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Item 4.1 - 3rd Amendment to the DDLA for the Villa De Vida Affordable Housing ProjectG��Y W9h i f C�ry1N THE GpJ DATE: TO: FROM: CONTACT: SUBJECT: Summa: City of Poway COUNCIL AGENDA REPORT April 2, 2019 Honorable Mayor and Members of the City Council APPROVED APPROVED AS AMENDED ❑ (SEE MINUTES) DENIED ❑ REMOVED ❑ CONTINUED RESOLUTION NO. Honorable Chairman and Members of the HousingAuthority Robert Manis, Director of Development Services M Robert Manis, Director of Development Services (858) 668-4601 or bmanisapoway.org Third Amendment to the Disposition, Development and Loan Agreement for the Villa de Vida Affordable Housing Project The Disposition, Development and Loan Agreement (DDLA) for the Villa de Vida affordable housing development was approved by the Poway Housing Authority and City Council on October 4, 2016. Since its approval, the DDLA has been amended twice. In October 2018, the project received 9% tax credits from the Tax Credit Allocation Committee (TCAC), without which the project would not be feasible. The project also received a loan from the County of San Diego, Innovative Housing Trust Fund earlier this year. Since then, the Developers, Villa de Vida and Mercy Housing, have been working to finalize all the requirements needed to close escrow and implement the project within the 180 -day TCAC deadline. Modifications to the DDLA and some of the ancillary documents are needed to close escrow no later than April 9, 2019. Recommended Action: It is recommended that the City Council and the governing body of the Poway Housing Authority: 1) Approve the third amendment to the Disposition, Development and Loan Agreement for the Villa de Vida project (Attachment A) and authorize the Executive Director of the Poway Housing Authority to execute the DDLA and all ancillary documents. Discussion: The Villa de Vida affordable housing project is proposed on a 2.71 -acre site owned by the Poway Housing Authority, located at 12341 Oak Knoll Road. The 54 -unit project will provide 53 units for developmentally disabled adults with extremely low, very low, and low incomes. One unit will be provided for an on-site manager. The DDLA was approved on October 4, 2016 and the Development Review (DR) for the project was approved by the City Council on February 21, 2017. The first amendment to the DDLA was approved by the Poway Housing Authority and City Council on June 20, 2017 to reflect an increased loan amount resulting from a new appraisal of the property. The second amendment to the DDLA was approved on February 6, 2018 to increase the Authority's construction loan amount from $500,000 to $750,000 and to give the Developers additional opportunities to apply for 9% tax credits to finance the project. The full loan amount from the Authority is $3,450,000 ($2,700,000 property purchase price plus $750,000 for construction). 1 of 119 April 2, 2019, Item # 4.1 2 of 119 April 2, 2019, Item # 4.1 3 of 119 April 2, 2019, Item # 4.1 1 1552\12\2547457.7 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Poway Housing Authority 13325 Civic Center Drive Poway, CA 92064 Attention: Executive Director NO FEE FOR RECORDING PURSUANT TO GOVERNMENT CODE SECTIONS 6103 AND 27383 APN: 317-152-14-00 (Space above this line for Recorder's Use) THIRD AMENDMENT TO LAND DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (Villa De Vida Poway) This Third Amendment to Land Disposition, Development and Loan Agreement (the "Third Amendment") is entered into as of April 2, 2019, by and among the Poway Housing Authority, a public body, corporate and politic (the "Authority"), and Villa de Vida Poway, L.P., a California limited partnership (the "Developer") with reference to the following facts: RECITALS A.Capitalized terms used in this Third Amendment, but not defined, shall have the meaning set forth in the Original DDA (as defined herein below). B.The Authority and the Developer entered into that certain Land Disposition, Development and Loan Agreement dated as of October 4, 2016 and recorded in the Official Records of San Diego County, California (the "Official Records") on April 10, 2017 as Document No. 2017-016002, as amended by that certain First Amendment to the Land Disposition, Development and Loan Agreement dated as of June 20, 2017 and recorded in the Official Records on July 10, 2017 as Document No. 2017-03098, as further amended by that certain Second Amendment to the Land Disposition, Development and Loan Agreement dated as of February 6, 2018 and recorded in the Official Records on March 22, 2018 as Document No. 2018-0113457, as such may be further amended from time to time (collectively, the "Original DDA"). C.The purpose of this Third Amendment, authorized under Section 10.18 of the Original DDA, is to: (1) incorporate comments provided by the Investor to protect the Investor's interest and approved Lender for the conventional loan and necessary to close the transaction; (2) 4 of 119 April 2, 2019, Item # 4.1Attachment A 1552\12\2547457.7 2 revise the terms for the use of the Supportive Services Reserve (as defined herein below) and the conditions for disbursements thereunder; and (3) to make necessary conforming amendments. NOW, THEREFORE, the Authority and the Developer, agree as follows: ARTICLE 1. AMENDMENTS TO ORIGINAL DDA Section 1.1 Amendment to Section 1.1(c)(9). Section 1.1(c)(9) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(9) Cash deposited into the "Operating Reserve" to replenish the Operating Reserve (initially capitalized by the Developer in the approximate amount of Two Hundred Fifty-Five Thousand Four Hundred Forty Dollars ($255,440), 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)." Section 1.2 Amendment to Section 1.1(c)(10). Section 1.1(c)(10) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(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 Twelve Thousand Five Hundred Dollars ($12,500) per year which amount may increase annually by up to three percent (3%)." Section 1.3 Amendment to Section 1.1(d). Section 1.1(d) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(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 Wells Fargo Bank, National Association in the approximate amount of Nineteen Million Five Hundred Six Thousand Four Hundred Eighty-Seven Dollars ($19,506,487) (the "Bank Loan"). The Bank Loan is intended to be paid down at the close of permanent financing to the approximate amount of Two Million Eight Hundred Twenty-Two Thousand Dollars ($2,822,000); (2)Low Income Housing Tax Credit investor limited partner capital contribution in the approximate amount of Nineteen Million Eight Hundred Twenty- Nine Thousand Nineteen Dollars ($19,829,019) (the "Tax Credit Investor Equity"); 5 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 3 (3)A loan from the County of San Diego in the approximate amount of Three Million Four Hundred Forty-Five Thousand Dollars ($3,445,000) (the "County Loan"); (4) Subject to the terms of Section 6.9(c) below, a loan from Villa de Vida, Inc., used to capitalize a resident services reserve in the amount not less than Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Supportive Services Reserve")." Section 1.4 Amendment to Section 1.1(qq). Section 1.1(qq) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(qq) "County Loan" means the loan from the County of San Diego as further described in Section 1.1(d)(3) above." Section 1.5 Amendment to Section 1.1(tt). Section 1.1(tt) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(tt) "Investor" means Wells Fargo Affordable Housing Community Development Corporation, its successors and/or assigns, as the Investor of the Developer." Section 1.6 Amendment to Section 2.4(b)(4). Section 2.4(b)(4) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(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 the County Loan from the County, 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." Section 1.7 Amendment to Section 2.6. Section 2.6 of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "Section 2.6 Other Financing. As of the date of the Third Amendment, the Developer has secured financing commitments for the Development and no other financing applications are necessary to fund the construction of the Development. The Developer shall also submit to the Authority 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 6 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 4 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 1.8 Amendment to Section 3.2. Section 3.2 of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "Section 3.2 Purchase Price. The purchase price for the Property is Two Million Seven Hundred Thousand Dollars ($2,700,000), to be paid to the Authority by the Developer at the Close of Escrow." Section 1.9 Amendment to Section 6.9. Section 6.9 of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "Section 6.9 Resident Services Plan and Resident Services Budget. (a) Resident Services Funded from Operating Income. 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. As part of the Approved Financing Plan, the Authority has approved an annual sum of Ninety-Five Thousand Dollars ($95,000), increased by two percent (2%) per year for the entire Term, for Resident Services to be paid out of Operating Expenses. The Resident Services to be paid out of Operating Expenses shall be used to pay for one fulltime resident services coordinator, site events and activities, supplies, and reasonable costs associated with the oversight and management of site-based staff not to exceed 10% of staffing costs (inclusive of benefits) consistent with the Resident Services Plan. (b) Additional Resident Services Funded from Supportive Services Reserve. In addition, the Developer has committed to fund a "Supportive Services Reserve" which the Developer is capitalizing with: (1) a deposit of One Million Seven Hundred Two Thousand Five Hundred Ninety-Two Dollars ($1,702,592) at the Close of Escrow; (2) an additional deposit of Seven Hundred Ninety-Seven Thousand Four Hundred Eight Dollars ($797,408) which will be made at least two (2) months prior to the completion of construction; and (3) commencing ten (10) years from the Completion of Construction of the Development and continuing for the entire Term of the Agreement, the Developer shall make additional deposits of the Developer's share of Residual Receipts in the amounts shown on the Reserve Draw Schedule (the "Partnership Cash Flow Deposits", and collectively the "Supportive Services Deposits"). The Supportive Services Deposits are to be held in the Supportive Service Reserve and shall be used exclusively to fund "Additional Resident Services" (defined below) at the Development in excess of those payable from Annual Operating Expenses. The Additional Resident Services shall be proposed by the Developer on an annual basis as part of the updates to the Resident Service Plan required under subsection (d) below, consistent with the requirements of this subsection (b). The Parties agree and acknowledge that the Supportive Services Reserve was established to pay solely for Additional Services to be provided to residents of the Development, including a part-time activity coordinator and 7 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 5 reasonable costs associated with the oversight and management of site-based staff, not to exceed ten percent (10%) of direct staffing costs (inclusive of benefits). No funds deposited into the Supportive Services Reserve may be used for any other purposes without prior written approval from the Authority. The 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 solely dedicated to paying for the Additional Resident Services approved by the Authority under the Services Budget and Services Plan. Notwithstanding anything to the contrary, the Partnership Cash Flow Deposits required hereunder shall be subject to the rights of the Investor under the Developer's partnership agreement, including but not limited to requirements to pay credit adjusters, investor loans, unpaid asset management fees (including investor asset management fees in excess of $5,000 which are payable under the terms of the Developer's partnership agreement), replenishment of the Operating Reserve to the full amount required under the Developer's partnership agreement, and 10% of the remaining balance to the Investor (collectively, "LPA Priority Payments"). If and to the extent the Partnership Cash Flow Deposits are not funded as a result of the payment of LPA Priority Payments, then the Developer's general partners shall make available the funds necessary to fully fund the Partnership Cash Flow Deposits and any remaining Partnership Cash Flow is reserved to fund the Partnership Cash Flow Deposits. (c) As of the date of this Agreement, the Parties agree and acknowledge that the Supportive Services Reserve draw down schedule, attached hereto as Attachment H, incorporated herein by this reference (the "Reserve Draw Schedule"), will serve as a baseline for the authorized annual expenditures from the Supportive Services Reserve. The Reserve Draw Schedule, which is hereby approved by the Housing Authority, allows for a maximum annual withdrawal of up to Fifty Thousand Dollars ($50,000) per year, increased by two percent (2%) per year for the Term, which the Developer will use to fund Additional Services (the "Maximum Reserve Annual Draw"), thereby ensuring that the Additional Resident Services shall be available to the Residents of the Development for the entire Term. The Maximum Reserve Annual Draw represents the baseline of Additional Resident Services that are intended to remain relatively constant for the entire Term, subject to minor modifications approved in writing by the Authority (including for example temporary services or pilot programs not intended to continue for the Term) as part of the Services Plan and Services Budget. (d) Other than as provided in subsection (c) above, if the Developer desires to provide services in excess of the Maximum Reserve Annual Draw, the Developer shall be required to make additional deposits into the Supportive Services Reserve or increase the Partnership Cash Flow Deposits in an amount necessary to fund the additional services for the remainder of the Term or intended duration of such Additional Services, as applicable, and shall also provide to the Authority for its review and approval any necessary revisions to the Reserve Draw Schedule which, if approved would also include a revision to the Maximum Reserve Annual Draw. 8 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 6 (e) Services Budget. The Resident Services Budget attached hereto as Attachment I, incorporated herein by this reference, is the approved initial Resident Services Budget. No later than six (6) months prior to the completion of construction of the Development pursuant to the Development Schedule, the Developer shall submit to the Authority updates to the Resident Services Budget showing: (1) the annual sum of Resident Services to be paid out of Operating Expenses pursuant to subsection (a) above and provide details about the services to be provide utilizing such funds; and (2) the actual amount of funds necessary to fund Additional Resident Services for the upcoming year to be paid from the Support Services Reserve, which subject to the terms specified in subsection (c) above, shall not exceed the Maximum Reserve Annual Draw. Annually each year thereafter, within sixty (60) days prior to the end of the Developer's fiscal year, the Developer shall submit to the Authority, for its review and approval, any updates or revisions to the Resident Services Budget. (f) Service Plan. The Resident Services Plan attached hereto as Attachment J, incorporated herein by this reference is the approved initial Resident Services Plan for the Development. No later than six (6) months prior to the completion of construction of the Development pursuant to the Development Schedule, the Developer shall submit to the Authority updates to the Resident Services Plan showing: (1) detailed description of the required services being provided to the Residents of the Development and being funded from Operating Expenses; and (2) a detailed description of the Additional Resident Services being provided to the Residents of the Development and being funded from the Supportive Services Reserve. Annually each year thereafter, within sixty (60) days prior to the end of the Developer's fiscal year, the Developer shall submit to the Authority, for its review and approval, any updates or revisions to the Resident Services Plan. Notwithstanding anything herein to the contrary, the Authority shall not prohibit the Developer from providing any services required by any governmental agency or lender or required under the TCAC use agreement. (g) Review and Approval. 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 after submission. 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 seven (7) working days in accordance with the procedures set forth above. The approval of the Resident Services Plan and Resident Services Budget required hereunder shall not be unreasonably conditioned, withheld or delayed. Notwithstanding anything to the contrary, the Developer agrees and acknowledges that the Authority shall have the right to disapprove changes to the 9 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 7 Resident Services Plan and Resident Services Budget which: (1) are in excess of the Maximum Reserve Annual Draw; or (b) cause fluctuations and disruption in the services being provided to Residents of the Development. If the Authority does not approve or disapprove updates to Resident Services Plan or Resident Services Budget within the timeframe specified in this subsection (g), then the Resident Services Plan or Resident Services Budget, as applicable, from the prior year shall remain in effect and the Resident Services Budget from the prior year shall be subject to the two percent (2%) escalators pursuant to subsections (a) and (c) respectively." Section 1.10 Amendment to Section 7.4(f). Section 7.4(f) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(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, which shall be payable by either the existing limited partner or the transferee of the limited partner's interest; and (2) in such Transfers, a wholly owned affiliate of the limited partner retains a membership or partnership interest and serves as a managing member or managing general partner of the successor limited partner." Section 1.11 Amendment to Section 8.4(a). Section 8.4(a) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(a) In the event that, following the Close of Escrow, this Agreement is terminated as a result of an uncured Event of Default as defined in 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." Section 1.12 Amendment to Section 8.4(a)(13). Section 8.4(a)(13) of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(13) The Developer breaches any other material provision of this Agreement (including without limitation the failure to make the Supportive Services Deposits and the Partnership Cash Flow Deposits required under Section 6.9 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 1.13 Amendment to Section 8.5. Section 8.5 of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "(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 10 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 8 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) Terminating this Agreement; (2) Prosecuting an action for damages or specific performance; and (3) 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 1.14 Amendment to Section 8.6. Section 8.6 of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "Section 8.6 Right of Reverter. (a) In the event that, following the Close of Escrow, this Agreement is terminated pursuant to Section 8.5 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: (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; 11 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 9 (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. (c) Notwithstanding anything herein to the contrary, the Authority confirms that the right of reverter pursuant to this Section 8.6 and the Grant Deed shall be limited by and shall not defeat, render invalid or limit any Security Financing Interest in connection with the Bank Loan with respect to the Property or any rights or interest of the Investor with respect to the Property. (d) In the event of any foreclosure of any Security Financing Interest of Bank (or any conveyance by deed in lieu thereof) and after the Authority receiving notice of a default and an opportunity to cure (as provided in the subordination agreement between the Bank, Authority and the Developer), Authority agrees that any right of reverter set forth in this Section 8.6 and the Grant Deed shall be terminated and be non-enforceable by the Authority. Notwithstanding anything to the contrary, the Authority's rights and remedies under the Regulatory Agreement would remain in full force and effect in the event of any foreclosure described in this subsection (d)." Section 1.15 Amendment to Section 8.7. Section 8.7 of the Original DDA is hereby deleted in its entirety and replaced and amended as follows: "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 any 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 8.5. (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: 12 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 10 (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. (d) Notwithstanding anything herein to the contrary, the Authority confirms that the option to purchase pursuant to this Section 8.7 and the Grant Deed shall be limited by and shall not defeat, render invalid or limit any Security Financing Interest in connection with the Bank Loan with respect to the Property or any rights or interest of the Investor with respect to the Property. (e) In the event of any foreclosure of any Security Financing Interest of Bank (or any conveyance by deed in lieu thereof) and after the Authority receiving notice of a default and an opportunity to cure (as provided in the subordination agreement between the Bank, Authority and the Developer), Authority agrees that any option to purchase set forth in this Section 8.7 and the Grant Deed shall be terminated and be non-enforceable by the Authority. Notwithstanding anything to the contrary, the Authority's rights and remedies under the Regulatory Agreement would remain in full force and effect in the event of any foreclosure described in this subsection (e)." Section 1.16 Amendment to Subsection 10.1. Section 10.1 of the Original DDA is amended to add the Investor's address to read as follows: "To the Investor: Wells Fargo Affordable Housing Community Development Corporation MAC D1053-170 301 South College Street Charlotte, NC 28288 Attention: Director of Tax Credit Asset Management" Section 1.17 Amendment to Section 10.21. The Original DDA is hereby amended to add Section 10.21 which shall read as follows: "10.21 Investor's Rights. 13 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 11 The Authority agrees to the following provisions for the benefit of the Developer's Investor: (a) The Authority will give the Investor a copy of any written notice that the Authority gives to Borrower under this Agreement and the other Authority Documents; (b) The Authority will give the Investor forty-five (45) days after the Investor's receipt of such notice to cure any default under the Authority Documents; (c) If a default is incapable of being cured within the forty-five (45) day period set forth in item (b) above, so long as such cure is commenced within the forty-five (45) days and is being diligently pursued to completion, the Authority will give the Investor additional time to cure such default, but in no event later than one hundred twenty (120) days; (d) If the Investor makes any such payment or otherwise cures such default, the Authority will accept such action as curing such Default as if such payment or cure were made by Borrower; (e) The Authority will permit insurance and condemnation proceeds to be used to rebuild the Development provided that: (1) sufficient funds are provided from other sources to effectively rebuild the Affordable Development to a lawful multifamily housing complex, and (2) subject to the rights of any senior lenders, the Authority shall hold all such proceeds and disburse them based on the progress of construction, subject to such additional reasonable conditions as the Authority may impose." Section 1.18 Amendment to Exhibit D: Approved Financing Plan. The Financing Proposal attached to the Original DDA as Exhibit D, is hereby replaced with the Financing Plan attached to this Amendment as Attachment B, incorporated herein by this reference and is approved as the Financing Plan pursuant to Section 5.11 of the Original Agreement. Section 1.19 Amendment to Exhibit F: Form of Authority Promissory Note. The Form of Authority Promissory Note attached to the Original DDA as Exhibit F, is hereby replaced with the Form of Authority Promissory Note attached to this Amendment as Attachment C, incorporated herein by this reference. Section 1.20 Amendment to Exhibit G: Form of Authority Deed of Trust. The Form of Authority Deed of Trust attached to the Original DDA as Exhibit G, is hereby replaced with the Form of Authority Deed of Trust attached to this Amendment as Attachment D, incorporated herein by this reference. Section 1.21 Amendment to Exhibit B: Development Schedule. The Development Schedule attached to the Original DDA as Exhibit B, is hereby replaced with the revised Development Schedule attached to this Amendment as Attachment E, incorporated herein by this reference. 14 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 12 Section 1.22 Amendment to Exhibit E: Form of Authority Regulatory Agreement. The form of Authority Regulatory Agreement attached to the Original DDA as Exhibit E, is hereby replaced with the form of Authority Regulatory Agreement attached to this Amendment as Attachment F, incorporated herein by this reference. Section 1.23 Amendment to Exhibit H: Form of Notice of Affordability Restrictions on Transfer of Property. The Form of Notice of Affordability Restrictions on Transfer of Property attached to the Original DDA as Exhibit H, is hereby replaced with the Form of Notice of Affordability Restrictions on Transfer of Property attached to this Amendment as Attachment G, incorporated herein by this reference. ARTICLE 2. MISCELLANEOUS Section 2.1 No Other Changes to the Agreement. Except as expressly modified by this Third Amendment, all other provisions of the Original DDA remain unmodified and continue in full force and effect. Section 2.2 Conflicts with the Agreement. In the event of any conflict between this Third Amendment and the Original DDA, the provisions of this Third Amendment shall prevail. Section 2.3 Effective Date. This Third Amendment shall be effective on the date first set forth above. Section 2.4 Successors and Assigns. This Third Amendment shall be binding on and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties. Section 2.5 California Law. This Third Amendment shall be governed by and construed in accordance with the laws of the State of California. Section 2.6 Counterparts; Multiple Originals. This Third Amendment may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. Section 2.7 Recordation. This Third Amendment shall be recorded against the Developer's interest in the Property described in the attached Attachment A, at the Close of Escrow. 15 of 119 April 2, 2019, Item # 4.1 13 1552\12\2547457.7 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: Villa de Vida GP, LLC, a California limited liability company, its Managing General Partner By: Mercy Housing Calwest, a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ By: VDV POWAY LLC, a California limited liability company, its Administrative General Partner By: Villa de Vida, Inc., a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ 16 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 14 AUTHORITY: POWAY HOUSING AUTHORITY, a public body corporate and politic B y: ________________________________ Tina White, Executive Director Date: _________________________ APPROVED AS TO FORM: GOLDFARB & LIPMAN LLP, Authority Special Counsel B y: _______________________ Rafael Yaquian 17 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 15 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 18 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 16 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 19 of 119 April 2, 2019, Item # 4.1 A-1 1552\12\2547457.7 ATTACHMENT A LEGAL DESCRIPTION The land is situated in the State of California, County of San Diego, City of Poway, and is described as follows: 20 of 119 April 2, 2019, Item # 4.1 B-1 1552\12\2547457.7 ATTACHMENT B FINANCING PLAN The attached Financing Plan hereby supersedes the Financing Proposal attached as Exhibit D of the Original DDA. 21 of 119 April 2, 2019, Item # 4.121 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway Prepared For:Mercy Housing California Prepared By:California Housing Partnership Corporation Version:v 2.27 (pre-closing) Revised:3/28/19 Notes: Sources of Funds…………………………………..……..1 Threshold Basis Limits……………………...……………7 Uses of Funds…………………………………...……….1a 15-Year Cash Flow……………………...……………8 Unit Mix & Rental Income…………………………………..2 Outstanding Debt & Reserves……………………...……………8a Rent Comparison Table………..……………………………………..2a Schedule of Deductions……………………...……………9 Tax Credit Calculation…………………………………..3 Analysis of Taxable Income……………………...……………10 Base Year Income & Expense…………………………………..4 Capital Account & Exit Tax Liability……………………...……………11 Mortgage Calculation & Bond Ratios…………………………………..4a Investment Summary……………………...……………12 Lease-up/Placed-in-Service Schedule…………………………………..5 Net Quarterly Benefits……………………...……………13 Net Syndication Proceeds…………………………………..6 PAGE 1 PERMANENT OID TERM / AMOUNT INT RATE INT RATE AMORT COMMENTS CCRC Permanent Loan 2,822,000 5.19% 15 All-in rate (underwriting & cash flow):5.19% City Land Loan 2,700,000 3.00%1.76%57 City of Poway 750,000 3.00%1.76%57 GP Loan (Villa de Vida fundraising)2,500,000 0.00%0.00%55 SD County IHTF NOFA 3,445,000 3.00%1.79%55 Mandatory Interest payment:0.00% Deferred Developer Fee 600,000 0.00%City of Poway requires $600K deferred fee 2.53% Capital Contributions NET FIGURES (TCAC)Total currently paid developer fee:1,400,000$ General Partner 100 % ownership:0.01% Limited Partners (WFAHCDC)19,829,019 19,679,019 % ownership:99.99% Credit pricing (Federal LIHTC):$1.0050 TOTAL SOURCES 32,646,119 32,496,119 Credit pricing (State LIHTC):$0.800 Surplus/(Shortfall)(0) CONSTRUCTION AMOUNT INT RATE TERM (Mo.) WFB Construction Loan 19,506,487 5.60%28 6,310,000$ City Land Loan 2,700,000 3.00%28 City of Poway 700,000 3.00%28 $50,000 hold back until Permanent Conversion GP Loan (Villa de Vida fundraising)1,702,592 0.00%28 SD County IHTF NOFA 3,445,000 3.00%28 Costs Deferred Until Completion*1,909,038 Deferred Developer Fee 600,000 Capital Contributions NET FIGURES (TCAC) General Partner 100 0.00% Limited Partners (WFAHCDC)2,082,902 1,932,902 TOTAL SOURCES 32,646,119 32,496,119 Surplus/(Shortfall)0 COSTS DEFERRED UNTIL CONVERSION DEVELOPER FEE PAYMENT SCHEDULE TCAC Monitoring Fee 21,730 Total paid developer fee 1,400,000$ Operating Reserve (6 mos) 369,900 Syndication consulting - LP Admission 600,000 GP Loan (Services Reserve)797,408 100% Completion - Legal: Perm Close - Completion (Equity as source)100,000 Title/Recording/Escrow - Permanent 20,000 Permanent Conversion 400,000 Audit/Cost Certification - 8609 300,000 Developer Fee 700,000 Total 1,400,000 1,909,038 INTEREST RATE STACK Construction Permanent HCIDLA LEVERAGING SCORE Tranche A Tranche B Total Sources (not including HCID or equity)3,572,000$ Total Development Costs 32,646,119 30-day LIBOR/est. rate 2.500%2.440%0.000% Lender Spread 1.600%2.650%2.650%Ratio Sources to TDC 10.942% Cushion 1.500%0.000%0.100%0.000% TOTAL 5.60%0.00%5.19%2.65% Rates Revised:3/22/19 TABLE OF CONTENTS SOURCES OF FUNDS 22 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway PAGE 1-A Uses of Funds Version: Revised: Total Hard Costs 15,978,268 100.00% TOTAL TOTAL DEPRECIABLE TAX CREDIT ELIGIBLE RESIDENTIAL COMM NON- CONST/ TOTAL 100.00%0.00%DEPREC RESIDENTIAL COMM EXPENSE AMORTIZE REHAB ACQUIS. ACQUISITION COSTS Acquisition: Land 2,700,000 2,700,000 0 2,700,000 Offsite Improvements 0 0 0 0 0 0 GENERAL DEVELOPMENT COSTS Residential Construction 12,271,650 12,271,650 0 0 12,271,650 0 0 12,271,650 Parking 59,778 59,778 0 0 59,778 0 0 59,778 Demolition 117,958 117,958 0 117,958 0 0 0 0 Site Improvements/Landscape 1,006,034 1,006,034 0 0 1,006,034 0 1,006,034 Furnishings (included in contract)520,147 520,147 0 520,147 0 520,147 Contractor General Conditions 931,216 931,216 0 0 931,216 0 931,216 Contractor O&P 783,249 783,249 0 0 783,249 0 783,249 GC Bond & Insurance 288,236 288,236 0 0 288,236 0 288,236 Construction Contingency 2,305,517 2,305,517 0 0 2,305,517 0 2,305,517 Local Permits/Fees 375,000 375,000 0 0 375,000 0 375,000 Local Development Impact Fees 786,481 786,481 0 0 786,481 0 786,481 Phase I/Asbestos/Toxics 25,000 25,000 0 0 25,000 0 25,000 Wage Monitoring 45,000 45,000 0 45,000 0 45,000 Architecture 642,579 642,579 0 642,579 0 642,579 Survey & Engineering 330,000 330,000 0 330,000 0 330,000 Appraisal 15,000 15,000 0 0 15,000 0 0 15,000 Market Study 15,000 15,000 0 15,000 0 15,000 Predevelopment Loan Interest & Fees 50,360 50,360 0 50,360 0 0 0 0 Construction Interest Reserve 1,733,200 1,733,200 0 1,114,200 0 619,000 1,114,200 0 Title/Recording/Escrow - Acquisition 20,000 20,000 0 20,000 0 0 0 0 Title/Recording/Escrow - Construction 65,000 65,000 0 65,000 0 65,000 0 Title/Recording/Escrow - Permanent 20,000 20,000 0 20,000 Insurance 98,000 98,000 0 98,000 0 0 98,000 0 Real Estate Taxes 55,978 55,978 0 55,978 0 0 55,978 0 Soft Cost Contingency 349,228 349,228 0 349,228 0 349,228 TCAC Application/Monitoring Fee 157,858 157,858 0 157,858 Legal: Acquisition 0 0 0 0 0 0 Construction Closing 85,000 85,000 0 85,000 0 85,000 0 Permanent Closing 20,000 20,000 0 20,000 Syndication Consulting 65,000 65,000 0 65,000 0 0 0 Audit/Cost Certification 35,000 35,000 0 0 0 35,000 0 0 Furnishings (common area)225,000 225,000 0 225,000 0 225,000 Replacement Reserve 20,250 20,250 0 20,250 Operating Reserve (6 mos) 369,900 369,900 0 369,900 Marketing/Lease-Up Account 135,000 135,000 0 135,000 Utility Connection Fees 750,000 750,000 0 750,000 0 750,000 Construction Management 336,000 336,000 0 336,000 0 336,000 Supportive Services Reserve* 2,500,000 2,500,000 0 2,500,000 0 0 0 Syndication Costs 50,000 50,000 0 50,000 0 0 0 Developer Fee 2,000,000 2,000,000 0 2,000,000 0 1,400,000 0 COSTS OF ISSUANCE/FINANCING FEES Lender Expenses & Inspections 40,000 40,000 0 40,000 0 40,000 Lender Counsel 80,000 80,000 0 80,000 0 80,000 Lender/Credit Enhancement Fees (constr loan)146,300 146,300 0 146,300 146,300 Lender/Credit Enhancement Fees (perm loan)21,200 21,200 0 21,200 0 Subtotal -Costs of Issuance 287,500 287,500 0 0 266,300 0 0 21,200 266,300 0 TOTAL DEVELOPMENT COSTS 32,646,119 32,646,119 0 5,893,468 25,744,593 0 789,000 219,058 25,144,593 0 TDC per Unit 604,558 *This reserve is fundraised by Villa de Vida. Maximum Seller Loan 6%MAXIMUM DEVELOPER FEE CALCULATION Syndication Costs:150,000 Constr Acq Total Purchase Price 2,700,000 Max TCAC Fee (Per Limit)2,200,000 - 2,200,000 Max. TCAC Fee in TDC (cost efficiency)1,585,848 - 1,585,848 Payoff: first mortgage 96,428 Max. TCAC Fee in basis 1,400,000 - 1,400,000 - Maximum Seller Note*2,603,572 Ratio 100.00%0.00%100.00% Maximum Fee per Poway 2,000,000 - 2,000,000 MAXIMUM FEE PER TCAC APP 2,000,000 - 2,000,000 v 2.27 (pre-closing) March 28, 2019 23 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway PAGE 2 Unit Mix & Rental Income Version: Revised: UTILITY AVERAGE AFFORDABILITY FOR UNIT MIX ALLOWANCES SPECIAL NEEDS UNITS 40.00%0 BR 0 $0 1 BR 50 $37 AVERAGE AFFORDABILITY FOR 2 BR 4 $47 ALL UNITS (%AMI) 44.53%3 BR 0 $0 4 BR 0 $0 RESIDENTIAL INCOME TAX-CREDIT ELIGIBLE - TIER 1:30%AMI LIHTC CA RDL: ELI TCAC SN Percentage of Targeted Units:13.2% * 6 1BR and 1 2BR unit restricted to CA RDL: ELI per Poway Reg Agmt % MEDIAN PER-UNIT PER-UNIT TOTAL TOTAL PER UNIT TOTAL INCOME MONTHLY MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER SQ FT SQ FT AFFORDABLE GROSS RENT NET RENT NET RENT NET RENT 1 BR 6 600 3,600 26.9%491 454 2,724 32,688 2 BR 1 850 850 25.2%552 505 505 6,060 TOTAL 7 4,450 3,229 38,748 TAX-CREDIT ELIGIBLE - TIER 2:40%AMI LIHTC TCAC SN Percentage of Targeted Units:49.1% * 6 1BR and 1 2BR unit restricted to CA RDL: VLI; 11 1BR unit restricted to CA RDL: LI per Poway Reg Agmt % MEDIAN PER-UNIT PER-UNIT TOTAL TOTAL PER UNIT TOTAL INCOME MONTHLY MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER SQ FT SQ FT AFFORDABLE GROSS RENT NET RENT NET RENT NET RENT 1 BR 25 600 15,000 40.0%730 693 17,325 207,900 2 BR 1 850 850 40.0%876 829 829 9,948 TOTAL 26 15,850 18,154 217,848 TAX-CREDIT ELIGIBLE - TIER 3:50%AMI LIHTC TCAC SN Percentage of Targeted Units:13.2% * 1 2BR unit restricted to CA RDL: VLI per Poway Reg Agmt % MEDIAN PER-UNIT PER-UNIT TOTAL TOTAL PER UNIT TOTAL INCOME MONTHLY MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER SQ FT SQ FT AFFORDABLE GROSS RENT NET RENT NET RENT NET RENT 1 BR 6 600 3,600 50.0%913 876 5,256 63,072 2 BR 1 850 850 42.0%920 873 873 10,476 TOTAL 7 4,450 6,129 73,548 TAX-CREDIT ELIGIBLE - TIER 4:50%AMI LIHTC SN (non-TCAC)Percentage of Targeted Units:3.8% % MEDIAN PER-UNIT PER-UNIT TOTAL TOTAL PER UNIT TOTAL INCOME MONTHLY MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER SQ FT SQ FT AFFORDABLE GROSS RENT NET RENT NET RENT NET RENT 1 BR 2 600 1,200 50.0%913 876 1,752 21,024 2 BR 0 850 0 0.0%0 873 0 0 TOTAL 2 1,200 1,752 21,024 TAX-CREDIT ELIGIBLE - TIER 5:60%AMI LIHTC SN (non-TCAC)Percentage of Targeted Units:20.8% % MEDIAN PER-UNIT PER-UNIT TOTAL TOTAL PER UNIT TOTAL INCOME MONTHLY MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER SQ FT SQ FT AFFORDABLE GROSS RENT NET RENT NET RENT NET RENT 1 BR 11 600 6,600 60.0%1,095 1,058 11,638 139,656 2 BR 0 850 0 0.0%0 1,267 0 0 TOTAL 11 6,600 11,638 139,656 * All units underwritten at 2007 50% AMI rents MANAGER UNITS % MEDIAN PER-UNIT PER-UNIT TOTAL TOTAL PER UNIT TOTAL INCOME MONTHLY MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER SQ FT SQ FT AFFORDABLE GROSS RENT NET RENT NET RENT NET RENT 2 BR 1 600 600 0.0%0 0 0 0 TOTAL 1 600 0 0 SECTION 8 (PBVs) - 20-year contract from HACSD PER-UNIT PER UNIT PER-UNIT TOTAL TOTAL INCOME MONTHLY SECTION 8 MONTHLY MONTHLY ANNUAL UNIT TYPE NUMBER TIER NET RENT NET RENT S8 PREMIUM SECTION 8 PREMIUM S8 PREMIUM 1 BR 6 30%454 1,543 1,089 6,534 78,408 1 BR 25 40%693 1,543 850 21,250 255,000 1 BR 6 50%876 1,543 667 4,002 48,024 1 BR 2 50%876 1,543 667 1,334 16,008 1 BR 11 60%1,058 1,543 485 5,335 64,020 2 BR 1 30%505 2,003 1,498 1,498 17,976 2 BR 1 40%829 2,003 1,174 1,174 14,088 2 BR 1 50%873 2,003 1,130 1,130 13,560 TOTAL 53 42,257 507,084 SECTION 8 PREMIUM (annual Section 8 income less total annual base rents)507,084 TOTAL - BASE RENT PLUS SECTION 8 PREMIUM 83,159 997,908 TOTAL RESIDENTIAL INCOME TOTAL TOTAL TOTAL UNITS MONTHLY (Net)ANNUAL 54 83,159 997,908 TOTAL SQ FT - TAX CREDIT ELIGIBLE 28,100 TOTAL SQ FT - NON-TAX CREDIT ELIGIBLE 0 TOTAL RENTABLE SQ FT 28,100 MISCELLANEOUS INCOME PER-UNIT TOTAL TOTAL MONTHLY MONTHLY ANNUAL Laundry/Vending 4.58 248 2,970 Financial & Other Revenue 2.00 108 1,296 v 2.27 (pre-closing) March 28, 2019 24 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway PAGE 3 Tax Credit Calculation Version: Revised: FEDERAL CALIFORNIA CONST/ CONST/ ACQUIS REHAB TOTAL ACQUIS REHAB TOTAL TOTAL ELIGIBLE COSTS 0 25,144,593 25,144,593 0 25,144,593 25,144,593 Less: Non-Eligible (Parking): 0 0 0 0 0 ELIGIBLE BASIS 0 25,144,593 25,144,593 0 25,144,593 25,144,593 THRESHOLD BASIS LIMIT 19,657,092 Voluntary Reduction 0 REQUESTED ELIGIBLE BASIS 0 19,657,092 19,657,092 0 25,144,593 25,144,593 HIGH COST ADJUSTMENT (Y/N)Y 100.0%130.0%2018 SADDA 100.0%100.0% ADJUSTED ELIGIBLE BASIS 0 25,554,219 25,554,219 0 25,144,593 25,144,593 APPLICABLE FRACTION*100.0%100.0%100.0%100.0% QUALIFIED CREDIT BASIS 0 25,554,219 25,554,219 0 25,144,593 25,144,593 CREDIT REDUCTION 0.00%0 0 0 ADJUSTED QUALIFIED CREDIT BASIS 0 25,554,219 25,554,219 CREDIT RATE Federal Annual/Yr 1-3 State 3.32%9.00%3.32%9.00% Year 4 - State 3.04%3.00% MAXIMUM CREDIT AMOUNT PER COSTS Federal Annual/Yr 1-3 State 0 2,299,880 2,299,880 0 6,789,040 6,789,040 Year 4 - State 0 754,338 754,338 Total 0 7,543,378 7,543,378 ACTUAL TCAC CREDIT RESERVATION Federal Annual/Total State N/A N/A 1,973,234 N/A N/A N/A MAXIMUM ALLOWABLE CREDITS Federal Annual/Total State 0 1,973,234 1,973,234 7,543,378 Adjustment to State Credit for Gap -7,543,378 MAXIMUM ALLOWABLE - TEN YEAR TOTAL 19,732,340 0 v 2.27 (pre-closing) March 28, 2019 25 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway PAGE 4 Base Year Income & Expense Version: Revised: INCOME Scheduled Gross Income - Special Needs 330,144 Scheduled Gross Income - Special Needs (non-TCAC restricted)160,680 Section 8 Premium 507,084 Misc. Income 4,266 Vacancy Loss - Special Needs 5.0%(24,541) Vacancy Loss - Section 8 Premium 5.0%(25,354) Vacancy Loss - Misc Income 5.0%(213) EFFECTIVE GROSS INCOME 952,065 EXPENSES - RESIDENTIAL Administrative Advertising 540 Legal 5,500 Accounting/Audit 8,100 Misc. Admin Expense 9,726 Telephone & Cable 15,070 Total Administrative 38,936 Management Fee 47,952 Utilities Electricity 27,000 Gas 8,586 Total Utilities 35,586 Water/Sewer 32,940 Payroll/Payroll Taxes Manager Payroll 102,000 Maintenance Payroll 74,880 Health Insurance & Other Employee Benefits 42,202 Total Payroll/Payroll Taxes 219,082 Insurance (Hazard)64,500 Property Taxes 2,500 Maintenance Painting 500 Trash Removal 14,580 Grounds 5,900 Exterminating 5,316 Elevator 5,584 Misc. operating supplies, contracts and expenses 28,234 Total Maintenance 60,114 Replacement Reserve ($375/du per City)20,250 Other Resident Services 95,000 Annual Monitoring Fee (SD HCD)4,000 Transit Passes 5,832 Total Other 104,832 TOTAL EXPENSES - RESIDENTIAL 626,692 Per Unit Per Year (incl. Reserves)11,605 Per Unit Per Year (w/o Reser., Taxes, Tenant Serv.)9,317 NET AVAILABLE INCOME 325,373 NET AVAILABLE INCOME (w/o Section 8)(156,357) v 2.27 (pre-closing) March 28, 2019 26 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway PAGE 4-B Mortgage Calculation & Bond Ratios Version: Revised: MAXIMUM MORTGAGE CALCULATION Permanent Loan Financing Type:CCRC Permanent Loan Net Operating Income (less Operating Subsidy)(156,356) Section 8 Income 95%481,730 Adjusted NOI 325,373 DSC 1.20 Available for Debt Service 271,144 Less: debt service on VHHP - Less: debt service on AHSC loan - Less: debt service on Seller Financing - Available for Debt Service 271,144 Underwriting Maximum Constraint Loan Amount Debt Service Coverage 1.20 2,822,000 Max Loan Necessary for Feasibility 2,822,000 Loan-to-Value 80.0%3,386,230 Percent of Transaction Costs 100.0%32,646,119 Statutory Limit 19,657,092 Commitment NA Bond Loan Commitment NA MAXIMUM MORTGAGE NA MAXIMUM MORTGAGE 2,822,000 LOAN CONSTANT/TIC CALCULATION Tranche A IRP Tranche B Underwriting Tranche Underwriting Bond/Loan Rate 5.19000%5.19000%2.65000%2.65000%2.65000% Term (Yr)15.00 15.00 20.00 20.00 20.00 Mortgage Insurance Premium 0.00000%0.00000%0.00000%0.00000%0.00000% Amort (P&I)4.41872%4.41872%3.79689%3.79689%3.79689% Loan Constant 9.60872%9.60872%6.44689%6.44689%6.44689% Imputed Total Interest Cost (TIC)5.19000%7.42029%2.65000%2.65000%2.65000% v 2.27 (pre-closing) March 28, 2019 27 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway PAGE 5 Lease-up/Placed-in-Service Schedule Version: Revised: LIHTC LEASE-UP SCHEDULE BUILDING PLACED-IN-SERVICE SCHEDULE OPERATIONS SCHEDULE Lease-Up Start (Year):2020 Start Year:2020 Start Year:2020 Month # Units Percent Month Building ## Units Percent Month No. Units Percent Jan-20 0 0.0%Jan-20 0 0 0.0%Jan-20 0 0.0% Feb-20 0 0.0%Feb-20 0 0 0.0%Feb-20 0 0.0% Mar-20 0 0.0%Mar-20 0 0 0.0%Mar-20 0 0.0% Apr-20 0 0.0%Apr-20 0 0 0.0%Apr-20 0 0.0% May-20 0 0.0%May-20 0 0 0.0%May-20 0 0.0% Jun-20 0 0.0%Jun-20 0 0 0.0%Jun-20 0 0.0% Jul-20 0 0.0%Jul-20 0 0 0.0%Jul-20 0 0.0% Aug-20 0 0.0%Aug-20 0 0 0.0%Aug-20 0 0.0% Sep-20 0 0.0%Sep-20 0 0 0.0%Sep-20 0 0.0% Oct-20 8 15.1%Oct-20 1 9 16.7%Oct-20 9 16.7% Nov-20 9 17.0%Nov-20 0 9 16.7%Nov-20 9 16.7% Dec-20 9 17.0%Dec-20 0 9 16.7%Dec-20 9 16.7% TOTAL 26 49.1%TOTAL 27 50.0%TOTAL 27 50.0% % Q.O. in First Year 8.0%% PIS in First Year 8.3%% Operating in First Year 8.3% LIHTC LEASE-UP SCHEDULE BUILDING PLACED-IN-SERVICE SCHEDULE OPERATIONS SCHEDULE Lease-Up Start (Year):2021 Start Year:2021 Start Year:2021 Month # Units Percent Month Building ## Units Percent Month No. Units Percent Jan-21 35 66.0%Jan-21 1 36 66.7%Jan-21 36 66.7% Feb-21 9 17.0%Feb-21 0 9 16.7%Feb-21 9 16.7% Mar-21 9 17.0%Mar-21 0 9 16.7%Mar-21 9 16.7% Apr-21 0 0.0%Apr-21 0 0 0.0%Apr-21 0 0.0% May-21 0 0.0%May-21 0 0 0.0%May-21 0 0.0% Jun-21 0 0.0%Jun-21 0 0 0.0%Jun-21 0 0.0% Jul-21 0 0.0%Jul-21 0 0 0.0%Jul-21 0 0.0% Aug-21 0 0.0%Aug-21 0 0 0.0%Aug-21 0 0.0% Sep-21 0 0.0%Sep-21 0 0 0.0%Sep-21 0 0.0% Oct-21 0 0.0%Oct-21 0 0 0.0%Oct-21 0 0.0% Nov-21 0 0.0%Nov-21 0 0 0.0%Nov-21 0 0.0% Dec-21 0 0.0%Dec-21 0 0 0.0%Dec-21 0 0.0% TOTAL 53 100.0%TOTAL 54 100.0%TOTAL 54 100.0% % Q.O. in First Year 95.8%% PIS in First Year 95.8%% Operating in First Year 95.8% DEVELOPMENT SCHEDULE Closing 2Q 2019 Construction start May 2019 17 months construction Construction completion October 2020 4Q 2020 Placed in service 4Q 2020 Qualified occupancy 1Q 2021 Permanent conversion 3Q 2021July 2021 Lease Up/Mo Bldg. PIS by Month Completed Lease Up/Mo Bldg. PIS by Month March 2021 Completed Lease Up/Mo v 2.27 (pre-closing) March 28, 2019 Lease Up/Mo October 2020 April 2019 28 of 119 April 2, 2019, Item # 4.1 Villa de Vida - Poway67.932 PAGE 8 55-Year Cash Flow (True Debt)Attachment 5BVersion:Revised:ASSUMPTIONS:Perm Loan - % Debt Svc Yr 00.00% Rent Increase:2.50%Perm Loan - % Debt Svc Yr 141.67%Year 1 income @ current HAP rents:83.33%10 mos @ post-rehab rentsTransition Expenses Increase:3.50%Perm Loan - % Debt Svc Yr 2100.00%Year 1 income @ MUB HAP rents:16.67%2 mos @ post-rehab rentsReserve Reserve Increase:0.00%Percent Lease-up Yr 1100.00% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2018201920202021202220232024202520262027202820292030203120322033203420352036203720382039204020412042GROSS POTENTIAL INCOME - SPECIAL NEEDS27,512 324,298 346,858 355,529 364,417 373,528 382,866 392,437 402,248 412,305 422,612 433,178 444,007 455,107 466,485 478,147 490,101 502,353 514,912 527,785 540,979 554,504 568,366 GROSS POTENTIAL INCOME - SPECIAL NEEDS (NON-TCAC)13,390 157,835 168,814 173,035 177,361 181,795 186,340 190,998 195,773 200,667 205,684 210,826 216,097 221,499 227,037 232,713 238,530 244,494 250,606 256,871 263,293 269,875 276,622 Section 8 Premium 42,257 498,104 532,755 546,074 559,726 573,719 588,062 602,764 617,833 633,278 649,110 665,338 681,972 699,021 716,496 734,409 752,769 771,588 790,878 810,650 830,916 851,689 872,981 Misc. Income356 4,190 4,482 4,594 4,709 4,827 4,947 5,071 5,198 5,328 5,461 5,597 5,737 5,881 6,028 6,178 6,333 6,491 6,654 6,820 6,990 7,165 7,344 Vacancy Loss - Special Needs5.0%(573)(16,215)(17,343)(17,776)(18,221)(18,676)(19,143)(19,622)(20,112)(20,615)(21,131)(21,659)(22,200)(22,755)(23,324)(23,907)(24,505)(25,118)(25,746)(26,389)(27,049)(27,725)(28,418)Vacancy Loss - Section 8 Premium5.0%(880)(24,905)(26,638)(27,304)(27,986)(28,686)(29,403)(30,138)(30,892)(31,664)(32,456)(33,267)(34,099)(34,951)(35,825)(36,720)(37,638)(38,579)(39,544)(40,532)(41,546)(42,584)(43,649)Vacancy Loss - Misc & non-SN5.0%(286)(8,101)(8,665)(8,881)(9,103)(9,331)(9,564)(9,803)(10,049)(10,300)(10,557)(10,821)(11,092)(11,369)(11,653)(11,945)(12,243)(12,549)(12,863)(13,185)(13,514)(13,852)(14,198)GROSS EFFECTIVE INCOME 81,775 935,206 1,000,265 1,025,272 1,050,905 1,077,178 1,104,109 1,131,712 1,160,006 1,189,007 1,218,733 1,249,202 1,280,433 1,312,445 1,345,256 1,378,888 1,413,361 1,448,696 1,484,914 1,522,037 1,560,089 1,599,092 1,639,069 TOTAL OPERATING EXPENSES 42,079 500,839 540,906 559,838 579,433 599,713 620,703 642,427 664,912 688,184 712,271 737,200 763,002 789,707 817,347 845,954 875,562 906,207 937,924 970,752 1,004,728 1,039,893 1,076,290 REAL ESTATE TAXES2.00%2,500 2,550 2,601 2,653 2,706 2,760 2,815 2,872 2,929 2,988 3,047 3,108 3,171 3,234 3,299 3,365 3,432 3,501 3,571 3,642 3,715 3,789 3,865 SUPPORTIVE SERVICES EXPENSES2.00%7,917 92,863 98,838 100,815 102,831 104,888 106,985 109,125 111,308 113,534 115,804 118,121 120,483 122,893 125,350 127,857 130,415 133,023 135,683 138,397 141,165 143,988 146,868 Annual Monitoring Fee (SD HCD)1.00%0 4,000 4,040 4,080 4,121 4,162 4,204 4,246 4,289 4,331 4,375 4,418 4,463 4,507 4,552 4,598 4,644 4,690 4,737 4,785 4,832 4,881 4,930 NET OPERATING INCOME29,279 334,954 353,879 357,886 361,814 365,656 369,401 373,042 376,569 379,970 383,236 386,355 389,315 392,103 394,708 397,114 399,308 401,275 402,998 404,462 405,649 406,540 407,117 REPLACEMENT RESERVE1,688 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 NET INCOME AVAILABLE FOR DEBT SERVICE27,592 314,704 333,629 337,636 341,564 345,406 349,151 352,792 356,319 359,720 362,986 366,105 369,065 371,853 374,458 376,864 379,058 381,025 382,748 384,212 385,399 386,290 386,867 CCRC Permanent Loan Debt Service0112,982271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,1580000000 Principal052,408137,427144,732152,425160,526169,059178,045187,508197,475207,971219,025230,667242,927255,840269,438283,760298,842314,726331,455-1,159,84700 Interest5.190%060,574133,731126,426118,733110,632102,09993,11383,65073,68363,18752,13340,49128,23115,3181,720-283,760-298,842-314,726-331,4551,159,84700TOTAL DEBT SERVICE0112,982271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,158271,1580000000NET CASH FLOW27,592 201,721 62,471 66,478 70,406 74,248 77,993 81,634 85,161 88,562 91,828 94,947 97,907 100,695 103,300 105,706 379,058 381,025 382,748 384,212 385,399 386,290 386,867 27,592 0 Debt Service Coverage RatioN/A2.791.231.251.261.271.291.301.311.331.341.351.361.371.381.39#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!CHECKCHECKDISTRIBUTION OF CASH FLOWLP/PM fees limited by City of Poway as belowLP Investor Services Fee - Current3%7,500 7,500 7,725 7,957 8,195 8,441 8,695 8,955 9,224 9,501 9,786 10,079 10,382 10,693 11,014 11,344 11,685 LP Investor Services Fee - Deferred0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Deferred Developer Fee20,092 193,996 54,514 58,282 61,965 65,553 69,038 72,410 4,149 0 0 0 0 0 0 0 0 0 0 0 0 0 0 600,000 Partnership Management Fee3%12,500 0 0 0 0 0 0 0 0 15,835 16,310 16,799 17,303 17,822 18,357 18,907 19,475 0 0 0 0 0 0 0 Partnership Management Fee - Deferred0 0 0 0 0 0 0 0 55,676 55,478 0 0 0 0 0 0 0 0 0 0 0 0 0 City Land Loan19.58%0 0 0 0 0 0 0 0 0 1,368 12,717 13,169 13,586 13,965 14,302 14,596 74,217 74,602 74,940 75,226 75,459 75,633 75,746 SD County IHTF NOFA24.98%0 0 0 0 0 0 0 0 0 1,746 16,226 16,803 17,335 17,818 18,249 18,623 94,696 95,187 95,618 95,983 96,280 96,502 96,647 City of Poway5.44%0 0 0 0 0 0 0 0 0 380 3,532 3,658 3,774 3,879 3,973 4,054 20,616 20,723 20,817 20,896 20,961 21,009 21,041 General Partner90.00%0 0 0 0 0 0 0 0 0 3,145 29,227 30,268 31,226 32,096 32,872 33,546 170,576 171,461 172,237 172,895 173,429 173,830 174,090 Limited Partner10.00%0 0 0 0 0 0 0 0 0 349 3,247 3,363 3,470 3,566 3,652 3,727 18,953 19,051 19,137 19,211 19,270 19,314 19,343 v 2.27 (pre-closing)March 28, 201929 of 119April 2, 2019, Item # 4.1 Villa de Vida - Poway55-Year Cash Flow (True Debt)ASSUMPTIONS:Perm Loan - % Debt Svc Yr 0 Rent Increase:2.50%Perm Loan - % Debt Svc Yr 1 Expenses Increase:3.50%Perm Loan - % Debt Svc Yr 2 Reserve Increase:0.00%Percent Lease-up Yr 1 20182019GROSS POTENTIAL INCOME - SPECIAL NEEDSGROSS POTENTIAL INCOME - SPECIAL NEEDS (NON-TCAC)Section 8 Premium Misc. IncomeVacancy Loss - Special Needs5.0%Vacancy Loss - Section 8 Premium5.0%Vacancy Loss - Misc & non-SN5.0%GROSS EFFECTIVE INCOME TOTAL OPERATING EXPENSES REAL ESTATE TAXES2.00%SUPPORTIVE SERVICES EXPENSES2.00%Annual Monitoring Fee (SD HCD)1.00%NET OPERATING INCOMEREPLACEMENT RESERVENET INCOME AVAILABLE FOR DEBT SERVICE CCRC Permanent Loan Debt Service Principal Interest5.190%TOTAL DEBT SERVICENET CASH FLOWDebt Service Coverage RatioDISTRIBUTION OF CASH FLOWLP/PM fees limited by City of Poway as belowLP Investor Services Fee - Current3%7,500 LP Investor Services Fee - DeferredDeferred Developer Fee600,000 Partnership Management Fee3%12,500 Partnership Management Fee - DeferredCity Land Loan19.58%SD County IHTF NOFA24.98%City of Poway5.44%General Partner90.00%Limited Partner10.00%23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 2043204420452046204720482049205020512052205320542055205620572058205920602061582,576 597,140 612,069 627,370 643,054 659,131 675,609 692,499 709,812 727,557 745,746 764,390 783,499 803,087 823,164 843,743 864,837 886,458 908,619 283,538 290,626 297,892 305,339 312,973 320,797 328,817 337,037 345,463 354,100 362,952 372,026 381,327 390,860 400,631 410,647 420,913 431,436 442,222 894,806 917,176 940,105 963,608 987,698 1,012,391 1,037,700 1,063,643 1,090,234 1,117,490 1,145,427 1,174,063 1,203,414 1,233,500 1,264,337 1,295,946 1,328,344 1,361,553 1,395,592 7,528 7,716 7,909 8,107 8,309 8,517 8,730 8,948 9,172 9,401 9,636 9,877 10,124 10,377 10,637 10,903 11,175 11,454 11,741 (29,129)(29,857)(30,603)(31,369)(32,153)(32,957)(33,780)(34,625)(35,491)(36,378)(37,287)(38,219)(39,175)(40,154)(41,158)(42,187)(43,242)(44,323)(45,431)(44,740)(45,859)(47,005)(48,180)(49,385)(50,620)(51,885)(53,182)(54,512)(55,874)(57,271)(58,703)(60,171)(61,675)(63,217)(64,797)(66,417)(68,078)(69,780)(14,553)(14,917)(15,290)(15,672)(16,064)(16,466)(16,877)(17,299)(17,732)(18,175)(18,629)(19,095)(19,573)(20,062)(20,563)(21,077)(21,604)(22,145)(22,698)1,680,047 1,722,048 1,765,100 1,809,228 1,854,459 1,900,821 1,948,341 1,997,050 2,046,977 2,098,152 2,150,606 2,204,371 2,259,480 2,315,967 2,373,867 2,433,214 2,494,044 2,556,395 2,620,305 1,113,960 1,152,948 1,193,302 1,235,067 1,278,295 1,323,035 1,369,341 1,417,268 1,466,872 1,518,213 1,571,350 1,626,348 1,683,270 1,742,184 1,803,161 1,866,271 1,931,591 1,999,197 2,069,168 3,942 4,021 4,102 4,184 4,267 4,353 4,440 4,528 4,619 4,711 4,806 4,902 5,000 5,100 5,202 5,306 5,412 5,520 5,631 149,805 152,802 155,858 158,975 162,154 165,397 168,705 172,079 175,521 179,031 182,612 186,264 189,990 193,789 197,665 201,618 205,651 209,764 213,959 4,979 5,029 5,079 5,130 5,181 5,233 5,285 5,338 5,391 5,445 5,500 5,555 5,610 5,666 5,723 5,780 5,838 5,896 5,955 407,360 407,248 406,760 405,873 404,562 402,803 400,570 397,837 394,573 390,751 386,338 381,303 375,611 369,228 362,116 354,238 345,552 336,018 325,592 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 387,110 386,998 386,510 385,623 384,312 382,553 380,320 377,587 374,323 370,501 366,088 361,053 355,361 348,978 341,866 333,988 325,302 315,768 305,342 0000000000000000000000000000000000000000000000000000000000000000000000000000387,110 386,998 386,510 385,623 384,312 382,553 380,320 377,587 374,323 370,501 366,088 361,053 355,361 348,978 341,866 333,988 325,302 315,768 305,342 #DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!#DIV/0!0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 75,794 75,772 75,676 75,503 75,246 74,902 74,464 73,929 73,290 72,542 71,678 70,692 69,578 68,328 66,935 65,393 63,692 61,826 59,784 96,707 96,679 96,557 96,336 96,008 95,569 95,011 94,328 93,513 92,558 91,456 90,198 88,776 87,181 85,405 83,436 81,267 78,885 76,280 21,054 21,048 21,021 20,973 20,902 20,806 20,685 20,536 20,358 20,151 19,911 19,637 19,327 18,980 18,593 18,165 17,692 17,174 16,607 174,200 174,149 173,930 173,530 172,940 172,149 171,144 169,914 168,445 166,725 164,740 162,474 159,912 157,040 153,840 150,294 146,386 142,096 137,404 19,356 19,350 19,326 19,281 19,216 19,128 19,016 18,879 18,716 18,525 18,304 18,053 17,768 17,449 17,093 16,699 16,265 15,788 15,267 30 of 119April 2, 2019, Item # 4.1 Villa de Vida - Poway55-Year Cash Flow (True Debt)ASSUMPTIONS:Perm Loan - % Debt Svc Yr 0 Rent Increase:2.50%Perm Loan - % Debt Svc Yr 1 Expenses Increase:3.50%Perm Loan - % Debt Svc Yr 2 Reserve Increase:0.00%Percent Lease-up Yr 1 20182019GROSS POTENTIAL INCOME - SPECIAL NEEDSGROSS POTENTIAL INCOME - SPECIAL NEEDS (NON-TCAC)Section 8 Premium Misc. IncomeVacancy Loss - Special Needs5.0%Vacancy Loss - Section 8 Premium5.0%Vacancy Loss - Misc & non-SN5.0%GROSS EFFECTIVE INCOME TOTAL OPERATING EXPENSES REAL ESTATE TAXES2.00%SUPPORTIVE SERVICES EXPENSES2.00%Annual Monitoring Fee (SD HCD)1.00%NET OPERATING INCOMEREPLACEMENT RESERVENET INCOME AVAILABLE FOR DEBT SERVICE CCRC Permanent Loan Debt Service Principal Interest5.190%TOTAL DEBT SERVICENET CASH FLOWDebt Service Coverage RatioDISTRIBUTION OF CASH FLOWLP/PM fees limited by City of Poway as belowLP Investor Services Fee - Current3%7,500 LP Investor Services Fee - DeferredDeferred Developer Fee600,000 Partnership Management Fee3%12,500 Partnership Management Fee - DeferredCity Land Loan19.58%SD County IHTF NOFA24.98%City of Poway5.44%General Partner90.00%Limited Partner10.00%42 43 44 45 46 47 48 49 50 51 52 53 54 55 20622063206420652066206720682069207020712072207320742075931,335 954,618 978,483 1,002,946 1,028,019 1,053,720 1,080,063 1,107,064 1,134,741 1,163,109 1,192,187 1,221,992 1,252,542 1,283,855 453,278 464,609 476,225 488,130 500,334 512,842 525,663 538,805 552,275 566,081 580,234 594,739 609,608 624,848 1,430,482 1,466,244 1,502,900 1,540,472 1,578,984 1,618,459 1,658,920 1,700,393 1,742,903 1,786,475 1,831,137 1,876,916 1,923,839 1,971,935 12,034 12,335 12,644 12,960 13,284 13,616 13,956 14,305 14,663 15,029 15,405 15,790 16,185 16,590 (46,567)(47,731)(48,924)(50,147)(51,401)(52,686)(54,003)(55,353)(56,737)(58,155)(59,609)(61,100)(62,627)(64,193)(71,524)(73,312)(75,145)(77,024)(78,949)(80,923)(82,946)(85,020)(87,145)(89,324)(91,557)(93,846)(96,192)(98,597)(23,266)(23,847)(24,443)(25,054)(25,681)(26,323)(26,981)(27,655)(28,347)(29,056)(29,782)(30,526)(31,290)(32,072)2,685,813 2,752,958 2,821,782 2,892,326 2,964,634 3,038,750 3,114,719 3,192,586 3,272,401 3,354,211 3,438,066 3,524,017 3,612,117 3,702,420 2,141,589 2,216,545 2,294,124 2,374,418 2,457,523 2,543,536 2,632,560 2,724,700 2,820,064 2,918,766 3,020,923 3,126,656 3,236,088 3,349,352 5,743 5,858 5,975 6,095 6,217 6,341 6,468 6,597 6,729 6,864 7,001 7,141 7,284 7,429 218,238 222,603 227,055 231,596 236,228 240,953 245,772 250,687 255,701 260,815 266,031 271,352 276,779 282,314 6,015 6,075 6,136 6,197 6,259 6,322 6,385 6,449 6,513 6,579 6,644 6,711 6,778 6,846 314,227 301,877 288,492 274,020 258,408 241,598 223,534 204,154 183,394 161,187 137,466 112,158 85,188 56,479 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 293,977 281,627 268,242 253,770 238,158 221,348 203,284 183,904 163,144 140,937 117,216 91,908 64,938 36,229 293,977 281,627 268,242 253,770 238,158 221,348 203,284 183,904 163,144 140,937 117,216 91,908 64,938 36,229 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 57,559 55,141 52,520 49,687 46,630 43,339 39,802 36,007 31,943 27,595 22,950 17,995 12,715 7,093 73,441 70,356 67,012 63,396 59,496 55,297 50,784 45,943 40,756 35,209 29,283 22,960 16,223 9,051 15,989 15,317 14,589 13,802 12,953 12,039 11,056 10,002 8,873 7,665 6,375 4,999 3,532 1,970 132,290 126,732 120,709 114,196 107,171 99,607 91,478 82,757 73,415 63,422 52,747 41,359 29,222 16,303 14,699 14,081 13,412 12,688 11,908 11,067 10,164 9,195 8,157 7,047 5,861 4,595 3,247 1,811 31 of 119April 2, 2019, Item # 4.1 C-1 1552\12\2547457.7 ATTACHMENT C FORM OF AUTHORITY PROMISSORY NOTE The attached Form of Promissory Note hereby supersedes the Promissory Note attached as Exhibit F of the Original DDA. 22 of 119 April 2, 2019, Item # 4.132 of 119 April 2, 2019, Item # 4.1 1552\12\1949060.8 1 PROMISSORY NOTE (Villa de Vida) $3,450,000 Poway, California April __, 2019 FOR VALUE RECEIVED, VILLA DE VIDA POWAY, L.P., a California limited partnership ("Borrower"), promises to pay to THE POWAY HOUSING AUTHORITY, a public body, corporate and politic ("Holder") the principal sum of Three Million Four Hundred Fifty Thousand Dollars ($3,450,000) or so much thereof as is disbursed pursuant to the DDLA (as defined in Section 1 below). All capitalized terms used but not defined in this Note have the meanings set forth in the DDLA. 1. Borrower's Obligation. This Note evidences the Borrower's obligation to pay the Holder the principal amount of Three Million Four Hundred Fifty Thousand Dollars ($3,450,000) for the funds loaned to Borrower by Holder (the "Loan"). The Borrower intends to use Two Million Seven Hundred Thousand Dollars ($2,700,000) of the Loan funds to finance land acquisition costs for the Development and Seven Hundred Fifty Thousand Dollars ($750,000) of the Loan funds to finance related construction costs of the Development, pursuant to that certain Disposition, Development and Loan Agreement dated as of October 4, 2016, and recorded in the Official Records of San Diego County, California (the "Official Records") on April 10, 2017, as Document No. 2017-016002, as amended by that certain First Amendment to the Land Disposition, Development and Loan Agreement dated as of June 20, 2017, and recorded in the Official Records on July 10, 2017, as Document No. 2017-03098, as further amended by that certain Second Amendment to the Land Disposition, Development and Loan Agreement dated as of February 6, 2018, and recorded in the Official Records on March 22, 2018, as Document No. 2018-0113457, as further amended by that certain Third Amendment to the Land Disposition, Development and Loan Agreement dated as of April 2, 2019, as such may be amended from time to time, by and between Borrower and Holder (collectively, the "DDLA "). 2. Interest. The Loan will bear simple interest at three percent (3%) per annum; provided, however, in the event of an uncured Developer Event of Default under the Authority Documents and the failure of the Borrower to cure the same within the time specified in the Authority Documents, interest shall accrue following the Developer Event of Default at the default rate of the lesser of ten percent (10%), compounded annually, or the highest rate permitted by law. 3. Term and Repayment Requirements. Payments due under this Note are due in accordance with this Note and as set forth in Section 4.5 of the DDLA. In any event, the unpaid principal balance is due and payable not later than the expiration of the Term of the DDLA. Repayment of this Note shall be non-recourse to the Borrower pursuant to Section 4.10 of the DDLA 4. No Assumption. This Note is not assumable by the successors and assigns of Borrower without the prior written consent of the Holder except as provided in the DDLA. 33 of 119 April 2, 2019, Item # 4.1 1552\12\1949060.8 2 5. Security. This Note is secured by the Assignment of Collateral Documents, dated concurrently with the DDLA (the "Assignment") and the Loan Deed of Trust executed concurrently herewith. 6. Terms of Payment. (a) Borrower shall make all payments due under this Note in currency of the United States of America to Holder at the Poway Housing Authority, 13325 Civic Center Drive, Poway, CA 92064, Attention: Executive Director, or such other place as Holder may from time to time designate. (b) All payments on this Note are without expense to Holder. Borrower shall pay all costs and expenses, including reconveyance fees and reasonable attorney's fees of Holder, incurred in connection with the payment of this Note and the release of any security hereof. (c) The obligations of Borrower under this Note are absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever. 7. Default. (a) Upon the occurrence of an uncured Developer Event of Default, the entire unpaid principal balance, and together with all other sums then payable under this Note, will, at the option of the Holder, become immediately due and payable upon written notice by the Holder to the Borrower without further demand. (b) The Holder's failure to exercise the remedy set forth in subsection 7(a) above or any other remedy provided by law upon the occurrence of an uncured Developer Event of Default will not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other uncured Developer Event of Default. The acceptance by Holder hereof of any payment which is less than the total of all amounts due and payable at the time of such payment will not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of the Holder, except as and to the extent otherwise provided by law. 8. Waivers. (a) Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of non-payment of this Note. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower. (b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note 34 of 119 April 2, 2019, Item # 4.1 1552\12\1949060.8 3 must not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part. 9. Miscellaneous Provisions. (a) All notices to Holder or Borrower are to be given in the manner and at the addresses set forth in the DDLA, or to such addresses as Holder or Borrower may therein designate. (b) Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement. (c) This Note is governed by the laws of the State of California. (d) The times for the performance of any obligations hereunder are to be strictly construed, time being of the essence. (e) The Authority Documents, of which this Note is a part, contain the entire agreement between the parties as to the Loan. This Note may not be modified except upon the written consent of the parties. This Note replaces, supersedes, and makes null and void any previously executed promissory note in favor of the Lender. 35 of 119 April 2, 2019, Item # 4.1 1552\12\1949060.8 4 IN WITNESS WHEREOF, this Promissory Note is executed by Borrower as of the day and year written below and is effective as of the date first written above. DEVELOPER: VILLA DE VIDA POWAY, L.P., a California limited partnership By: Villa de Vida GP, LLC, a California limited liability company, its Managing General Partner By: Mercy Housing Calwest, a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ By: VDV POWAY LLC, a California limited liability company, its Administrative General Partner By: Villa de Vida, Inc., a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ 36 of 119 April 2, 2019, Item # 4.1 D-1 1552\12\2547457.7 ATTACHMENT D FORM OF AUTHORITY DEED OF TRUST The attached Form of Authority Deed of Trust hereby supersedes the Authority Deed of Trust attached as Exhibit G of the Original DDA. 23 of 119 April 2, 2019, Item # 4.137 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Poway Housing Authority 13325 Civic Center Drive Poway, CA 92064 Attention: Attention: Executive Director NO FEE FOR RECORDING PURSUANT TO GOVERNMENT CODE SECTIONS 6103 AND 27383 APN: 317-152-14-00 (Space above this line for Recorder's Use) DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY AGREEMENT, AND FIXTURE FILING THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY AGREEMENT, AND FIXTURE FILING ("Deed of Trust") is made as of April __, 2019, by and among Villa de Vida Poway, L.P., a California limited partnership ("Trustor"), Commonwealth Land Title Company, a California corporation ("Trustee"), and the Poway Housing Authority, a public body, corporate and politic ("Beneficiary"). FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's fee interest in the property located in the City of Poway, County of San Diego, State of California, that is described in the attached Exhibit A, incorporated herein by this reference (the "Property"). TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents; TOGETHER WITH all easements, rights-of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto; TOGETHER WITH any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property; 38 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 2 TOGETHER WITH all building materials and equipment now or hereafter delivered to said Property and intended to be installed therein; TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property; TOGETHER WITH all estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or will be, attached to said building or buildings in any manner; and TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment, work in process and other personal property to be incorporated into the Property; all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other personal property now or hereafter appropriated for use on the Property, whether stored on the Property or elsewhere, and used or to be used in connection with the Property; all rents, issues and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, trade names, trademarks and service marks arising from or related to the Property and any business conducted thereon by Trustor; all replacements, additions, accessions and proceeds; and all books, records and files relating to any of the foregoing. All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever. 39 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 3 FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS (collectively, the "Secured Obligations"): A. Payment of just indebtednesses of Trustor to Beneficiary of all sums at any time owing under, or in connection with, the Authority Promissory Note (defined in Article 1 below) until paid or cancelled and any other amounts owing under the Authority Documents. Said principal and other payments are due and payable as provided in the Authority Promissory Note. The Authority Promissory Note and all its terms are incorporated herein by reference, and this conveyance secures any and all extensions thereof, however evidenced; B. Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein; C. Performance of every obligation, covenant or agreement of Trustor contained herein and in the Authority Documents (defined in Article 1 below); and D. All modifications, extensions and renewals of any of the Secured Obligations (including without limitation: (1) modifications, extensions or renewals at a different rate of interest; or (2) deferrals or accelerations of the required principal payment dates or interest payment dates or both, in whole or in part), however evidenced, whether or not any such modification, extension or renewal is evidenced by a new or additional promissory note or notes (defined in Article 1 below). AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: ARTICLE 1: DEFINITIONS Section 1.1 Definitions. In addition to the terms defined elsewhere in this Deed of Trust, the following terms have the following meanings in this Deed of Trust: (a) "Authority Documents" means this Deed of Trust, the Authority Promissory Note, the Authority Regulatory Agreement, the Disposition and Loan Agreement, and any other debt, loan or security instruments between Trustor and the Beneficiary relating to the Property. (b) "Authority Loan" means the loan made by the Beneficiary to the Trustor in the amount of up to Three Million Four Hundred Fifty Thousand Dollars ($3,450,000). (c) "Authority Promissory Note" means that certain promissory note in the amount of Three Million Four Hundred Fifty Thousand Dollars ($3,450,000) dated as of April 2, 2019, herewith executed by the Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust. (A copy of the Authority Promissory Note is on file with the 40 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 4 Beneficiary and terms and provisions of the Authority Promissory Note are incorporated herein by reference.) (d) "Authority Regulatory Agreement" means that certain 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 securing the Authority's interest in the Authority Loan. (e) "Disposition and Loan Agreement" means that certain Disposition, Development and Loan Agreement between Trustor and Beneficiary, as of October 4, 2016, and recorded in the Official Records of San Diego County, California (the "Official Records") on April 10, 2017, as Document No. 2017-016002, as amended by that certain First Amendment to the Land Disposition, Development and Loan Agreement dated as of June 20, 2017, and recorded in the Official Records on July 10, 2017, as Document No. 2017-03098, as further amended by that certain Second Amendment to the Land Disposition, Development and Loan Agreement dated as of February 6, 2018, and recorded in the Official Records on March 22, 2018, as Document No. 2018-0113457, as further amended by that certain Third Amendment to the Land Disposition, Development and Loan Agreement dated as of April 2, 2019, as such may be amended from time to time, providing for the Beneficiary to make the Authority Loan. (f) "Principal" means the aggregate of the amounts required to be paid under the Authority Promissory Note. ARTICLE 2: MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY Section 2.1 Maintenance and Modification of the Property by Trustor. (a) The Trustor agrees that at all times prior to full payment of the sum owed and performance of the Secured Obligations under the Authority Promissory Note, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. The Beneficiary has no responsibility in any of these matters or for the making of improvements or additions to the Security. (b) Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security or any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file or record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the 41 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 5 Security or the Authority Documents; provided, however, that Beneficiary exercises its rights as agent of Trustor only in the event that Trustor fails to take, or fails to diligently continue to take, those actions as hereinbefore provided. (c) Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or claims as Beneficiary specifies upon laborers, materialmen, subcontractors or other persons who have furnished or claim to have furnished labor, services or materials in connection with the Security. Nothing herein contained requires Trustor to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of the County of San Diego, a surety bond in an amount equal to the amount of such claim item to protect against a claim of lien, or to provide other form of security acceptable to the Beneficiary at the Beneficiary's sole and absolute discretion. Section 2.2 Granting of Easements. Trustor may not grant easements, licenses, rights- of-way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities, including, without limitation, water, gas, electricity, sewer, telephone, or those required by law and as approved, in writing, by Beneficiary. Section 2.3 Assignment of Rents. (a) Subject to the rights of any approved senior mortgage lender, as part of the consideration for the indebtedness evidenced by the Authority Promissory Note, Trustor hereby absolutely and unconditionally assigns and transfers to Beneficiary all the rents and revenues of the Property including those now due, past due, or to become due by virtue of any lease or other agreement for the occupancy or use of all or any part of the Property, regardless of to whom the rents and revenues of the Property are payable. Trustor hereby authorizes Beneficiary or Beneficiary's agents to collect the aforesaid rents and revenues and hereby directs each tenant of the Property to pay such rents to Beneficiary or Beneficiary's agents; provided, however, that prior to written notice given by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Authority Documents, Trustor shall collect and receive all rents and revenues of the Property as trustee for the benefit of Beneficiary and Trustor to apply the rents and revenues so collected to the Secured Obligations with the balance, so long as no such breach has occurred, to the account of Trustor, it being intended by Trustor and Beneficiary that this assignment of rents constitutes an absolute assignment and not an assignment for additional security only. Upon delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Authority Documents, and without the necessity of Beneficiary entering upon and taking and maintaining full control of the Property in person, by agent or by a court-appointed receiver, Beneficiary shall immediately be entitled to possession of all rents and revenues of the Property as specified in this Section as the same becomes due and payable, including but not limited to rents then due and unpaid, and all such rents will, immediately upon delivery of such notice, be held by Trustor as trustee for the benefit of Beneficiary only; provided, however, that the written notice by Beneficiary to Trustor of the breach by Trustor contains a statement that Beneficiary exercises its rights to such rents. Trustor agrees that commencing upon delivery of such written notice of Trustor's breach by Beneficiary to Trustor, each tenant of the Property shall make such rents payable to and pay such rents to 42 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 6 Beneficiary or Beneficiary's agents on Beneficiary's written demand to each tenant thereof, delivered to each tenant personally, by mail or by delivering such demand to each rental unit, without any liability on the part of said tenant to inquire further as to the existence of a default by Trustor. (b) Subject to the rights of any approved senior mortgage lender, the Trustor hereby covenants that Trustor has not executed any prior assignment of said rents, that Trustor has not performed, and will not perform, any acts or has not executed and will not execute, any instrument which would prevent Beneficiary from exercising its rights under this Section, and that at the time of execution of this Deed of Trust, there has been no anticipation or prepayment of any of the rents of the Property for more than two (2) months prior to the due dates of such rents. Trustor covenants that Trustor will not hereafter collect or accept payment of any rents of the Property more than two (2) months prior to the due dates of such rents. Trustor further covenants that Trustor will execute and deliver to Beneficiary such further assignments of rents and revenues of the Property as Beneficiary may from time to time request. (c) Upon Trustor's breach of any covenant or agreement of Trustor in the Authority Documents, after applicable notice and cure periods, Beneficiary may in person, by agent or by a court-appointed receiver, regardless of the adequacy of Beneficiary's security, enter upon and take and maintain full control of the Property in order to perform all acts necessary and appropriate for the operation and maintenance thereof including, but not limited to, the execution, cancellation or modification of leases, the collection of all rents and revenues of the Property, the making of repairs to the Property and the execution or termination of contracts providing for the management or maintenance of the Property, all on such terms as are deemed best to protect the security of this Deed of Trust. In the event Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to the appointment of such receiver. Beneficiary or the receiver will be entitled to receive a reasonable fee for so managing the Property. (d) All rents and revenues collected subsequent to delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Authority Documents after applicable notice and cure periods, are to be applied first to the costs, if any, of taking control of and managing the Property and collecting the rents, including, but not limited to, attorney's fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the Property, premiums on insurance policies, taxes, assessments and other charges on the Property, and the costs of discharging any obligation or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this Deed of Trust. Beneficiary or the receiver is to have access to the books and records used in the operation and maintenance of the Property and will be liable to account only for those rents actually received. Beneficiary is not liable to Trustor, anyone claiming under or through Trustor or anyone having an interest in the Property by reason of anything done or left undone by Beneficiary under this Section. (e) If the rents of the Property are not sufficient to meet the costs, if any, of taking control of and managing the Property and collecting the rents, any funds expended by Beneficiary for such purposes will become part of the Secured Obligations. Unless Beneficiary and Trustor agree in writing to other terms of payment, such amounts are payable by the Trustor 43 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 7 to the Beneficiary, upon notice from Beneficiary to Trustor requesting payment thereof and will bear interest from the date of disbursement at the rate stated in Section 3.3. (f) If the Beneficiary or the receiver enters upon and takes and maintains control of the Property, any application of rents as provided herein will not cure or waive any default hereunder or invalidate any other right or remedy of Beneficiary under applicable law or provided herein. This assignment of rents of the Property will terminate at such time as this Deed of Trust ceases to the Secured Obligations. ARTICLE 3: TAXES AND INSURANCE; ADVANCES Section 3.1 Taxes, Other Governmental Charges and Utility Charges. (a) Trustor shall pay, or cause to be paid prior to the date of delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company that are or may become a lien affecting the Security or any part thereof; provided, however, that Trustor is not required to pay and discharge any such tax, assessment, charge or levy so long as: (1) the legality thereof is promptly and actively contested in good faith and by appropriate proceedings; and (2) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section. With respect to taxes, special assessments or other similar governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien thereof on any part of the Security; provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments. Except as provided in clause (2) of the first sentence of this paragraph, the provisions of this Section shall not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies. (b) In the event that Trustor fails to pay any of the items required by this Section to be paid by Trustor, Beneficiary may (but is under no obligation to) pay the same, after the Beneficiary has notified the Trustor in writing of such failure to pay and the Trustor fails to fully pay such items within seven (7) business days after receipt of such notice. Any amount so advanced therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, will become part of the Secured Obligations secured hereby, and Trustor agrees to pay all such amounts. Section 3.2 Provisions Respecting Insurance. (a) Trustor agrees to provide insurance conforming in all respects to that required under the Authority Documents at all times and until all amounts secured by this Deed of Trust have been paid and all Secured Obligations hereunder have been fulfilled, and this Deed of Trust has been reconveyed. (b) All such insurance policies and coverages are to be maintained at Trustor's sole cost and expense. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, are to be delivered to the Beneficiary upon demand therefor at any time prior to the Trustor's satisfaction of the Secured Obligations. 44 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 8 (c) The Trustor is aware that California Civil Code Section 2955.5(a) provides as follows: "No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property." Section 3.3 Advances. In the event the Trustor fails to maintain the full insurance coverage required by this Deed of Trust or fails to keep the Security in accordance with the Authority Documents, the Beneficiary, after at least seven (7) days ' prior written notice to Trustor, may (but is under no obligation to): (a) take out the required policies of insurance and pay the premiums on the same; and (b) make any repairs or replacements that are necessary and provide for payment thereof. All amounts so advanced by the Beneficiary will become part of the Secured Obligations (together with interest as set forth below) and will be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, will bear interest from the date of the advance at the lesser of ten percent (10%) per annum or the maximum rate permitted by law. ARTICLE 4: DAMAGE, DESTRUCTION OR CONDEMNATION Section 4.1 Awards and Damages. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of: (a) a taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain; (b) any damage to or destruction of the Property or in any part thereof by insured casualty; and (c) any other injury or damage to all or any part of the Property ( collectively, the "Funds"), are hereby assigned to and are to be paid to the Beneficiary by a check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any Funds and is authorized to apply them in whole or in part to any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary determines at its sole option. The Beneficiary is entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for its disposition. Application of all or any part of the Funds collected and received by the Beneficiary or the release thereof will not cure or waive any default under this Deed of Trust. The rights of the Beneficiary under this Section are subject to the rights of any senior mortgage lender. The Beneficiary shall release the Funds to Trustor to be used to reconstruct the improvements on the Property provided that Beneficiary reasonably determines that Trustor (taking into account the Funds) has sufficient funds to rebuild the improvements in substantially the form that existed prior to the casualty or condemnation. 45 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 9 ARTICLE 5: AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST Section 5.1 Other Agreements Affecting Property. The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Authority Documents and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof. Section 5.2 Agreement to Pay Attorneys' Fees and Expenses. In the event of any Event of Default hereunder, and if the Beneficiary employs attorneys or incurs other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary (including, but not limited to, other professional services fees and costs). Any such amounts paid by the Beneficiary will be added to the Secured Obligations, and will bear interest from the date such expenses are incurred at the lesser of ten percent (10%) per annum or the maximum rate permitted by law. Section 5.3 Payment of the Principal. The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Authority Promissory Note in the amounts and by the times set out therein. Section 5.4 Personal Property. To the maximum extent permitted by law, the personal property subject to this Deed of Trust is deemed to be fixtures and part of the real property and this Deed of Trust constitutes a fixtures filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust constitutes a security agreement under the California Commercial Code. The Trustor hereby grants the Beneficiary a security interest in such items. Section 5.5 Financing Statement. The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary to maintain such valid perfected security interest in the Security in order to secure the payment of the Authority Promissory Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument. Trustor shall pay all costs of filing such financing statements and any extensions, renewals, amendments, and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements, and releases thereof, as the Beneficiary may reasonably require. Without the prior written consent of the Beneficiary, Trustor shall not create or suffer to be created pursuant to the California Commercial Code any other security interest in the Security, including replacements and additions thereto. 46 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 10 Section 5.6 Operation of the Security. The Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in full compliance with the Authority Documents. Section 5.7 Inspection of the Security. At any and all reasonable times upon forty- eight (48) hours' prior written notice, the Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, may inspect the Security without payment of charges or fees. Section 5.8 Nondiscrimination. (a) In satisfaction of California Health and Safety Code Sections 33345 and 33436, the Trustor herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there will 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. (b) Notwithstanding paragraph (a), with respect to familial status, paragraph (a) 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 (a) 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 (a). ARTICLE 6: HAZARDOUS MATERIALS (a) Trustor shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under, or about the Property including, but not limited to, soil and ground water conditions. Trustor shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as may be 47 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 11 customarily used in construction and operation of the improvements on the Property or as may be kept and used in and about residential development of this type. (b) Trustor shall promptly advise Beneficiary in writing if at any time it receives written notice of: (1) any and all enforcement, cleanup, removal or other governmental or regulatory actions related to the Property instituted, completed or threatened against Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials Law ("Hazardous Materials Law"); (2) all claims made or threatened by any third party against Trustor or the Property relating to any loss, damage, cost, expense or liability, contribution, cost recovery compensation, loss or injury directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on or under the Property (the matters set forth in clauses (1) and (2) above are hereinafter referred to as "Hazardous Materials Claims"); and (3) Trustor's 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 classified as "border-zone property" under the provision of California Health and Safety Code, Sections 25220 et seq., or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. (c) Beneficiary has 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 attorneys' fees in connection therewith paid by Trustor. Trustor shall indemnify and hold harmless Beneficiary and its council members, supervisors, directors, officers, employees, and agents (collectively, "Indemnified Parties") from claims arising from Trustor's breach of its obligations under the first section of this Article 6, including without limitation claims for: (1) all foreseeable consequential damages; (2) the costs of any required, reasonable and necessary repair, cleanup or detoxification of the Property and the preparation and implementation of reasonable and necessary closure, remedial or other required plans all to the extent required by an environmental regulatory agency asserting jurisdiction under Hazardous Materials Laws; and (3) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (1) and (2), including but not limited to reasonable attorneys' fees and other professional services fees and costs. This indemnification applies whether or not any government agency has issued a cleanup order. Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (i) losses attributable to diminution in the value of the Property; (ii) loss or restriction of use of rentable space on the Property; (iii) adverse effect on the marketing of any rental space on the Property; and (iv) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Property and surrounding properties). 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. (d) Without Beneficiary's prior written consent, which shall not be unreasonably withheld, Trustor may not take any remedial action in response to the presence of any Hazardous Materials on, under, or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, 48 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 12 which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgment, impairs the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent shall not be necessary in the event that the presence of Hazardous Materials on or under the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably practicable to obtain Beneficiary's consent before taking such action, provided that in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if either: (1) a particular remedial action is ordered by a court of competent jurisdiction; (2) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (3) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (4) the action has been agreed to by Beneficiary. (e) The Trustor hereby acknowledges and agrees that: (1) this Article is intended as the Beneficiary's written request for information (and the Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5; and (2) each representation and warranty in this Deed of Trust or any of the other Authority Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. (f) In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the Beneficiary's or the Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to: (1) waive its lien on such environmentally impaired or affected portion of the Property; and (2) exercise: (i) the rights and remedies of an unsecured creditor, including reduction of its claim against the Trustor to judgment; and (ii) any other rights and remedies permitted by law. For purposes of determining the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Trustor will be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Trustor knew or in the exercise of reasonable diligence should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) reasonable attorneys' fees, incurred by the Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the default rate specified in the Disposition and Loan Agreement until paid, will be added to the indebtedness secured by this 49 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 13 Deed of Trust and will be due and payable to the Beneficiary upon its demand made at any time following the conclusion of such action. ARTICLE 7: EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default. The following constitute events of default following the expiration of any applicable notice and cure periods (each an "Event of Default"): (a) failure to make any payment to be paid by Trustor under the Authority Documents; (b) failure to observe or perform any of Trustor's other covenants, agreements or obligations under the Authority Documents, including, without limitation, the provisions concerning discrimination, subject to applicable notice and cure periods, if any, included in the Authority Documents; (c) failure to make any payment, observe or perform any of Trustor's other covenants, agreements, or obligations under any Secured Obligations; and failure to make any payments or observe or perform any of Trustor's; or (d) failure to make any payments or observe or perform any of Trustor's other covenants, agreements or obligations under any other debt instrument or regulatory agreement secured by the Property, which default is not cured within the time and in the manner provided therein. Section 7.2 Acceleration of Maturity. If an Event of Default has occurred and is continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default and all unpaid Secured Obligations are immediately due and payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified in the Authority Documents), and no omission on the part of the Beneficiary to exercise such option when entitled to do so may be construed as a waiver of such right. Section 7.3 The Beneficiary's Right to Enter and Take Possession. If an Event of Default has occurred and is continuing, the Beneficiary may: (a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Property and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts that it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any Event of Default or Notice of Sale (as defined in Section 7.3(c) below) hereunder or invalidate any act done in response to such Event of Default or pursuant to such Notice of Sale and, notwithstanding the continuance in possession of the Security, Beneficiary will be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise the power of sale; (b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; 50 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 14 (c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor's interest in the Security to be sold ("Notice of Sale"), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of the County of San Diego, California; or (d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing the Secured Obligations. Section 7.4 Foreclosure By Power of Sale. (a) Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Beneficiary shall deliver to the Trustee the Notice of Sale and shall deposit with Trustee the Authority Promissory Note which is secured hereby (and the deposit of which will be deemed to constitute evidence that the unpaid Principal amount of the Secured Obligations are immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. (b) Upon receipt of such Notice of Sale from the Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Sale as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Sale having been given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate lots or parcels or items as Trustee deems expedient and in such order as it may determine unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts will be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale. (c) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (1) the unpaid Principal amount of the Authority Promissory Note; (2) all other Secured Obligations owed to Beneficiary under the Authority Documents; (3) all other sums then secured hereby; and (4) the remainder, if any, to Trustor. (d) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale. Section 7.5 Receiver. If an Event of Default occurs and is continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard to the then value of the Security or the interest of Trustor therein, may apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), 51 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 15 and Trustor hereby irrevocably consents to such appointment and waives further notice of any application thereof. Any such receiver or receivers will have all the usual powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and will continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated. Section 7.6 Remedies Cumulative. No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy will be cumulative and concurrent and will be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. Section 7.7 No Waiver. (a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default will exhaust or impair any such right, power or remedy, and may not be construed to be a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time to time and as often as may be deemed expeditious by the Beneficiary. Beneficiary's express or implied consent to breach, or waiver of, any obligation of the Trustor hereunder will not be deemed or construed to be a consent to any subsequent breach, or further waiver, of such obligation or of any other obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, will not constitute a waiver by the Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by the Trustor. (b) If the Beneficiary: (1) grants forbearance or an extension of time for the payment or performance of any Secured Obligations; (2) takes other or additional security or the payment of any sums secured hereby; (3) waives or does not exercise any right granted in the Authority Documents; (4) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Authority Documents; (5) consents to the granting of any easement or other right affecting the Security; or (6) makes or consents to any agreement subordinating the lien hereof, any such act or omission will not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer, endorser, surety or guarantor (unless expressly released); nor will any such act or omission preclude the Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary will the lien of this Deed of Trust be altered thereby. Section 7.8 Suits to Protect the Security. The Beneficiary has the power to: (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of Trust; (b) preserve or protect its interest (as described in this Deed of Trust) in the Security; and (c) restrain the enforcement of or compliance with any legislation or other 52 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 16 governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary. Section 7.9 Trustee May File Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, the Trustee and/or the Beneficiary, to the extent permitted by law, will be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount that becomes due and payable by the Trustor hereunder after such date. Section 7.10 Waiver. The Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to collect any Secured Obligations, including but not limited to sums owing under the Authority Promissory Note, or in proceedings against the Security, in connection with the delivery, acceptance, performance, default, endorsement or guaranty of this Deed of Trust. Section 7.11 Investor Rights. If a default or an Event of Default shall have occurred, whenever the Authority delivers any notice or demand to the Trustor, the Authority shall at the same time deliver to the Approved Lenders and the Investor, a copy of such notice or demand. The Investor shall (insofar as the rights of the Authority are concerned) have the right, but not the obligation, at its option to cure such default or Event of Default as follows: (a) forty-five (45) days after the Investor's receipt of such notice to cure any default under the Loan Documents; and (b) If a default is incapable of being cured within the forty-five (45) day period set forth in item (a) above, so long as such cure is commenced within the forty-five (45) days and is being diligently pursued to completion, the Authority will give the Investor additional time to cure such default, but in no event later than one hundred twenty (120) days, and Beneficiary agrees to accept cures thereunder by Investor. ARTICLE 8: MISCELLANEOUS Section 8.1 Amendments. This Deed of Trust cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor. Section 8.2 Reconveyance by Trustee. Upon written request of Beneficiary stating that all Secured Obligations have been paid or forgiven, and all obligations under the Authority Documents have been performed, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall fully reconvey the Security to Trustor, or to the person or persons legally entitled thereto. Section 8.3 Notices. 53 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 17 (a) If at any time after the execution of this Deed of Trust it becomes necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication must be in writing and is to be served personally, by reputable overnight delivery service (which provides a delivery receipt) or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and, (1) if intended for Beneficiary is to be addressed to: Authority: Poway Housing Authority 13325 Civic Center Drive Poway, CA 92064 Attention: Executive Director and (2) if intended for Trustor shall be addressed to: Villa de Vida, L.P. 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 with copies to: Wells Fargo Affordable Housing Community Development Corporation MAC D1053-170 301 South College Street Charlotte, NC 28288 Attention: Director of Tax Credit Asset Management Any notice, demand or communication will be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. A copy of any notice sent to the Beneficiary must also be sent to the Office of the City Clerk at the above address. Either party may change its address at any time by giving written notice of such change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective. Trustor's limited partner shall have all the notice and cure rights set forth in the Disposition and Loan Agreement. Section 8.4 Successors and Joint Trustors. Where an obligation created herein is binding upon Trustor, the obligation also applies to and binds any transferee or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the Trustor and a transferee, such obligation will be deemed to be a joint and several obligation of 54 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 18 the Trustor and such transferee. Where more than one entity or person is signing as Trustor, all obligations of Trustor will be deemed to be a joint and several obligation of each and every entity and person signing as Trustor. Section 8.5 Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust. Section 8.6 Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity will not affect the balance of the terms and provisions hereof, which terms and provisions will remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, will be considered to have been first paid or applied to the full payment of that portion of the debt that is not secured or partially secured by the lien of this Deed of Trust. Section 8.7 Governing Law. This Deed of Trust is to be governed by and construed in accordance with the laws of the State of California. Section 8.8 Gender and Number. In this Deed of Trust the singular includes the plural and the masculine includes the feminine and neuter and vice versa, if the context so requires. Section 8.9 Deed of Trust, Mortgage. Any reference in this Deed of Trust to a mortgage also refers to a deed of trust and any reference to a deed of trust also refers to a mortgage. Section 8.10 Actions. Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security. Section 8.11 Substitution of Trustee. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter will be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution is to be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, will be conclusive proof of proper appointment of the successor trustee. Section 8.12 Statute of Limitations. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law. Section 8.13 Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of a pending 55 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 19 sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee is to be a party unless brought by Trustee. Section 8.14 Tax Credit Provisions. (a) Notwithstanding anything to the contrary contained herein or in any documents secured by this Deed of Trust or contained in any subordination agreement, and to the extent applicable, the Beneficiary acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of foreclosure (collectively, "Foreclosure") with respect to the Security encumbered by this Deed of Trust, the following rule contained in 26 U.S.C. Section 42(h)(6)(E)(ii), as amended, applies: (b) For a period of three (3) years from the date of Foreclosure, with respect to any unit that had been regulated by the Regulatory Agreement with the California Tax Credit Allocation Committee: (a) none of the tenants occupying those units at the time of Foreclosure may be evicted or their tenancy terminated (other than for good cause); (b) nor may any rent be increased except as otherwise permitted under Section 42 of the Internal Revenue Code. [Signature Page Follows] 56 of 119 April 2, 2019, Item # 4.1 Deed of Trust Signature Page 1552\12\1949162.11 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written. TRUSTOR: VILLA DE VIDA POWAY, L.P., a California limited partnership By: Villa de Vida GP, LLC, a California limited liability company, its Managing General Partner By: Mercy Housing Calwest, a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ By: VDV POWAY LLC, a California limited liability company, its Administrative General Partner By: Villa de Vida, Inc., a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ 57 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 58 of 119 April 2, 2019, Item # 4.1 1552\12\1949162.11 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 59 of 119 April 2, 2019, Item # 4.1 A-1 1552\12\1949162.11 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY The land referred to is situated in the County of San Diego, City of Poway, State of California, and is described as follows: 60 of 119 April 2, 2019, Item # 4.1 E-1 1552\12\2547457.7 ATTACHMENT E DEVELOPMENT SCHEDULE The attached Development Schedule hereby supersedes the Development Schedule attached as Exhibit B of the Original DDA. This Development Schedule summarizes the schedule for various activities under the Disposition and Development Agreement to which this exhibit is attached. The 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. Obligation Section Schedule Community Outreach Meeting ERNA September 2016 Developer shall submit to the Authority Concept Drawings. 2.3(a)(1) Not later than November 1, 2016. (Deemed completed) Parties shall have negotiated mutually acceptable Tenant Selection Plan 2.13 Not later than sixty (60) days from the Effective Date (December 5, 2016) (Deemed completed) Developer shall submit to the Authority Schematic Design Drawings. 2.3(a)(2) Not later than February 15, 2017. (Deemed completed) Developer shall submit applications governmental approvals for the Improvements. 2.2(a) Not later than November 1, 2016 for all entitlement applications and no later than 120 days prior to the Close of Escrow for all building plan and site improvements. (Deemed completed) Developer shall submit to the Authority Final Construction Drawings. 2.3(a)(2) Prior to the Close of Escrow and in no event later than April 22, 2019. (Deemed completed) Developer shall submit a first round application for a Tax Credit Reservation. 2.5(b) February 28, 2018 or such other date set forth by TCAC for the first competitive application fund round. (Deemed completed) Developer shall submit three (3) proposals from prospective contractors. 2.9(a) Not later than March 1, 2018. (Deemed completed) Developer shall submit a timely and complete application for a County Loan which is administered through a Notice of Funding Availability process administered through the County of San 2.6(c) Not later than June 1, 2016. (Deemed completed) 24 of 119 April 2, 2019, Item # 4.161 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 2 Obligation Section Schedule Diego Department of Housing and Community Development. Developer shall submit a timely and 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. 2.6(d) Not later than October 31, 2016. (Deemed completed) Intentionally Deleted 2.6(b) Intentionally Deleted. Developer shall submit any updates to the Financing Proposal. 2.4(b) Promptly, as necessary to reflect material 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. (Note- Approved Financing Plan is appended to the Third Amendment to which this Schedule is attached.) Developer shall receive all necessary governmental approvals for the Improvements. 3.4 Prior to Closing for all building and infrastructure permits, but in no case later than May 1, 2019. (Deemed completed) Developer shall submit the proposed Construction Contracts for the Improvements for Authority approval. 2.9(a) Not later than thirty (30) days prior to the Close of Escrow. (Deemed completed) Authority shall promptly review and approve Construction Contract. 2.9(b) Within ten (10) days following the Authority's receipt of the complete Construction Contract. (Deemed completed) Developer will grant to the Authority, pursuant to the Assignment Agreement, a valid, second priority continuing security interest in Collateral Documents 4.11 On the Effective Date and as necessary upon Developer's execution of additional Collateral Documents. Close of Escrow (recording of the Memorandum of DDLA, the Authority Deed of Trust, the Authority Regulatory Agreement, and the Notice of Affordability Restrictions in the Official Records). 3.4 No later than 180 days following an award of 9% tax credits, but in no event later than April 22, 2019. (Note- Close of Escrow is expected on April 9, 2019) Developer shall furnish to the Authority evidence of the insurance coverage meeting the requirements of Section 6.10 2.11 On or before the Close of Escrow. Developer shall obtain one (1) labor and material bond and one (1) performance bond for construction of the Improvements meeting the requirements 2.10 On or before the Close of Escrow. 25 of 119 April 2, 2019, Item # 4.162 of 119 April 2, 2019, Item # 4.1 1552\12\2547457.7 3 Obligation Section Schedule 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 May 1, 2019. Developer shall submit to the Authority and updates to Resident Services Plan and Resident Services Budget 6.9 Not later than six (6) months after commencement of construction of Improvements. (Note- Initial Resident Services Plan and Resident Services Budget are appended to the Third Amendment to which this Schedule is attached.) Developer shall submit to the Authority an initial proposed Management Plan. 2.8(a) Not later than six (6) months after commencement of construction of Improvements. Authority shall approve or disapprove the Management Plan in writing. 2.8(b), 6.8 Within fifteen (15) calendar days following the 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 December 31, 2020. Developer shall provide to Authority a draft financial accounting of all sources and uses of funds for the Development 5.16 No later than ninety (90) days following completion of construction of the Development and issuance of the Certificate of Completion, expected to be approximately May 1, 2021. Developer shall submit to the Authority a copy of the Development's cost certification report prepared by the Developer's accountant No later than one hundred fifty (150) days following completion of construction, expected to be approximately June 1, 2021 26 of 119 April 2, 2019, Item # 4.163 of 119 April 2, 2019, Item # 4.1 F-1 1552\12\2547457.7 ATTACHMENT F FORM OF AUTHORITY REGULATORY AGREEMENT 27 of 119 April 2, 2019, Item # 4.164 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Poway Housing Authority 13325 Civic Center Drive Poway, CA 92064 Attention: Attention: Executive Director NO FEE FOR RECORDING PURSUANT TO GOVERNMENT CODE SECTIONS 6103 AND 27383 APN: 317-152-14-00 REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (Villa De Vida) This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") is made and entered into as of April __, 2019, by and between the Poway Housing Authority, a public body, corporate and politic (the "Authority") and Villa de Vida Poway, L.P. (the "Owner"). RECITALS A. These Recitals refer to and utilize certain capitalized terms which are defined in Article 1 of this Agreement. The Parties intend to refer to those definitions in connection with the use of capitalized terms in these Recitals. B. The Authority and the Owner executed that certain Disposition, Development and Loan Agreement, as of October 4, 2016, and recorded in the Official Records of San Diego County, California (the "Official Records") on April 10, 2017, as Document No. 2017-016002, as amended by that certain First Amendment to the Land Disposition, Development and Loan Agreement dated as of June 20, 2017, and recorded in the Official Records on July 10, 2017, as Document No. 2017-03098, as further amended by that certain Second Amendment to the Land Disposition, Development and Loan Agreement dated as of February 6, 2018, and recorded in the Official Records on March 22, 2018, as Document No. 2018-0113457, as further amended by that certain Third Amendment to the Land Disposition, Development and Loan Agreement dated as of April 2, 2019, as such may be amended from time to time (collectively, the "Disposition and Loan Agreement"), under which the Authority agreed to loan and the Owner agreed to borrow up to Three Million Four Hundred Fifty Thousand Dollars ($3,450,000) (the "Authority Loan"), which the Owner will use, together with funds obtained from other sources, for the acquisition, development and construction of approximately fifty-four (54) affordable units. C. The funds loaned to the Owner pursuant to the Disposition and Loan Agreement consist of Housing Fund Proceeds. Pursuant to Health and Safety Code Section 33334.3, the Authority must restrict developments assisted with Housing Fund Proceeds, so that the 65 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 2 Developments remain affordable to low and moderate income households for the longest feasible time. The Authority is requiring the execution of this Agreement in order to implement the requirements Health and Safety Code Section 33334.3. D. The Authority has agreed to make the Authority Loan to the Owner on the condition that the Development be maintained and operated in accordance with Health and Safety Code Sections 33334.2 et seq., and 33413(b)(2)(A)(i) and 34176.1 and in accordance with additional restrictions concerning affordability, operation, and maintenance of the Development, as specified in this Regulatory Agreement, and the Disposition Agreement. The Authority has determined that restriction of seven (7) Units for Extremely Low Income Households pursuant to Section 2.1 below, will satisfy the requirements of Health and Safety Code 34167.1. E. In consideration of receipt of the Authority Loan, the Owner has further agreed to observe all the terms and conditions set forth below. F. In order to ensure that the entire Development will be used and operated in accordance with these conditions and restrictions, the Authority and the Owner wish to enter into this Agreement, which is secured by the Authority Deed of Trust. THEREFORE, the Authority and the Owner hereby agree as follows: ARTICLE 1. DEFINITIONS 1.1 Definitions. When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Article 1. (a) "Actual Household Size" means the actual number of persons in the applicable household. (b) "Adjusted Income" means the total anticipated annual income of all persons in a household, as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar method of calculation of adjusted income. In the event that no such program exists, the Authority shall provide the Owner with a reasonably similar method of calculation of adjusted income as provided in said Section 6914. (c) "Agreement" means this Regulatory Agreement and Declaration of Restrictive Covenants. (d) "Authority Deed of Trust" means the deed of trust in favor of the Authority encumbering the Property which secures repayment of the Authority Loan and performance of this Agreement. (e) "Authority Loan" means the loan from the Authority to the Owner in an amount not to exceed Three Million Four Hundred Fifty Thousand Dollars ($3,450,000). 66 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 3 (f) "Assumed Household Size" shall have the meaning set forth in Section 2.2(d). The definition is utilized to calculate affordable rent and is not intended to be a limit on the number of persons occupying a unit. (g) "City" means the City of Poway, a municipal corporation. (h) "Development" means the Property and the Improvements. (i) "Disposition and Loan Agreement" has the meaning set forth in Recital B. (j) "Dissolved RDA" means the dissolved Poway Redevelopment Agency, a public body, corporate and politic. (k) "Extremely Low Income Household" means a household with an Adjusted Income that does not exceed the qualifying limits for extremely low income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of California Department of Housing and Community Development. (l) "Extremely Low Income Rent" means the rent permitted to be charged for an Extremely Low Income Unit pursuant to Section 2.2(a) below. (m) "Extremely Low Income Unit" means the Units, which, pursuant to Section 2.1(g) below, are required to be occupied by Low Income Households. (n) "Housing Fund Proceeds" means any of the funds transferred to the Authority, together with any funds generated from housing assets, maintained in the Low and Moderate Income Housing Asset Fund, created in the accounts of the Authority pursuant to Health and Safety Code Section 34176(d). (o) "Improvements" means the approximately fifty-four (54) units of affordable housing to be constructed on specified portions of the Property, including the manager's unit, all common areas, amenities, plans, entitlements, appurtenances, improvement easements, buildings and fixtures associated with the Property. (p) "Investor Limited Partner" means, Wells Fargo Affordable Housing Community Development Corporation, its successors and/or assigns, as the Investor of the Developer, the tax credit limited partner or partners, and their respective successors and assigns, admitted to the Owner's partnership in connection with the issuance of low income housing tax credits to the Development, which admission will occur concurrent with closing of construction financing for development of the Improvements. (q) "Low Income Household" shall mean a household with an Adjusted Income that does not exceed the qualifying limits for lower income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by HCD. 67 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 4 (r) "Low Income Rent" shall mean the maximum allowable rent for a Low Income Unit pursuant to Section 2.2(c) below. (s) "Low Income Units" shall mean the Units, which, pursuant to Section 2.1(c) below, are required to be occupied by Low Income Households. (t) "Median Income" means the median gross yearly income adjusted for Actual Household Size (to qualify residents) or Assumed Household Size (to calculate rents), as applicable, in the County of San Diego, California, as published from time to time by the State of 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 Owner with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by the State of California Department of Housing and Community Development. (u) "Owner" means Villa de Vida Poway, L.P., a California limited partnership and its successors and assigns. (v) "Property" means the real property located in the City of Poway, County of San Diego, more particularly described in Exhibit A attached hereto and incorporated herein, also referred to as the "Property") (w) "Rent" means the total of monthly payments by the residents of a Unit (other than the manager's unit) for the following: use and occupancy of the Unit and land and associated facilities, including parking; any separately charged fees or service charges assessed by Owner which are required of all residents, other than security deposits; the cost of an adequate level of service for utilities paid by the resident, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not cable or telephone service; and any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than Owner, and paid by the Resident. (x) "Resident" means a household legally occupying a Unit pursuant to a valid lease with Owner. (y) "Term" means the term of this Agreement, which commences as of the date of this Agreement and, unless terminated earlier or extended by the Parties pursuant to this Agreement, ends fifty-seven (57) years from the date this Agreement is recorded against the Property. (z) "Unit" means one (1) of the approximately fifty-four (54) units (including the manager's unit) to be constructed as part of the Development. (aa) "Very Low Income Household" means a household with an Adjusted Income that does not exceed the qualifying limits for very low income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of California Department of Housing and Community Development. 68 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 5 (bb) "Very Low Income Rent" means the rent permitted to be charged for a Very Low Income Unit pursuant to Section 2.2(b) below. (cc) "Very Low Income Units" means the Units, which, pursuant to Section 2.1(b) below, are required to be occupied by Very Low Income Households. ARTICLE 2. AFFORDABILITY COVENANTS 2.1 Occupancy Requirements. The Units shall be occupied by Residents meeting the following income requirements: (a) Extremely Low Income Units. Seven (7) Units, including six (6) one- bedroom Units and one (1) two-bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Extremely Low Income Households; and (b) Very Low Income Units. Eight (8) Units, including six (6) one-bedroom Units, and two (2) two-bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Very Low Income Households. (c) Low Income Units. Eleven (11) Units, including eleven (11) one-bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Low Income Households. (d) Manager's Unit. One (1) one-bedroom Unit shall be available for designation as the manager's unit. (e) Preservation of Extremely Low Income Units. In the event of a foreclosure of the Construction Loan prior to Construction Loan Payoff, then the Authority and the entity acquiring the Development at foreclosure shall apportion the affordability targeting in a manner consistent with Health and Safety Code Section 34176.1. In the event of a loss of the Section 8 subsidy, then the Authority and the entity the Developer shall apportion the affordability targeting in a manner consistent with Health and Safety Code Section 34176.1. In no event will the occupancy requirements imposed after a foreclosure of the Construction Loan or deed in lieu of foreclosure require the Owner's successor in interest to provide more than seven (7) Extremely Low Income Units. (f) Fair Housing. The Development shall be operated at all times in compliance with the provisions of: (1) the Unruh Act; (2) the California Fair Employment and Housing Act, (3) Section 504 of the Rehabilitation Act of 1973; (4) the United States Fair Housing Act, as amended, and (5) any other applicable law or regulation (including the Americans With Disabilities Act, to the extent applicable to the Development). Owner agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the Authority) the Authority, and its boardmembers, officers and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of Owner's failure to comply with applicable legal requirements related to housing for persons with disabilities. The 69 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 6 provisions of this subsection shall survive expiration of the Term or other termination of this Agreement, and shall remain in full force and effect. 2.2 Allowable Rent. (a) Extremely Low Income Rent. Subject to Section 2.3 below, the Rent charged to Residents of the Extremely Low Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of thirty percent (30%) of Median Income, adjusted for Assumed Household Size. (b) Very Low Income Rent. Subject to Section 2.3 below, the Rent charged to Residents of the Very Low Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of fifty percent (50%) of Median Income, adjusted for Assumed Household Size. (c) Low Income Rent. Subject to Section 2.3 below, the Rent charged to Residents of the Low Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of Median Income, adjusted for Assumed Household Size. (d) Assumed Household Size. In calculating the allowable Rent for the Units, the following "Assumed Household Sizes" shall be utilized, provided that the Development receives an allocation of low income housing tax credits, otherwise Assumed Household Size shall be determined pursuant to the terms of Health and Safety Code Section 50052.5(h): Number of Bedrooms Assumed Household Size One 2 Two 3 Three 5 (e) No later than November 1 of each calendar year, the Authority shall provide the Owner with a schedule of permissible maximum Extremely Low Income Rents, Very Low Income Rents and Low Income Rents for the succeeding year. Under no circumstance may Owner raise rents above the permissible maximum rents as allowed under the annual rent schedule provided by the Authority. 2.3 Increased Income of Residents. (a) Extremely Low Income Household to Very Low or Low Income Household. If, upon recertification of a Resident's income, the Owner determines that a former Extremely Low Income Household's Adjusted Income has increased and exceeds the qualifying income for an Extremely Low Income Household set forth in Section 1.1 above, but does not exceed the qualifying limit for a Very Low Income Household or Low Income Household as set forth in Section 1.1 above, then, upon expiration of the Resident's lease: (1) Such Resident's Unit may be considered a Very Low Income Unit or Low Income Unit, as applicable; 70 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 7 (2) Such Resident's Rent may be increased to a Very Low Income Rent or a Low Income Rent, as applicable, upon sixty (60) days written notice to the Resident; and (3) The Owner shall rent the next available Unit to an Extremely Low Income Household at an Extremely Low Income Rent. (b) Very Low Income Household to Low Income Household. If, upon recertification of a Resident's income, the Owner determines that a former Very Low Income Household's Adjusted Income has increased and exceeds the qualifying income for a Very Low Income Household set forth in Section 1.1above, but does not exceed the qualifying limit for a Low Income Household as set forth in Section 1.1 above, then, upon expiration of the Resident's lease: (1) Such Resident's Unit may be considered a Low Income Unit; (2) Such Resident's Rent may be increased to a Low Income Rent, upon sixty (60) days written notice to the Resident; and (3) The Owner shall rent the next available Unit to a Very Low Income Household at a Very Low Income Rent. (c) Non-Qualifying Household. If, upon recertification of the income of a resident, the Owner determines that a former Extremely Low Income Household, Very Low Income Household or Low Income Household has an Adjusted Income exceeding the maximum qualifying income for a Low Income Household, such Resident shall be permitted to continue occupying the Unit and upon expiration of the Resident's lease and upon sixty (60) days written notice, the Rent may be increased to the lesser of one-twelfth (1/12th) of thirty percent (30%) of actual Adjusted Income of the Resident, or fair market rent (subject to 24 C.F.R. 92.252(i)(2) regarding low income housing tax credit requirements) and the Owner shall rent the next available Unit to a Extremely Low Income Household, Very Low Income Household or Low Income Household to meet the requirements of Section 2.1 above. (d) Termination of Occupancy. Upon termination of occupancy of a Unit by a Resident, such Unit shall be deemed to be continuously occupied by a household of the same income level (e.g., Extremely Low Income Household, Very Low Income Household or Low Income Household) as the income level of the vacating Resident, until such Unit is reoccupied, at which time the income character of the Unit (e.g., Extremely Low Income Unit, Very Low Income Unit or Low Income Unit) shall be redetermined. In any event, Owner shall maintain the occupancy requirements set forth in section 2.1 above. 2.4 Resident Selection. (a) The Owner must provide the Authority for its review and approval the Owner's written marketing plan in compliance with the tenant selection plan approved pursuant to Section 2.13 of the Disposition and Loan Agreement. 71 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 8 (b) The Owner shall not discriminate against any applicants for tenancy on the basis of source of income or rent payment (for example, without limitation, Temporary Assistance for Needy Families (TANF) or Section 8), and the Owner shall consider a prospective Resident's previous rent history of at least one (1) year, or such other time period the Owner deems reasonable, as evidence of the prospective Resident's ability to pay the applicable Rent. The ability to pay shall be demonstrated if the prospective Resident can document that the prospective Resident's gross income is at least two (2) times the prospective rent. The Owner, in the reasonable exercise of its discretion, may waive the requirement that the prospective Resident's gross income equal at least two (2) times the prospective rent, and admit prospective Residents with lower gross incomes. 2.5 Lease Provisions. The Owner shall include in leases for all Units provisions which authorize the Owner to immediately terminate the tenancy of any household one or more of whose members misrepresented any fact material to the household's qualification as an Extremely Low Income Household, Very Low Income Household or Low Income Household, as applicable. Each lease or rental agreement shall also provide that the household is subject to annual certification in accordance with Section 3.1 below, and that, if the household's income increases above the applicable limits for an Extremely Low Income Household, Very Low Income Household or Low Income Household, as applicable, such household's Rent may be subject to increase. 2.6 Condominium Conversion. The Owner shall not convert the Development units to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the Term of this Agreement. 2.7 Units Available to the Disabled. Owner shall construct the Development to comply with all applicable federal and state disabled persons accessibility requirements including the Federal Fair Housing Act, Section 504 of the Rehabilitation Act of 1973, Title II and/or Title III of the Americans with Disabilities Act of 1990, and Title 24 of the California Code of Regulations. ARTICLE 3. INCOME CERTIFICATION AND REPORTING 3.1 Income Certification. The Owner will obtain, and complete, as a condition to initial occupancy and maintain on file annually thereafter, income certifications from each Resident renting any of the Units. The Owner shall make a good faith effort to verify that the income provided by an applicant or occupying household in an income certification is accurate by taking two or more of the following steps as a part of the verification process: (a) obtain a minimum of the three (3) most current pay stubs for all adults age eighteen (18) or older; (b) obtain an income tax return for the most recent tax year; (c) conduct a credit agency or similar search; (d) obtain the three (3) most current savings and checking account bank statements; (e) obtain an income verification form from the applicant's current employer; (f) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (g) if the applicant is unemployed and has no such tax return, obtain another form of independent 72 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 9 verification. Copies of Resident income certifications shall be available to the Authority upon request. 3.2 Annual Report to Authority. The Owner shall submit to the Authority: (a) not later than the forty-fifth (45th) day after the close of each calendar year, or such other date as may be requested by the Authority, a statistical report, including income and rent data for all Units, an assessment of compliance with the Resident Services Plan (including an assessment of the Resident Services Plan outcomes), an assessment of compliance with the approved Management Plan, an evaluation of the Management Agent, and (b) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by the Authority. 3.3 Additional Information. The Owner shall provide any additional information reasonably requested by the Authority. The Authority shall have the right to examine and make copies of all books, records or other documents of the Owner which pertain to the Development. 3.4 Records. (a) The Owner shall keep and maintain at the Development, or elsewhere with the Authority's written consent, complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the Authority to inspect records, including records pertaining to income and household size of Residents, Rent charged Residents and affirmative marketing requirements. All Resident lists, applications and waiting lists relating to the Development shall at all times be kept separate and identifiable from any other business of the Owner and shall be maintained as required by the Authority, in a reasonable condition for proper audit and subject to examination during business hours by representatives of the Authority. The Owner shall retain copies of all materials obtained or produced with respect to occupancy of the Units for a period of at least five (5) years. (b) The Authority shall notify Owner of any records it deems insufficient. Owner shall have fifteen (15) 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 fifteen (15) days is reasonably necessary to correct the deficiency, then Owner shall begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible. 3.5 Annual Operating Budget. The Owner, at least sixty (60) days prior to the end of each of the Owner's fiscal year, shall furnish the Authority an Annual Operating Budget. Upon receipt by the Authority of the proposed Annual Operating Budget, the Authority shall promptly review the same and approve or disapprove it within ten (10) business days. If the Annual Operating Budget is not approved by the Authority, the Authority shall set forth in writing and notify the Owner of the Authority's reasons for withholding such approval. The Owner shall thereafter submit a revised Annual Operating Budget for Authority approval, which approval shall be granted or denied within ten (10) business days in accordance with the procedures set forth above. 3.6 Approval of Use of Reserve Funds. The Owner agrees to create and maintain the reserves required by the Approved Financing (as defined in the Disposition and Loan Agreement) and the reserves in the amounts approved by the Authority as part of the Financing 73 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 10 Plan submitted by the Owner pursuant to Section 2.4 of the Disposition and Loan Agreement. Prior to the use of funds from the reserves, the Owner must submit a written request to withdraw funds from the reserve account. The written request shall specify the amount requested and state how the funds will be used. The Authority shall approve such request within thirty (30) days of receipt of the written request for use of reserves; such request shall not be unreasonably withheld. If the Authority fails to approve a request within the thirty (30) days, such request shall be deemed approved. 3.7 Resident Services Plan. (a) Not less than six (6) months prior to completion and not less than sixty (60) days prior to the end of the Owner's fiscal year thereafter, Owner shall furnish to the Authority a draft "Resident Services Plan." Upon receipt by the Authority of the proposed Resident Services Plan, the Authority shall promptly review the same and approve or disapprove it within ten (10) business days. If the Resident Services Plan is not approved by the Authority, the Authority shall set forth in writing and notify the Owner 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, consistent with applicable low income housing tax credit regulations. The Owner shall thereafter submit the revised Resident Services Plan within ten (10) business days of notification of disapproval. The Authority shall either approve or disapprove the submitted revised Resident Services Plan within ten (10) business days of the date such revised Resident Services Plan is received by the Authority, and shall approve the revised Resident Services Plan if the requested changes have been made. (b) If, as a result of a periodic review, the Authority determines, in its reasonable judgment, that the Residents of the Development are not receiving material services and/or there is a failure to achieve outcomes identified in the approved Resident Services Plan, the Authority shall deliver notice to the Owner of its intention to, in addition to any other remedies available to the Authority hereunder, require the Owner to: (1) replace the resident service coordinator or resident services provider; or (2) meet in good faith to consider methods for improving the resident services being offered to Residents of the Development; or (3) deliver notice to the Owner requiring the Owner to cause the replacement of the resident services coordinator or resident services provider with a resident services coordinator or resident services provider selected by the Authority. (c) If, after the above procedure, the Authority requires in writing the replacement of the resident services coordinator or the resident services provider, the Owner shall promptly dismiss the then resident services coordinator or resident services provider, as applicable, and shall appoint as the resident services coordinator or resident services provider, as applicable, a person or entity capable of meeting the standards for a resident services coordinator or resident services provider, as applicable, under the Resident Services Plan and approved by the Authority at the Authority's reasonable discretion. (d) Any contract for the resident services coordinator or resident services provider, as applicable, for the Development entered into by the Owner shall provide that the contract can be terminated as set forth above. Failure to remove the resident services coordinator or the resident services provider, as applicable, in accordance with the provisions of this Section 74 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 11 shall constitute default under this Agreement, and the Authority may enforce this provision through legal proceedings as specified in Section 6.5 below. 3.8 On-site Inspection. The Authority shall have the right to perform an on-site inspection of the Development at least one (1) time per year upon forty-eight hours (48) prior notice. The Owner agrees to cooperate in such inspection. ARTICLE 4. OPERATION OF THE AFFORDABLE DEVELOPMENT 4.1 Residential Use. (a) The Development shall be operated only for residential use. No part of the Development shall be operated as transient housing in which the term of Resident occupancy is less than thirty (30) days. (b) 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. 4.2 Taxes and Assessments. The Owner shall pay all real and personal property taxes, assessments, if any, 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 line or charge from attaching to the Development; provided, however, that the Owner shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Owner exercises its right to contest any tax, assessment, or charge against it, the Owner, 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. 4.3 Nondiscrimination. (a) All of the Units shall be available for occupancy on a continuous basis to members of the general public who are income eligible. Developer shall not give preference to any particular class or group of persons in renting the Units, except to the extent that the Units are required to be leased to Extremely Low Income Households, Very Low Income Households, or Low Income Households, or pursuant to Section 4.5 below. (b) There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (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 himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with 75 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 12 reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. (c) Notwithstanding the preceding paragraph, with respect to familial status, the preceding paragraph 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 the preceding paragraph 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 the preceding paragraph. (d) The provisions of this Section shall run with the land and survive termination of this Agreement. 4.4 Section 8 Certificate Holders. The Owner will accept as residents, on the same basis as all other prospective residents, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act, or its successor. The Owner shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective residents, nor shall the Owner apply or permit the application of management policies or lease provisions with respect to the Development which have the effect of precluding occupancy of units by such prospective Residents. 4.5 Priority to City, Dissolved RDA and Authority Displacees. To the maximum extent permitted by law and provided that the applicants meet standard applicant screening standards for the Development Borrower shall give a priority in the rental of any Units to eligible households displaced by activity of the City, the Authority, or the Dissolved RDA, as provided in Health and Safety Code Section 33411.3. ARTICLE 5. PROPERTY MANAGEMENT AND MAINTENANCE 5.1 Management Responsibilities. The Owner is responsible for all management functions with respect to the Development, including without limitation the selection of residents, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The Authority shall have no responsibility over management of the Development. The Owner shall retain a professional property management company, approved by the Authority in its reasonable discretion, to perform its management duties hereunder. A resident manager shall also be required. Prior to the commencement of construction of the Development, the Owner shall submit a proposed "Management Plan" to the Authority for approval by the Authority. The Authority shall approve or disapprove (with written explanation for disapproval) of the proposed management plan by notifying the Owner in writing within sixty (60) days of the date of submission to the Authority. 5.2 Management Agent; Periodic Reports. The Development shall at all times be managed by an experienced management agent reasonably acceptable to the Authority, with 76 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 13 demonstrated ability to operate residential facilities like the Development in a manner that will provide decent, safe, and sanitary housing (as approved, the "Management Agent"). As of the date of this Agreement, Mercy Housing Management is approved as the Management Agent. The Owner shall submit for the Authority's approval the identity of any proposed Management Agent and on-site resident manager. The Owner shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent and on-site resident manager as is reasonably necessary for the Authority to determine whether the proposed Management Agent or on-site resident manager meets the standard for a qualified Management Agent or on-site resident manager set forth above. If the proposed Management Agent or on-site resident manager meets the standard for a qualified Management Agent or on- site resident manager set forth above, the Authority shall approve the proposed Management Agent or on-site resident manager by notifying the Owner in writing. Unless the proposed Management Agent or on-site resident manager is disapproved by the Authority within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved. 5.3 Performance Review. In addition to the reporting requirements under Section 5.2 above, the Authority reserves the right to conduct an annual (or more frequently, if deemed reasonably necessary by the Authority) review of the management practices and financial status of the Development. The purpose of each periodic review will be to enable the Authority to determine if the Development is being operated and managed in accordance with the requirements and standards of this Agreement. The Owner shall cooperate with the Authority in such reviews. 5.4 Replacement of Management Agent or On-Site Resident Manager. (a) 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 material requirements and standards of this Agreement, the Authority shall deliver notice to the Owner of its intention to cause replacement of the Management Agent or on-site resident manager, including the reasons therefor. Within fifteen (15) days of receipt by Owner of such written notice, Authority staff and the Owner shall meet in good faith to consider methods for improving the financial and operating status of the Development. If, after a reasonable period as determined by the Authority (not to exceed sixty (60) days after the meeting between the Authority and the Owner), the Authority determines that the Owner is not operating and managing the Development in accordance with the material requirements and standards of this Agreement, the Authority may require replacement of the Management Agent or on-site resident manager. (b) If, after the above procedure, the Authority requires in writing the replacement of the Management Agent or on-site resident manager, the Owner shall promptly dismiss the then Management Agent or on-site resident manager within thirty (30) days notice, and shall appoint as the Management Agent or on-site resident manager a person or entity meeting the standards for a Management Agent or on-site resident manager set forth in Section 5.2 above and approved by the Authority pursuant to Section 5.2 above. (c) Any contract for the operation or management of the Development entered into by the Owner shall provide that the contract can be terminated as set forth above. Failure to 77 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 14 remove the Management Agent or on-site resident manager in accordance with the provisions of this Section shall constitute default under this Agreement, and the Authority may enforce this provision through legal proceedings as specified in Section 6.5, below. 5.5 Maintenance Requirements. (a) The Owner agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, on the Development in good condition and repair (and, as to landscaping, in a healthy condition), normal wear and tear excepted, and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, and in accordance with the following maintenance conditions: (1) Landscaping. The Owner agrees to have landscape maintenance performed at least every other week, including replacement of dead or diseased plants with comparable plants. Owner agrees to adequately water the landscaping on the Development in compliance with City policies. No improperly maintained landscaping on the Development shall be visible from public streets and/or rights of way. (2) Yard Area. No yard areas on the Development shall be left unmaintained, including: (i) broken or discarded furniture, appliances and other, household equipment stored in yard areas for a period exceeding one (1) week; (ii) packing boxes, lumber, trash, dirt and other debris in areas visible from public improvements or neighboring properties; and (iii) vehicles parked or stored in other than approved parking areas. (3) Building. No buildings located on the Development may be left in an unmaintained condition so that any of the following exist: (i) violations of state law, uniform codes, or City ordinances; (ii) conditions that constitute an unsightly appearance that detracts from the aesthetics or value of the Development or constitutes a private or public nuisance; (iii) broken windows; (iv) graffiti (must be removed within seventy-two (72) hours); and (v) conditions constituting hazards and/or inviting trespassers, or malicious mischief. 78 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 15 (4) Sidewalks. The Owner shall maintain, repair, and replace as necessary all private sidewalks adjacent to the Development. (b) The Authority places prime importance on quality maintenance to protect its investment and to ensure that all Authority-assisted affordable housing projects within the City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the Development will be acceptable to the Authority assuming the Owner agrees to provide all necessary improvements to assure the Development is maintained in good condition. The Owner shall make all repairs and replacements necessary to keep the Improvements in good condition and repair. (c) In the event that the Owner 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 Development 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 Development and perform all acts and work necessary to protect, maintain, and preserve the Improvements and landscaped areas on the Development, and to attach a lien on the Development, or to assess the Development, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Authority and/or costs of such cure, including a ten percent (10%) administrative charge, which amount shall be promptly paid by the Owner to the Authority upon demand. 5.6 Safety Conditions. (a) The Owner 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 Owner 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) use its best efforts to work with the San Diego Sheriff's Department to implement and operate an effective neighborhood watch program and participate in the Crime Free Multi-Housing Program; 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. (b) The Authority shall have the right to enter on the Development and/or contact the San Diego County Sherriff's 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 79 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 16 surrounding community, and to perform or cause to be performed such acts as are necessary to correct the condition. ARTICLE 6. MISCELLANEOUS 6.1 Term. The provisions of this Agreement shall apply to the Development for the entire Term even if the entire Authority Loan is paid in full prior to the end of the Term; provided, however, that the provisions of Sections 2.1 and 4.3 of the Agreement shall run with the Development and shall remain in effect in perpetuity. This Agreement shall bind any successor, heir or assign of the Owner, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by the Authority. The Authority makes the Authority Loan on the condition, and in consideration of, this provision, and would not do so otherwise. 6.2 Notice of Expiration of Term. The Owner must comply with all notice requirements of Government Code Section 65863.10, Section 65863.11 and 65863.13, or successor statutes. The Owner shall also file a copy of any notices sent by the Owner pursuant to this Section with the Authority Executive Director. 6.3 Compliance with Disposition and Loan Agreement and Program Requirements. The Owner's actions with respect to the Development shall at all times be in full conformity with: (a) all requirements of the Disposition and Loan Agreement; (b) all requirements of the Authority Deed of Trust; and (c) all requirements imposed on projects assisted with Housing Fund Proceeds under California Health and Safety Code Section 33334.2 et seq. 6.4 Covenants to Run With the Land. The Authority and the Owner hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Development, provided, however, that on the expiration of the Term of this Agreement said covenants and restrictions shall expire, unless otherwise expressly stated herein. Each and every contract, deed or other instrument hereafter executed covering or conveying the Development or any portion thereof 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 such conveyed portion of the Development from the requirements of this Agreement. 6.5 Enforcement by the Authority. If the Owner fails to perform any obligation under this Agreement, and fails to cure the default within thirty (30) days after the Authority has notified the Owner in writing of the default or, if the default cannot be cured within thirty (30) days, failed to commence to cure within thirty (30) days and thereafter diligently pursue such cure, the Authority shall have the right to enforce this Agreement by any or all of the following actions, or any other remedy provided by law: 80 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 17 (a) Calling the Loan. The Authority may declare a default under the Promissory Note, accelerate the indebtedness evidenced by the Promissory Note, and proceed with foreclosure under the Authority Deed of Trust. (b) Action to Compel Performance or for Damages. The Authority may bring an action at law or in equity to compel the Owner's performance of its obligations under this Agreement, and/or for damages. (c) Remedies Provided Under Disposition and Loan Agreement. The Authority may exercise any other remedy provided under the Disposition and Loan Agreement. (d) Cure by Investor Limited Partner. The Authority hereby agrees to accept a cure of any default made or tendered hereunder by Investor Limited Partner on the same terms and conditions as if such cure was made or tendered by the Owner. 6.6 Rights of Third Parties to Enforce Covenants. Notwithstanding any other provisions of law, all covenants and restrictions contained herein which implement Health and Safety Code Sections 33334.3 and/or 33413(b)(4), or successor provisions, shall run with the land and shall be enforceable by the Authority, the City, and any of the parties listed in Health and Safety Code Section 33334.3(f)(7), so long as such provision or successor provision remains in effect. 6.7 Listing of Development in Database. The Owner hereby acknowledges and agrees that Health and Safety Code Section 33418(c) requires that the Development be listed in a database that shall be made available to the public on the internet and which will include the street address, assessor's parcel number, and other information about the Development. The Owner must disclose this requirement to all Residents and prospective Residents. 6.8 Attorneys Fees and Costs. In any action brought to enforce this Agreement, the prevailing party shall be entitled to all costs and expenses of suit, including attorneys' fees. This Section shall be interpreted in accordance with California Civil Code Section 1717 and judicial decisions interpreting that statute. 6.9 Recording and Filing. The Authority and the Owner shall cause this Agreement, and all amendments and supplements to it, to be recorded against the Development in the Official Records of the County of San Diego. 6.10 Governing Law. This Agreement shall be governed by the laws of the State of California. 6.11 Amendments. This Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title, and duly recorded in the real property records of the County of San Diego, California. 6.12 Notice. Formal notices, demands, and communications between the Authority and the Owner 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 by express 81 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 18 delivery service, return receipt requested, or delivered personally, to the principal office of the Authority and the Owner as follows: If to the Owner: Villa de Vida, L.P. 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 with copy to Investor Limited Partner: Wells Fargo Affordable Housing Community Development Corporation MAC D1053-170 301 South College Street Charlotte, NC 28288 Attention: Director of Tax Credit Asset Management If to the Authority: Poway Housing Authority 13325 Civic Center Drive Poway, CA 22604 Attention: Executive Director 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. Receipt shall be deemed to have occurred on the date shown on a written receipt for delivery or refusal of delivery. A copy of all notices delivered to Owner hereunder shall be delivered simultaneously to the Investor Limited Partner. 6.13 Waiver of Requirements. Any of the requirements of this Agreement may be expressly waived by the Authority in writing, but no waiver by the Authority of any requirement of this Agreement shall, or shall be deemed to, extend to or affect any other provision of this Agreement. 6.14 Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall not in any way be affected or impaired thereby. 82 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 19 6.15 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. 6.16 Tax Credit Program. Notwithstanding anything contained herein to the contrary, for as long as the Property is subject to the requirements of the California and/or Federal Low- Income Housing Tax Credit Program under the provisions of Section 42 of the Code and Section 23610.5 of the California Revenue and Taxation Code, as applicable (collectively, the "Tax Credit Program") and there is a conflict between the requirements of the Tax Credit Program and the affordability provisions set forth in 2.3 above, inclusive, then the provisions of the Tax Credit Program shall prevail. That notwithstanding, the fact that this Regulatory Agreement and the Tax Credit Program provide for greater, lesser or different obligations or requirements shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed. [Signature Page Follows] 83 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 20 IN WITNESS WHEREOF, the Authority and the Owner have executed this Agreement by duly authorized representatives, all on the date first written above. AUTHORITY: POWAY HOUSING AUTHORITY, a public body corporate and politic By: ______________________ Tina White, Executive Director APPROVED AS TO FORM: GOLDFARB & LIPMAN LLP, Authority Special Counsel By: _______________________ Rafael Yaquian 84 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 21 OWNER: VILLA DE VIDA POWAY, L.P., a California limited partnership By: Villa de Vida GP, LLC, a California limited liability company, its Managing General Partner By: Mercy Housing Calwest, a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ By: VDV POWAY LLC, a California limited liability company, its Administrative General Partner By: Villa de Vida, Inc., a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ 85 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 86 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 87 of 119 April 2, 2019, Item # 4.1 1552\12\1949376.8 A-1 EXHIBIT A PROPERTY LEGAL DESCRIPTION The land referred to is situated in the County of San Diego, City of Poway, State of California, and is described as follows: 88 of 119 April 2, 2019, Item # 4.1 G-1 1552\12\2547457.7 ATTACHMENT G NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY 28 of 119 April 2, 2019, Item # 4.189 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Poway Housing Authority 13325 Civic Center Drive Poway, CA 92064 Attention: Executive Director NO FEE FOR RECORDING PURSUANT TO GOVERNMENT CODE SECTIONS 6103 AND 27383 APN: 317-152-14-00 (Space above this line for Recorder's Use) NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY NOTICE IS HEREBY GIVEN, that the Poway Housing Authority, a public body, corporate and politic (the "Authority"), to carry out certain obligations under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.), and the Redevelopment Plan for the Paguay Redevelopment Project, has required Villa de Vida Poway, L.P., a California limited partnership (the "Owner") to enter into certain affordability covenants and restrictions entitled, Regulatory Agreement and Declaration of Restrictive Covenants (the "Restrictions"), with reference to a housing development (the "Development") to be constructed on that certain real property (the "Property") located in the City of Poway, San Diego County, Assessor's Parcel No. 317-152- 14-00, and further described in Exhibit A incorporated herein by reference. The affordability covenants and restrictions contained in the Restrictions include without limitation and as further described in the Restrictions: 1. Seven (7) Units, including six (6) one-bedroom Units and one (1) two- bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Extremely Low Income Households; 90 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 2 2. Eight (8) Units, including six (6) one-bedroom Units, and two (2) two- bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Very Low Income Households; 3. Eleven (11) Units, including eleven (11) one-bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Low Income Households; 4. Additional requirements concerning operation, management, and maintenance of the Development are also imposed by the Restrictions. In the event of any conflict between this Notice of Affordability Restrictions on Transfer of Property (the "Notice") and the Restrictions, the terms of the Restrictions shall prevail. The Restrictions have been recorded concurrently herewith, and shall remain in effect for fifty-seven (57) years from the date the Regulatory Agreement is recorded with the Office of the San Diego County Recorder or until _________ __, 20__. This Notice is being recorded and filed by the Authority in compliance with Health and Safety Code Sections 33334.3(f)(3) and (4) and Section 33413(c)(5), as amended, and shall be indexed against the Authority and the Owner. [Remainder of Page Left Intentionally Blank] 91 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 IN WITNESS WHEREOF, the parties have executed this Notice of Affordability Restrictions on Transfer of Property on or as of ____________ __, 20__. AUTHORITY: POWAY HOUSING AUTHORITY, a public body corporate and politic By: _______________________ Tina White, Executive Director APPROVED AS TO FORM: GOLDFARB & LIPMAN LLP, Authority Special Counsel By: _______________________ Rafael Yaquian 92 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 OWNER: VILLA DE VIDA POWAY, L.P., a California limited partnership By: Villa de Vida GP, LLC, a California limited liability company, its Managing General Partner By: Mercy Housing Calwest, a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ By: VDV POWAY LLC, a California limited liability company, its Administrative General Partner By: Villa de Vida, Inc., a California nonprofit public benefit corporation, its sole member and manager By: ________________________________ Name: ________________________________ Its: ________________________________ Date: _____________________ 93 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 94 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, 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. 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. ______________________________________ Name: ______________________________ Name: Notary Public 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. 95 of 119 April 2, 2019, Item # 4.1 1552\12\1949743.5 A-1 EXHIBIT A LEGAL DESCRIPTION The land is situated in the State of California, County of San Diego, City of Poway, and is described as follows: 96 of 119 April 2, 2019, Item # 4.1 H-1 1552\12\2547457.7 ATTACHMENT H RESERVE DRAW SCHEDULE 97 of 119 April 2, 2019, Item # 4.1 98 of 119 April 2, 2019, Item # 4.1 I-1 1552\12\2547457.7 ATTACHMENT I APPROVED INITIAL RESIDENT SERVICES BUDGET 99 of 119 April 2, 2019, Item # 4.1 100 of 119 April 2, 2019, Item # 4.1 J-1 1552\12\2547457.7 ATTACHMENT J APPROVED INITIAL RESIDENT SERVICES PLAN 101 of 119 April 2, 2019, Item # 4.1 102 of 119 April 2, 2019, Item # 4.1 103 of 119 April 2, 2019, Item # 4.1 104 of 119 April 2, 2019, Item # 4.1 105 of 119 April 2, 2019, Item # 4.1 106 of 119 April 2, 2019, Item # 4.1 107 of 119 April 2, 2019, Item # 4.1 108 of 119 April 2, 2019, Item # 4.1 109 of 119 April 2, 2019, Item # 4.1 110 of 119 April 2, 2019, Item # 4.1 111 of 119 April 2, 2019, Item # 4.1 112 of 119 April 2, 2019, Item # 4.1 113 of 119 April 2, 2019, Item # 4.1 114 of 119 April 2, 2019, Item # 4.1 115 of 119 April 2, 2019, Item # 4.1 116 of 119 April 2, 2019, Item # 4.1 117 of 119 April 2, 2019, Item # 4.1 118 of 119 April 2, 2019, Item # 4.1 119 of 119 April 2, 2019, Item # 4.1