the best interests, and will materially contribute to the implementation of, the Redevelopment Plan by increasing the supply of low and moderate income housing available at affordable housing cost. K. The Developer's construction and operation of the Development are not financially feasible without the Authority's financial assistance. The Authority therefore desires to transfer the Property to the Developer in accordance with the terms set forth in this Agreement and to provide the Developer with the Authority Loan to provide construction funding in consideration for the Developer's agreement to construct and operate the Development consistent with this Agreement and the Authority Regulatory Agreement, including (without limitation) the occupancy and affordability restrictions. The amount of the Authority Loan provided pursuant to this Agreement does not exceed the amount of Authority's assistance necessary to make the Developer's acquisition of the Property and the construction and operation of the Development, as restricted by this Agreement, financially feasible. 2 I55Z I N 8&a 197.8 L. The Authority intends to apply the Units to be developed pursuant to this Agreement toward satisfaction of the statutorily mandated affordable housing production requirements for the Project Area under Health and Safety Code Section 33413(b)(2) and to meet replacement housing requirements applicable to the Redevelopment Area pursuant to Health and Safety Code. M. Pursuant to the California Environmental Quality Act and its implementing guidelines, the City (in its capacity as "lead agency"), filed a "Notice of Exemption" under Section 15332 of the CEQA Guidelines: (i) as a Class 32 project that is consistent with the General Plan and applicable zoning regulations; (ii) is occurring within the City limits on a property that is less than five acres; (iii) the Property has no value as a habitat for endangered, rare or threatened species; (iv) the project does not result in any significant effects relating to traffic, noise, air quality, or water quality; and (v) the Property is adequately served by all required utilities and public services. The Notice of Exemption served as the environmental documentation for the Authority's consideration and approval of this Agreement and the transactions contemplated by this Agreement. THEREFORE, the Authority and the Developer agree as follows: ARTICLE I DEFINITIONS AND EXHIBITS Section 1 I Definitions. In addition to the terms defined elsewhere in this Agreement, the following definitions shall apply throughout this Agreement. (a) "Acquisition Component" has the meaning set forth in Section 4.6(a) below (b) "Agreement" means this Disposition, Development and Loan Agreement, including the attached exhibits and all subsequent operating memoranda and amendments to this Agreement. (c) "Annual Operating Expenses" with respect to a particular calendar year means the following costs reasonably and actually incurred for operation and maintenance of the Development to the extent that they are consistent with an annual independent audit performed by a certified public accountant reasonably acceptable to the Authority using generally accepted accounting principles: (1) Property taxes and assessments imposed on the Development, as applicable; (2) Debt service currently due on a non -optional basis (excluding debt service due from residual receipts) on loans associated with the construction and operation of the Development and approved by the Authority in the approved Financing Plan pursuant to Section 2.4, 155211211884197.8 3 (3) Property management fees and reimbursements, not to exceed fees and reimbursements which are standard in the industry, and pursuant to a management contract approved by the Authority pursuant to the terms of Sections 2.8 and 6.7 of this Agreement: (4) Premiums for property damage and liability insurance; (5) Any annual license or certificate of occupancy fees required for operation of the Development.- (6) evelopment; (6) Security services: (7) Advertising and marketing costs; (8) Cash deposited into reserves for capital replacements of the Development in an amount of Three Hundred Seventy -Five Dollars per Unit per Year ($375.00) or such other amount approved by the Authority as part of the approved Financing Plan; (9) Cash deposited into the "Operating Reserve" to replenish the Operating Reserve (initially capitalized by the Developer in the approximate amount of One Hundred Fifty -Two Thousand Eight Hundred Thirty -Eight Dollars ($152,838), the total sum on deposit in the Operating Reserve at any one time shall be capped at six (6) months of gross rent from the Development, as such rent may vary from time to time; or such other amount approved by the Authority as part of the approved Financing Plan and annual operating budgets): (10) Asset management fee and, for the first fifteen (15) years of the Term, including the limited partner partnership management fee in the amount of Five Thousand Dollars ($5,000) per year which amount may increase annually by up to three percent (3%) and a general partner partnership management fee in the amount of Fifteen 'Thousand Dollars ($15,000) per year which amount may increase annually by up to three percent (3%); (11) Utility services not paid for directly by tenants, including without limitation, water sewer, and trash collection; (12) maintenance and repair, including pest control, landscaping, grounds maintenance, painting and decorating, cleaning, common systems repair, janitorial supplies and services, (13) Social services fees and expenses up to Ninety Five -Thousand ($95,000) per year, but excluding costs paid from the Supportive Services Reserve; (14) Annual audit fees, inspection fees, or monitoring fees required in relation to any Approved Financing; (15) Extraordinary operating costs specifically approved by the Authority in its reasonable discretion; and 4 1552112[1884197.8 (16) Payments of deductibles in connection with casualty insurance claims not normally paid from reserves, the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves, (17) Reasonable accounting fees and legal fees: (18) Payments made toward the outstanding balance of the deferred Developer Fee, but only for the first ten (10) years of operation of the Development (measured from the date of issuance of a certificate of occupancy or equivalent document for the Development); and (19) Other ordinary and reasonable operating expenses approved by the Authority in its reasonable discretion and not listed above. (20) Annual Operating Expenses shall exclude the following: depreciation, amortization, depletion or other non-cash expenses, any amount expended from a reserve account. (d) "Approved Financing" means the loans, grants, and other financing to be secured by the Developer, and approved by the Authority for the purpose of financing the costs of the Development which shall be consistent with the approved Financing Plan, and is anticipated to include: (1) A construction loan from a bank reasonably approved by the Authority in the approximate amount of Sixteen Million Six Hundred Seventeen Thousand Six Hundred Sixteen Dollars ($16,617,616) (the "Bank Loan"). The Bank Loan is intended to be paid down at the close of permanent financing to the approximate amount of One Million Seven Hundred Seventeen Thousand Dollars ($1.717,000): (2) Low Income Housing Tax Credit investor limited partner capital contribution in the approximate amount of Seventeen Million Sixty -Seven Thousand Dollars ($17,067,000) (the "Tax Credit Investor Equity"); (3) A HOME Investment Partnership Act loan from the County of San Diego in the approximate amount of One Million Dollars ($1.000,000) (the "County HOME Loan"): (4) Subject to Section 2.6(b) below, an Affordable Housing Program loan from a member institution of the Federal Home Loan Bank of San Francisco, pursuant to Section 21 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, in an amount reasonably approved by the Authority in the Financing Plan: and (5) Subject to the terms of Section 6.9(c) below, a capitalized resident services reserve in the amount not less than Two Million Five Hundred Thousand Dollars ($2.500.000) (the "Supportive Services Reserve"). 5 1552M 884197.8 (e) "Area Median Income" means the median gross yearly income, adjusted for household size. in the County of San Diego. California, as determined by the California Department of Housing and Community Development. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months. the Authority shall provide the Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by the State. (f) "Assignment Agreement" means the agreement pursuant to which the Developer assigns to the Authority its rights and obligations with respect to certain agreements, Plans and Specifications, and approvals, executed by the Developer and the Authority with regards to the Authority Loan and as a precondition to the making of the Authority Loan. (g) "Authority" means the Poway Housing Authority, a California public body corporate and politic. (h) "Authority Board" means the Board of Directors of the Authority (i) "Authority Deed of Trust" means the deed of trust that will encumber the Developer's fee interest in the Property to secure repayment of the Authority Promissory Note, substantially in the form attached hereto as Exhibit G. 0) "Authority Documents" shall mean, collectively, this Agreement, the Authority Promissory Note, the Authority Deed of Trust, the Authority Regulatory Agreement, the Notice of Affordability Restrictions on Transfer of Property and all other documents required to be executed by the Developer in connection with the transaction contemplated by this Agreement. (k) "Authority Event of Default" has the meaning set forth in Section 8.3(a). (1) "Authority Loan" shall mean the loan in an amount not to exceed Two Million Six Hundred Thousand Dollars ($2,600,000) made from the Authority to the Developer pursuant to the terms of this Agreement. (m) "Authority Promissory Note" means the promissory note that will evidence the Developer's obligation to repay the Authority Loan as set forth in this Agreement, substantially in the form attached hereto as Exhibit F (n) "Authority Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants that will be recorded in the Official Records against the Developer's fee interest of the Property upon the Close of Escrow and will restrict the development of the Property to affordable housing, substantially in the form attached hereto as Exhibit E. (o) "Bid Package" means the package of documents Developer's general contractor is required to distribute to potential bidders as part of the process of selecting subcontractors for the Development. The Bid Package is to include the following: (i) an invitation to bid; (ii) copy of the proposed construction contract; and (iii) all Construction Plans. 6 1552\12\1881197.8 (p) "CEQA" means the California Environmental Quality Act. Califomia Public Resources Code §21000- §21177. as amended. (q) "Certificate of Completion" means the final certificate of completion issued by the City, or comparable City sign -off on the completion of construction of the Improvements. (r) "Certified Access Specialist" means a certified access specialist registered with the State of Califomia Department General Services Division of State Architect and who has met the requirements of Government Code Section 4459.5 (s) "City" means the City of Poway, California, a municipal corporation. (t) "City Council" has the meaning set forth in Recital B (u) "Close of Escrow" means the date of recording of the Deed and the recordation of the Authority Deed of Trust, the Authority Regulatory Agreement, and the Notice of Affordability Covenants. (v) "Collateral Documents" means the Developers right, title and interest to all project agreements, including but not limited to development reports, all contracts, architect's agreements, engineer's agreements, management agreements, and all other contracts and agreements which concern the development and/or operation of the Development, all "Governmental Approvals" (including but not limited to all permits and licenses), plans, specifications, drawings, franchises, utility agreements and similar materials not yet obtained, and any other documents and information related to the Development, reports, Plans and Specifications, and general documents associated with the Development. For purposes of clarifying the foregoing, "Collateral Documents" shall expressly exclude any documents that, pursuant to applicable law, the Developer does not have the right to pledge and assign as contemplated by this Agreement. (w) "Concept Drawings" means the basic site plan, elevations and sections of the Improvements. (x) "Construction Plans" means all construction documentation, developed pursuant to Section 2.3 of this Agreement, upon which the Developer, and the Developer's several contractors, shall rely in building each and every part of the Improvements (including landscaping, parking, and common areas) and shall include, but not necessarily be limited to, the Concept Drawings, the Schematic Design Drawings and Final Construction Drawings, the final architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings") and a time schedule for construction. (y) "Conventional Loans" means a construction loan and/or permanent loans from private lending institutions and public lenders, approved by the Authority in the Financing Plan. (z) "County" means the County of San Diego, California, a political subdivision. 7 1552\]2\1884197 8 (aa) "Developer" means Villa de Vida Poway. L.P., a California limited partnership and its successors and assigns as permitted by this Agreement. (bb) "Developer Event of Default" has the meaning set forth in Section 8.4(a). (cc) "Developer Fee" means that amount of developer fee in the amount and for the purposes set forth in Section 4.8. (dd) "Development" means the Property and the Improvements. (cc) "Development Schedule" means the summary schedule of actions to be taken by the Parties pursuant to this Agreement to achieve disposition of the fee interest in the Property to the Developer and the development of the Improvements, subject to the provisions of Section 10.3 of this Agreement. The Development Schedule is attached to this Agreement as Exhibit B. (ff) "Effective Date" means the date this Agreement is entered into by the Parties as first written above. (gg) "Escrow" means the escrow established with the Title Company for the purpose of conveying the Property from the Authority to the Developer (hh) "Financing Plan" means the Developer's plan for financing the acquisition of the fee interest in the Property and the development of the Improvements, approved by the Authority pursuant to Section 2.4 and as may be amended pursuant to Section 5 11 (i i) "Financing Proposal" means the Developer's initial financing proposal for financing the acquisition of the Property and the development of the Improvements, in the form approved by Authority and attached hereto as Exhibit D (jj) "Fiscal Year" shall mean the Developer's fiscal year which ends on December 31, except as the Developer otherwise notifies the Authority in writing. (kk) "Former Agency" has the meaning set forth in the first paragraph of this Agreement (II) "Grant Deed" means the grant deed by which the Authority conveys the Property to the Developer in the form attached hereto as Exhibit I, incorporated herein by this reference. (mm) "Gross Revenue" with respect to a particular Fiscal Year, means all revenue, income, receipts, and other consideration actually received from operation and leasing of the Development, including but not limited to (1) all rents, fees and charges paid by tenants, payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements resulting in actual income; 8 1552\12\1884197.8 (2) The proceeds of business interruption or similar insurance; (3) Any payment received in consideration for the leasing or other use of any portion of the Development: (4) Subject to the rights of Senior Lenders, the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Development (or applied toward the cost of recovering such proceeds); (5) Subject to the rights of Senior Lenders, condemnation awards for a taking of part or all of the Development for a temporary period: and (6) Gross Revenue shall exclude tenants' security deposits, loan proceeds, capital contributions or other similar advances. (nn) "Hazardous Materials" means: (1) any "hazardous substance" as defined in Section 101(14) of CERCLA (42 U.S.C. Section 9601 (14)) or Section 25281(d) or 25316 of the California Health and Safety Code as amended from time to time; (2) any "hazardous waste," "infectious waste" or "hazardous material" as defined in Section 25117, 25117.5 or 255010) of the California Health and Safety Code as amended from time to time; (3) any other waste, substance or material designated or regulated in any way as "toxic" or "hazardous" in the RCRA (42 U.S.C. Section 6901 et sec.), CERCLA (42 U.S.C. Section 9601 et seq.). Federal Water Pollution Control Act (33 U.S.C. Section 1251 et sec.), Safe Drinking Water Act (42 U.S.C. Section 300(f) et seq.), Toxic Substances Control Act (15 U.S.C. Section 2601 et sec.), Clean Air Act (42 U.S.C. Section 7401 et sec.), California Health and Safety Code (Section 25100 et sem., Section 39000 et seq.), or California Water Code (Section 13000 et sec.) as amended from time to time; and (4) any additional wastes, substances or materials which at such time are classified, considered or regulated as hazardous or toxic under any other present or future environmental or other similar laws relating to the Development (5) The term "Hazardous Materials" shall not include: (i) construction materials, gardening materials, household products, office supply products or janitorial supply products customarily used in the construction, maintenance, rehabilitation, or management of commercial properties, buildings and grounds, or typically used in household activities, or (ii) certain substances which may contain chemicals listed by the State of California pursuant to California Health & Safety Code Section 25249.8 et sem., which substances are commonly used by a significant portion of the population living within the region of the Improvements, including, but not limited to, alcoholic beverages, aspirin, tobacco products, nutrasweet and saccharine, so long as such materials and substances are stored, used and disposed of in compliance with all applicable Hazardous Materials Laws. 9 1552\12\1884197.8 (oo) "Hazardous Materials Laws" means all federal, state, and local laws, ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under the Development or any portion thereof (pp) "HOME" means the HOME Investment Partnership Act Program pursuant to the Cranston -Gonzales National !-lousing Act of 1990, as amended. (qq) "HOME Loan" means the HOME Loan from the County of San Diego as further described in Section 11(d)(3) above. (rr) "HUD" means the United States Department of Housing and Urban Development. (ss) "Improvements" means the fifty-four (54) affordable housing units (including one manager's unit) to be constructed by the Developer together with all common areas, amenities, plans, entitlements, appurtenances, improvement easements, buildings and fixtures, and landscaping associated with the Property (tt) "Investor" means a reputable equity investor, reasonably acceptable to the Authority, committed to purchasing a membership interest in the Developer (uu) "Lender's Share of Residual Receipts" means fifty percent (50%) of the Residual Receipts. (vv) "Lower Income Household" means a household with an adjusted income that does not exceed sixty percent (60%) of area median income, adjusted for actual household size. (ww) "Management Agent" means a management agent retained by the Developer and approved by the Authority in accordance with the provisions of Sections 2.8 and 6.7 to manage the Development. (xx) "Management Plan" shall have the meaning specified in Section 2.8. (yy) "Memorandum of DDLA" means the memorandum of the Disposition, Development and Loan Agreement to be recorded in the Official Records against the Property at the Close of Escrow "rhe form of the Memorandum of DDLA is attached as Exhibit J (zz) "Net Proceeds of Permanent Financing" means the portion of the approved Financing Plan funds that are not required to pay the costs of acquisition and development of the Development (including but not limited to the funding of reserves, the payment of deferred Developer Fee and repayment of construction financing). Net Proceeds of Permanent Financing. if any, shall be determined pursuant to the procedure set forth in Section 4.5(c). (aaa) "Notice of Affordability Restrictions" means the Notice of Affordability Restrictions on Transfer of Property that will be recorded in the Official Records against the Developer's fee interest of the Property at the Close of Escrow and will restrict the development and operation of the Property to affordable housing, the form of which is attached hereto as 10 1552112\1884197.8 Exhibit H, pursuant to Sections 33334.3 and/or 33413(c)(5) of the Community Redevelopment Law, or successor provisions. (bbb) "Official Records" means the official land records of the County (ccc) "Operating Memorandum" has the meaning given in Section 10.17(a) below (ddd) "Parties" means the Authority and the Developer and the term Party shall refer to each of them individually (eee) "Partnership" means Villa de Vida Poway, L.P., a California limited partnership, a partnership created for the purpose of syndicating the low income housing tax credits, which will own the Development and is herein also referred to as the Developer (fif) "Permanent Closing" means the date that all deeds of trust (or assignments of deeds of trust) associated with Approved Financing necessary for the permanent financing of the Development as shown on the approved Financing Plan that have been recorded in the Official Records against the Property are converted to permanent loans deeds of trust, which shall also be referenced as the "Conversion Date" (ggg) "Permanent Financing" means the sources of approved permanent financing as listed in the approved Financing Plan. (hhh) "Project Area" has the meaning set forth in Recital B. (iii) "Property" has the meaning set forth in Recital E. U) "Purchase Price" means the Two Million One Hundred Thousand Dollars ($2,100,000) purchase price to be paid for the acquisition of the Property Section 6.9(a). Section 6.9(a) (kkk) "Redevelopment Plan" has the meaning set forth in Recital B. (III) "Resident Services Budget" shall have the meaning specified in (mmm)"Resident Services Plan' shall have the meaning specified in (nnn) "Residual Receipts" in a particular Fiscal Year shall mean the amount by which Gross Revenue exceeds Annual Operating Expenses. (000) "Schematic Design Drawings" shall mean the initial drawings for the Development showing site plans, elevations and landscape features for the Improvements as more particularly described in Section 2.3. (ppp) "Scope of Development" means the description of the basic physical characteristics of the Development, including a basic site plan, which will serve as a basis for the II 1552112\18&1197,8 Developer's application for the governmental approvals and for the preparation of the Construction Plans. The Scope of Development is attached to this Agreement as Exhibit C. (qqq) "Security Financing Interest" has the meaning set forth in Section 9 1 (nT) "Sponsor" or "Sponsors" means Villa de Vida, a California nonprofit public benefit corporation and/or Mercy Housing California, a California nonprofit public benefit corporation. (sss) "Successor Agency" has the meaning set forth in Recital C. (ttt)"Tax Credit Funds" means the proceeds from the sale of a partnership interest in the Developer to the Investor in the anticipated amount set forth in the Financing Proposal, or such other amount as may be approved by the Authority in the approved Financing Plan. (uuu) "Tax Credit Reservation" means a preliminary reservation of Tax Credits from TCAC. (vvv) "Tax Credits" means federal low-income housing tax credits established pursuant to Section 42 of the Internal Revenue Code of 1986, as amended. (www) "TCAC" means the California Tax Credit Allocation Committee. (xxx) "Term" means the term of this Agreement, which commences as of the Effective Date this Agreement and, unless terminated earlier ore extended by the Parties pursuant to this Agreement, ends fifty-seven (57) years from the Close of Escrow (the date the Regulatory Agreement is recorded against the Property). (yyy) "Title Company" means the Los Angeles office of Commonwealth Land Title Company located at 888 S. Figueroa St, Suite 2100, Los Angeles CA 90017, unless modified pursuant to Section 3.3 (fizz) "Title Report" means that certain title report dated June 3, 2015. Order Number 08014813, issued by the Title Company for the Property (aaaa) "Transfer" has the meaning set forth in Section 7 1 (bbbb) "Unit" means one of the units to be constructed on the Property Section 1.2 Exhibits. The following exhibits are attached to and incorporated in the Agreement: Exhibit A. Legal Description of the Property Exhibit B Development Schedule Exhibit C. Scope of Development Exhibit D- Financing Proposal Exhibit F. Form of Authority Regulatory Agreement 12 1552\12"884197.8 Exhibit 17 Form of Authority Promissory Note Exhibit G. Form of Authority Deed of Trust Exhibit H. Form of Notice of Affordability Restrictions on Transfer of Property Exhibit I Form of Grant Deed Exhibit J Memorandum of DDLA ARTICLE 2. PREDISPOSITION REQUIREMENTS Section 2.1 Conditions Precedent to Conveyance of Property The requirements set forth in this Article 2 are conditions precedent to the Authority's obligation to convey the Property to the Developer The Authority shall have no obligation to convey the Property to the Developer unless the Developer has satisfied the conditions precedent set forth in this Article 2 in the manner set forth below and within the timeframe set forth in the Development Schedule. Developer may request extensions to the time periods and dates set forth in the Development Schedule and the Authority may grant such requests in its sole and absolute discretion. In no event shall the Authority be obligated to provide such extensions. Section 2.2 Governmental Approvals. (a) No later than the date set forth in the Development Schedule, the Developer shall apply for and exercise diligent good faith efforts to obtain, all governmental approvals necessary for development and operation of the Improvements, including but not limited to necessary entitlements, grading plans, infrastructure plans and a building permit or permits. The Developer's application for the governmental approvals shall be substantially consistent with the Scope of Development. Procurement by the Developer of all governmental approvals, including all applicable land use approvals and a building permit, shall be a condition precedent to the Authority's obligation to convey the Property to the Developer In the event the Developer intends to use funds disbursed at Close of Escrow to pay for a building permit, the Authority may convey the land to Developer if Developer has obtained a permit -ready letter in place of a building permit; provided, however, the Developer shall provide evidence and assurances reasonably satisfactory to the Authority that Developer will pull the permit concurrent with or immediately following Close of Escrow (b) The Developer acknowledges that execution of this Agreement by the Authoritv does not constitute approval by the City or the Authority of any required entitlements, building permits, or other construction approvals, and in no way limits the discretion of the City or the Authority in the permit allocation and approval process. Section 2.3 Review and Approval of Design and Construction Documents. (a) In designing and constructing the Development. Developer shall cause all design documents to be substantially consistent with the Scope of Development attached as Exhibit C. the Concept Drawings, and the Schematic Design Drawings. The Scope of Development, the Concept Drawings, and the Schematic Design Drawings shall establish the baseline design standards from which Developer shall prepare all subsequent Construction Plans. The Construction Plans shall incorporate any applicable mitigation measures, reasonably 13 155211211884197.8 imposed on the Development by the Authority or City Within the times set forth in the Development Schedule, Developer shall submit to the Authority the Construction Plans in the following stages: (1) Concept Drawings. The Concept Drawings shall Logically Evolve, as defined below, from the approved Scope of Development. These drawings shall include basic site plans, elevations, and sections of the Improvements as they are initially proposed to be developed and constructed by the Developer Key interior and exterior dimensions shall be established and a detailed tabulation of floor area by use provided. (2) Schematic Design Drawings. The Schematic Design Drawings shall Logically Evolve, as defined below, from the approved Concept Drawings, by clearly defining the development of the Improvements. These drawings shall include bedroom sizes, Floor plans, elevations, features in common or public areas, landscape features, locations for signs, parking facilities with all spaces indicated, and major building materials under consideration, potential exterior materials, the colors and textures to be used, and any off-site public improvements to be implemented by Developer Key interior and exterior dimensions shall be established and a detailed tabulation of Floor area by use provided. (3) Final Construction Drawings. The Final Construction Drawings shall Logically Evolve from the approved Concept Drawings and Schematic Drawings. The Final Construction Drawings must provide all the detailed information necessary to obtain a building permit to build the Improvements including complete building, mechanical systems, site, landscape, exterior signage and construction details, requirements, standards, and plans and specifications. (4) Approval of Construction Plans. The purpose of the Authority's review of the Construction Plans under this Agreement is to ensure consistency with the Scope of Development, the provisions of this Agreement, and conformance to the Redevelopment Plan. Provided that the submittals meet the requirements of this Section, the Authority shall be required to approve those Construction Plans which Logically Evolve from concepts set forth in previously approved Construction Plans. For purposes of this Section, the phrase "Logical Evolution" or "Logically Evolve" means a refinement or amplification of the previously approved drawings into subsequently approved drawings. If the Authority reasonably determines that there are material changes which are not Logical Evolutions from previously approved Construction Plans or which raise material concerns that were not reviewable in previously approved Construction Plans, in approving or disapproving such Construction Plans, the Authority shall act in its reasonable discretion. Any disapproval of the new Construction Plans shall be in writing and shall state in detail the reasons for the Authority's disapproval. The Authority shall approve or disapprove submittals under this Section within twenty (20) days of receipt of the submittal from Developer In the event the Authority disapproves a submittal of the Construction Plans pursuant to this Section, the Authority shall submit a list of reasons for such disapproval to Developer, together with its notice of disapproval. Upon receipt of such notice from the Authority. Developer shall have fifteen (15) business days to resubmit a revised submittal. Upon the Authority's receipt of a revised submittal, the Authority shall have seven (7) business days to reasonable approve or disapprove of the revised design. The process for revision and review of revisions shall be repeated until the Authority has approved the applicable 14 1552\1211884197.8 submittals: provided, however that if the Authority's approval of the drawings has not been obtained by one hundred twenty (120) days following the date of the Developer's initial submission then the Authority may terminate this Agreement pursuant to Section 8.4 (b) The Developer acknowledges that the Authority's right to review and approve the Construction Plans under this Agreement are in addition to, and shall not be limited by, the City's obligation and right to review the Construction Plans for consistency with applicable building code requirements and other State and local rules and regulations. The Developer further acknowledges that the Authority shall have no obligation to approve Construction Plans, pursuant to this Agreement, in the event that the Developer fails to incorporate the Authority's commercially reasonable requested changes or modifications to the proposed Construction Plans (even in the event that such requested changes or modifications exceed the minimum thresholds set forth in the applicable building code and have not been required by the City's building department so long as the request is consistent with the Logical Evolution of previously approved drawings under subsection (a)(3) above). The Developer further acknowledges that approval of the Construction Plans by the Authority under this Agreement does not constitute approval by the City as required for issuance of a building permit or other approvals. Section 2.4 Financing Proposal and Financing Plan. (a) As of the Effective Date, the Authority has approved the Financing Proposal attached to this Agreement as Exhibit D (b) Within the time specified in the Development Schedule, the Developer shall submit for Authority approval an updated Financing Proposal as required under Section 5 11 below, evidencing availability of the funds necessary to finance the acquisition of the fee interest in the Property and development and operation of the improvements on the Property The update to the Financing Proposal shall include: (1) An estimated operating proforma for the Development for fifty- seven (57) years, which shall show debt service on all loans (including. but not limited to the Authority Loan): (2) An estimated sources and uses, including a cost breakdown for costs of constructing the Improvements. The sources and uses shall include all assumptions for all debt and equity financing, shall show the timing of uses of each source of financing and shall break down which expenses each source of financing is funding. The sources and uses shall detail the amount of the Developer Fee, if any, which cannot exceed the amount set forth in Section 4.8, and shall provide a proposed schedule of payments of the fees paid to the Developer, if any, based on performance milestones as to be mutually agreed to by the Developer and the Authority (3) A description of any joint ventures (including, but not limited to the admission of any additional members to the Developer) or partnerships the Developer proposes to enter into in order to provide funds for construction of the Improvements and acquisition of the Property including copies of the proposed joint venture or partnership agreements: 15 1552\12" 884197.8 (4) A copy of the commitment or commitments obtained by the Developer for any loans, grants, or other financial assistance (including, but not limited to, a Tax Credit Reservation letter from TCAC, evidence of a HOME Loan Commitment from the County, evidence of an AFIP Loan Commitment from the Federal Home Loan Bank or a member institution (if applicable), and construction and permanent loans from private lenders) to assist in financing the construction of the Improvements certified by the Developer to be true and correct copies thereof The Developer shall submit evidence of its efforts to receive competitive pricing on the Tax Credits and proof of application for a County HOME Loan, an AHP Loan, and other Conventional Loans as required under Section 2.5 and 2.6 respectively; and (c) A certified financial statement or other financial statement in such form reasonably satisfactory to the Authority evidencing other sources of capital sufficient to demonstrate that the Developer has adequate funds available and is committing such funds to cover the difference, if any, between costs of development and construction of the Improvements and the amount available to the Developer from external sources. (d) The Authority shall reasonably approve or disapprove the revised Financing Proposal in writing within fifteen (15) calendar days after the Authority's receipt. Upon Authority approval, the Developer's Financing Proposal shall be referred to as the Financing Plan. (e) If the Financing Proposal is disapproved by the Authority, the Authority shall provide a detailed written explanation of the reason(s) for the disapproval and the Developer shall have fifteen (15) calendar days from the date of the Developer's receipt of the Authority's notice of disapproval to submit a revised Financing Proposal. The provisions of this Section relating to time periods for approval, disapproval and resubmission of a new Financing Proposal shall continue to apply until the revised Financing Proposal has been approved by the Authority, provided, however, that if the Authority's approval of the revised Financing Plan has not been obtained by the date set forth in the Development Schedule, the Authority may terminate this Agreement pursuant to Section 8.4 (o The Parties agree that notwithstanding the time requirements set forth in this Section for submission and resubmission to the Authority by the Developer of revisions to the Financing Proposal or approved Financing Plan and review and approval of the revised Financing Proposal or Financing Plan by the Authority, the Developer is responsible for assuring that a Financing Proposal or Financing Plan in approvable form is submitted to the Authority in a timely manner such that the Authority may have the time permitted by this Section to review and approve a Financing Plan no later than the date set forth in the Development Schedule. (g) Prior to the issuance of the Certificate of Completion for the Improvements, any material change, modification, revision or alteration of the approved Financing Plan must first be submitted to and approved by the Authority for conformity to the provisions of this Agreement, which approval shall not be unreasonably withheld. conditioned, or delayed. If not so approved, the approved Financing Plan shall continue to control. 16 1552\12\1884197.8 Section 2.5 Tax Credit Reservation. Financing. (a) The Developer intends to utilize Tax Credit Funds to partially finance the Development, which are subject to a competitive application process implemented by TCAC. Receipt by the Developer of a Tax Credit Reservation pursuant to this Section shall be a condition precedent to the Authority's obligation to transfer the Property To satisfy the requirements of this Section, the "Fax Credit Reservation shall be for an amount sufficient to meet the requirements of the Financing Plan to be approved by the Authority pursuant to Section 2.4 (b) The Developer shall submit a timely and complete application for the Tax Credit Reservation to TCAC in the 2017 first round of TCAC preliminary reservations. If the Developer does not receive a Tax Credit Reservation in the 2017 first round, then the Developer shall submit a timely and complete application for the Tax Credit Reservation to TCAC in the 2017 second round of TCAC preliminary reservations. If the Developer does not receive a Tax Credit Reservation in the 2017 second round, then the Developer shall submit a timely and complete application for the "fax Credit Reservation to TCAC in the 2018 first round of TCAC preliminary reservations. If the Developer does not receive a Tax Credit Reservation in the first round of the 2018 TCAC application cycle, then the Authority may either- (1) terminate this Agreement pursuant to Section 8.2; or (2) confer with the Developer in good faith for a period not to exceed sixty (60) days to determine if the Developer should submit a further application to TCAC in a subsequent preliminary reservation round or if a feasible and mutually acceptable alternate arrangement can be made to finance development of the Improvements. If no agreement is reached by the Parties within such sixty (60) day period regarding the alternative financing structure for the construction of the Improvements, this Agreement may be terminated in accordance with the provisions of Section 8.2. Any agreement that is reached between the parties regarding an alternative financing plan for the construction of the Improvements shall be memorialized in an implementation agreement to this Agreement. (c) Upon an award of the Tax Credit Reservation from TCAC, the Developer shall exercise diligent good faith efforts to obtain a funding commitment from the Investor for the Tax Credit Funds. Such funding commitment shall be in a form reasonably acceptable to the Authoritv Procurement of the Tax Credit Reservation and an acceptable funding commitment for the Tax Credit Funds is a condition precedent to the Authority's obligation to convey the Property to the Developer Section 2.6 Other Approved Financing. (a) The Developer intends to apply for and utilize Affordable Housing Program Funds administered by the Federal Home Loan Bank, a County HOME Loan from the County, and other sources of permanent financing to partially finance the Development. (b) AHP Loan. Notwithstanding the foregoing, in the event the Developer decides in its reasonable discretion that an AHP Loan is required to finance the construction of the Improvements, the Developer shall submit a timely and complete application for the AHP Loan which is subject to a competitive application process implemented by the Federal Home Loan Bank of San Francisco and its member institutions. To satisfy the requirements of this Section. but only in the event that an AHP Loan is needed to finance the construction of the Improvements, the Developer shall submit a timely and complete AIiP Loan application for 17 1552\12\1884197.8 Affordable Housing Program's by no later than the date set forth in the Development Schedule. If the Developer does not receive an AHP Loan in the first application cycle, then the Developer shall submit a timely and complete application for the next application cycle. If the Developer does not receive an AHP Loan commitment in the second application, then the Authority may confer with the Developer in good faith for a period not to exceed sixty (60) days to determine if the Developer should submit a further application for an AHP Loan in a subsequent application round or if a feasible and mutually acceptable alternate arrangement can be made to finance development of the Improvements. Any agreement that is reached between the parties regarding an alternative financing plan for the construction of the Improvements shall be memorialized in an implementation agreement to this Agreement. (c) County HOME Loan. The Developer shall submit a timely and complete application for a County HOME Loan which is administered through a Notice of Funding Availability process administered through the County of San Diego Department of Housing and Community Development. To satisfy the requirements of this Section the Developer must submit a timely and complete County HOME Loan application pursuant to the Notice of Funding Availability process administered by the County of San Diego Department of Housing and Community Development for 2017 HOME Loan funds. If the Developer does not receive a County HOME Loan commitment in the 2017 Notice of Funding Availability process, then the Developer shall submit a timely and complete application for the 2018 Notice of Funding Availability process. If the Developer does not receive a County HOME Loan commitment in the 2018 Notice of Funding Availability process, then the Authority may confer with the Developer in good faith for a period not to exceed sixty (60) days to determine if the Developer should submit a further application for a County HOME Loan in a subsequent Notice of Funding Availability application round or if a feasible and mutually acceptable alternate arrangement can be made to finance development of the Improvements. Any agreement that is reached between the parties regarding an alternative financing plan for the construction of the Improvements shall be memorialized in an amendment to this Agreement. Submitting a timely and complete application for a County HOME Loan is a condition precedent to the Authority's obligation to convey the Property to the Developer (d) Proiect Based Housing Vouchers. 'Ilse Developer and the Authority will cooperate in attempting to secure a Housing Assistance Payment Basic Contract with the County of San Diego to secure not less than fifty-three (53) "Project Based Housing Vouchers" for the Development. The Authority and the Developer expects that Project Based Housing Vouchers will provide assistance for all units in the Development for not less than two (2) consecutive fifteen (15) year terms. If the Developer is unable to secure the Project Based Housing Vouchers, then the Authority and the Developer will confer in good faith for a period not to exceed sixty (60) days to determine if a feasible and mutually acceptable alternative arrangement can be made to finance the development of the Improvements. Any agreement that is reached between the parties regarding an alternative financing plan for the construction of the Improvements shall be memorialized in an amendment to this Agreement. (e) Other Financing. As set forth in the Development Schedule, in addition to the Tax Credit Funds all other financing necessary to construct the Improvements, as required and approved by the Authority in the Financing Plan, shall be closed by the Developer prior to. or simultaneously with the Close of Escrow The Developer shall also submit to the Authority 18 1552\12\1884197.8 evidence reasonably satisfactory to the Authority that any conditions to the release or expenditure of funds described in the approved Financing Plan as the sources of funds to pay the costs of constructing the Improvements have been met or will be met by the Close of Escrow and subject to the Developer's satisfaction of standard disbursement preconditions required to be satisfied on a periodic basis, for constructing the Improvements. Submission by the Developer, and approval by the Authority, of such evidence of funds availability shall be a condition precedent to the Authority's obligation to convey the Property to the Developer Section 2.7 Other Governmental Approvals. (a) No later than the date set forth in the Development Schedule, the Developer shall apply for a building permit allowing for the construction of the Improvements called for in the Construction Plans. After submitting the application for a building permit, the Developer shall diligently pursue and obtain a building permit for the Improvements, and no later than the date set forth in the Development Schedule, the Developer shall deliver evidence to the Authority that the Developer is entitled to issuance of a building permit for the Improvements upon payment of permit fees. Only upon delivery to the Authority of such evidence in form reasonably satisfactory to the Authority shall the predisposition condition of this Section be deemed met. If such evidence is not delivered within the time set forth in the Development Schedule, this Agreement may be terminated pursuant to Section 8.4 The Authority shall render all reasonable assistance (at no cost to the Authority) to the Developer to obtain the building permit. (b) The Developer acknowledges that execution of this Agreement by the Authority does not constitute approval by the City of any required permits, applications, or allocations, and in no way limits the discretion of the City in the permit allocation and approval process. Section 2.8 Management Plan and Procedures. (a) The Developer shall submit to the Authority an initial proposed Management Plan no later than six (6) months after the commencement of construction of the Development as set forth in the Development Schedule. The Developer shall submit to the Authority for approval the name and qualifications of a proposed management agent (as required under Section 6.7 hereof), a proposed management agreement and written guidelines or procedures for tenant selection (in compliance with the Tenant Selection Plan approved pursuant to Section 2.13 below), operation and management of the Development, and implementation of the income certification and reporting requirements of the Authority Regulatory Agreement (collectively the "Management Plan"). (b) The Authority shall approve or disapprove the Management Plan in writing within fifteen (15) calendar days following the Authority's receipt of the complete Management Plan, which approval shall not be unreasonably denied. If the Management Plan is disapproved by the Authority, the Authority shall deliver a written notice to the Developer setting forth, in reasonable detail, the reasons for such disapproval. The Developer shall have Fifteen (15) calendar days following the receipt of such notice to submit a revised Management Plan. The provisions of this Section relating to time periods for approval, disapproval, and resubmission of the new Management Plan shall continue to apply until the Management Plan 19 155211211884 197 8 has been approved by the Authority; provided, however, that if the Authority's reasonable approval of the Management Plan has not been obtained by the date set forth in the Development Schedule the Authority may terminate this Agreement pursuant to Section 8.4 Section 2.9 Construction Contract. (a) No later than the date set forth in the Development Schedule, the Developer shall submit to the Authority not less than three (3) proposals from prospective contractors detailing the estimated development costs for the construction of the Improvements. The Authority shall approve the contractor for the Improvements, which approval shall not be unreasonably withheld, conditioned, or delayed. The Authority shall look to the totality of such proposals in the evaluation of the proposals and cost shall not be the sole deciding factor (b) No later than the date set forth in the Development Schedule, the Developer shall submit to the Authority for its limited approval the proposed construction contract, with the approved contractor for the Improvements. The Authority's review and approval shall be limited exclusively to a determination whether (1) the guaranteed maximum construction cost set forth in the construction contract is consistent with the approved Financing Plan; (2) the construction contract is with the Authority approved contractor; (3) the construction contract contains provisions consistent with the requirements of this Agreement; and (4) the construction contract requires a retention of ten percent (10%) of costs until completion of the Improvements or as approved by the Authority at is sole discretion. The Authority's approval of the construction contract shall in no way be deemed to constitute approval of or concurrence with any other terra or condition of the construction contract. (c) Upon receipt by the Authority of the proposed construction contract, the Authority shall promptly review same and approve it within ten (10) days if it satisfies the limited criteria set forth above. If the construction contract is not approved by the Authority, the Authority shall set forth in writing and notify the Developer of the Authority's reasons for withholding such approval. The Developer shall thereafter submit a revised construction contract for Authority approval, which approval shall be granted or denied in ten (10) days in accordance with the criteria and procedures set forth above. Any construction contract executed by the Developer for the Improvements shall be in a forth approved by the Authority, which approval shall not be unreasonably withheld, conditioned, or delayed. Section 2.10 Construction Bonds. No later than the date set forth in the Development Schedule, the Developer shall obtain one (1) labor and material bond and one (1) performance bond for construction of the Improvements, each in an amount equal to one hundred percent (100%) of the scheduled cost of construction. Each bond shall name the Authority as co -obligee and shall be issued by a reputable insurance company licensed to do business in California, reasonably acceptable to the Authority The form of the labor and material bond and the performance bond shall be subject to the Authority's prior review and written approval, which shall not be unreasonably withheld. 20 1552112\1884197 8 Section 2.11 Insurance. The Developer shall furnish to the Authority evidence of the insurance coverage meeting the requirements of Section 6.10 below no later than the date set forth in the Development Schedule. Section 2.12 Property Inspection. (a) Within ninety (90) days following execution of this Agreement, Developer may make such investigations regarding the Property, the development of the Property or the suitability of the Property for the Development (including but not limited to investigation of environmental hazards. geologic conditions, soils conditions, or water conditions on or about the Property as Developer deems appropriate). If, as a result of such investigation. Developer reasonably concludes that the condition of the Property makes economically infeasible the Development as contemplated in this Agreement, then Developer may terminate this Agreement, pursuant to Section 8.2 below, by providing written notice to Authority within one hundred twenty (120) days after the date of this Agreement. The Authority shall permit Developer or its designated consultants to enter the Property for the purposes of making investigations pursuant to this Section. Developer shall restore any portion of the Property disturbed or damaged as a result of Developer's investigation to the condition that existed prior to the disturbance or damage. (b) Developer shall also indemnify, defend and hold the City and the Authority and their board members, council members, officers, and employees harmless against any claims for damage to person or property arising from entry on or investigation of Developer, its employees, officers, agents, contractors or consultants, pursuant to this Section, except resulting solely from the gross negligence or willful misconduct of the City or the Authority This obligation to indemnify shall survive termination of this Agreement. Section 2.13 Resident Selection Plan. The Developer and the Housing Authority hereby agree to meet and confer to formulate a resident selection plan (the "Tenant Selection Plan"). which among other things, must address marketing and outreach to local special needs populations. If and to the extent the parties cannot agree on a mutually acceptable Tenant Selection Plan within sixty (60) days from the Effective Date, the Authority at its sole and absolute discretion may terminate this Agreement, and thereafter neither party shall have any rights against or liability to the other under this Agreement. ARTICLE 3 DISPOSITION OF PROPERTY Section 3 1 Sale and Purchase. Provided the pre -disposition requirements set forth in Article 2 and the additional closing conditions set forth in Section 3.4 have been satisfied. the Authority shall transfer fee interest to the Developer the Property pursuant to the terms, covenants, and conditions of this Agreement. 21 1552"2\1884197.8 Section 3.2 Purchase Price. The purchase price for the Property is Two Million One Hundred Thousand Dollars ($2,100.000), to be paid to the Authority by the Developer at the Close of Escrow Section 3.3 Opening Escrow The Parties shall establish the Escrow with the Title Company The Parties shall execute and deliver all written instructions to the Title Company to accomplish the terms hereof, which instructions shall be consistent with this Agreement. Upon request by the Developer, the Title Company may be changed to a company requested by the Developer, provided: (a) the Developer makes the request prior to the opening of escrow; (b) the title company is approved by the Authority; and (c) the Developer shall pay all title insurance and escrow costs of the new title company Section 3 4 Close of Escrow (a) Authority Conditions to Close Escrow The Close of Escrow shall occur no later than the date set forth in the Development Schedule, and only in the event that all conditions precedent to conveyance set forth in Article 2 have been satisfied or waived by the Authority In addition to the conditions precedent set forth in Article 2, the following conditions shall be satisfied prior to or concurrently with, and as conditions of, the Close of Escrow - (1) There shall exist no condition, event or act which would constitute a breach or default under this Agreement, the Authority Documents, or under any other project financing agreements or contracts related to the Development, or which, upon the giving of notice or the passage of time, or both, would constitute such a breach or default. (2) All representations and warranties of the Developer contained in this Agreement and the Authority Documents shall be true and correct in all material respects as of the Close of Escrow (3) The Developer shall provide the Authority with copies of the Developer's organizational documents, and a certified copy of a Developer's authorizing resolution approving the transactions contemplated under the Authority Documents and the Developer's execution of the Authority Documents. (4) The Authority has approved the Financing Plan. (5) The Developer shall have furnished the Authority with evidence of the insurance coverage meeting the general insurance requirements set forth in Section 6.10. (6) The Developer shall have executed and delivered to the Authority Promissory Note, the Authority Deed of Trust, the Authority Regulatory Agreement, the Notice of Affordability Restrictions, the Assignment Agreement and any other documents and instruments required to be executed and delivered, all in a form and substance reasonably satisfactory to the Authority 22 1552"2\1884197.8 (7) The Memorandum of DDLA. the Authority Deed of Trust, the Authority Regulatory Agreement, and the Notice of Affordability Restrictions shall have been recorded in the Official Records against the Developer's interest in the Property as a lien subject only to the exceptions authorized by the Authority (8) The Developer shall have obtained issuance of a building permit, or evidence that the Developer is entitled to issuance of a building permit for the Improvements by paying the required building permit fees. (9) A title insurer reasonably acceptable to the Authority is unconditionally and irrevocably committed to issuing an ALTA 2006 LP -10 Lender's Policy of insurance insuring the lien priority of the Authority Deed of Trust in the amount of the Authority Loan subject only to such liens approved by the Authority in the Financing Plan as prior to the lien of the Authority Deed of Trust and such exceptions and exclusions as may be reasonably acceptable to the Authority and containing such endorsements as the Authority may reasonably require. (b) Developer Conditions to Close Escrow The Close of Escrow shall occur no later than the date set forth in the Development Schedule, and only in the event that all conditions precedent to conveyance set forth in this subsection (b) have been satisfied or waived by the Developer The following conditions shall be satisfied prior to or concurrently with or waived by the Developer, as conditions of, the Close of Escrow - (1) There shall exist no condition, event or act which would constitute a breach or default under this Agreement, the Authority Documents, or which, upon the giving of notice or the passage of time, or both, would constitute such a breach or default. (2) The Authority shall have executed the Deed and any other documents required hereunder, and delivered such documents into escrow established pursuant to this Agreement. (3) The Title Company shall, subject solely to payment of Title Company's regularly scheduled premium, have irrevocably committed to issue the title policy requested by Developer subject only to the exceptions identified in Section 3.5 hereof. Section 3.5 Condition of Title. Upon the Close of Escrow, the Developer shall have insurable fee interest to the Property which shall be free and clear of all liens. encumbrances, clouds and conditions. rights of occupancy or possession, except: (a) applicable building and zoning laws and regulations; (b) the provisions of the Redevelopment Plan; (c) the provisions of this Agreement; (d) the provisions of the Authority Regulatory Agreement: 23 15521%1881197.8 (e) the Authority Deed of Trust: (f) the Notice of Affordability Restrictions (g) any lien for current taxes and assessments or taxes and assessments accruing subsequent to recordation of the Memorandum of the DDLA, Report. (h) the liens of any loan approved by the Authority in the Financing Plan, and (i) exceptions 3. 4, 5 and 6 of Schedule 13- Section B. as listed in the Title Section 3.6 Condition of Property (a) "AS IS" CONVEYANCE. THE DEVELOPER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT THE AUTHORITY IS CONVEYING AND THE DEVELOPER IS OBTAINING THE FEE INTEREST IN THE PROPERTY (AND ALL IMPROVEMENTS CURRENTLY LOCATED THERON) ON AN "AS IS WITH ALL FAULTS" BASIS AND THAT THE DEVELOPER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM THE AUTHORITY AS TO ANY MATTERS CONCERNING THE PROPERTY, INCLUDING WITHOUT LIMITATION: (A) THE QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, TOPOGRAPHY, CLIMATE, AIR, WATER RIGHTS, WATER, GAS, ELECTRICITY, UTILITY SERVICES, GRADING, DRAINAGE, SEWERS, ACCESS TO PUBLIC ROADS AND RELATED CONDITIONS); (B) THE QUALITY, NATURE, ADEQUACY, AND PHYSICAL CONDITION OF SOILS, GEOLOGY AND GROUNDWATER; (C) THE EXISTENCE, QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES SERVING THE PROPERTY; (D) THE DEVELOPMENT POTENTIAL OF THE PROPERTY, AND THE PROPERTY'S USE, HABITABILITY, MERCHANTABILITY, OR FITNESS, SUITABILITY, VALUE OR ADEQUACY OF THE PROPERTY FOR ANY PARTICULAR PURPOSE; (F.) THE ZONING OR OTHER LEGAL STATUS OF THE PROPERTY OR ANY OTHER PUBLIC OR PRIVATE RESTRICTIONS ON THE USE OF THE PROPERTY; (F) THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY APPLICABLE CODES, LAWS, REGULATIONS, STATUTES, ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS OF ANY GOVERNMENTAL OR QUASI -GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON OR ENTITY; (G) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS ON, UNDER OR ABOUT THE PROPERTY OR THE ADJOINING OR NEIGHBORING PROPERTY; AND (H) THE CONDITION OF TITLE TO THE PROPERTY. THE DEVELOPER AFFIRMS THAT THE DEVELOPER HAS NOT RELIED ON THE SKILL OR JUDGMENT OF THE AUTHORITY OR ANY OF ITS RESPECTIVE AGENTS, EMPLOYEES OR CONTRACTORS TO SELECT OR FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT THE AUTHORITY MAKES NO WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE. THE DEVELOPER ACKNOWLEDGES THAT IT SHALL USE ITS INDEPENDENT JUDGMENT AND MAKE ITS OWN DETERMINATION AS 24 155211211884197.8 TO THE SCOPE AND BREADTH OF ITS DUE DILIGENCE INVESTIGATION WHICH IT SHALL MAKE RELATIVE TO THE PROPERTY AND SHALL RELY UPON ITS OWN INVESTIGATION OF THE PHYSICAL, ENVIRONMENTAL, ECONOMIC AND LEGAL CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, WHETHER THE PROPERTY IS LOCATED IN ANY AREA WHICH IS DESIGNATED AS A SPECIAL FLOOD HAZARD AREA, DAM FAILURE INUNDATION AREA, EARTHQUAKE FAULT ZONE, SEISMIC HAZARD ZONE, HIGH FIRE SEVERITY AREA OR WILDLAND FIRE AREA, BY ANY FEDERAL, STATE OR LOCAL AGENCY). THE DEVELOPER UNDERTAKES AND ASSUMES ALL RISKS ASSOCIATED WITH ALL MATTERS PERTAINING TO THE PROPERTY'S LOCATION IN ANY AREA DESIGNATED AS A SPECIAL FLOOD HAZARD AREA, DAM FAILURE INUNDATION AREA, EARTHQUAKE FAULT ZONE, SEISMIC HAZARD ZONE, HIGH FIRE SEVERITY AREA OR WILDLAND FIRE AREA, BY ANY FEDERAL, STATE OR LOCAL AGENCY. (b) Survival. The terms and conditions of this Section shall expressly survive the Close of Escrow, shall not merge with the provisions of the Grant Deed, or any other closing documents and shall be deemed to be incorporated by reference into the Grant Deed. The Authority is not liable or bound in any manner by any oral or written statements, representations or information pertaining to the Property furnished by any contractor, agent. employee, servant or other person. The Developer acknowledges that the Purchase Price reflects the "as is" nature of this conveyance and any faults, liabilities, defects or other adverse matters that may be associated with the Property The Developer has fully reviewed the disclaimers and waivers set forth in this Agreement with the Developers counsel and understands the significance and effect thereof (c) Acknowledgment. The Developer acknowledges and agrees that: (1) to the extent required to be operative, the disclaimers of warranties contained in this Section are "conspicuous" disclaimers for purposes of all applicable laws and other legal requirements; and (2) the disclaimers and other agreements set forth in such sections are an integral part of this Agreement, that the Purchase Price has been adjusted to reflect the same and that the Authority would not have agreed to convey the Property to the Developer without the disclaimers and other agreements set forth in this Section. (d) Developer's Release of Public Entities. The Developer, on behalf of itself and anyone claiming by, through or under the Developer hereby waives its right to recover from and fully and irrevocably releases the City, the former Agency, the Successor Agency, the Authority and their respective council members, board members, employees, officers, directors, representatives, and agents (the "Released Parties") from any and all claims, responsibility and/or liability that the Developer may have or hereafter acquire against any of the Released Parties for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to. (1) the condition (including any construction defects, errors, omissions or other conditions. latent or otherwise), valuation, salability or utility of the Property, or its suitability for any purpose whatsoever: (2) any presence of Hazardous Materials; and (3) any information furnished by the Released Parties under or in connection with this Agreement. (e) Scope of Release. The release set forth in this Section includes claims of which the Developer is presently unaware or which the Developer does not presently suspect to 25 1552\1 21 1884 197.9 exist which, if known by the Developer, would materially affect the Developer's release of the Released Parties. The Developer specifically waives the provision of any statute or principle of law that provides otherwise. In this connection and to the extent permitted by law, the Developer agrees, represents and warrants that the Developer realizes and acknowledges that factual matters now unknown to the Developer may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and the Developer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that the Developer nevertheless hereby intends to release, discharge and acquit the Released Parties from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses. Accordingly, the Developer, on behalf of itself and anyone claiming by, through or under the Developer, hereby assumes the above- mentioned risks and hereby expressly waives any right the Developer and anyone claiming by, through or under the Developer, may have under Section 1542 of the California Civil Code, which reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Developer's Initials: ?15 14-1 (f) Notwithstanding the foregoing, this release shall not apply to, nor shall the Authority be released from, the Authority's actual fraud or misrepresentation. Section 3 7 Costs of Escrow and Closing. Ad valorem taxes, if any, shall be prorated as of the Close of Escrow The Developer shall pay the cost of title insurance, transfer tax, Title Company document preparation, recordation fees and the escrow fees of the Title Company, if any, and any additional costs to close the Escrow ARTICLE 4 LOAN PROVISIONS Section 4 1 Loan Amount. Subject to the terms and conditions set forth in die Authority Documents, the Authority hereby agrees to make a loan to the Developer of' up to Two Million Six Hundred Thousand Dollars ($2,600,000). The Developer's obligation to pay the Authority Loan shall be evidenced by the Authority Promissory Note. Section 4.2 Interest. Simple interest at three percent (3%) per annum shall accrue on the principal amount of the Authority Loan except in a Developer Event of Default, whereupon interest shall accrue from and after the date of the Authority Promissory Note until paid at the rate of ten percent (10%) FT1 exist which, if known by the Developer, would materially affect the Developer's release of the Released Parties. The Developer specifically waives the provision of any statute or principle of law that provides otherwise. In this connection and to the extent permitted by law, the Developer agrees, represents and warrants that the Developer realizes and acknowledges that.factual matters now unknown to the Developer may have given or may hereafter give rise to causes of action, claims, demands. debts. controversies. damages. costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and the Developer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that the Developer nevertheless hereby intends to release, discharge and acquit the Released Parties from any such unknown causes of action, claims, demands, debts, controversies, damages, costs. losses and expenses. Accordingly, the Developer on behalf of itself and anyone claiming by, through or under the Developer, hereby assumes the above- mentioned risks and hereby'express] y waives any right the Developer and anyone claiming by through or under the Developer, may have under Section 1542 of the California Civil Code, which reads as follows: "A general release docs not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor " Developer's Initiu� (f) Notwithstanding the foregoing, this release shall not apply to, nor shall the Authority be released from, the Authority's actual fraud or misrepresentation. Section 3 7 Costs of Escrow and Closing. Ad valorem taxes, if any, shall be prorated as of the Close of Escrow The Developer shall pay the cost of title insurance. transfer tax, "title Company document preparation, recordation fees and the escrow fees of the Title Company if any, and any additional costs to close the Escrow ARTICLE 4 LOAN PROVISIONS Section 4 1 Loan Amount. Subject to the terms and conditions set forth in the Authority Documents, the Authority hereby agrees to make a loan to the Developer of up to Two Million Six Hundred Thousand Dollars ($2.600,000). The Developer's obligation to pay the Authority Loan shall be evidenced by the Authority Promissory Note. Section 4.2 Interest. Simple interest at three percent (3%) per annum shall accrue on the principal amount of the Authority Loan except in a Developer Event of Default, whereupon interest shall accrue from and after the date of the Authority Promissory Note until paid at the rate of ten percent (10%) 26 compounded annually, or the highest rate permitted by law Section 4.3 Use of Authority Loan. The Authority Loan shall be used solely for the acquisition, construction and permanent financing in accordance with the Financing Plan to be approved by the Authority The Developer may not use any proceeds of the Authority Loan for any other purpose without the prior written consent of the Authority Section 4 4 Security; Subordination of Regulatorygreement. (a) The Authority agrees to subordinate the Authority Deed of 'frust to other Approved Financing (in each case, a "Senior Lien"), but only on condition that all of the following conditions are satisfied. (1) All the proceeds of the proposed Senior Lien, less any transaction costs, must be used to provide acquisition, construction or permanent financing for the Development, or any combination thereof (2) The proposed lender (each, a "Senior Lender") must be a state or federally chartered financial institution, a nonprofit corporation or a public entity that is not affiliated with the Developer or any of Developers affiliates, other than as a depositor or a lender (3) Developer must demonstrate to the Authority's reasonable satisfaction that subordination of the Authority Deed of Trust is necessary to secure adequate construction, rehabilitation and/or permanent financing to ensure the viability of the Development, including the operation of the Development as affordable housing, as required by this Agreement. To satisfy this requirement, Developer must provide to the Authority, in addition to any other information reasonably required by the Authority, evidence demonstrating that the proposed amount of the Senior Loan is necessary to provide adequate construction, rehabilitation and/or permanent financing to ensure the viability of the Development, and adequate financing for the Development would not be available without the proposed subordination. (4) The subordination agreement(s) must be structured to minimize the risk that the Authority Deed of Trust would be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Lien. To satisfy this requirement, the subordination agreement must provide the Authority with adequate rights to cure any defaults by Developer, including: (i) providing the Authority or its successor with copies of any notices of default at the same time and in the same manner as provided to Developer and (ii) providing the Authority with a cure period of at least sixty (60) days to cure any default. (5) The subordination(s) described in this Section may be effective only during the original term of the Senior Loan and any extension of its term or refinancing approved in writing by the Authority, and to any refinancing of the Senior Loan as approved by the Authority subject to the Authority's ability to make the findings required under Health and Safety Code Section 33334 14(a). 27 1552MM84197 8 (6) No subordination may limit the effect of the Authority Deed of Trust before a foreclosure, nor require consent of the holder of' the Senior Loan to exercise any remedies by the Authority under the Authority Documents. (7) Upon a determination by the Authority Executive Director that the conditions in this Section have been satisfied, the Authority Executive Director or his/her designee will be authorized to execute the approved subordination agreement without the necessity of any further action or approval. (b) In no event shall the Authority subordinate the Authority Regulatory Agreement. Section 4.5 Repayment Schedule. The Authority Loan shall be repaid as follows: (a) Term. The Authority Loan shall have a term that expires on the date fifty- seven (57) years from the Close of Escrow (the date on which the Regulatory Agreement is recorded against the Property). (b) Payments. Commencing on the May I first occurring after the Fiscal Year in which the Improvements are completed pursuant to this Agreement, and on each May I thereafter throughout the term of the Authority Loan, the Developer shall make repayments of the Authority Loan equal to its pro -rata share of the Lender's Share of Residual Receipts, if any The Developer shall provide the Authority in a form to be provided by the County, within sixty (60) days following the end of each of the Developer's Fiscal Year, a report showing the actual income and expenditures with respect to the Development for the immediately preceding Fiscal Year, the calculation of Annual Operating Expenses, Gross Revenue, and Residual Receipts and the status of all reserve funds, including without limitation, an annual audited financial statement for the Development prepared by a certified public accountant reasonably approved by the Authority Payments made shall be credited first against accrued interest and then against outstanding principal. (c) Special Repayments from Net Proceeds of Permanent Financing. Subject to the rights of Senior Lenders (or other lenders of Approved Financing), and to the extent additional subordinate loan proceeds, equity or surplus development sources following a cost certification, no later than ten (10) days after the date Developer receives its final Tax Credit Investor Equity contribution, Developer shall pay to the Authority one -hundred percent (100%) of the Net Proceeds of Permanent Financing, as a special repayment of the Authority Loan. No later than one hundred twenty (120) days following completion of construction of the Development, Developer shall submit to the Authority for its review a preliminary calculation of the Net Proceeds of Permanent Financing and a draft of the final cost certification. The Authority shall approve or disapprove Developer's determination of the amount of the Net Proceeds of Permanent Financing in writing within thirty (30) days of receipt, which approval shall not be unreasonably withheld. If Developer's determination is disapproved by the Authority, Developer shall re -submit documentation to the Authority until the Authority approval is obtained. Notwithstanding anything to the contrary, the Developer may request a deduction from the Net Proceeds of Permanent Financing to reduce the outstanding balance of 28 1552112us841e7s the Deferred Developer Fee (subject to the restrictions in Section 4.8 hereof) upon approval from the Authority, which approval shall not be unreasonably withheld. (d) Payment in Full. Subject to the provisions of subsection (e) below, all principal and interest, if any, on the Authority Loan shall, at the option of the Authority, be due and payable upon the earliest of (1) a Transfer other than a Transfer permitted or approved by the Authority as provided in Article 7 below; (2) the occurrence of an uncured Developer Event of Default for which the Authority exercises its right to cause the Authority Loan indebtedness to become immediately due and payable; or (3) the expiration of the Term specified in (a) above. (e) Prepayment. The Developer shall have the right to prepay the Authority Loan at any time. However, this Agreement and the Authority Regulatory Agreement shall remain in effect for their entire respective terms, regardless of any prepayment or timely payment of the Authority Loan. Section 4.6 Conditions Precedent to Disbursement of Authority Loan. (a) The disbursements made pursuant to this Section may not exceed the amount of the Authority Loan. The Authority shall disburse the Authority Loan into Escrow in three components: (1) an "Acquisition Component" in the amount of Two Million One Hundred Thousand Dollars ($2,100,000); (2) a "Construction Component' in the amount of Four Hundred Fifty Thousand ($450,000); and (3) a "Completion Component' in the amount of Fifty Thousand Dollars ($50,000). The division of the Authority Loan between the Acquisition Component, the Construction Component and the Completion Component may be readjusted by the Authority Executive Director on behalf of the Authority without the need for formal amendment of this Agreement. The Authority will disburse the Acquisition Component subject to the conditions precedent set forth in subsection (b) below, the Construction Component subject to the conditions set forth in subsection (c) below (but in no event before the Construction Closing), and the Completion Component at Permanent Closing subject to the conditions precedent set forth in subsection (d) below (b) The Authority shall not be obligated to make any disbursements of the Acquisition Component of the Authority Loan proceeds unless the conditions precedent set forth in Article 2 have been satisfied and the following conditions precedent are satisfied: (1) There exists no Developer Event of Default nor any act, failure, omission or condition that would constitute a Developer Event of Default under this Agreement; (2) The conditions precedent described in Section 3 4(a) have been satisfied or waived by the Authority; and (3) The undisbursed proceeds of the Authority Loan, together with other funds or firm commitments for funds that the Developer has obtained in connection with the acquisition of the Development are not less than the amount that the Authority determines is necessary to pay for acquisition of the Property and to satisfy all of the covenants contained in this Agreement. 29 1552"N884197.8.8 (c) The Authority shall not be obligated to make any disbursements of the Construction Component of the Authority Loan proceeds unless the conditions precedent set forth in Article 2 have been satisfied and the following conditions precedent are satisfied: (1) All requirements set forth in Section 4.6(b)(1) have been and continue to be satisfied and there exists no Event of Default nor any act, failure. omission or condition that would constitute a Developer Event of Default under this Agreement; (2) The Authority has received and approved the general contractor's construction contract that Developer has entered or proposed to enter for construction of the Development as required pursuant to Section 2.9 above; (3) The Authority has reasonably approved: (i) the copy of the labor and material (payment) bond; and (ii) the copy of the performance bond from the Developer for the construction of the Improvements as required pursuant to Section 2.10 above; (4) The Authority has received and reviewed at least three (3) construction proposals from the prospective contractor, which the Developer has obtained from prospective contractors for construction of the Development as required under the terms of this Agreement; (5) The Developer has closed all construction financing for the Development and has provided evidence reasonably acceptable to the Authority that the Developer is prepared to commence construction of the Improvements no later than the date set forth in the Development Schedule; (6) The Authority has received a written draw request from the Developer, including certification that the condition set forth in Section 4.6(b)(1) continues to be satisfied, and setting forth the proposed uses of funds consistent with the Financing Plan as required under Section 2.4 and Section 5 11, the amount of funds needed, and, where applicable, a copy of the bill or invoice covering a cost incurred or to be incurred; and (7) When a disbursement is requested to pay any contractor in connection with the Improvements, the written request must be accompanied by- (i) certification by Developer's architect reasonably acceptable to the Authority that the work for which disbursement is requested has been completed (although the Authority reserves the right to inspect the Development and make an independent evaluation); and (ii) lien releases and/or mechanics lien title insurance endorsements reasonably acceptable to the Authority (d) The Authority shall not be obligated to make any disbursements of the Completion Component of the Authority Loan proceeds unless the conditions precedent set forth in Article 2 have been satisfied and the following conditions precedent are satisfied: (1) All requirements set forth in Section 4.6(b)(1) and 4.6(c)(1) have been and continue to be satisfied and there exists no Event of Default nor any act, failure. omission or condition that would constitute a Developer Event of Default under this Agreement; 30 1552\12\1884197.8 (2) The Authority has received a cop), of a Certificate of Completion issued by the City for the Development; (3) The Developer has satisfied all conditions for the receipt of the completion/conversion installment of the "fax Credit Investor Equity. consistent with Developer's Partnership Agreement; (4) The Authority has received a draft of the Final Cost Certification for the Development from Developer showing all uses and sources; (5) The Authority has received from Developer and approved a form of tenant lease; (6) The Authority has received from Developer and approved the Management Plan; (7) The Authority has received from Developer and approved a copy of the Resident Services Plan for the provision of service to tenants; (8) The Authority has received from Developer current evidence of the insurance coverage meeting the requirements of Section 6.10 below; (9) The Developer has submitted copies of all certified payrolls to the Authority, and any identified payment issues have been resolved, or the Authority is working diligently to resolve any such issues; and (10) The Authority has received a written draw request from the Developer, including certification that the condition set forth in Section 5.6(b) continues to be satisfied, and setting forth the proposed uses of funds consistent with the Financing Plan as required under Section 2.4 and Section 5 11, the amount of funds needed, and, where applicable. a copy of the bill or invoice covering a cost incurred or to be incurred. (e) All funds to be disbursed pursuant to this Agreement shall be available to be disbursed to a Senior Lender, if and to the extent, the Senior Lender takes over the construction of the Development, the Senior Lender agrees to be bound to the terms hereof and the Senior Lender has cured any Default of the Developer Section 4 7 Reports and Accounting of Residual Receipts. (a) Audited Financial Statement. In connection with the annual repayment of the Authority Loan. the Developer shall furnish to the Authority an audited statement duly certified by an independent firm of certified public accountants reasonably approved by the Authority, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year The Authority hereby approves CohnReznick as the pre - approved certified public accountants for the purposes of this Section 4 7(a). Either one of the Parties may request to change the pre -approved independent firm of certified public accountants at any time. upon prior written notice. 31 1552\I 2\1684197.8 (b) Books and Records. The Developer shall keep and maintain at the Development, or elsewhere with the Authority's written consent, full, complete and appropriate books, record and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail the Developer's calculation of Residual Receipts. Books, records and accounts relating to the Developer's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement which provide for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and available for inspection by the Authority, its auditors or other authorized representatives at reasonable intervals during normal business hours on reasonable prior notice to the Developer Copies of all tax returns and other reports that the Developer may be required to furnish any governmental agency shall at all reasonable times be open for inspection by the Authority at the place that the books, records and accounts of the Developer are kept. The Developer shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (c) below then pending. (c) Authority Audits. The receipt by the Authority of any statement pursuant to subsection (a) above or any payment by the Developer or acceptance by the Authority of any loan repayment for any period shall not bind the Authority as to the correctness of such statement or such payment. Within three (3) years after the receipt of any such statement, the Authority or any designated agent or employee of the Authority at any time shall be entitled to audit the Residual Receipts and all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of the Developer and other places where records are kept. Immediately after the completion of an audit, the Authority shall deliver a copy of the results of such audit to the Developer If it shall be determined as a result of such audit that there has been a deficiency in a loan repayment to the Authority, then such deficiency shall become immediately due and payable with interest at the default rate set forth in Section 4.2 above, determined as of and accruing from the date that said payment should have been made. In addition, if the Developer's auditor's statement for any calendar year shall be found to have understated Residual Receipts by more than five percent (5%) and the Authority is entitled to any additional Authority- Loan repayment as a result of said understatement, then the Developer shall pay, in addition to the interest charges referenced hereinabove, all of the Authority's reasonable costs and expenses connected with any audit or review of the Developer's accounts and records. Section 4.8 Developer Fee. The amount and the terms of the Authority Loan, as provided in this Article 4, have been established by taking into account the anticipated costs of development, including a maximum "Developer Fee", not to exceed Two Million Dollars ($2.000.000), to be paid for development and construction management services. A minimum amount of Six Hundred Thousand Dollars ($600.000) of the Developer Fee shall be deferred, interest free. At Project completion (measured from the date of issuance of a certificate of occupancy, or equivalent document, for the Development) the Developer may make an initial payment from Net Proceeds of Permanent Financing pursuant to Section 4.5(c) above. For the first ten (10) years of operation of the 32 1552U N 884197.8 Development (measured from the date of issuance of a certificate of occupancy, or equivalent document, for the Development), the Developer shall be allowed to make payments on the outstanding balance of the Developer Fee as an Annual Operating Expense pursuant to the approved Financing Plan. From and after the eleventh (11th) year of Operation of the Development, the Developer may not make payments on the outstanding balance of the Developer Fee from Annual Operating Expenses, but shall instead make payments on the outstanding balance of the Developer Fee from the Developer's fifty percent (50%) share of Residual Receipts. Notwithstanding anything to the contrary, the Developer Fee may be reduced, or deferred, as necessary so that these funds may be utilized to pay Development cost - overruns; provided however, that the Developer shall obtain the Authority's prior written consent to any revision to the Financing Plan in accordance with Section 5 11 Except for the Developer Fee and reasonable asset management, property management or partnership management fees that are approved in advance by the Authority, no compensation from any source shall be received by or be payable to the Developer, any entity Controlled by the Developer, any General Partner or Member, or any other entity or organization in connection with the provision of development and construction management services for the acquisition and construction of the Improvements. Section 4.9 Assumption. The Authority Promissory Note shall not be assumable by successors and assigns of the Developer without the prior written consent of the Authority, which consent shall be granted or denied in the Authority's sole discretion, subject to the terms of Section 7.5 when applicable. Section 4 10 Non -Recourse. (a) Following recordation of the Authority Deed of Trust, and except as provided below, the Developer shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Authority Loan or the performance of the covenants of the Developer under the Authority Deed of Trust. The sole recourse of the Authority with respect to the principal of, or interest on, the Authority Promissory Note and defaults by the Developer in the performance of its covenants under the Authority Deed of Trust shall be to the property described in the Authority Deed of "frust; provided, however, that nothing contained in the foregoing limitation of liability shall. (1) limit or impair the enforcement against all such security for the Authority Promissory Note of all the rights and remedies of the Authority thereunder; or (2) be deemed in any sway to impair the right of the Authority to assert the unpaid principal amount of the Authority Promissory Note as demand for money within the meaning and intendment of Section 431 70 of the California Code of Civil Procedure or any successor provision thereto. (b) The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Authority Promissory Note and the performance of the Developer's obligations under the Authority Deed of Trust, except as hereafter set forth; nothing contained herein is intended to relieve the Developer of its waiver of liability in Section 3.6 and the Developer's indemnification obligations under this Agreement, or liability for (I) fraud or willful misrepresentation; (2) the failure to pay taxes, assessments or other charges which may create liens on the Developer's 33 1552\1211884197.8 interest in the Property that are payable or applicable prior to any foreclosure under the Authority Deed of Trust (to the full extent of such taxes, assessments or other charges); (3) the fair market value of any personal property or fixtures removed or disposed of by the Developer other than in accordance with the Authority Deed of Trust; and (4) the misappropriation of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development. Section 4 11 Assignment of Collateral Documents. (a) The Developer will grant to the Authority, pursuant to the Assignment Agreement, a valid, second priority (or such lower priority if approved by the Authority in writing), continuing security interest in all of the Developer's right, title, and interest presently existing and after-acquired or arising Collateral Documents in order to secure prompt, full and complete payment of any and all of Developer's obligations to the Authority under this Agreement and in order to secure prompt, full and complete performance by Developer of each of its covenants and duties under this Agreement and the Affordability Covenant. For purposes hereof, the Collateral Documents subject to the Assignment Agreement shall expressly exclude any document that, pursuant to applicable law, the Developer does not have the right to pledge and assign as contemplated by this Agreement. The Authority shall not have any obligation under any Collateral Documents assigned pursuant to the Assignment Agreement until it expressly agrees in writing to be bound by such contracts or agreements. Upon the Developer Event of Default that has not been cured pursuant to this Agreement, in accordance with the Assignment Agreement, the Authority may use any of the Collateral Documents for any purpose for which the Developer could have used them for construction of the Development, and the Developer shall cooperate with the Authority to implement the Assignment Agreement and immediately deposit with the Authority, for the Authority's use, all the Collateral Documents. (b) Prior to Close of [--screw, except as provided below, the sole recourse of the Authority after an uncured Event of Default under this Agreement, and with respect to the principal of, or interest on, the Authority Promissory Note shall be to the property described in the Assignment Agreement: provided, however that nothing contained in the foregoing limitation of liability shall (1) limit or impair the enforcement against all such security for the Authority Promissory Note of all the rights and remedies of the Authority thereunder; or (2) be deemed in any way to impair the right of the Authority to assert the unpaid principal amount of the Authority Promissory Note as demand for money within the meaning and intendment of Section 431 70 of the California Code of Civil Procedure or any successor provision thereto. The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note, except as hereafter set forth; nothing contained herein is intended to relieve the Developer of its indemnification obligations under this Agreement or any of the Authority Documents or liability for fraud or willful misrepresentation or the material misapplication of the Acquisition Loan funds. 34 1552112\1884197.8 ARTICLE 5 CONSTRUCTION OF IMPROVEMENTS Section 5 1 Construction Pursuant to Plans. Unless modified by operation of Section 5.2, the Improvements shall be constructed substantially in accordance with the Construction Plans and the terms and conditions of the land use permits and approvals and building permits, including any variances granted. Section 5.2 Change in Construction of Improvements. (a) If the Developer desires to make any material change in the Improvements which are not substantially consistent with the Final Construction Plans, the Developer shall submit the proposed change to the Authority for its approval. No change which is required for compliance with building codes or other government health and safety regulations shall be deemed material. If the Improvements, as modified by any such proposed change, will conform to the requirements of this Agreement, and the Construction Plans, the Authority shall approve the change by notifying the Developer in writing. For purposes of this Section, a material change shall mean any change which is expected to substantially alter the external appearance of the Development (including any color change) or which is expected to result in an individual change of Fifty Thousand Dollars ($50,000) or a cumulative change of One Hundred Fifty Thousand Dollars ($150,000), or more, in the cost of construction of the Improvements (determined from the Financing Plan approved following the completion of the Construction Plans ). (b) Unless a proposed change is rejected by the Authority within ten (10) working days, it shall be deemed approved. If rejected within such time period, the previously approved Construction Plans shall continue to remain in full force and effect. If the Authority rejects a proposed change. it shall provide the Developer with the specific reasons therefore. (c) The approval of changes in the Construction Plans by the Authority pursuant to this Section shall be in addition to any approvals required to be obtained from the Authority pursuant to building permit requirements. Approval of changes in the Construction Plans by the Authority shall not constitute approval by the Authority and shall in no way limit the Authority's discretion in approving changes to the Construction Plans. Section 5.3 Commencement of Improvements. The Developer shall commence construction of the Improvements no later than the date set forth in the Development Schedule. Section 5.4 Completion of the Improvements. The Developer shall diligently prosecute to completion the construction of the Improvements no later than the date set forth in the Development Schedule. 35 1552[ 121884197.9 Section 5.5 Equal Opportunity. During the construction of the Improvements, the Developer. and its successors, assigns and subcontractors shall not discriminate against any employee or applicant for employment in connection with the construction of the Improvements because of race, color, religion, ethnic group identification, sex, sexual preference, marital status. ancestry or national origin. Each of the following activities shall be conducted in a non-discriminatory manner- hiring; upgrading; demotion and transfers: recruitment and recruitment advertising; layoff and termination; rate of pay and other forms of compensation; and selection for training including apprenticeship. Section 5.6 Compliance with Applicable Law: Prevailing Wage Requirement. (a) The Developer shall cause all construction to be performed in compliance with: (1) All applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or that may be enacted hereafter, and (2) All directions. rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. 'rhe work shall proceed only after the payment of all applicable fees, procurement of each permit, license, or other authorization that may be required by any governmental agency having jurisdiction, and the Developer shall be responsible to the Authority for the procurement and maintenance thereof as may be required of the Developer and all entities engaged in work on the Property (b) If required by applicable law, the Developer shall pay and shall cause the contractor and subcontractors to pay prevailing wages in the construction of the Development as those wages are determined pursuant to California Labor Code Section 1720 et sec., to employ apprentices as required by Califomia Labor Code Sections 1777.5 et sem., and the implementing regulations of the Department of Industrial Relations (the "DIR"). If required by applicable law, Developer shall and shall cause the contractor and subcontractors to comply with the other applicable provisions of California Labor Code Sections 1720 et Eq., 1777.5 et sec., and implementing regulations of the DIR. If required by applicable law, Developer shall and shall cause the contractor and subcontractors to keep and retain such records as are necessary to determine if such prevailing wages have been paid as required pursuant to Califomia Labor Code Section 1720 et Eg., and apprentices have been employed are required by California Labor Code Section 1777.5 et sec. Copies of the currently applicable per diem prevailing wages are available from DIR. If required by applicable law, during the construction of the Development, Developer shall or shall cause the contractor to post at the Property the applicable prevailing rates of per diem wages. Developer shall cause its respective contractors and subcontractors to be registered as set forth in Labor Code Section 1725.5 If required by applicable law, the Developer shall cause its respective contractors and subcontractors to do all the following: (1) all calls for bids, bidding materials and the construction contract documents for the Development must specify that (i) no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the Development unless registered with the DIR pursuant to Labor Code 36 1552\12\1885197.8 Section 1725.5, and (ii) the Development is subject to compliance monitoring and enforcement by the DIR, (2) The Developer is required to provide the Authority all information required by Labor Code Section 1773.3 as set forth in the DIR's online form PWC -100 within two (2) days of the award of the contract (https:Hwulv.dir.ca.gov/pwc I OOext/); (3) The Developer shall cause its respective contractors to post job site notices, as prescribed by regulation by the DIR, and (4) The Developer shall cause its respective contractors to furnish payroll records required by Labor Code Section 1776 directly to the Labor Commissioner, at least monthly in the electronic format prescribed by the Labor Commissioner (c) The Developer shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City and the Authority) the City, the Authority, and their board members, council members, officers, and employees against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Developer, its contractor and subcontractors), if required by applicable law, to pay prevailing wages as determined pursuant to California Labor Code Section 1720 et sec., to employ apprentices pursuant to California Labor Code Section 1777.5 et and implementing regulations of the DIR or to comply with the other applicable provisions of California Labor Code Sections 1720 et sec., 1777.5 et sec., to meet the conditions of Section 1771 4 of the Labor Code as set forth above and the implementing regulations of the DIR in connection with the construction of the Development or any other work undertaken or in connection with the Property This Section shall survive the repayment of the Authority Loan, the reconveyance of the Authority Deed of Trust and the expiration of the Loan Term. (d) The Developer shall construct the Development to comply with all applicable federal and state disabled persons accessibility requirements including but not limited to the Federal Fair Housing Act, Section 504 of the Construction Act of 1973, Title II and/or Title III of the Americans with Disabilities Act of 1990, Title 24 of the California Code of Regulations and the Uniform Federal Accessibility Standards ("UFAS"). In compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794, et sec.), a minimum of three (3) units in the Development shall be constructed to be readily accessible and usable by households with a mobility impaired member and a minimum of two (2) units shall be constructed and to be readily accessible and usable by households with a hearing or visually impaired member The Developer shall deliver to the Authority, a certification from a Certified Access Specialist certifying that the Development (as constructed) meets the requirements of this subsection (d). Section 5 7 Progress Report. Until such time as the Developer has completed construction of the Improvements, as evidenced by issuance of final Certificates of Occupancy by the City for all buildings in the Development, the Developer shall provide the Authority with quarterly progress reports, or more frequent updates if Authority reasonably requires, regarding the status of the construction of the Development, including a certification that the actual construction costs to date conform to the Financing Plan. Section 5.8 Construction Responsibilities. 37 1552\12\1884197.8 (a) It shall be the responsibility of the Developer to coordinate and schedule the work to be performed so that commencement and completion of construction will take place in accordance with this Agreement. (b) The Developer shall be solely responsible for all aspects of the Developer's conduct in connection with the Development, including (but not limited to) the quality and suitability of the plans and specifications, the supervision of construction work, and the qualifications. financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the Authority with reference to the Development is solely for the purpose of determining whether the Developer is properly discharging its obligations to the Authority, and should not be relied upon by the Developer or by any third parties as a warranty or representation by the Authority as to the quality of the design or construction of the Development. Section 5.9 Mechanics Liens, Stop Notices, and Notices of Completion. (a) If any claim of lien is filed against the Property or the Improvements or a stop notice affecting the Authority Loan is served on the Authority or any other lender or other third party in connection with the Development, then the Developer shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the Authority a surety bond from a surety acceptable to the Authority in sufficient form and amount, or provide the Authority with other assurance satisfactory to the Authority that the claim of lien or stop notice will be paid or discharged provided, however, that Developer shall have the right to contest in good faith any such liens or stop notice. (b) If the Developer fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section or obtain a surety bond, then in addition to any other right or remedy, the Authority may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Developer's expense. Alternatively, the Authority may require the Developer to immediately deposit with the Authority the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof The Authority may use such deposit to satisfy any claim or lien that is adversely determined against the Developer (c) The Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Development for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Property and/or Improvements. The Developer authorizes the Authority, but without any obligation, to record any notices of completion or cessation of labor or any other notice that the Authority deems necessary or desirable to protect its interest in the Development and Property Section 5 10 Inspections. The Developer shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Development by the Authority and by public authorities during reasonable business hours upon forty-eight (48) hours' written notice for the purposes of determining compliance with this Agreement. 38 155211211884197.8 Section 5 11 Financing: Revisions to Plan. As of the date of this Agreement, the Authority has approved the Financing Proposal set forth in Exhibit D In accordance with Section 2.4, the Developer shall obtain the Authority's approval of the Financing Plan. The Developer shall promptly submit any proposed material amendments to the Financing Plan, including but not limited to any material amendments or modifications to the development budget (including the unavailability of any sources of financing identified in Sections 2.5 and 2.6), or the commitment letter from any other lender, to the Authority Written consent of the Authority shall be required to amend the Financing Plan, provided that the Authority shall consent to any amendment of the Financing Plan that increases the cost of the construction of the Improvements if such amendment also demonstrates that there is Approved Financing (or any source other than assistance from the Authority or the City) available to pay for such increases. The Authority shall utilize best efforts to approve or disapprove requested amendments to the Financing Plan within five (5) working days of receipt of a request for approval. Section 5 12 Information. The Developer shall provide any information reasonably requested by the Authority in connection with the Development. Section 5 13 Records. (a) The Developer shall maintain complete, accurate, and current records pertaining to the Development for a period of five (5) years after the creation of such records, and shall permit any duly authorized representative of the Authority to inspect and copy records upon reasonable notice to the Developer Such records shall include all invoices, receipts, and other documents related to expenditures from the Authority Loan funds. Records must be kept accurate and current. (b) The Authority shall notify the Developer of any records it deems insufficient. The Developer shall have thirty (30) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the Authority in such notice, or if a period longer than thirty (30) days is reasonably necessary to correct the deficiency, then the Developer shall begin to correct the deficiency within thirty (30) days and complete the correction of the deficiency as soon as reasonably possible. Section 5 14 Relocation. (a) The parties acknowledge that the Property and all improvements currently located thereon are vacant or will be vacant and free of any relocation responsibilities by the Close of Escrow If and to the extent the acquisition of the Property or the construction of the Development by the Developer result in the permanent or temporary displacement of residential tenants, homeowners. or businesses, then the Developer shall comply with all applicable local, state, and federal statutes and regulations, (including without limitation California Government Code Section 7260 et se�{c ., and accompanying regulations) with respect to relocation planning, advisory assistance, and payment of monetary benefits. The Developer shall be solely 39 1552112\1884197.8 responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. (b) The Developer shall defend (with counsel reasonably acceptable to the City, the Successor Agency and the Authority), the City, the Successor Agency and the Authority and their board members, council members, officers, and employees against any claim for damages, compensation. fines, penalties, relocation payments or other amounts arising out of the failure or alleged failure of any person or entity (including the Developer, City, the Successor Agency and Authority) to satisfy relocation obligations related to the development of the Development. This obligation to indemnify shall survive termination of this Agreement. Section 5 15 Bid Package. (a) The Developer shall cause Developer's General Contractor to provide the Bid Package to all subcontractors. (b) All calls for bids, bidding materials and the construction contract documents for the Development must specify that: (1) No contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the Development unless registered with the DIR pursuant to Labor Code Section 1725.5, and (2) the Development is subject to compliance monitoring and enforcement by the DIR. Section 5 16 Financial Accounting and Post -Completion Audits. (a) No later than ninety (90) days following completion of construction of the Development and issuance of the Certificate of Completion, the Developer shall provide to Authority a draft financial accounting of all sources and uses of funds for the Development. No later than one hundred fifty (150) days following completion of construction of the Development, the Developer shall submit to the Authority a copy of the Development's cost certification report prepared by the Developer's accountant and submitted to ICAC showing the sources and uses of all funds utilized for the Development. (b) The Developer shall make available for examination at reasonable intervals and during normal business hours to Authority all books, accounts. reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit Authority to audit, examine, and make excerpts or transcripts from such records upon reasonable prior notice to the Developer The Authority, in its reasonable discretion, may make audits of any records related to the development or operation of the Development or the Developer's compliance with the Authority Documents. ARTICLE 6. ONGOING DEVELOPER OBLIGATIONS Section 6.1 Applicability 40 1552112"884197.8 The conditions and obligations set forth in this Article 6 shall apply throughout the Term, unless a different period of applicability is specified for a particular condition or obligation. Section 6.2 Use. (a) The Developer hereby agrees that, for the entire Term, the Development will be used only for residential use consistent with the Authority Regulatory Agreement. (b) The Authority Regulatory Agreement shall require that a portion of the Units shall be affordable to and occupied by Lower Income Households. (c) All Units in the Development shall be made available to and occupied by income qualified households that include a "special needs" person, meaning a person with disabilities that meets the requirements under 24 C.F.R. 5 403, who is in need of services or would benefit from services to be provided at the Development. Section 6.3 Maintenance. (a) The Developer agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, of the Development in first-class condition, repair and sanitary condition (and, as to landscaping, in a healthy condition, subject to any restrictions on water use) and in accordance with a Management Plan approved pursuant to Section 2.8 of this Agreement (including without limitation any landscape and signage plans), as the same may be amended from time to time, and all applicable laws, rules, ordinances, orders, and regulations of all federal, state, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials. (b) The Developer acknowledges the great emphasis the Authority places on quality maintenance to protect its investment and to provide quality low-income housing for area residents and to ensure that Authority -assisted affordable housing projects are not allowed to deteriorate due to deficient maintenance. In addition, the Developer shall keep the Development free from all graffiti, and any accumulation of shopping carts, debris or waste material. The Developer shall promptly make all repairs and replacements necessary to keep the Development in first-class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. (c) In the event that the Developer breaches any of the covenants contained in this section and such default continues for a period of seven (7) days after written notice from the Authority with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the Authority with respect to landscaping and building improvements, then the Authority, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the Authority shall be permitted (but is not required) to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the 41 155211211884197.8 Authority and/or costs of such cure, including a ten percent (10%) administrative charge, which amount shall be promptly paid by the Developer to the Authority upon demand. Section 6.4 Taxes and Assessments. The Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property or the Developers fee interest in the Property; provided, however, that the Developer shall have the right to contest in good faith any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge against it, the Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. Section 6.5 Mandatory Language in All Subsequent Deeds, Leases and Contracts. (a) Basic Requirement. The Developer covenants by and for itself, its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age, source of income, or disability in the sale, lease, sublease transfer, use, occupancy, tenure or enjoyment of the Development nor shall the Developer or any person claiming under or through the Developer 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 in the Development. The foregoing covenant shall run with the land. (b) Provisions in Conveyance Documents. All deeds, leases or contracts made or entered into by Developer, its successors or assigns, as to any portion of the Property shall contain therein the following language: (1) In Deeds. "(1) Grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed, nor shall the grantee or any person claiming under or through the grantee, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955 9 of the Government Code. With respect to familial status, nothing in paragraph (I) shall be construed to affect Sections 51.2, 51.3, 514, 51 10. 51 11, and 799.5 of the Civil Code, 42 1552\1211884197.8 relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)." (2) In Leases: "(1) Lessee herein covenants by and for itself. its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee or any person claiming under or through the lessee, 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, sublessees, subtenants, or vendees in the premises herein leased. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955 9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51 4, 51 10, 51 11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n). (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)." (3) In Contracts: "(I) "there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor shall the transferee or any person claiming under or through the transferee 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 of the land. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (I) shall be construed to affect Sections 51.2, 51.3, 51 4, 51 10, 51 11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)." Section 6.6 Hazardous Materials. 43 1552"2%1884197.8.s (a) Covenants. (1) No Hazardous Materials Activities. The Developer hereby represents and warrants to the Authority that, at all times from and after the Close of Escrow, the Developer shall not cause or permit the Property, or the Improvements thereon to be used as a site for the use, generation, manufacture, storage, treatment. release, discharge, disposal, transportation or presence of any Hazardous Materials. (2) Hazardous Materials Laws. The Developer hereby represents and warrants to the Authority that, at all times from and after the Close of Escrow, the Developer shall comply and cause the Property, and the Improvements thereon to comply with Hazardous Materials Laws, including without limitation, those relating to soil and groundwater conditions. (3) Notices. The Developer hereby represents and warrants to the Authority that, at all times from and after the Close of Escrow, the Developer shall immediately notify the Authority in writing of- (i) the discovery of any Hazardous Materials on or under the Property; (ii) any knowledge by the Developer that the Property does not comply with any Hazardous Materials Laws; (iii) any claims or actions pending or threatened against the Developer, the Property, or the Improvements by any governmental entity or agency or any other person or entity relating to Hazardous Materials or pursuant to any Hazardous Materials Laws (collectively "Hazardous Materials Claims"); and (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property, that could cause the Property, or any part thereof to be designated as "border zone property" under the provisions of California Health and Safety Code Sections 25220, et sem., or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Development under any Hazardous Materials Laws. The Authority shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorney's fees in connection therewith paid by the Developer (4) Remedial Action. Without the Authority's prior written consent, which shall not be unreasonably withheld, the Developer shall not take any remedial action in response to the presence of any Hazardous Materials on, under, or about the Development (other than in emergency situations or as required by governmental agencies having jurisdiction), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claims. (b) Indemnity Without limiting the generality of the indemnification set forth in Section 10.6 below. the Developer hereby agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City and the Authority) the City and the Authority, their board members, council members, officers, and employees (together, the "Indemnified Parties") from and against any and all claims, losses, damages. liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial action requirements, enforcement actions of any kind, and all costs and expenses incurred in connection therewith (including, but not limited to, reasonable attorney's fees and expenses), arising directly or indirectly, in whole or in part, out of (1) the failure of the Developer or any other person or entity to comply with any Hazardous Materials Law relating in any way 44 155211211884197.8 whatsoever to the handling, treatment, presence, removal, storage, decontamination, cleanup, transportation or disposal of Hazardous Materials into. on, under or from the Development on or after the date of conveyance of the Property to the Developer: (2) the presence in, on or under the Development of any Hazardous Materials or any releases or discharges of any Hazardous Materials into, on, under or from the Development to the extent it arises on or after the date of conveyance of the Property to the Developer; or (3) an), activity carried on or undertaken on or off the Development. subsequent to the conveyance of the Property to the Developer, and whether by the Developer or any successor in title or any employees, agents, contractors or subcontractors of the Developer or any successor in title, or any third persons at any time occupying or present on the Development, in connection with the handling, treatment, removal, storage, decontamination, cleanup, transport or disposal of any Hazardous Materials at any time located or present on or under the Development. The foregoing indemnity shall further apply to any residual contamination on or under the Development, or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. The provisions of this subsection shall survive expiration of the Term or other termination of this Agreement, and shall remain in full force and effect. The forgoing indemnity shall not apply to any claims, losses, damages, liabilities, fines, penalties, or charges that are caused by the sole negligence or willful misconduct of the Indemnified Parties. (c) No Limitation. The Developer hereby acknowledges and agrees that the Developer's duties, obligations and liabilities under this Agreement, including, without limitation, under subsection (b) above, are in no way limited or otherwise affected by any information the Authority may have concerning the Development and/or the presence within the Development of any Hazardous Materials, whether the Authority obtained such information from the Developer or from its own investigations. Section 6.7 Management Agent; Periodic Reports. (a) Management Agent. The Development shall at all times be managed by an experienced Management Agent reasonably acceptable to the Authority, with demonstrated ability to operate residential facilities like the Development in a manner that will provide decent, safe, and sanitary housing. The Authority hereby preapproves Mercy Housing Management as the initial management agent for the Development. For any change in the Management Agent. the Developer shall submit for the Authority's reasonable approval the identity of any proposed Management Agent. The Developer shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent as is reasonably necessary for the Authority to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the Authority shall approve the proposed Management Agent by notifying the Developer in writing. (b) Performance Review The Authority reserves the right to conduct a periodic review of the management practices and financial status of the Development within thirty (30) days after each anniversary of the issuance of the Certificate of Completion. The purpose of each periodic review will be to enable the Authority to determine if the Development 45 155212\ 1884197 8 is being operated and managed in accordance with the requirements and standards of this Agreement. 'rhe Developer shall cooperate with the Authority in such reviews. (c) Books, Records and Reports. For purposes of such periodic reviews, the Developer and the Management Agent shall make available to the Authority for inspection all books and records with respect to the Development. In addition, the Developer shall provide the Authority with: (1) by not later than thirty (30) days prior to commencement of each Fiscal Year, the annual budget for the upcoming Fiscal Year; (2) within ninety (90) days following the end of each Fiscal Year, a report showing the actual income and expenditures with respect to the Development for the immediately preceding Fiscal Year and the status of all reserve funds; and (3) within one hundred twenty (120) days following the end of each Fiscal Year, a copy of the Developers federal income tax filings for the Fiscal Year (d) Replacement of Management Agent. If, as a result of a periodic review, the Authority determines in its reasonable judgment that the Development is not being operated and managed in accordance with any of the requirements and standards of the Management Plan, the Management Agreement, or the Authority Documents, the Authority shall deliver notice to the Developer of its intention to cause replacement of the Management Agent. Within thirty (30) days of receipt by the Developer of such written notice, Authority staff and the Developer shall meet in good faith to consider methods for improving the financial and operating status of the Development, including, without limitation, replacement of the Management Agent. If, after such meeting, Authority staff recommends in writing the replacement of the Management Agent, the Developer shall promptly dismiss the then Management Agent, and shall appoint as the Management Agent a person or entity meeting the standards for a Management Agent set forth in subsection (a) above and approved by the Authority pursuant to subsection (a) above. (e) Any contract for the operation or management of the Development entered into by the Developer shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section shall constitute a Developer Event of Default under this Agreement, and the Authority may enforce this provision through legal proceedings as specified in Article 8. Section 6.8 Approval of Management Plan Modifications. Pursuant to Section 2.8, the Authority is to review and approve the written Management Plan for the Development no later than six (6) months after commencement of construction of the Development pursuant to the Development Schedule. Each year thereafter, within sixty (60) days of the end of the Developer's Fiscal Year. the Developer shall submit to the Authority any proposed changes to the Management Plan. The Authority shall approve or disapprove the proposed changes to the Management Plan in writing within fifteen (15) calendar days following the Authority's receipt of the request to amend the Management Plan, which approval shall not be unreasonably denied. If the change to the Management Plan is disapproved by the Authority. the Authority shall deliver a written notice to the Developer setting forth, in reasonable detail, the reasons for such disapproval. "rhe Developer shall have fifteen (15) calendar days following the receipt of such notice to submit a revised Management Plan modification in any way necessary to ensure that such policies comply with the provisions of this Agreement. The 46 1552112\1884197,8 Authority's approval of the amendments to the Management Plan shall not be unreasonably withheld. Section 6.9 Resident Services Plan and Resident Services Budget. (a) Developer hereby agrees to contract for a resident services coordinator at least one (1) month prior to completion of the Improvement pursuant to Section 5 4 above. The Developer shall submit to the Authority and initial proposed Resident Services Plan and Resident Services Budget no later than six (6) months after the commencement of construction of the Development pursuant to the Development Schedule as set forth in Section 5.3 above. Each year thereafter, within sixty (60) days of the end of the Developer's fiscal year, the Developer shall furnish to the Authority a draft Resident Services Plan and Resident Services Budget. Upon receipt by the Authority of the proposed Resident Services Plan and Resident Services Budget, the Authority shall promptly review the same and approve or disapprove the Resident Services Plan and the Resident Services Budget within ten (10) working days. If the Resident Services Plan or Resident Services Budget are not approved by the Authority, the Authority shall set forth in writing and notify the Developer of the Authority's reasons for withholding such approval, which may include a request by the Authority for a change in the nature or scope of resident services or a change in service provider The Developer shall thereafter submit a revised Resident Services Plan and Resident Services Budget for Authority approval, which approval shall be granted or denied within five (5) working days in accordance with the procedures set forth above. (b) The Resident Services Budget shall show required expenditures from Annual Operating Expenses, and may include an annual sum of Ninety -Five Thousand Dollars ($95.000) for Resident Services, provided however the Operating Expenses line item for Resident Services may be increased in such amount approved by the Authority prior to commencement of the Fiscal Year, pursuant to the procedure for submission and approval of the Resident Services Plan and Resident Services Budget as set forth in Section 6.9(a). (c) It is currently anticipated that the Developer will provide additional social services to Tenants in the Development in excess of those payable from Annual Operating Expenses. The Borrower hereby agrees to make a deposit of Two Million Five Hundred Thousand Dollars ($2.500.000) (the "Supportive Services Deposit") into the Supportive Services Reserve, which shall be used exclusively to fund additional Tenant Services at the Development. Expenditures from the Supportive Services Reserve shall be excluded from Annual Operating Expenses and any future deposits into the Supportive Services Reserve shall be excluded from Operating Income and shall instead be dedicated to paying for the additional Tenant Services. If the Developer is not able to secure sufficient operating subsidies for the Development as required under Section 2.6(d), the Supportive Services Deposit may instead be used to fund a capitalized operating reserve subject to approval of an update to the Financing Plan required under Section 2.4 and Section 5 11 Section 6.10 Insurance Requirements. (a) Required Coverage. The Developer shall maintain and keep in force, at the Developer's sole cost and expense, the following insurance applicable to the Development: 47 1552\1211884197.8 (1) Workers' Compensation insurance, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000.000) each accident. (2) Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broad Form Property Damage, Products and Completed Operations. Products and Completed Operations coverage shall be obtained no later than completion of construction of the Development. (3) Comprehensive Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non -owned and hired vehicles, as applicable; provided, however, that if the Developer does not own or lease vehicles for purposes of this Agreement, then no automobile insurance shall be required and both parties to this Agreement shall initial this provision signifying same. (4) Builders' risk insurance during the course of construction covering the Development and covering all risks of loss; (5) Property insurance covering the Development covering all risks of loss, including earthquake (but only if it is commercially affordable at a reasonable price and with a reasonable deductible, in Authority's reasonable opinion, and if Authority requests in writing that such coverage be carried) and flood (if the Property is located in a Flood zone), for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the Authority, naming the Authority as a Loss Payee, as its interest may appear (b) Contractor's Insurance. The Developer shall cause any general contractor or agent working on the Development under direct contract with the Developer to maintain insurance of the types and in at least the minimum amounts described in subsections (a)(1), (a)(2), and (a)(3) above, and shall require that such insurance shall meet all of the general requirements of subsection (c) below Subcontractors working on the Development under indirect contract with the Developer shall be required to maintain the insurance described in subsections (a)(1), (a)(2) and (a)(3) above; provided that the amount of Commercial General Liability insurance for each subcontractor shall have a limit of not less than One Million Dollars ($1.000,000). Liability and Comprehensive Automobile Liability insurance to be maintained by such contractors and agents pursuant to this subsection shall name as additional insureds the City, the Successor Agency, the Former Agency, the Authority, their board members, officers, agents, and employees. (c) General Requirements. The required insurance shall be provided under an occurrence form, and the Developer shall maintain such coverage continuously throughout the Term. Should an}' of the required insurance be provided under a form of coverage that provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit shall be three times the occurrence limits specified above. Comprehensive General Liability Comprehensive Automobile Liability and Property insurance policies shall be endorsed to name as additional insureds the Authority, the 48 1552 1 21 1884197.8 City, and the City and Authority's board and council members. officers, agents, and employees. All policies and bonds shall be endorsed to provide: (1) thirty (30) days prior written notice of cancellation, reduction in coverage, intent not to renew or any material change in said policies to the address established for notices to the Authority pursuant to this Agreement; (2) an agreement that such policies are primary and noncontributing with any insurance that may be carried by the Authority; (3) a provision that no act or omission of the Developer shall affect or limit the obligation of the property insurance carrier to pay the amount of any loss sustained; and (4) a waiver by the insurer of all rights of subrogation against the Authority and its authorized parties in connection with any property loss or damage thereby insured against. (d) Certificates of Insurance. Upon the Authority's request at any time during the term of this Agreement, the Developer shall provide certificates of insurance, in form and with insurers reasonable acceptable to the Authority, evidencing compliance with the requirements of this Section, and shall provide complete copies of such insurance policies, including a separate endorsement naming the City and the Authority as additional insureds, if requested by the Authority Section 6.11 Audits. The Developer shall make available for examination at reasonable intervals and during normal business hours to the Authority all books, accounts, reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit the Authority to audit, examine, and make excerpts or transcripts from such records. The Authority may make audits of any conditions relating to this Agreement. Section 6.12 Safety Conditions. (a) The Developer acknowledges that the Authority places a prime importance on the security of Authority assisted projects and the safety of the residents and surrounding community The Developer agrees to implement and maintain throughout the Term the following security measures in the Development: (1) to the extent feasible employ defensible space design principles and crime prevention measures in the operation of the Development including but not limited to maintaining adequate lighting in parking areas and pathways; (2) for the entire Term of this Agreement, the Developer shall cause the Management Agent to participate in the San Diego County Sheriff Department's Crime Free Multi-Flousing Unit Program, wherein specialized training and other resources are provided to multi -family property owners and managers to reduce the potential for onsite criminal activity Completion of the Department's four (4) training phases and a pull Certification (Phase V) shall be achieved and maintained by the Management Agent; and (3) provide added security including dead -bolt locks for every entry door, and where entry doors are damaged, replace them with solid -core doors. 49 1552\12\1884197 8 (b) The Authority shall have the right to enter on the Property and/or contact the San Diego County Sherrifrs Department if it becomes aware of or is notified of any conditions that pose a danger to the peace, health, welfare or safety of the residents and/or the surrounding community, and to perform or cause to be performed such acts as are necessary to correct the condition. Section 6.13 Notice of Litigation. The Developer shall promptly notify the Authority in writing of any litigation materially affecting Developer, the Developer's ability to perforin its obligations under this Agreement, or the Property and of any claims or disputes that involve a material risk of such litigation. ARTICLE 7 ASSIGNMENT AND TRANSFERS Section 7 1 Definitions. As used in this Article, the term "Transfer" means: (a) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to this Agreement or of the Development or any part thereof or any interest therein or any contract or agreement to do any of the same; or (b) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to any ownership interest in Developer or any contract or agreement to do any of the same; or (c) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer; or (d) The leasing of part or all of the Property or the Improvements thereon; provided, however, that leasing of the Units included within the Improvements to tenant occupants in accordance with the Authority Regulatory Agreement shall not be deemed a Transfer for purposes of this Article. Section 7.2 Purpose of Restrictions on Transfer (a) This Agreement is entered into solely for the purpose of development and operation of the Development and its subsequent use in accordance with the terms hereof. The Developer recognizes that the qualifications and identity of the Developer are of particular concern to the Authority, in view of - (1) The importance of the Development of the Property to the general welfare of the community: 50 1552%12k 1884197 8 (2) The land acquisition assistance and other public aids that have been made available by law and by the government for the purpose of making such Development possible: (3) The reliance by the Authority upon the unique qualifications and ability of the Developer to serve as the catalyst for development of the Property and upon the continuing interest which the Developer will have in the Property to assure the quality of the use, operation and maintenance deemed critical by the Authority in the development of the Property; (4) The fact that a change in ownership or control of the owner of the Property, or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or with respect to the identity of the parties in control of the Developer or the degree thereof is for practical purposes a transfer or disposition of the Property; (5) The fact that the Property is not to be acquired or used for speculation, but only for development and operation by the Developer in accordance with the Agreement; and (6) The importance to the Authority and the community of the standards of use, operation and maintenance of the Property (b) The Developer further recognizes that it is because of such qualifications and identity that the Authority is entering into this Agreement with the Developer and that Transfers are permitted only as provided in this Agreement. Section 7.3 Prohibited Transfers. (a) The limitations on Transfers set forth in this Section shall apply throughout the Term. Except as expressly permitted in this Agreement, the Developer represents and agrees that the Developer has not made or created, and will not make or create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the Authority (b) Any Transfer made in contravention of this Section shall be void and shall be deemed to be a default under this Agreement whether or not the Developer knew of or participated in such Transfer Section 7 4 Permitted Transfers. Notwithstanding the provisions of Section 7.3, the following Transfers shall be permitted and are hereby approved by the Authority (a) Any Transfer creating a Security Financing Interest permitted pursuant to the approved Financing Plan. (b) Any Transfer directly resulting from the foreclosure of a Security Financing Interest or the granting of a deed in lieu of foreclosure of a Security Financing Interest or as otherwise permitted under Article 7 51 155211211884197 8 (c) The leasing of residential units within the Development in accordance with the Authority Regulatory Agreement. (d) The granting of easements or permits to facilitate the development of the Property (e) The Authority hereby approves a Transfer of a limited partnership interest in the Developer to the Investor, or to an affiliate of the Investor (provided such affiliate provides documentation reasonably acceptable to the Authority that the affiliate has sufficient financial capability to provide the capital contributions set forth in the Financing Plan) and future transfers of such interest provided that: (I) the Developer's partnership agreement provides for capital contributions of the limited partners consistent with Financing Plan and is first approved by the Authority in its reasonable discretion; (2) all documents associated with the tax credit syndication of the Development are submitted to the Authority for approval prior to execution, which approval shall not be unreasonably withheld; and (3) in subsequent transfers the Investor (or an affiliate of the Investor reasonably acceptable to the Authority) remains liable for all unpaid capital contributions. The Parties agree and acknowledge that one of the Sponsors shall remain the managing general partner of the Developer throughout the Term. In the event the general partner of the Developer is removed by the limited partner of the Developer for cause following default under the Developer's partnership agreement, the Authority hereby approves the transfer of the general partner interest to a 501(c)(3) tax-exempt nonprofit public benefit corporation that is selected by the limited partner and approved in advance and in writing by the Authority, which approval shall not be unreasonably withheld. (f) The Authority also hereby approves future Transfers of the limited partner interest provided that. (1) such Transfers do not affect the timing and amount of the limited partner capital contributions provided for in the Partnership Agreement approved by the Authority; and (2) in such Transfers, a wholly owned affiliate of the general partners retains a membership or partnership interest and serves as a managing member or managing general partner of the successor limited partner (g) The Authority also hereby approves Transfer of the Property from the Developer to either of the Sponsors or a nonprofit affiliate of the Sponsors, and an assumption of the Authority Loan by such transferee, provided that: (1) the transferee expressly assumes the obligations of the Developer under the Authority Documents, utilizing a form of assignment and assumption agreement to be provided by the Authority; and (2) all funds maintained in the Operating Reserve and the Replacement Reserve are transferred to the transferee with the Development and continue to be reserved solely to pay operating costs or replacement costs of the Development. Section 7.5 Effectuation of Certain Permitted Transfers. (a) No Transfer of this Agreement permitted pursuant to Section 7 4 shall be effective unless, at the time of the "Transfer the person or entity to which such Transfer is made, by an instrument in writing prepared by the Authority and in form recordable among the land records, shall expressly assume the obligations of the Developer under this Agreement and agree to be subject to the conditions and restrictions to which the Developer is subject arising during this Agreement, to the fullest extent that such obligations are applicable to the particular portion 52 1552\12\1884197.8 of or interest in the Development conveyed in such Transfer Anything to the contrary notwithstanding, the holder of a Security Financing Interest whose interest shall have been acquired by, through or under a Security Financing Interest or shall have been derived immediately from any holder thereof shall not be required to give to Authority such written assumption until such holder or other person is in possession of the Property or entitled to possession thereof pursuant to enforcement of the Security Financing Interest. (b) In the absence of specific written agreement by the Authority, no such Transfer. assignment or approval by the Authority shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. Section 7.6 Other Transfers with Authority Consent. The Authority may, in its sole discretion, approve in writing other Transfers as requested by the Developer In connection with such request, there shall be submitted to the Authority for review all instruments and other legal documents proposed to effect any such Transfer If a requested Transfer is approved by the Authority such approval shall be indicated to the Developer in writing. Such approval shall be granted or denied by the Authority within sixty (60) days of receipt by the Authority of Developer's request for approval of a Transfer Upon such approval, if granted, the transferee, by an instrument in writing prepared by the Authority and in form recordable among the land records, shall expressly assume the obligations of the Developer under this Agreement and agree to be subject to the conditions and restrictions to which the Developer is subject arising during this Agreement, to the fullest extent that such obligations are applicable to the particular portion of or interest in the Development conveyed in such Transfer ARTICLE 8. DEFAULT AND REMEDIES Section 8.1 General Applicability The provisions of this Article shall govern the parties' remedies for breach or failure of this Agreement. Section 8.2 No Fault of Parties. (a) The following events constitute a basis for a party to terminate this Agreement without the fault of the other- (1) ther (1) The Authority despite good faith and diligent efforts, is legally prevented from, or for reasons outside of the Authority's control, is unable to convey the Property to the Developer and the Developer is otherwise entitled to such conveyance and the dates set forth in the Development Schedule; (2) The Developer, despite good faith and diligent efforts is unable to obtain a Tax Credit Reservation as required under Section 2.5 and makes a reasonable determination that the Development is economically infeasible. 53 1 sr_u zu 88a 1 ez8 (b) Upon the happening of any of the above-described events, and at the election of either party, this Agreement may be terminated by written notice to the other party After termination, neither party will have any rights against or liability to the other under this Agreement, except that the indemnification provisions of this Agreement shall survive such termination and remain in full force and effect. Section 8.3 Fault of Authority (a) Except as to events constituting a basis for termination under Section 8.2, the following events each constitute an "Authority Event of Default" and a basis for the Developer to take action against the Authority - (1) The Authority, without good cause, fails to convey the Property to the Developer within the time set forth in the Development Schedule and in the manner set forth in Article 3 and the Developer is otherwise entitled by this Agreement to such conveyance; or (2) The Authority breaches any other material provision of this Agreement (including failure to timely respond to performance time frames set forth in this Agreement). (b) Upon the happening of any of the above-described events, the Developer shall first notify the Authority in writing of its purported breach or failure, giving the Authority forty-five (45) days from receipt of such notice to cure or, if cure cannot be accomplished within forty-five (45) days, to commence to cure such breach, failure, or act. In the event the Authority does not then so cure within said forty-five (45) days, or if the breach or failure is of such a nature that it cannot be cured within forty-five (45) days, the Authority fails to commence to cure within such forty-five (45) days and thereafter diligently complete such cure within a reasonable time thereafter but in no event later than one hundred twenty (120) days, then the Developer shall be afforded all of its rights at law or in equity, by taking all or any of the following remedies: (1) terminating in writing this Agreement (provided, however, that the indemnification provisions of this Agreement shall survive such termination and remain in full force and effect); and (2) prosecuting an action for damages or specific performance. Section 8.4 Fault of Developer (a) Except as to events constituting a basis for termination under Section 8.2, the following events each constitute a "Developer Event of Default" and a basis for the Authority to take action against the Developer- (1) eveloper (1) The Developer fails to exercise good faith and diligent efforts to satisfy, within the time set forth in the Development Schedule and in the manner set forth in Article 2, one or more of the conditions precedent to the Authority's obligation to convey the fee interest in the Property to the Developer: (2) The Developer refuses to accept conveyance from the Authority of the Property within the time periods and under the terms set forth in Article 3 and after satisfaction or waiver of the conditions set forth in Section 3 4(b): 54 1552" 2\1884197.8 (3) The Developer constructs or attempts to construct the Improvements in violation of Article 5, (4) The Developer has not satisfied all preconditions set forth in this Agreement to commencement of construction of the Improvements by the Close of Escrow, or fails to commence or complete construction of the Improvements within the times set forth in Article 5, or abandons or suspends construction of the Improvements prior to completion of all construction for a period of sixty (60) days after written notice by the Authority of such abandonment or suspension; (5) The Developer fails to comply with any obligation or requirement set forth in Article 5 or Article 6; (6) A Transfer occurs, either voluntarily or involuntarily, in violation of Article 7, (7) Any representation or warranty contained in this Agreement or in any application, financial statement, certificate or report submitted to the Authority in connection with this Agreement proves to have been incorrect in any material and adverse respect when made; (8) An event of default occurs under the Authority Deed of Trust, the Authority Promissory Note, or the Authority Regulatory Agreement, subject to all applicable notice and cure periods; (9) A court having jurisdiction shall have made or entered any decree or order (i) adjudging the Developer or its Sponsors to be bankrupt or insolvent; (ii) approving as properly filed a petition seeking reorganization of the Developer or its Sponsors, or seeking any arrangement for the Developer or its Sponsors, under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction; (iii) appointing a receiver trustee, liquidator or assignee of the Developer or its Sponsors, in bankruptcy or insolvency or for any of their properties; or (iv) directing the winding up or liquidation of the Developer or its Sponsors, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period will apply under this subsection (i) as well; or the Developer or its Sponsors, shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive; (10) The Developer shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period shall apply under this subsection (10) as well) or prior to sooner sale pursuant to such sequestration. attachment, or execution; 55 1552[12\1884197.8 (11) The Developer or its Sponsors shall have been dissolved or shall have voluntarily suspended their business: or (12) There shall occur any default declared by any lender under any loan document related to any loans, secured by a deed of trust on the Development after the expiration of all applicable cure periods: or (13) The Developer breaches any other material provision of this Agreement or any material provision in any of the other Authority Documents which remains uncured after expiration of any applicable cure periods. Section 8.5 Remedies (a) Upon the happening of any of the above-described events in Section 8.4, the Authority shall first notify the Developer in writing of its purported breach, failure or act above described, giving the Developer in writing forty-five (45) days from receipt of such notice to cure, or, if cure cannot be accomplished within said forty-five (45) days, to commence to cure such breach, failure, or act. In the event the Developer fails to cure within said forty-five (45) days, or if such breach is of a nature that it cannot be cured within forty-five (45) days, Developer fails to commence to cure within said forty-five (45) days and diligently complete such cure within a reasonable time thereafter but in no event later than one hundred twenty (120) days, then the Authority shall be afforded all of its rights at law or in equity by taking any or all of the following remedies: (1) Prosecuting an action for damages or specific performance; and (2) Any of the remedies specified in Section 8.6 through Section 8.10 (b) Notwithstanding the notice and cure periods set forth above, with respect to a Developer Event of Default described in subsection 8.4(a)(6), (7), or (8) above, the Authority may initiate enforcement action, without the provision of any notice, or the passage of any cure period. Section 8.6 Rieht of Reverter (a) In the event that, following the Close of Escrow, this Agreement is terminated pursuant to Section 8.4 and such termination occurs prior to issuance of a Certificate of Completion for the Improvements, then the Authority shall have the right to reenter and take possession of the applicable portion of the Property still owned by the Developer, and all Improvements thereon, and to revest in the Authority the estate of the Developer in that portion of the Property (b) Upon vesting or revesting in the Authority of title to any applicable portion of the Property, the Authority shall promptly use its best efforts to resell such portion of the Property consistent with the Authority's obligations under applicable laws. Upon sale the proceeds shall be applied as follows: 56 1552\1 2U 884197.8 (1) First, to reimburse the Authority for any costs it incurs in managing or selling the Property (after exercising its right of reverter), including but not limited to amounts to discharge or prevent liens or encumbrances arising from any acts or omissions of the Developer; (2) Second, to reimburse the Authority for reasonable damages to which it is entitled under this Agreement by reason of the Developer's default: (3) Third, to the Developer for the reasonable cost of the Improvements the Developer has placed on the Property and such other reasonable costs Developer has incurred directly in connection with development of the Property that were not financed by the Authority; and (4) Fourth, any balance to the Authority Section 8.7 Option to Repurchase, Reenter and Repossess. (a) The Authority shall have the additional right at its option to repurchase, reenter and take possession of the Property or an}, portion thereof owned by the Developer with all improvements thereon, if after conveyance of title to any portion of the Property, and prior to the issuance of the Certificate of Completion for the Improvements, there is an uncured Developer Event of Default pursuant to Section 8.4 (b) Such right to repurchase, reenter and repossess, to the extent provided in this Agreement, shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit (1) Any approved Senior Lien permitted by this Agreement; or (2) Any rights or interest provided in this Agreement for the protection of the holder of such Senior Lien Interests. (c) To exercise its right to repurchase, reenter and take possession with respect to the Property owned by the Developer, the Authority shall pay to the Developer in cash an amount equal to: (1) The Purchase Price paid to the Authority for the applicable portion of the Property pursuant to Section 3.2 not financed by the Authority; plus (2) The fair market value of the improvements existing on the applicable portion of the Property at the time of the repurchase, reentry and repossession; less (3) Any gains or income withdrawn or made by the Developer from the applicable portion of the Property or the improvements thereon; less (4) The value of any unpaid liens or encumbrances on the applicable portion of the Property which the Authority assumes or takes subject to said encumbrances. 57 1552\12\1884197.8 Section 8.8 Acceleration of Note. Following occurrence of an uncured Developer Event of Default, the Authority shall have the right to cause all indebtedness of the Developer to the Authority under this Agreement and the Authority Promissory Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest or dishonor The Authority may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the Authority as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Authority Deed of Trust or exercise of its rights under the Assignment Agreement. The Developer shall be liable to pay the Authority on demand all expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the Authority in connection with the collection of the Authority Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Authority Loan. Section 8.9 Right to Cure at Developer's Expense. The Authority shall have the right to cure any monetary default by the Developer under a loan in connection with the Development. However, if the Developer is in good faith contesting a claim of default under a loan and the Authority's interest under this Agreement is not imminently threatened by such default, in the Authority's sole judgment, the Authority shall not have the right to cure such default. The Developer agrees to reimburse the Authority for any funds advanced by the Authority to cure a monetary default by Developer upon demand therefore, together with interest thereon at the lesser of the rate of ten percent (10%) per annum or the maximum rate permitted by law from the date of expenditure until the date of reimbursement. Section 8.10 Delivery of Collateral Documents. If this Agreement is terminated pursuant to Section 8.2 or Section 8.4, then the Developer shall promptly deliver to the Authority, within ten (10) days of such termination, copies of all Collateral Documents. The delivery of the documents specified in this Section shall be accompanied by the Assignment Agreement; provided however, that any use of the Collateral Documents by the Authority or any other person shall be without liability of any kind to the Developer and without any representation or warranty of the Developer or its employees as to the quality, validity or usability of the Collateral Documents. Section 8.11 Rights of Mortgagees. Any rights of the Authority under this Article shall not defeat, limit or render invalid any Security Financing Interest permitted by this Agreement or any rights provided for in this Agreement for the protection of holders of Security Financing Interests. Section 8.12 Remedies Cumulative. No right. power, or remedy given by the terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy 58 1552\12\1884197.8 shall be cumulative and in addition to every other right, power, or remedy given by the terms of any such instrument, or by any statute or otherwise. Neither the failure nor any delay to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy Section 8.13 Waiver of Terms and Conditions. No waiver of any default or breach by the Developer hereunder shall be implied from any omission by the Authority to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the Authority to or of any act by the Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under this Agreement, or the Authority Regulatory Agreement, nor shall it invalidate any act done pursuant to notice of default, or prejudice the Authority in the exercise of any right, power, or remedy hereunder or under this Agreement, unless in the exercise of any such right, power, or remedy all obligations of the Developer to Authority are paid and discharged in full. ARTICLE 9 SECURITY FINANCING AND RIGHTS OF HOLDERS Section 9 1 No Encumbrances Except for Development Purposes. Notwithstanding any other provision of this Agreement, mortgages and deeds of trust, or any other reasonable method of security are permitted to be placed upon the Developer's fee interest in the Property but only for the purpose of securing loans approved by the Authority pursuant to the approved Financing Plan. Mortgages, deeds of trust, or other reasonable security instruments securing loans approved by the Authority pursuant to the approved Financing Plan are each referred to as a "Security Financing Interest." The words "mortgage" and "deed of trust" as used in this Agreement include all other appropriate modes of financing real estate construction, and land development. Section 9.2 Holder Not Obligated to Construct. The holder of any Security Financing Interest authorized by this Agreement is not obligated to construct or complete any improvements or to guarantee such construction or completion. However, nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses of improvements provided for or authorized by this Agreement or the Authority Regulator}' Agreement. 59 1552\1211884197.8 Section 9.3 Notice of Default and Right to Cure. Whenever the Authority pursuant to its rights set forth in Article 8 of this Agreement delivers any notice or demand to the Developer with respect to the commencement, completion, or cessation of the construction of the Improvements, the Authority shall at the same time deliver to each holder of record of any Security Financing Interest creating a lien upon the Developer's fee interest in the Property or any portion thereof, and the Investor, a copy of such notice or demand. Each such holder shall (insofar as the rights of the Authority are concerned) have the right, but not the obligation, at its option, within ninety (90) days after the receipt of the notice. to cure or remedy or commence to cure or remedy any such default or breach affecting the Property which is subject to the lien of the Security Financing Interest held by such holder and to add the cost thereof to the security interest debt and the lien on its security interest. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Improvements (beyond the extent necessary to conserve or protect such improvements or construction already made) without first having expressly assumed in writing the Developer's obligations to the Authority relating to such Improvements under this Agreement. The holder in that event must agree to complete, in the manner provided in this Agreement, the Improvements to which the lien or title of such holder relates. Any such holder properly completing such Improvements pursuant to this paragraph shall assume all rights and obligations of Developer under this Agreement and shall be entitled, upon completion and written request made to the Authority, to a Certificate of Completion from the Authority, in a form acceptable by the Authority Section 9 4 Failure of Holder to Complete Improvements. In any case where six (6) months after default by the Developer in completion of construction of the Improvements under this Agreement, the holder of record of any Security Financing Interest, having first exercised its option to construct, has not proceeded diligently with construction, the Authority shall be afforded those rights against such holder it would otherwise have against Developer under this Agreement. Section 9.5 Right of Authority to Cure. In the event of a default or breach by the Developer of a Security Financing Interest prior to the completion of development, and the holder has not exercised its option to complete the development called for on the Property. the Authority may cure the default, prior to the completion of any foreclosure. In such event the Authority shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Authority in curing the default. The Authority shall also be entitled to a lien upon the Property or any portion thereof to the extent of such costs and disbursements. The Authority agrees that such lien shall be subordinate to any Security Financing Interest, and the Authority- shall execute from time to time any and all documentation reasonably, requested by Developer to effect such subordination. Section 9.6 Right of Authority to Satisfy Other Liens. After the conveyance of title to the Property or any portion thereof and after the Developer has had a reasonable time to challenge, cure or satisfy any liens or encumbrances on the Property or any portion thereof, the Authority shall have the right to satisfy any such lien or 60 1552112\1884197.8 encumbrances: provided, however, that nothing in this Agreement shall require the Developer to pay or make provision for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount therein and so long as such delay in payment shall not subject the Property or any portion thereof to forfeiture or sale. Section 9 7 Holder to be Notified. The provisions of this Article shall be incorporated into the relevant deed of trust or mortgage evidencing each Security Financing Interest to the extent deemed necessary by, and in form and substance reasonably satisfactorily to the Authority, or shall be acknowledged by the holder of a Security Financing Interest prior to its coming into any security right or interest in the Property ARTICLE 10. GENERAL PROVISIONS Section 10.1 Notices, Demands and Communications. Formal notices, demands, and communications between the Authority and the Developer shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested or delivered personally, to the principal office of the Authority and the Developer as follows: Authority- Poway Housing Authority 13325 Civic Center Drive Poway. CA 92064 Attn: Executive Director Developer- Villa de Vida, LP c/o Villa de Vida 10620 Treena Street, Suite 230 San Diego, CA 92131 Attn. Executive Director Mercy Housing California 1500 South Grand Avenue, Suite 100 Los Angeles, CA 90015 Attn: Vice President Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this Section. Section 10.2 Non -Liability of Public Officials. Employees and Agents. No board member, official, employee or agent of the Authority, the Former Agency the Successor Agency, or the City shall be personally liable to the Developer, or any successor in 61 1552k 211884197.8 interest, in the event of any default or breach by the Authority or for any amount which may become due to the Developer or successor or on any obligation under the terms of this Agreement. Section 10.3 Forced Delay In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock -outs; riots; Floods; earthquakes; fires; casualties; acts of god; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits filed by third parties concerning or arising out of this Agreement); weather or soils conditions which, in the opinion of the Developer's contractor, will necessitate delays; inability to secure necessary labor, materials or tools; acts of the other party; acts or failure to act of any public or govemmental agency or entity (other than the acts or failure to act of the Authority); or any other causes (other than Developer's inability to obtain financing for the Improvements) beyond the control or without the fault of the party claiming an extension of time to perforin. An extension of time for any cause will be deemed granted if notice by the party claiming such extension is sent to the other within ten (10) days from the date the party seeking the extension first discovered the cause and such extension of time is not rejected in writing by the other party within ten (10) days of receipt of the notice. Times of performance under this Agreement may also be extended in writing by the Authority and the Developer In no event shall the cumulative delays exceed one hundred eighty (180) days, unless otherwise agreed to by the Parties in writing. Section 10.4 Inspection of Books and Records. Upon request, the Developer shall permit the Authority to inspect at reasonable times and on a confidential basis those books, records and all other documents of the Developer necessary to determine the Developer's compliance with the terms of this Agreement. The Developer also has the right at all reasonable times to inspect the books, records and all other documentation of the Authority pertaining to its obligations under this Agreement. Section 10.5 Title of Parts and Sections. Any titles of the articles. sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any part of its provision. Section 10.6 General Indemnification. The Developer agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City and the Authority) the City, the Authority, and their respective directors, officers and employees, from all suits, actions, claims. causes of action, costs. demands, judgments and liens arising out of the Developer's performance or non-performance under this Agreement, or any other agreement executed pursuant to this Agreement, or arising out of acts or omissions of any of the Developer's contractors, subcontractors, or persons claiming under any of the aforesaid, except as directly caused by the Authority's willful misconduct or gross negligence. The provisions of this Section shall survive expiration of the 62 1552ki2k] 884 197.8 Term or other termination of this Agreement. and shall remain in full force and effect. Section 10.7 Applicable Law This Agreement shall be interpreted under and pursuant to the laws of the State of Califomia. Section 10.8 No Brokers. Each party represents to the other that it has not had any contact or dealings regarding the Property, or any communication in connection with the subject matter of this transaction, through any real estate broker or other person who can claim a right to a commission or finder's fee except as agreed to in writing by the Authority and the Developer If any broker or finder makes a claim for a commission or finder's fee based upon a contact, dealings, or communications, the party through whom the broker or finder makes this claim shall indemnify, defend with counsel of the indemnified party's choice, and hold the indemnified party harmless from all expense, loss, damage and claims, including the indemnified party's attorneys' fees, if necessary, arising out of the broker's or finder's claim. The provisions of this Section shall survive expiration of the Term or other termination of this Agreement, and shall remain in full force and effect. Section 10.9 Severability If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability Section 10 10 Legal Actions, Venue. In the event any legal action is commenced to interpret or to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, the venue for such action shall be the Superior Court of the County of San Diego. In the event any legal action is commenced to interpret or to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, the party prevailing in any such action shall be entitled to recover against the party not prevailing all reasonable attorney's fees and costs incurred in such action. Section 10.1 1 Binding Upon Successors. (a) This Agreement shall be binding upon and inure to the benefit of the heirs. administrators, executors. successors in interest and assigns of each of the parties hereto except that there shall be no Transfer of any interest by any of the parties hereto except pursuant to the terms of this Agreement. Any reference in this Agreement to a specifically named party shall be deemed to apply to any successor, heir, administrator, executor or assign of such party who has acquired an interest in compliance with the terms of this Agreement, or under law (b) The covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Property However, on the termination of 63 15521211884197.8 this Agreement, such covenants and restrictions shall expire. Each and every contract, deed, or other instrument hereafter executed covering or conveying the Property shall be held conclusively to have been executed, delivered, and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed, or other instrument, unless the Authority expressly releases the Property from the requirements of this Agreement. Section 10.12 Parties Not Co -Venturers. Nothing in this Agreement is intended to or does establish the Parties as partners, co - venturers, or principal and agent with one another Section 10 13 Time of the Essence. In all matters under this Agreement, the parties agree that time is of the essence. Section 10.14 Action by the Authority Except as may be otherwise specifically provided in this Agreement or another Authority Document, whenever any approval, notice, direction, finding, consent, request, waiver, or other action by the Authority is required or permitted under this Agreement or another Authority Document, such action may be given, made, or taken by the Authority Executive Director, or by any person who shall have been designated in writing to the Developer by the Authority Executive Director, without further approval by the Authority Board. Any such action shall be in writing. Section 10.15 Representations and Warranties. (a) The Developer hereby represents and warrants to the Authority as follows: (1) Organization. The Developer is a duly organized, validly existing California limited partnership and is in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (2) Authority of Developer The Developer has full power and authority to execute and deliver this Agreement, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. (3) Authorih of Persons Executing Documents. This Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Developer, and all actions required under the Developer's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. 64 I sszu 2u ssa 19TS (4) Valid Binding Agreements. This Agreement and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of the Developer enforceable against it in accordance with their respective terms. (5) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on the Developer, or any provision of the organizational documents of the Developer, or will conflict with or constitute a breach of or a default under any agreement to which the Developer is a party, or will result in the creation or imposition of any lien upon any assets or property of the Developer, other than liens established pursuant hereto. (6) Compliance with Laws; Consents and Approvals. The construction of the Improvements will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies and with all applicable directions. rules and regulations of the Fire marshal, health officer, building inspector and other officers of any such government or agency (7) Pending Proceedings. The Developer is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of the Developer, threatened against or affecting the Developer, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Developer, materially affect the Developer's ability to develop the Improvements. (8) Title to Property Upon the recordation of the Grant Deed and the Memorandum DDLA, the Developer will have good and marketable fee title to the Property and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than those liens approved by the Authority, liens for current real property taxes and assessments not yet due and payable, and liens in favor of the Authority or approved in writing by the Authority (9) Financial Statements. The financial statements of the Developer and other financial data and information furnished by the Developer to the Authority fairly present the information contained therein. As of the date of this Agreement, there has not been any adverse, material change in the financial condition of the Developer from that shown by such financial statements and other data and information. (10) Sufficient Funds. The Developer holds sufficient funds or binding commitments for sufficient funds to obtain the fee interest in the Property, and complete the construction and operation the Improvements in accordance with this Agreement. (b) The Authority hereby represents and warrants to the Developer as follows: 65 15521211884197.8 (1) Authority Authority is a public body, corporate and politic. existing pursuant to the Housing Authorities Law of the State of California, which has been authorized to transact business pursuant to action of the City and pursuant to the applicable sections of Community Redevelopment Law and the Dissolution Statutes. To the best of the Authority knowledge. the Authority has full right, power and lawful authority to grant, sell and convey the Property and make the Authority Loan as provided herein and the execution. performance and delivery of this Agreement by Authority has been fully authorized by all requisite actions. (2) FIRPTA. Authority is not a "foreign person" as defined by 17IRPTA or any similar state statute. or is exempt from the provisions of FIRPTA and any similar state statute. Section 10.16 Entry by the Authority The Developer shall permit the Authority, through its officers, agents, or employees, at all reasonable times, and upon forty-eight hours' notice, to enter into the Development. (a) to inspect the work of construction to determine that the same is in conformity with the requirements of this Agreement; and (b). following completion of construction, to inspect the ongoing operation and management of the Development to determine that the same is in conformance with the requirements of this Agreement. The Developer acknowledges that the Authority is under no obligation to supervise, inspect, or inform the Developer of the progress of construction, or operations and the Developer shall not rely upon the Authority therefore. Any inspection by the Authority during the construction is entirely for its purposes in determining whether the Developer is in compliance with this Agreement and is not for the purpose of determining or informing the Developer of the quality or suitability of construction. The Developer shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers. Section 10 17 Operating Memoranda; Implementation Agreements. (a) The parties acknowledge that the provisions of this Agreement require a close degree of cooperation and that new information and future events may demonstrate that changes are appropriate with respect to the details of performance of the parties under this Agreement. The parties desire, therefore, to retain a certain degree of Flexibility with respect to the details of performance for those items covered in general terms under this Agreement. If and when, from time to time, the parties find that refinements or adjustments are desirable, such refinements or adjustments shall be accomplished through operating memoranda or implementation agreements approved by the parties which, after execution shall be attached to this Agreement as addenda and become a part hereof, each an "Operating Memorandum" This 66 1552 1211884197.8 Agreement describes some, but not all, of the circumstances in which the preparation and execution of operating memoranda or implementation agreements may be appropriate. (b) Operating memoranda or implementation agreements may be executed on the Authority's behalf by the Authority Executive Director, or his or her designee. In the event a particular subject requires notice or hearing, such notice or hearing shall be appropriately given. Any significant modification to the terms of performance under this Agreement shall be processed as an amendment of this Agreement in accordance with this Section and must be approved by the Authority Board. Section 10 18 Amendments. The parties can amend this Agreement only by means of a writing executed by the Developer and the Authority Section 10.19 Multiple Originals; Counterparts. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. Section 10.20 Complete Understanding of the Parties. This Agreement constitutes the entire understanding and agreement of the parties. All prior discussions, understandings and written agreements are superseded by this Agreement. The Developer and the Developer's counsel have read and reviewed this Agreement and agree that any rule of construction (including, but not limited to Civil Code Section 1654, as may be amended from time to time) to the effect that ambiguities are to be resolved against the drafting party shall not apply to the interpretation of this Agreement. [Signatures on following page] 67 1552\1 2\18&11 o7.8 IN WITNESS WHEREOF, the Authority and the Developer have executed this Agreement in triplicate on or as of the date First above written. DEVELOPER: VILLA DE VIDA POWAY. L.P., a California Limited Partnership By Mercy Housing Calwest, a California nonprofit public benefit corporation, its managing general partner By. Ed [folder, Vice President Date: By- Villa de Vida, Inc., a California nonprofit public benefit corporation, its co -general partner By - Edward B. Merchant, Chairman of the Board Date: NOTE: Section 3.6 requires the initials of the Developer AUTHORITY: POWAY HOUSING AU'rHORITY, a public body corporate and politic By. Tina White. Executive Director APPROVED AS TO FORM. GOLDFARB R LIPMAN LLP, Authority Special Counsel Rafael Yayuian 68 155211211884197.8 California All -Purpose Acknowledgment CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF SAN DIEGO On December 20, 2016 before me, Carol S. Legg, Notary Public, personally appeared Tina White, who proved to me on the basis of satisfactory evidence to be the person(,,) whose name(4 is/a4--e subscribed to the within instrument and acknowledged to me that he/she/#" executed the same in his/her/their authorized capacity(ies), and that by his/her/t4eif signature(,,) on the instrument the person(s), or the entity upon behalf of which the person(5} acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. CAROL S. LEGG � Commission p 2105416 Notary Public - CaII1omI3 ( XI � San 01000 County COMM Expim-Apir 28.2019 Carol S. Legg, Notar Public OPTIONAL Title or type of document: Land Disposition, Development and Loan Agreement (DDLA) between Poway Housing Authority and Villa de Vida Poway, L.P Document Date Number of Pages: October 4, 2016 68 plus exhibits Signers Other Than Named Above: Ed Holder, VP of Villa de Vida and Edward B. Merchant, Chairman of the Board for Villa de Vida. IN' WITNESS Wl-IEkFOF the Authority and the Developer have executed this Agreement in triplicate on or as of the date first abovewritten. DLVELOPER VILLA DE VIDA POWAY, LP a California Limited Partnership BY' Mercy Housing Calwest, a California nonprofit public benefit corporation, its managing general partner By Ed Holder- Vice President Date: to f :- C / /C By- Villa de Vida, Inc., a California nonprofitpublic benefit corporation. its co -general partner By- Date. y Edward B Merchant, Chairman of the Board Date. NOTE. Section 3.6 requires the initials of the Developer APPROVED AS TO FORM GOLDFARB & LIPMAN LLP, Authority Special Counsel 2 Rafael 1'aquian AUT}t ORffl': POWAY HOUSING AUTHORITY a public body corporate and politic By - Tina White, Executive Director r 68 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of LOS r t t IGS ) On 10IZb�1lo before me, -EvtNhlnrcAl f4oi4yji ?�Udy-,, Date Here Insert Name and Title of the O ice personally appeared EA 4olkc Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ,r ERIKA J. VILLABLANCA Commission N 2077247 = < -e Notary Public - Calltornla Los Angtlet County Comm EjWm 8 2018+ Though Place Notary Seal Above I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature �e �/ rn �• ()( 0- l't.L[irk � Signature(bf Notary Public OPTIONAL this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document £ ��yt f¢Qvrev� Title or Type of Document: ,_)')?�ocument Date: 1 Dy ?DI(o Number of Pages: Signer(s) Ot er Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other* Signer Is Representing: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other- Signer therSigner Is Representing: 02014 National Notary Association • www.NationaiNotary.org • 1 -800 -US NOTARY (1-800-876-6827) Item #5907 IN WITNESS WHEREOF the Authority and the Developer have executed this Agreement in triplicate on or as of the date first above written. DEVELOPER: VILLA DE VIDA POWAY, L.P., a California Limited Partnership By- Mercy Housing Calwest, a California nonprofit public benefit corporation, its managing general partner By Ed Holder, Vice President Date: By Villa de Vida, Inc., a California nonprofit public benefit corporation, its co -general partner By. i y Edward B Merchant, Chairman of the Board Date: 10 j a 6 h b NOTE: Section 3.6 requires the initials of the Developer APPROVED AS TO FORM GOLDFARB & LIPMAN LLP, Authority Special Counsel 10 Rafael Yaquian AUTHORITY: POWAY HOUSING AUTHORITY, a public body corporate and politic Tina White, Executive Director Cfi CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT .. 1189 xKxKxne•KNKYnxiiVRt/RI�Hn�ixRVRfhixltNFx.G/RxKMtxRM TtM1f�lit nxK!•RxG4xR[ Rx xRN • RxMAtxKxRt/KrNte nxux K+•Kxhertu• A notary public or other officer completing this certificate verifies only the identity of the Individual who signed the document to which this certificate is attached, and not the truthfulness. accuracy, or validity of that document. State of California ) Countyof Los Anq_eles ). On D7 e- t ( d—a r 4 before me, Bryan S Choi O otai X Pir J51I C Date Here Insert Name and Ttfe of the Officer personally appeared/ 6 llarrI who proved to me on the basis of satisfactory evidence to be the person(Wwhose name(s)-is/art subscribed to the within instrument and acknowledged to me that. he/shefthey executed the same in his/her/their authorized capacity(iesj, and that by his/4oW4aeir-signatue(s)vrrthe instrument the person(s)-;- or erson(s)- or the entity upon behalf of which the person(s)-acted, executed the instrument. r I certify under PENALTY OF PERJURY under the laws of the State of California that the regoing paragraph is true and correct. BRYAN S.CH01 Commlislon # 2083411 i Notary PubliC • California i Z los Angeles County M Comm. Expires Sep 26, 2018 r Place Notary Seat Above WITNESS my hand and official seal. Signature C Signature of Notary Public OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of DocurnenO-u-t,( 0a��n� {!oma . r>Q„c Document Date: Number of Pages: Signers) Other Than Named Above: Capacity(les) Claimed by Si ner(s) /� Signer's flame: Pi, t'� e. c -"J ❑ Corporate Officer — Title(s): ❑ Partner — O Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other Signer Is Representing: Signer's Name: ❑ Corporate Officer ❑ Partner — ❑ Lim ❑ Individual Q Trustee ❑ Other- Signer therSigner Is RE lf Title(s): :d ❑ General Attorney in Fact Guardian or Conservator ing: dSS'8.�'-'S.L.i.�"w..f,"•'�-3Sgi:.�.¢.tf::�'::(.8:'L',:.wZisi's-3.'-'.�."3'a.t.'wiC�Zi �`-'��''S�ZS:?Li.r3-"'i:"-��'t'-3.`-:�'�rf�z3�3�'-'�<ii"�"�.��"iS.Y'tf=--L': ©2014 National Nolary /ssociation vrer.v. Ila lionalt iota ry.org 1 -800 -US h101'AR'f (1-800-876-6827) Itern «5907 IN WITNESS WHEREOF, the Authority and the Developer have execUted this Agreement in triplicate on or as of the date first above written. DEVELOPER. VILLA DB VIDA POWAY, L.P a California Limited Partnership By- Mercy Housing Calwest. a California nonprofit public benefit corporation, its managing general partner By- Ed Holder, Vice President Date - Dy Villa de Vida, Inc. a California nonprofit public benefit corporation, its co -general partner By - Edward 13 Merchant, Chairman of the Board Date: NOTE. Section 3.6 requires the initials of the Developer APPROVED AS TO FORM GOLDFARB K LIPMAN LLP. Authority Special Counsel 13v AUTHORITY: POWAY HOUSING AUTHORITY, a public body corporate and politic By - Tina White, Executive Director 68 EXHIBITA LEGAL DESCRIPTION OF THE PROPERTY The land is situated in the State of California, County of San Diego, City of Poway, and is described as follows: PARCEL 1 THAT PORTION OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 23, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 14 DISTANT ALONG SAID NORTH LINE NORTH 89° 00' 00' WEST, 3955.SO FEET FROM THE NORTHEAST CORNER OF SAID SECTION 23, BEING A POINT IN THE CENTER LINE OF HIGHWAY COMMISSION ROUTE 3, DMSION 2, BEING ALSO A POINT IN THE EASTERLY LINE OF THE LAND DESCRIBED IN DEED TO THE COUNTY OF SAN DIEGO, RECORDED OCTOBER 13, 1923, IN BOOK 500, PAGE 231 OF DEEDS, RECORDS OF SAN DIEGO COUNTY; THENCE ALONG THE EASTERLY, SOUTHERLY AND WESTERLY LINE OF SAID LAND AS FOLLOWS. ALONG THE CENTER LINE OF SAID ROUTE 3, DMSION 2, SOUTH 00" 40' 00' WEST, 146.07 FEET TO THE SOUTHEAST CORNER; SOUTH as' 22' 00' WEST, 420.00 FEET TO THE SOUTHWEST CORNER OF SAID LAND AND NORTH 000 40' OO- EAST, 188.00 FEET TO THE NORTHERLY LINE OF SAID SECTION 23; THENCE ALONG SAID NORTHERLY LINE SOUTH 890 00'00' EAST, TO THE TRUE POINT OF BEGINNING. PARCEL 2: THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 14, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 14 DISTANT ALONG SAID SOUTH LINE NORTH 89° 00' 00' WEST, 3955.50 FEET FROM THE SOUTHEAST CORNER OF SAID SECTION 14 TO THE CENTER LINE OF THE HIGHWAY COMMISSION ROUTE 3, DIVISION 2; THENCE ALONG SAID CENTER LINE NORTH 000 40' DO' EASE, 212.30 FIS=T TO AN INTERSECTION WITH THE CENTER LINE OF THE ROAD TO MIRAMAR, COUNTY ROAD NO. A-43, ROAD SURVEY 188, ACCORDING TO PLAT THEREOF ON FILE IN THE OFFICE OF THE COUNTY ENGINEER OF SAN DIEGO COUNTY; THENCE ALONG SAID CENTER LINE LAST MENTIONED SOUTH 85° 25' 00' EAST (ROS 3525) (DEED - SOUTH 85° 22' 00' WEST) 420.00 FEET, THENCE SOUTH 00° 40'00" WEST 171.00 FEET TO THE SOUTH LINE OF SAID SECTION 14; THENCE EASTERLY ALONG SAID SOUTH LINE TO THE TRUE POINT OF BEGINNING. Assessor's Parcel Number: 317-152-14-00 A -I 155211211884197.8 EXHIBIT B DEVELOPMENT SCHEDULE This Development Schedule summarizes the schedule for various activities under the Disposition and Development Agreement to which this exhibit is attached. 'rhe description of items in this Development Schedule is meant to be descriptive only, and shall not be deemed to modify in any way the provisions of the Agreement to which such items relate. Section references herein to the Agreement are intended merely as an aid in relating this Development Schedule to other provisions of the Agreement and shall not be deemed to have any substantive effect. Times for performance are subject to Force Majeure, as further provided in Section 10.3 of the Agreement. Whenever this Development Schedule requires the submission of plans or other documents at a specific time, such plans or other documents, as submitted, shall be complete and adequate for review by the Authority or other applicable governmental entity within the time set forth herein. Prior to the time set forth for each particular submission, the Developer shall consult with Authority and City staff informally as necessary concerning such submission in order to assure that such submission will be complete and in a proper form within the time for submission set forth herein. Oblipation Section Schedule T—OM—munity Outreach Meeting ERNA September 2016 Developer shall submit to the Authority 2.3(a)(1) Not later than November 1, 2016. Concept Drawings. Parties shall have negotiated mutually 2.13 Not later than sixty (60) days from the Effective Date acceptable Tenant Selection Plan December 5 2016 Developer shall submit to the Authority 2.3(a)(2) Not later than February 15, 2017 Schematic Design Drawings. Developer shall submit applications 22(a) Not later than November 1, 2016 for all entitlement governmental approvals for the applications and no later than 120 days prior to the Improvements. Close of Escrow for all building plan and site improvements. Developer shall submit to the Authority 2.3(a)(2) Not later than sixty (60) days prior to the Close of Final Construction Drawings. Escrow and in no event later than December 31, 2018. Developer shall submit the first 2.5(b) March 01, 2017 or such other date set forth by TCAC application for a Tae Credit Reservation. for the first competitive application fund round, provided Developer received an allocation of vouchers and County HOME funds from San Diego County in its 2016 Notice of Funding Availability._ Developer shall submit three (3) 2.9(a) Not later than %larch 1, 2017 proposals from prospective contracts. Developer shall submit a timely and 2.6(c) Not later than June I, 2016. (Deemed completed) complete application for a County HOME Loan which is administered through a Notice of Funding Availability process administered through the County of San Diego Department of Housing and Community Development. B-1 155211211884197.8 Obligation Section Schedule Developer shall submit a timely and 2.6(d) Not later than October 31, 2016. (Deemed completed) complete application for a County Project Based Vouchers which is administered through a Notice of Funding Availability process administered through the County of San Diego Department of Housing and Community Development. Developer shall submit a timely and 2.6(b) At Developers discretion pursuant to Section 2.6(b). complete application for the AHP Loan which is subject to a competitive application process implemented by the Federal Home Loan Bank of San Francisco and its member institutions. Developer shall submit any updates to 2.4(b) Promptly, ass necessary to reflect material the Financing Proposal. amendments to the initial Financing Proposal and the later approved Financing Plan. including but not limited to any material amendments or modifications to the development budget (including the unavailability of any sources of financing identified in Sections 2.5 and 2.6. Developer shall receive all necessary 3.4 Not later than March I, 2017 for all entitlements and governmental approvals for the no later than 5 days prior to Closing for all building Improvements. and infrastructure permits, but in no case later than March 1, 2019. Developer shall submit the proposed 2.9(a) Not later than thirty (30) days prior to the Close of Construction Contracts for the Escrow. Improvements for Authority approval. Authority shall promptly review and 2.9(b) Within ten (10) days following the Authority's receipt approve Construction Contract. of the complete Construction Contract. Developer will grant to the Authority 4.11 On the Effective Date and as necessary upon pursuant to the Assignment Agreement, Developers execution of additional Collateral a valid, second priority continuing Documents. security interest in Collateral Documents Close of Escrow (recording of the 3.4 No later than 180 days following an award of 9% tax Memorandum of DDLA, the Authority credits, but in no event later than March I, 2019 Deed of Trust. the Authority Regulatory Agreement, and the Notice of Affordability Restrictions in the Official Records). Developer shall furnish to the Authority 2.11 On or before the Close of Escrow evidence of the insurance coverage meeting the requirements of Section 6.10 Developer shall obtain one (1) labor and 2.10 On or before the Close of Escrow material bond and one Iperformance B-2 I55211NI884I97.8 Obligation Section Schedule bond for construction of the Improvements meeting the requirements of Section 2.10 for Authority approval. Commence Construction 5.3 Within ten (10) days of the Close of Escrow, but in no event later than March 30, 2019. Developer shall submit to the Authority 6.9 Not later than six (6) months after commencement of and initial proposed Resident Services construction of Improvements. Plan and Resident Services Budget Developer shall submit to the Authority 2.8(a) Not later than six (6) months after commencement of an initial proposed Management Plan. construction of Improvements. Authority shall approve or disapprove 2.8(b), 6.8 Within fifteen (15) calendar days following the the Management Plan in writing. Authority's receipt of the complete Management Plan and in no event later than no later than six (6) months after commencement of construction of the Development. Complete Construction 5.4 No later than 18 months following commencement of construction, but in no case later than September 30, 2020. Developer shall provide to Authority a 5.16 No later than ninety (90) days following completion of draft financial accounting of all sources construction of the Development and issuance of the and uses of funds for the Development Certificate of Completion Developer shall submit to the Authority No later than one hundred fifty (150) days following a copy of the Development's cost completion of construction certification report prepared by the Developer's accountant 13-3 155'-\]2\1884197.8 EXHIBIT C SCOPE OF DEVELOPMENT Villa de Vida Poway L.P. a California limited partnership (and its sponsors Villa de Vida and Mercy Housing) in connection with the City of Poway and the Poway Housing Authority will develop a 2.71 site located at 12341 Oak Knoll Rd with fifty-one (5 1) one -bedroom and three (3) two-bedroom supportive apartment units to rent to extremely low, very low and low income individuals with special needs. One of the units in the development will be set aside as property management unit. The Development will have a large community space with living room, kitchen and dining room, multi-purpose rooms, several lounges and resident services stations, management and resident services offices, exercise room and laundry room. In addition, outdoor courtyards and plaza with several areas that overlook Poway Creek will be provided as part of the improvements. The "green features" of the Development will include water efficient fixtures, native landscaping, efficient insulation and windows and a green building certification. The aging in place design features will ensure that the living spaces are accommodating and adaptive, which in tum will improve individuality and well-being over the entire life span of the future tenants. There will be 32 on-site parking spaces based on the assumption supported by existing data that most of the Tenants will not be driving. Villa de Vida will offer optional on-site services and supports that reflect best -practices and are highly individualized while remaining responsive to changes in the individual or family needs over time. Supportive living services include wellness and health management, personal finance, employment services, nutrition and healthy lifestyles, personal character development, and community enrichment. Residents are free to choose their own supportive living services or independent living services provider and Villa de Vida will help coordinate services at no extra charge. In addition to the Housing Authority funding, the development is expected to be funded by a variety of public and private sources including, San Diego County HOME funds. Project -Based Vouchers. 9% tax credit allocation and private capital donations, as further detailed in the Financing Proposal. C-1 155211 211 884 197.8 CONCEPT SITE PLAN - ON FILE WITH CITY OF POWAY SITE DATA SITE AREA: 2.05 AC. NET 2.71 AC. GROSS PROPERTY ZONE CB (EXISTING) FRONT SETBACK 20'-0" ST. SIDE SETBACK. 20'-0" INT SIDE SETBACK. 10'-0" REAR SETBACK. 0'-0" NUMBER OF UNITS 51 ONE BDRM. UNITS 3 TWO BDRM.UNITS 54 TOTAL UNITS DENSITY• 26.3 U/A NET 19.9 U/A Gross PROPOSED PARKING 32 ON-SITE PARKING 1 LOADING SPACE 10 APPROX. ST SPACES C-2 FIRST FLOOR BUILDING PLAN - ON FILE WITH CITY OF POWAY C-3 SECOND FLOOR BUILDING PLAN - ON FILE WITH CITY OF POWAY C-4 EXHIBIT D TABLE 1 PROJECT DESCRIPTION VILLA DE VMA dTY OF POWAY I. Location 12341 Oak Knoll Road II. Site Area 2.05 Acres (Usable) 01. Gross Building Area Net Residential Area 40,650 SF 66% CorrkWrs/Stairs/Elevator 8,783 SF 14% LeasingOffiors/Lobby 3,513 SF 6% Community Dining 3,148 SF 5% Social/Recreation Area 3,665 SF 6% Laundry/Trash 608 SF 1% Storage & Miscellaneaa .L547 SF n Total Gross Building Area 61,954 SF 100% IV. Construction Type Type V Elevator Internal Corridors V. Number of Simla 2 Starks VL Unit Mtn Number of Units c. One Bedroom 51 Units 90% 743 SF Two Bedroom 3 Units fig 1M9 SF Total/Average 54 Units UM 7S3 SF VIL Density VID. Affordability Mb; Units @ 30% AMI Units @ 40%AMI Units @ 50% AMI Units @ 60% AMI Manage Total/Average Average Affordability (excluding Manager unit) D(. Parking Type of Parking Total Parking Spaces Parking Ratio 26 Units/Net Acre 7 Units 13% 26 Units 48% 9 Units 17% 11 Units 20% 1 Units 2% 54 Units 100% Surface Parking 32 Spaces 059 Spaces/Unit TABLE 2 SURVEY OF COMPARABLE LAND SALES, JANUARY 2013 TO PRESENT VILLA DE VIDA CITY OF POWAY Sale Data Address 9M Sale Prtcg Acres $[SE Proposed Use 07/01/16 330-330 S Escondido Blvd Escondido $2,600,000 0.80 $75 Multi -family Development 06/28/16 Twin Oaks Valley Rd San Marcos $765,000 0.54 $33 Commercial Land 12/22/14 Babcock St San Diego $3,740,000 3.53 $24 Commercial Land 04/29/16 Camino Del Sur San Diego $4,239,000 4.30 $23 Commercial Land 01/13/14 701 Howard Ave Escondido $4,000,000 4.49 $20 Commercial Land 04/21/16 411 S Escondido Blvd Escondido $280,000 0.32 $20 Commercial Land 07/11/13 337 E Valley Pky Escondido $329,000 0.48 $16 Commercial Land 09/20/13 2690 S Escondido Blvd Escondido $250,000 0.45 $13 Commercial Land D4/07/16 Woodward Street San Marcos $1,400,000 3.38 $10 Multi -family Development 05/06/15 316 Mission Rd San Marcos $1,250,000 4.30 $7 Commercial Land 12/24/14 Feliclta Ave @ 1-15 Escondido $1,017,000 6.90 $3 Commercial Land Minimum $250,000 0.32 $3 Maximum $4,239,000 6.90 $75 Median $1,250,000 3.38 $20 Average $1,806,000 2.58 $22 ESTIMATED DEVELOPMENT COSTS VILLA DE VIDA CRY OFPOWAY TqE1'r,-17TT� Ardiftecture & Ertgineerini; Totals Per Unit Comments I. Direct Costs 111(2) $837,000 $15500 $14 Per 5F GBA Off -Site Improvements (3) $0 $0 $0 Per SF Site On -Sites landscaping $874,331 $16,191 $SO Per SF Site Demofrtlon $1581182 $2,929 $2 Per SF Site Parldrtg so $0 Included above Shell Construction $12,27%175 $227,225 $198 Per SFGBA FF&E 55181000 $9593 Allowance Comdwrcy $072,069 $25,409 99% of Directs Total Direct Costs $15,192,757 $281,347 $245 Per SF GBA TqE1'r,-17TT� Ardiftecture & Ertgineerini; $784,163 $14,522 51% of Directs Permits & Fees (3) $837,000 $15500 $14 Per 5F GBA legal & Accounting $5%000 $926 03% of Directs Tares & insurance $50,889 $942 03% of Directs Developer Fee $2,00%000 $37,037 131% of Directs Consfrucdon Management $145,000 $2,685 LO% of Directs Map $135,00(1 $2.500 09% of Directs Other Costs $0 $o 0.0% of Directs Comtl wmv S304 3_ $5.637 7.6% of Indirecct Total Irdlrect Costs $4,306,439 $79,749 283% of Directs III. Finandng Costs Loan Fees $154,600 $2,863 1.0% of Directs Interest During Construction $711,100 $13,169 4.7% of Directs Titie/Recorti tg/Escrow $5%000 $926 03% of Directs TCAC/Syndiation Fees $238,800 $4,422 1.6% of Directs Operating Lease-Up/Replacemert Reserves $173,088 $3,205 1.1% of Directs Supportive Services Reserve S2,S0DO00 $46.296 165% of Directs Total Financing Costs $3,827,568 $70,881 251% of Directs IV. Tonal Costs - Excluding Acquisition $23,326,784 $491,977 $377 Per SF GILA OrSay(Rounded) $23,327,000 (1) Asurnes payor t of prevaifing wages. 121 Includes Pro rata share of Contractor General Conditions, Contractor Overhead and Profit, and General Contactor Bond and tnwrance (3) per 0evdoper, not vedfled M 12AA orGty. TABLE 4 NET OPERATING INCOME VILLA DE VIDA CITY OF POWAY tt of Toted Units S�Month (1) Annual 4 Gross Scheduled Income One Bedroom @ 30% AMI 6 $416 $29,952 One Bedroom @ 40% AMI 25 $597 $179,100 One Bedroom @ 50%AMI 8 $720 $69,120 One Bedroom @ 60%AMI 11 $872 $115,104 One Bedroom Manager Unit 1 $D $0 Two Bedroom @ 3D% AMI 1 $461 $5,532 Two Bedroom @ 40% AMI 1 $713 $8,556 Two Bedroom @ SON AMI 1 $803 $9,635 Total/Average 54 $644 $417,000 Add: Other Intone $5 Unit/wnth JI.L40 Total Gross Scheduled Income (GSI) $420,240 H. Eftec 1 Gross tattome (EGI) $46 /Unit/Year (lea) Vacancy 1011% of GSI w ( 31 Total Effective Gross tntome (EGI) $378,378 BI. Operating Fxlpeerrsm (Less) operating Expenses $6,052 /Unit/Year ($326.804) (Less) Tenant Services Coordination $1,759 /Unit/Year ($95,000) (Less) Property Taxes 13) $46 /Unit/Year (SZSW) (Less) Replacement Reserves $375 /Uni[/Year (520,250) (Less) Monitoring Fee 74 /Unit/Year j 4,50(») Total Expenses 58,307 /Unit/Year ($448,554) 119% of EGI N. Net Operating tntome (NOI) ($70,176) V. Add: Operating Subsidy (4) $441 Unit/Month $285,984 (Less) Vacancy 10% of Subsidy 28 598 Total $257,386 VI. Adjusted NOI (Rounded) $187,000 ill Reflects 2016 TCAC rens, net of monthly utility allowance (bra kout not provided). (2) For pro forma purposes, TCAC requires the use of a 10% vacancy rate for special needs projects. 13) Assumes that the Project will receive tax-exempt status. (4) Reflects operating subsidy from Projec16ased Section 8 Vouchers. TABLE 5 RESIDUAL LAND VALUE VILLA DE VIDA CITY OF POWAY RI. Residua! Land Vatic ($SOO,ODO) ($9.000) .1 Total Per Unit I. Sources of Funds Supportable Debt $1,660,000 $31,000 Market Value of Tax Credits $17,067,000 $316,000 Deferred Developer Fee $600,000 $11,000 San Diego County HOME 51A00.000 $19 000 Capitalized Operating Subsidy Reserve 500 DDD $46,1100 Total Sources of Funds $22,827,000 $423,000 it. (Less( Development Costs - Exduding Acquisition (523327.000) ($432,000) RI. Residua! Land Vatic ($SOO,ODO) ($9.000) .1 Vi0a de Vida Key Cash Fbw Assumptions income Escvlallon: Residential 25% /Year Other Income 25% /Year Vacontr Residential 5.0% Other Income 5.0% Operating Ekpew Escalation: Operating Expenses 35% /Year Serv`ces/Amenttles Escalation 2.0% /Year Replacement Reserves Escalation 0.0% /Year Property Tax Fscafation (Assessments) 2-0% /Year Monitoring Fee Escalation (County) L0% /Year Lin ited Parbw Asset Management Fee Escalation $S1000 3.0% /Year General Partner Asset Management Fee Escalation $151000 3.0% /Year Cash Flow per: Yea -30 Years 31-55 Developer SO% 50% Public Agency loans County $1,000,000 28% 14% 14% City (Land and Cash Loan) $2,600,000 72% 36% 36% Total Public Loans 50% 50% Total 100% 100% TABLE 6 COMPENSATION TO THE AUTHORITY VILLA DE VIDA CRY OF POWAY I. Gross Scheduled Income (G51) (Leu) Vacancy II. EHecUva Gross Income (EGI) (Less) Openthhg Expenses 18. Net Operating Income (NOO (Las) Debt Service N. Project Cash Row V. Limbed Partner Asset Management Fee (Less) Wnited Partner Asset Mgmt Fee VI. Total Cash Row 1 1 3 s S 5 z 4 2 10 11 25% 5706,224 5723,880 5741,977 5760,526 $779539 $799,028 S819,OD3 5839,478 5860,465 $88077 5904,026 5.0% S35331 536194 37099 538026 ($U9n) 539951 (540.950) (S41,974) 543023 544099 545201 $670,913 $687,686 5704,878 5722,500 5740,562 5759,076 5778,053 5797,504 5817,442 $837,878 5858,825 15448.554) 1982 850 1549D.1721 (55009651 15520,2431 1$536.0221 fSSS23211 15569,157 ISS86,S47 10 5222,359 5225,703 5229,028 5232,327 5235,598 5238,834 $242,031 5245,183 5248,285 $25032 $254,315 5162 763 (5162,763) 5162 763 15162,763) 516 763 5162 763 ($162,76 5162 763) [SIG2,763 5162 763 162 763 $59,596 562,940 566,265 $69,564 572,835 576,071 $79,268 582,420 SBS,522 $88,569 591552 3.091 155.0001 1$51501 155.3431 (35.4641 155,6281 155.7961 15597ul 156.1491 1563341 (36,5241 156,1241 $54,596 $57,790 $60,960 564,101 567.207 570,274 573,297 576,271 579,189 582,045 $84,833 VII. Developer Fee Repaymentlsl 52,678,000 52,7S6,000 52,834,000 52,912,000 52,990,000 S3,068,ODO $3,146,000 53,224,000 53,302,OOD $3,357,440 Beginning Balance 5600000 5545,400 5487,614 5426,653 5362$53 5295,346 5225,072 5151,774 $75,503 Interest 0.076 50 50 50 SO 50 50 $D So So (less) Cash Row Cradd (554.596) (S57.790) (S60.9601 (j,MA01( (5672071 (570.2741 (573,2$,71 (5762711 1575,5431 Ending Balance 5545,404 5487,614 5426,653 S362,553 5295,346 5225,072 $151,774 $75,503 SO VIII. General Partner Asset Management Fee (Las) General Partner Asset Mgmt Fee 3.0% 3Q �-o 153685 (SI9.5721 4520,159 DL Cash Row A"Hable for Distribution SO 50 $0 50 50 50 SO 50 50 $62,473 564,674 7(. Poway Residual Receipts Loan Repayment Beginning Balance Interest (Las) Cash Flow Credit Ending Balance NPV of Payments to Authority @ M. County HOME Loan Repayment Beginning Balance Interest (Las) Cash Flow Credit Ending Balance 52600,000 52,678,000 52,7S6,000 52,834,000 52,912,000 52,990,000 S3,068,ODO $3,146,000 53,224,000 53,302,OOD $3,357,440 3.0% 578,000 578,000 578,000 578,000 578,000 $78,000 $78,000 578,000 $78,ODO $78,000 578,000 S2 32 52 52 S0 30 53 30 12 (S22 5601 1523,3555 $2,678,000 52,756,000 52,834,00) 52,912,000 52,990,000 $3,068,000 53,146,000 53,224,000 S3,3D2,000 $3,357,440 $3,412,086 10.0% $185,000 51,270,OD0 51,29023 $1,312,341 51,000.000 51,030,000 51,060,000 $1,09D,000 51,120,000 $1,150,000 51.180,000 S1,210,000 51,240,000 $1,270,000 51,291,323 3.096 530,000 $30,000 $30,000 $30.000 530.000 S30,ODO 530,000 530,000 530.000 $30.000 $30.000 50 50 SO 50 50 $0 $0 $D 50 158,677 50983 51,030,000 $1,060,000 $L,090,D00 51,120,000 51,150,000 $1,180,000 51,210,ODO 51,240,000 51,270,OD0 51,29023 $1,312,341 (1) hjn, nTrent o -tire d drhnrd d.,ck rf¢dvn, Paid hoe D[RbP[rr snit 0 rrsid,ol rccc ts. TABLE 6 COMPENSATION TO THE AUTHORITY VILLA DE VIDA CITY OF POWAY (1) lklbll� 1h Year ll, erhres afddnred 4eve fen R U 1.4 ,11 16 17 18 19 22 21 R I. Grass Scheduled Income (GSI) $926,627 $949,793 5973538 $997,876 51,022,823 51,01%393 $1,074,603 $1,101,468 51,129,005 $1,157,230 $1,186,161 (Las)Vacancy 546331 547490 (59816771 IS49,8941 ISS1,141)$5 420 553730 555073 $56450 $57862 559308 IL Eftectiva Grou Income (EGI) 5880,296 $902,303 $924,861 5947,982 5971,682 5995,974 $1,020,873 $2,046,395 SI,O72,555 51,099,369 51,126,853 (Less) Operating Expenses (Sgy,gyl [5642.2341 I5662A361 (5682.4931 (5703.6271 (5725.460) (S748,0181 (S771j211 (S795,403) IS820,2821 (5945.9871 10. Net Operating Incame (NOI) 5257,230 5260,069 5262,825 $265,489 5268,055 527D,513 $272,855 5275,071 5277,152 $279,087 5280,865 (Less) Dees Service 5162 763 (5162,763) 15162,763) 5162 763 15162,763) S16 763 5161763 ($162,763 ($162,763) ($162,7631 1$16Z763) IV. Project Cash Flovv $94,467 $97,306 $100,062 $102,726 5105,292 5107,750 5110,092 5134,308 $114,389 $116,324 5118,102 V. Limited Partner Asset Management Fact (Less) Limited Partner Asset Mgmt. Fee 923 (57.129) 1573431 157.5631 $4 jg LO 12 �2 �2 VI. Total Cash Flovr 597,546 590,177 592,719 595,163 5105,292 5307,750 $110,092 5112508 5114,389 5116,324 5118,102 VII. Developer Fee Repayment ltl Beginning Balance (merest (Las) Cash Flow Credd Ending Balance Vlll. General Partner Asset Management Fee (Less) General Partner Asset ldgmt. Fee 1520.7641 1 86 (S22,0281 fS22,6991(573.3701 W4,071) (524.7931 (525.5361 1526.3031 1527,0921 (527.9041 DL Cash Row Avallaw.fo Dutrihrrtion 566,782 568,791 570,691 572,475 $81,923 583,680 585,300 $86,772 588,087 589,232 $90,198 )L Pm"y Residual Receipts Loan Repayment Beginning Balance 53,412,086 $3,465,970 53,519,129 53,571,601 53,623,430 $3,671,847 53,719,629 53,766,827 53,813,492 $3,959,683 53,905,460 Interest 578,000 578,000 578,000 578,000 $78,000 578,000 578,000 $78,000 578,000 578,000 $78,000 (Less) Cash Flow Credit (524.1161 1524.8411 (525.527) (526.1711 (529.5831 (530.218) (530.803) (S313341 (53L8091 1532.2231 ($32,572) Ending Balance $3,465,970 53,519,129 $3,571,601 53,623,430 $3,671,847 53,719,629 53,766,827 53,813,492 53,859,683 $3,905,460 $3,950,889 NPV of Payments to Authority M. County HOME Loan Repayment Beginning Balance 51,312,341 51,333,065 51,353511 $1,373,693 51,393,627 51,412,249 $1,430,627 51,448,780 51,466,728 51,484,494 51,502,100 Interest $30,000 530,000 530,000 530,000 $30,000 $3D,000 $30,000 530,000 530,000 $30,000 $30,000 (Less) Cash Flow Credit 59275 59 Sa $9818 510066 511 78 $1 622 51184 512052 Sl 234 (SI2,393) (51 2,5291 Ending Balance $1,333,065 51,353,511 $1,373,693 $4393,627 51,412,249 51,430,627 $1,448,780 $1,466,728 $1,484,494 51,502,100 $1,519,573 (1) lklbll� 1h Year ll, erhres afddnred 4eve fen TABLE 6 COMPENSATION TO THE AUTHORITY VILLA DE VEDA C17Y OF POWAY I. Grow Scheduled Income (GA) (Less( Vacancy IL Effective Gross bx ms (EGI) (Less) Operating Expenses IB. Nat Operating Income (NOI) (Less) Debt Service N. Project Cash Flow V. Umited Partner Amat Management Fee (Lev) Limited Partner Asat MgmL Fee VI. Total Cash How 23 24 25 28 2Z R -4 34 i 32 E3 51,215,815 51,246,210 51,277,366 $3,309,300 51,342,032 $1,375,563 S1,409,973 51,445,222 $1,48L,353 51,518,386 51,SS6,346 (560,791) 56 11563 Mll (565,4651 5( 67,1021 (5611,779) (S70 499 $ 61 (S74,068) (575,919) (S77,817) $4,311,108 51,155,024 $l.LB3,900 $1,213,497 S1,243,83S 51,274,931 SI,306,804 51,339,474 53,372,961 51,407,265 51,442,467 51,478,529 (5872.5481 (5899.9931 15918,3512( 15957.6571 (5987.938) 151019231) 151,05L566) (51.0849851 151,U952e) ISLIS5.2111 151.1920971 5282,476 5283,907 5285,145 $286,178 5256,992 5287573 5287,906 5287,975 5287,764 52871256 $286,432 ($162,763) ($16Z763 5162 763 S16 763 5362 763 S16 763 $162 763 5162 763 50 $0 SO S119,713 5121,144 5122,382 5123,415 $124,229 S124,810 5125,143 S125,212 5287,764 5287.7% $286,432 m 52 52 �-o p- A 19 22 n LO S2 5119,713 $121,144 5122,982 SL23,415 5124,229 5124,610 5125,143 5125,212 5287,764 5287,256 5286,432 VII. Developer Fw Repaymem Nl Beginning Balance Interest (Less) Cash How Credit Ending Balance Vlll. General Partner Amt Management Fee (Lm) General Parmv Avec MOnt. Fee 1528.7421 1519,W IS30.4921 1531.4071 (S31,3491 15333191 1534.3191 (535,348) (536.4091 (5375011 (538.6261 DL Cash How Available for Dfstribudm $90,971 591$40 591,890 $92,008 591,880 $91.491 $90,824 S89,664 $251,355 5249,755 5247,806 ). Pwray Residml Receipts Loan Repayment 530,000 S30,000 $30,000 530,000 530,ODD 530,000 530,000 530,000 530,000 151-2,05) 51 714 Beginning Balance 53,950,889 $3,996,038 54,040,982 $4,085,800 S4,1AS74 54,175,395 $4,220,357 54,265,9S9 $4,311,108 54,298,941 54,986,IS2 Interart $78,000 $78,000 578,000 $78,000 $78,000 578,000 $78,000 578,000 578,000 $78,000 $78,000 (Lev) Cash flow Credit (532.8511 1533.056! 1533.1831 (513,2251 1533.1791 1533,0381 15327981 (532.4511 (590.7671 ($90.1891 (589.4851 Ending Balance 53,9%,038 54,040,982 54,085,800 54,L30,S74 $4,175,395 $4,220,357 54,265,559 54,311,108 54,298,341 54,286,152 54,274,666 NPV of Payments to Authority XJ. County HOME Loan Repayment Beginning Balance Interest (Lm) Cash How Credit Ending Balance (1) atPnnary in Year lL aahnce al delvred dev.%7 In 51,519,573 51,536,938 $1,554,224 $1,571,461 $1,588,682 $4605,921 $1,623,214 51,640,600 $1,658,119 S1,653,203 53,648,520 530,000 $30,000 530,000 S30,000 $30,000 530,000 530,ODD 530,000 530,000 530,000 530,000 151-2,05) 51 714 532 763 SI 779 ($12,761) (51Z707) 1 615 (512,481) (534,910) 1534,6981 534 417 53$36,938 $1,554,224 $1,571,461 SI,S88,682 S1,605,921 $1,623,214 $1,640,600 51,658,119 53,653,208 51,648,S20 $1,644,102 TABLE 6 COMPENSATION TO THE AUTHORITY VILLA DE VEDA CITY OF POWAY 1. Gross Scheduled Income (GSI) (Less) Vacancy IL Effective Gross Income (EGI) (Less) Operatmg Expenses 111. Net Operating Income(NOQ (Lev) Debt Service IV. Project Cash Flmv V. Limited Partner Asset Management Fee (Lest) Limited Partner Asset Mgmi Fee VI. Total Cash Flow 14 z SB 2z R 12 AQ R Aa 4u M 51,595,255 $1,635,136 $1,676,014 51,717,915 $1,760,863 51,804,884 51,850,006 51,896,257 $1,943,663 S1,992,255 $2,042,061 (579,763) SB1757 (50,801) (585,896) (588A43) 1590,244) 54 500 S94 813 (S97,183) (599,6131 5102 101 $1,515,492 $1,553,379 51,592,214 51,632,019 51,672,820 51,714,640 51,757,506 S1,8(11,444 $1,846,480 51,892,642 51,939,951 151.230.2181 151.269.6161 151.310.3361 ISUS2.4231 (51395.9221 (51.440.8841 (51.487.3561 (51.535.3911 151.585.043) (S1.636.3671 (S3.68941c. $285,274 5283,763 $281,877 $279,596 5276,897 $273,757 S270,150 5266,052 $261,437 5256,275 5250,53'. 50 SO $0 50 50 5o $0 SO 50 ,-o 5( 5285,274 S283,763 $281,877 5279596 $276,897 5273,757 $270,150 5266,052 $261,437 5256,275 5250,535 52 1W 54 54 52 A 59 54 52 54 51 5285,274 $283,763 5281,877 5279,S96 $276,897 5273,757 $270,150 S266,052 $261,437 5256,275 5250,53'. VII. Developer Fee Repayment Nl Beginning Balance Interest (Less) Cash Flow Credit Ending Balance NII. General Partner Asset Management Fee (Leu) General Partner Assat Mgmt. Fee (539,78S) 979 (542,2081 1543,47411594.7781 122 7505 (548.931) 5 8) C55C551,910) 53 ! IX Cash Flow Available lot Distribution 5245,489 $242,784 $239,669 $236,122 5232,119 5227,635 5222,645 $217,122 $211,038 $204,365 $397,071 X. Poway Residual Receipts Loan Repayment Beginning Balance 54,274,666 54,264,017 $4,254,345 54,245,798 $4,238,532 $4,232.711 54,228,510 54,226,110 54,225,705 $4,227,497 $4,231,691 Interest 578,000 $78,000 578,000 $78,000 578,000 578,000 578,000 $78,000 578,000 $78,000 578,00[ (Less) Cash Flow Credit (588.649) 4587.6721 (556.5471 (5552651 (583,8211 (582.201) 1580.3991 15784051 (576,208) (573,7981 (571.16! Ending Balance 54,264,017 54,254,345 $4,245,798 54,238,532 54,232,711 54,228,510 54,226,110 54,225,705 $4,227,497 54,231,698 54,238,531 NPV of Payments to Authority M. County HOME Loan Repayment Beginning Balance S3,644,102 S3,640,007 51,636,287 51,632,999 51,630,204 51.627,966 51,626,350 $1,625,427 51,625,271 51,625,960 $1,627,57[ Interest $30,000 530,000 530,000 S30,000 530,000 530,OOD $30,000 530,000 530,000 $30,000 530,00( (Lass) Cash Flow Credo $3409 (S33,720 (S33,287) (S32,795) (532,239) (531,616) (S30,9231 530156 ($29,311 (S28,394) (S27,37 Ending Balance $1,640,007 51,636,287 51,632599 51,63,204 $1,627,966 $1,626,350 51,625,427 51,625,271 $1,625,960 51,627576 51,63D,20! (3) 4epnri�ngh Year 116:bra eL4ehrred leWexrlee TABLE 6 COMPENSATION TO THE AUTHORITY VILLA OE VIDA CRY OF PO WAY 1. Gross Scheduled Insane (GSI) (Less) Vacancy IL Effective Gross Imome (EGL) (Less) Operating Expwes 10. Net Operating Income (NOL) (Lev) Debt Service IV. Pm(ect Cath Flosv V. Limited Partner Asset Management Fee (Less) Limited Partner AMC Mgrnt. Fee M. Total Cash Flow A5 Afi 47 M 42 22 .9 5A 31 H IS 52,093,112 52,145,440 52,199,076 52,254,D53 52,310,404 52,368,165 $2,427,369 $2,488,053 52,550,254 52,614,011 $2,679,361 5104 656 5107 72 5109 954 SI 703 5135 (5118,408) (S121,363) 5124 403 5127 513 5130 701 5733968 51,988,457 52.038,169 52,089,122 52,141.350 $2,194,884 $2,249,756 $2,3116,000 $2,363,650 52,422,741 $4483,310 52,545,393 151.7442601 151.800.950! 151.8595521 (51.920.1331 151.9827601 (52.047.503) (52.114.4351 152.183.6301 152.255.1671 152.329.1261 452.405.590 5244,197 5237,219 5229}70 5224217 $212,124 $202,253 $191,565 $180,020 5167,574 5154,184 5139,803 50 SO $0 50 50 SD SO SO SO 50 $0 5244,197 5237,219 $229,570 5221,217 5212,124 5202,253 5191,565 5180,020 5167,574 $154,184 5139,803 19 V V 19 % IV IQ 1% 12 52 v $244,197 5237,219 5229X0 5221,217 5212,124 5202,253 5191,565 5180,020 5167,574 5154,184 5139,803 VII. Developer Fee Repaymemisl Beginning Balance Imeren (Less) Cash Flow Coda Ending Balance Vlll. General Partner Asset Nlanegemam Fee (Less) General Pnbler Asset MgmL Foe (555,071) 1556.7241 1558.4261 (5§4,1781 1561.984! (563.843) 0,5791 IS67.7311 (569.7631 (571,8561 (S74.0121 DL Cash Flow Available Lor Oistdbu[ion $189,125 $180,495 $171,144 5161,039 $150,140 5138,410 5125,807 5112289 $97,811 582,328 565,791 X. Posvay Residual Receipts Loan Repayment 51,633,938 $1,638,869 530,000 530,000 Beginning Balance 54,238.534 54,248,238 $4,261,060 S4,Z77,258 54,297,105 54,320,687 54,348,906 54,381,476 54,418.927 54,461,607 54,509,877 Interest 578,000 578,000 578,000 578.000 578,000 578,000 578,000 578,000 578,000 578,000 578,000 (Less) Cash Flow Credit /5622451 4565.1791 (5618021 ISS8.153) 1554.171 Ij49,9811 540 f590549f 1$35.3211 1529.7291 1523.758) Ensimg Balance 54,248,18 54,261,060 $4,277,250 54,297,105 $4,320,887 54,348,906 54,381,476 54,418,927 $4,461,607 54,509,877 54,564,000 NPV of Payments to Authority )D. County NOME loan Repayment Beginning Balance Interest (Less) Cash flow Credit Ending Balance (1) e.rnrvmgm Year 11. frs`nv d4elvred derebperin $1,630,205 51,633,938 $1,638,869 530,000 530,000 530,000 526 267 525 069 51770 $1,633,938 $1,638,869 $1,645,099 51,645,099 51,652,733 51,661,880 530,000 530,000 530,000 IS22,3671 ($20,653) $19224 51,652,733 $1,661,880 53,672,656 51,672,656 $1,665,163 51,699,587 $1,716,003 51,734,568 530,000 $30,000 530.000 $30,000 $30,000 $17473 S15 % 513585I (S11,434)59138 $1,685,183 $1,699$8751,716,W3 $1,739,568 $1755000 TRUE COPY CERTIFICATION (Government Code 27361 7) C,tj�j of NWO.M ,1332SCtvlc, CMW--Df- Plac of Execution `Rou-" t CPr 92o(pq I certify under penalty of perjury that this material is a true copy of the original material contained in this document. 01 / 11 Date Rea Form #R9.1 (Revised 11-15-10) Signature of D clara 1� i CD 2. MAY Rhtil Type or Print Nam A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of ban 'Ne 9D Subscribed and sworn to (or affirmed) before me on this ) day of, 20 17, by Nicole MU hT proved to me on the basis of satisfactory evidence to be the persons who apeared before me. MONICA I. MARTINEZ Commbalon • 2115984 Notary Public - California z San IN go County My Comm. E Irea Jun 18.2019! (Seal) Signature r� TRUE COPY CERTIFICATION (Government Code 27361 7) rtk� 1 Pat�a�t, 13�2sLiylc,CCIl4WD2. Plac of Execution Ru," j c(Ir g2oco� I certify under penalty of perjury that this material is a true copy of the original material contained in this document. —()I / 1 I / 20l Date Rec.Form #R9.1 (Revised 11-15.10) Signature of D clar til i ale. IMuy06 l Type or Print Name A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of San VP - 7 Subscribed and sworn to (or affirmed) before me on this )' day of v >r 20 I7, by Q i c a►e Hum hT proved to me on the basis of satisfactory evidence to be the persons who ap eared before me. MONICA I. MARTINEZ Commbtlon 4 2115984 = < Notuy Public • CtlHomh z Sm Diego Courcy My Comm. Wres Jun 18, 2019 (Seal) Signature I&•C'a• L&