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"Interest" shall mean that the Note shall bear simple interest at the rate of Three <br />percent (3%) per annum, from the date of issuance of the Certificate of Completion. <br />"Operating Expenses" shall mean the sum of the following: <br />(a) payments of principal and interest on or with respect to the Senior <br />Loan(s); <br />(b) payments of any other amounts on or with respect to the Senior <br />Loan(s) beyond principal and interest (i.e. optional payments) as approved by the City; <br />(c) a property management fee no greater than sixty-five dollars <br />($65)/per unit/per month, increased annually by the lesser of: (i) three percent (3%); or (ii) <br />prior Year CPI, beginning the year following the issuance of the first certificate of <br />occupancy for the Project; <br />(d) Partnership related fees that are actually incurred and are reasonable <br />and customary to the partners of Borrower for similar projects in Southern California, and <br />which may include: (i) the partnership management fee payable to the Administrative <br />General Partner and/or Managing General Partner not to exceed twenty thousand dollars <br />($20,000) per operating year and escalating at three percent (3%) per operating year•, and <br />(ii) a limited partner asset management fee of seven thousand five hundred dollars ($7,500) <br />per year, escalating at (A) three percent (3%) per operating year; <br />(e) Deposits into required reserves required by any lender or <br />Borrower's Partnership Agreement; <br />(f) all other actual, reasonable cash operating costs and expenses, <br />calculated on an annual basis, that are directly attributable to managing and operating the <br />Property and the Borrower, including, without limiting the generality of the foregoing, the <br />following: costs and expenses for real and personal property taxes, special assessments or <br />similar charges; water, fuel, electricity and other utilities; heating, ventilation and air <br />conditioning expenses; labor; supplies; tools; equipment; insurance; advertising and <br />marketing; accounting and legal fees; brokerage commissions and other leasing expenses; <br />reasonable reserves for all anticipated expenses as approved by the City; and other such <br />items constituting operation, maintenance and repair costs actually paid by the Borrower, <br />subject to the following conditions: <br />(i) Depreciation, amortization, and accrued principal and <br />interest expenses on deferred payment debt and capital improvement expenditures shall not <br />be considered Operating Expenses, except as otherwise provided herein. <br />(g) Any expenses, compensation or fees paid to any affiliate of <br />Borrower shall only be included as Operating Expenses to the extent they are not in excess <br />of the reasonable expenses, compensation or fees which would be payable to unrelated <br />third parties in arms -length transactions for similar services in the Santa Ana, California <br />area; <br />3 <br />WISEPIace Permanent Supportive Housing <br />City HOME -ARP Loan Note <br />