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Item 68 - Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washigton Ave.
Community Development Agency https://www.santa-ana.org/cd Item # 68 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report June 21, 2022 TOPIC: Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue AGENDA TITLE: Public Hearing - For the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue: Approve two Loan Agreements for a total combined amount of $4,644,909 and a Development Impact Fee Deferral Agreement with Washington Santa Ana Housing Partners, L.P.; Approve two Subordination Agreements with U.S. Bank and the County of Orange; Approve an Additional Award of up to Eight Project-Based Vouchers for a combined total of 15 Project-Based Vouchers; Approve revisions to the joint sixty-five (65) year Ground Lease with Washington Santa Ana Housing Partners, L.P. and the County of Orange; and Approve a draft Land Use Covenant and Equitable Community Revitalization Grant Agreement with the State of California Department of Toxic Substances Control (Non-General Fund) (Contingent upon approval of Housing Authority Item # 5) RECOMMENDED ACTION CITY COUNCIL 1. Authorize the City Manager to execute a Loan Agreement with Washington Santa Ana Housing Partners, L.P. for $3,007,489 in HOME Investment Partnerships Program funds for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) subject to non-substantive changes approved by the City Manager and City Attorney. 2. Authorize the City Manager to execute a Loan Agreement with Washington Santa Ana Housing Partners, L.P. for $1,637,420 in Neighborhood Stabilization Program funds for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) subject to non-substantive changes approved by the City Manager and City Attorney. This Loan Agreement includes $339,727 in additional Neighborhood Stabilization Program funds to pay for an unanticipated increase in development costs. Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 2 2 7 6 6 3. Authorize appropriation adjustment to recognize and appropriate Neighborhood Stabilization Program 1-3 revenue from prior year fund balance of $237,371 and grant funds of $246,501. This additional funding is to complete the necessary $1,637,420 for contructions costs for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13. (Requires five affirmative votes) 4. Authorize the City Manager to execute a Development Impact Fee Deferral Agreement with Washington Santa Ana Housing Partners, L.P. to defer approximately $652,717 of their development impact fees for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) subject to non-substantive changes approved by the City Manager and City Attorney. The calculation of the final fee amount to be deferred will be determined at the time of issuance of the certificate of occupancy. 5. Authorize the City Manager to execute a Subordination Agreement with U.S. Bank, National Association to subordinate the City’s two Loan Agreements to a senior private loan, subject to non-substantive changes approved by the City Manager and City Attorney. 6. Authorize the City Manager to execute a Subordination Agreement with the County of Orange, to subordinate the City’s two Loan Agreements to a senior public loan, subject to non-substantive changes approved by the City Manager and City Attorney. 7. Authorize the City Manager to execute a future Subordination Agreement, if needed, with the State of California Department of Housing and Community Development, the California Community Reinvestment Corporation, and/or the Orange County Housing Finance Trust, for the City’s two Loan Agreements, after the Crossroads at Washington affordable housing project is complete, subject to approval as to form by the City Attorney. 8. Authorize the City Manager to appropriate potential future grant funds in the FY 22-23 Budget received through an Equitable Community Revitalization Grant Agreement with the State of California Department of Toxic Substances Control to address and remediate present or future human health or safety or the environment as a result of the presence on the land of hazardous materials at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13). EXECUTIVE SUMMARY On five separate meetings, the City Council has unanimously approved various actions for the development of the Crossroads at Washington project. This Staff Report is the culmination of all of the previous actions by City Council and will allow The Related Companies of California to close on their financing and develop the project on the Housing Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 3 2 7 6 6 Authority-owned property that has been joined with the County’s property. The Crossroads at Washington project will have 85 new affordable units and 1 manager’s unit, with 42 three- and four-bedroom units for large families, and 43 one- and two-bedroom affordable units for persons experiencing homelessness. 100% of the units will be for extremely low-income households at 30% Area Median Income. For the City Council actions, regarding the two Loan Agreements, on July 2, 2019, the City Council approved an award of $3,971,440 in funding and on August 17, 2021, the City Council increased that award by $333,742 to pay for an increase in development costs. The action herein includes another increase of $339,727 in additional funds to pay for an unanticipated increase in development costs. Regarding the Development Impact Fee Deferral Agreement, this will further assist the project to offset their increase in development costs. Regarding the Subordination Agreements, U.S. Bank and the County of Orange require the City to subordinate our loans to their senior loans. Staff is also seeking approval for future Subordination Agreements by various lenders that may be required after the project is completed. For the Housing Authority actions, the eight additional project-based vouchers are necessary to pay for an unanticipated increase in development costs. Combined the project will have up to 15 project-based vouchers from Santa Ana together with 43 project- based vouchers from the Orange County Housing Authority. Regarding the amendments to the Ground Lease, revisions were requested by U.S. Bank in order for the bank to approve their senior loan for the project. Finally, the Land Use Covenant and the Equitable Community Revitalization Grant (“ECRG”) Agreement with the State of California Department of Toxic Substances Control are required because the joint Housing Authority and County property was found to have environmental contaminants. The Land Use Covenant restricts all future development on the specific portions of the property with remaining environmental contaminants and the ECRG funds will support additional remediation activities. DISCUSSION On July 2, 2019, the City Council authorized the City Manager to execute a pre- commitment letter with The Related Companies of California (“Related”) and A Community of Friends (“ACOF”) for $3,971,440 in affordable housing funds consisting of $3,007,489 in HOME Investment Partnerships Program funds and $963,951 in Neighborhood Stabilization Program (“NSP”) funds for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) (the “Project”). The Staff Report from July 2, 2019 is attached as Exhibit 1 and the pre- commitment letter is attached as Exhibit 2. On August 17, 2021, the City Council authorized the City Manager to execute a First Amended and Restated pre-commitment letter for an additional $333,742 in Neighborhood Stabilization Program funds to pay for an unanticipated increase in Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 4 2 7 6 6 development costs. The Staff Report from August 17, 2021 is attached as Exhibit 3 and the first amended and restated pre-commitment letter is attached as Exhibit 4. After the City Council approves a pre-commitment of funding for an affordable housing project, it takes a substantial amount of time for a developer to address all development issues and secure their remaining sources of financing in their capital stack. After three years since Related and ACOF received a pre-commitment of funding from the City, Related and ACOF are prepared to close on their financing and begin construction of the Project. In order for Related and ACOF (the “Developer”) to develop the Crossroads at Washington Project and in accordance with the first amended and restated pre- commitment letter approved by the City Council on August 17, 2021, staff is recommending approval of a Loan Agreement for $3,007,489 in HOME Investment Partnerships Program funds, a Loan Agreement for $1,637,420 in Neighborhood Stabilization Program (“NSP”) funds (which includes an additional award of $339,727 in NSP funds), a Development Impact Fee Deferral Agreement, and two Subordination Agreements with U.S. Bank, National Association and the County of Orange as senior lenders. In addition, the following items are also required for this Project to move forward: 1) an award of eight additional project-based vouchers; 2) a revised joint sixty-five (65) year Ground Lease; 3) a Land Use Covenant; and 4) an Equitable Community Revitalization Grant Agreement. These various actions and Agreements are summarized in detail below, followed by a description of the Project. Loan Agreement – HOME Investment Partnerships Program Funds The HOME Investment Partnerships Program Loan Agreement is attached as Exhibit 5. The following loan terms are incorporated into the Loan Agreement: Borrower: Washington Santa Ana Housing Partners, L.P., which is a California limited partnership formed by Related and ACOF. Loan Amount: $3,007,489 principal amount from the HOME Investment Partnerships Program (the "HOME Program”) Interest Rate: 3% simple interest per year Term: Sixty-two (62) years from the date of issuance of the Certificate of Completion for the Project. Terms of Repayment: Repaid from twenty-four (24%) of residual receipts (pro- rata with payments due in connection with other financing provided) calculated by taking the Gross Revenues from the Property for each year, less deductions for annual Operating Expenses. Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 5 2 7 6 6 Disbursement Schedule/Budget: 90 percent of the funds will be disbursed upfront for the construction, with a 10 percent contingency. Selection of Tenants: Except for the permanent supportive housing units covered by the 43 project-based vouchers provided by the Orange County Housing Authority, a local preference shall be given to residents that live and/or work in the City of Santa Ana. [On February 18, 2020, the City Council adopted a resolution granting consent to the Orange County Housing Authority to administer project - based vouchers in the City of Santa Ana for the development of the Project.] The HOME Loan Agreement has been pre-signed by Related to acknowledge their acceptance of the terms. Loan Agreement – Neighborhood Stabilization Program Funds The Neighborhood Stabilization Program Loan Agreement is attached as Exhibit 6. All of the loan terms are the same as the HOME Loan Agreement above except for the Loan Amount below: Loan Amount: $1,637,420 principal amount from the Neighborhood Stabilization Program Disbursement Procedures: 100% of the NSP Loan will be disbursed by the City after the Agreement is recorded This Loan Amount includes $339,727 in additional NSP funds to pay for an unanticipated increase in development costs. On August 17, 2021, the City Council authorized the City Manager to execute a first amended and restated pre-commitment letter for an additional $333,742 in NSP funds to pay for an unanticipated increase in development costs. Since that date, the Developer’s costs have continued to increase due to an increase in the interest rate on the permanent loan and increase in construction costs. The increase in construction costs is primarily due to inflation and the increase in construction labor and materials. With City Council’s approval of the NSP Loan Agreement, the new combined total amount of NSP funds for the Project is $1,637,420. The origin of the City’s NSP funds is from the American Recovery and Reinvestment Act of 2009 and HUD will rescind these funds if the City does not use them. The NSP Loan Agreement has been pre-signed by Related to acknowledge their acceptance of the terms. Subordination Agreements Regarding the Subordination Agreement with U.S. Bank, National Association (“U.S. Bank”) the City’s total loans for this Project is equal to $4,644,909 compared to U.S. Bank’s larger loan for over $33.8 million. As a subordinate loan for a large affordable housing project such as this, it is standard practice for a private market senior lender to Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 6 2 7 6 6 request a Subordination Agreement for the City’s smaller loans in order to permit the senior lender to complete their underwriting and commit their private market financing. In the case of default, the Subordination Agreement will ensure the senior lender will be paid back before the City’s loans. The Subordination Agreement is attached as Exhibit 7. Regarding the Subordination Agreement with the County of Orange (the “County”), the City’s total capital contribution for this Project is larger than the County’s capital contribution for $2,650,701. However, when the County’s capital contribution is combined with the 43 project-based vouchers being provided from the Orange County Housing Authority, the County’s total financial contribution for the Project exceeds the City and Housing Authority’s contribution. As a result, the County requires a Subordination Agreement for the City’s loans in order to complete their underwriting and commit their financing. The Subordination Agreement is attached as Exhibit 8. Regarding the future Subordination Agreements, if needed, with the State of California Department of Housing and Community Development (“HCD”), the California Community Reinvestment Corporation (“CCRC”), and/or the Orange County Housing Finance Trust, these other lenders may request or require the City to subordinate our loans to their loans after the Project is complete and the construction loan is replaced by a permanent loan. For example, HCD requires the City as a subordinate local government lender to enter into a Subordination Agreement. HCD’s loan will be disbursed at the permanent loan conversion through the Orange County Housing Finance Trust. Therefore, HCD and/or the Orange County Housing Finance Trust may require a Subordination Agreement with the City after the Project is complete. Regarding the future Subordination Agreement with CCRC, CCRC is the permanent lender and will be purchasing the construction loan from U.S. Bank. At that point, CCRC will be requesting the City to enter into a Subordination Agreement to subordinate the City’s two loans to CCRC’s permanent loan. Any future Subordination Agreement will be approved as to form by the City Attorney’s Office prior to execution by the City Manager. Development Impact Fee Deferral Agreement The Development Impact Fee Deferral Agreement will defer the collection of the Project’s development impact fees until prior to issuance of the certificate of occupancy instead of requiring payment of the fees at the time of building permit issuance. The Agreement is attached as Exhibit 9. The Developer is entitled by State law to deferred payment of fees intended for public facilities or improvements because the deferral of such development impact fees will help facilitate the financing, development and construction of the project. Specifically, California Government Code Section 66007 states that “any local agency that imposes any fees or charges on residential development for the construction of public improvements or facilities shall not require the payment of those fees or charges, notwithstanding any other provision of law, until the date of the final inspection, or the Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 7 2 7 6 6 date the certificate of occupancy is issued, whichever occurs first.” The specific development impact fees that are part of this deferral request includes the following: Fee Description Factor Factor Total Transit Zoning Code Traffic Impact Mitigation Fair Share $1,333.54 per unit 86 Units $114,685 Drainage Area Assessment Fee $7,748.21 per acre 2.286 Acres $17,712 Sewer Connection Fee $49.00 per F.U.562 F.U. (est.)$25,774 Park Acquisition and Development Fee $400,448 Fire Facilities $0.94psf 100,104 SF $94,098 TOTAL $652,717 As an affordable housing project, the Project qualifies for this request for deferral of their development impact fees. The Development Impact Fee Deferral Agreement will defer approximately $652,717 of the development impact fees for the development of the Project. The following terms are incorporated into the Agreement: Fee Deferral and Amount: The deferred collection of the development impact fees in the estimated amount of approximately $652,717. Deferral Period: The development impact fees will be deferred until the final inspection or issuance of a certificate of occupancy for the Project, whichever comes first. Extension: An extension of the Agreement may only be granted by the City Council. Payment Security: Payment of fee is a personal obligation of the owner, or any successor secured by the property, and if left unpaid, shall be collected as a special lien against the property. Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 8 2 7 6 6 Recordation of Agreement and Lien against Property: The Agreement will be recorded in the Official Records of the County of Orange and the Agreement shall contractually bind the owner to pay the development impact fees and shall constitute a lien against the property. The intended goal of the collection of development impact fees at the time of building permit issuance is to ensure that the payment of the fees is completed prior to the vesting of development rights by a project developer. Development impact fees for development projects include customary fees to defray costs for the City to provide development services under the permit, outside agency fees as applicable, and established development impact fees. While deferral of collection of development impact fees is not a routine practice, the Developer submitted their request under California Government Code Section 66007 and the City is required to consider their request. The collection of the development impact fees for a new residential development is to generally fund planned acquisition and development of parks and open space within the City to mitigate the impacts that new developments will have on the demand for parks and open space within the City. While the request will defer the collection of the development impact fees to a later time in the development process, it will not waive or prevent the City from collecting the fees through protections and securities provided to the City under the agreement. Furthermore, the fees will be paid prior to the actual impact, as no residents will be allowed to occupy the Project until payment is received by the City. The Development Impact Fee Deferral Agreement has been pre-signed by Related to acknowledge their acceptance of the terms. Award of up to Eight Additional Project-Based Vouchers On August 17, 2021, the City Council approved an award of up to seven project-based vouchers and authorized the Executive Director of the Housing Authority to execute an Agreement to enter into a Project-Based Vouchers Housing Assistance Payments Contract. At the time of that approval, staff reported to the City Council that the Developer’s costs had increased since their initial award in July 2019. Since that date, the Developer’s costs have increased further. On May 6, 2022, Keyser Marston Associates (“KMA”) reviewed the Developer’s pro forma (as of April 22, 2022) and determined that the Project has an approximately $1.0 million additional financial gap due to an increase in the interest rate on the permanent loan and increase in construction costs. Given the extreme volatility within the construction industry at this time, the cost estimates appear reasonable, and are similar to other affordable housing projects that KMA has recently reviewed. Therefore, staff are recommending approval of up to eight additional project-based vouchers for the development of the Project to pay for an unanticipated increase in development costs. This will bring the Housing Authority’s total contribution to the Project Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 9 2 7 6 6 to 15 project-based vouchers (“PBVs”). Staff is recommending an amount up to eight additional project-based vouchers contingent upon a review of the Developer’s proforma prior to closing to determine if a full award of eight additional PBVs is necessary. If the Developer does not need the full award of 15 PBVs, staff will reduce the PBVs according to the Developer’s need prior to closing on their construction loan and/or permanent loan financing. Proposed Revisions to the Joint Sixty-Five (65) Year Ground Lease On February 18, 2020, the City Council authorized the Executive Director of the Housing Authority to enter into a Joint Powers Agreement with the County of Orange for the joint ownership of the adjacent properties located at 1126 and 1146 E Washington Avenue. At that same meeting, the City Council also authorized the Executive Director of the Housing Authority to execute a joint sixty- five (65) year Ground Lease and an Option Agreement with Washington Santa Ana Housing Partners, L. P., a California limited partnership formed by the Developer. The Staff Report from February 18, 2020, is attached as Exhibit 10. Since that date and during the option term, the Developer conducted a site assessment of the Project area and identified a number of unexpected environmental contaminants. This issue was communicated to the City Council on December 15, 2020 and August 17, 2021. To summarize the environmental contamination issue, the Developer retained Altec Testing & Engineering, Inc. (“Altec”) during their due diligence period to conduct environmental investigations for the sites. An initial Phase I environmental investigation was conducted on October 19, 2019. A Phase II Environmental Site Assessment (“Phase II”) Report was warranted based on the Phase I findings and was prepared by Altec on February 19, 2020. The Phase II identified unexpected contaminants and recommended additional environmental investigations to determine the extent of the soil contamination on the County and Housing Authority-owned properties. In addition, the County retained Geosyntec Consultants, Inc. to provide environmental peer review services and to act as the County’s consultant with respect to environmental issues on the property (the City retained services from a City consultant only as needed). Thereafter, and following approval by the Board of Supervisor on August 21, 2021, the County entered into a voluntary oversight agreement with the State of California Department of Toxic Substances Control (“DTSC”) that authorized DTSC to serve as the oversight agency for the Project. The Agreement allowed DTSC the ability to facilitate and help coordinate further inspections and investigations, review and approve appropriate remediation measures and documents, and engage the public, as necessary. Since the Developer did not contribute to the existing on-site environmental contaminants, the Developer has requested to amend the indemnity obligations in the Ground Lease to reflect the preexisting condition of the property related to the existing contaminants. As a result, the County and the Housing Authority staff have negotiated a revised Ground Lease to eliminate the Developer’s indemnity obligations associated only with these existing hazardous materials in Section 4.4.4 of the Ground Lease, but to maintain all Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 10 2 7 6 6 prior indemnity provisions. With the DTSC approved remediation plan, this should not result in any additional obligations or liability to the Housing Authority or City. In addition, U.S. Bank as the senior lender for the Project, requested revisions to the Ground Lease as part of their due diligence in order to approve their senior loan. In general, U.S. Bank’s revisions seek to protect and enhance their rights as a senior lender. Specifically, U.S. Bank requested revisions throughout the Ground Lease in the following Sections: Annual Operating Expenses, Effective Date, Net Refinancing Proceeds, Net Syndication Proceeds, Preconditions, Ownership of Improvements, contributions to the Capital Improvement Fund, Damage and Restoration, Transfer of Mortgages of Lessor’s Interest, Tenant’s Right to Encumber Leasehold Estate, Limitation on Lessor’s Termination Right, Leasehold Mortgagee Foreclosure Period, Multiple Leasehold Mortgages, Condemnation and Insurance Proceeds, and Effect of Foreclosure upon Base Rent, Successors and Assigns. Finally, the City and the County needed to make revisions to the County and Housing Authority’s base rents in order incorporate a loan from the Orange County Housing Finance Trust and adjust the residual receipt split. The revised Ground Lease is attached as Exhibit 11 with these revisions in redline format. The revised Ground Lease has been pre-signed by Related to acknowledge their acceptance of the terms. Land Use Covenant with the Department of Toxic Substances Control The property at 1126, 1136, & 1146 East Washington Avenue (the “Property”) has been found to have existing on-site environmental contaminants. Following their oversight of the Project, the State of California Department of Toxic Substances Control (“DTSC”) has determined that a Land Use Covenant is reasonably necessary to protect present or future human health or safety or the environment as a result of the presence on the property of hazardous materials as defined in Health and Safety Code section 25260. A limited portion of the Property will be subject to the restrictions of the Land Use Covenant (“Restricted Area”), and is more particularly described in Exhibit C of the Land Use Covenant. The Restricted Area is defined and bound by specific GPS coordinates. The Property has been investigated and/or remediated under DTSC’s oversight. DTSC approved a Supplemental Site Investigation, Screening Level Human Health Risk Assessment, and Removal Action Workplan in accordance with Health and Safety Code, division 20, chapter 6.8. The remediation activities conducted at the Property include (1) excavation and offsite disposal of soil contaminated with arsenic, lead, chromium, and petroleum hydrocarbons, and (2) institutional controls to restrict construction over the area of soil vapor contaminated with Tetrachloroethene beneath the western portion of the North parcel. However, hazardous substances, including Tetrachloroethene, remain at the Property above levels acceptable for unrestricted land use. Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 11 2 7 6 6 As a result of the continued presence of hazardous substances, which are also hazardous materials as defined in Health and Safety Code section 25260, at the Property, DTSC has concluded that it is reasonably necessary to restrict the use of the Restricted Area, in order to protect present or future human health or safety or the environment, and that the Land Use Covenant is required as part of the DTSC-approved remedy for the Property. DTSC has also concluded that the Property, as remediated and when used in compliance with the Environmental Restrictions of the Land Use Covenant, does not present an unacceptable risk to present and future human health or safety or the environment, which is a vital provision relative to the Project’s future residents. The specific Restrictions and Requirements for the Restricted Area are listed in Section 4 of the Land Use Covenant. The draft Land Use Covenant is attached as Exhibit 12. The final version of the Land Use Covenant will be subject to approval as to form by the City Attorney. Staff anticipates DTSC to finalize the Land Use Covenant after the agenda is published for the June 21, 2022 Housing Authority meeting. Considering that the DTSC is a Department of the State of California and the Land Use Covenant is a standard template agreement used across the State, the revisions that may be recommended by the City and County are limited. Equitable Community Revitalization Grant Agreement In 2021, the State of California adopted Senate Bill 158 referred to as the Cleanup in Vulnerable Communities Initiative, allocating $500 million to expedite the cleanup and beneficial reuse of contaminated properties, with priority given to properties in historically vulnerable and disadvantaged communities. DTSC’s Office of Brownfields Equitable Communities Revitalization Grant (“ECRG”) provides financial assistance to communities via reimbursable grants to investigate and clean up brownfields through a competitive process. DTSC will provide more than $250 million in ECRG grants to incentivize cleanup and investment in disadvantaged areas of the State. The ECRG program: Makes grants for eligible expenses up to $7 million; Focuses on environmental justice areas; and Supports applicants with free technical assistance and other expert guidance. Local governments, nonprofits and federally and non-federally recognized tribes are eligible to apply. As such, the City and the County submitted an ECRG application prior to the deadline on April 8, 2022. A total of 74 applications were received from across the State requesting a total of $112.3 million, less than the amount of funds DTSC made available. However, as of the date of submission of this Staff Report, DTSC is still reviewing the applications and has not made any award announcements. In preparation for award announcements, DTSC has provided a template ECRG Agreement that will be used for all grantees. The template ECRG Agreement is attached as Exhibit 13. The final version of the ECRG Agreement will be subject to approval as to form by the City Attorney. Staff anticipates DTSC to make award announcements after the agenda is published for the June 21, 2022 Housing Authority meeting. Considering Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 12 2 7 6 6 that the DTSC is a Department of the State of California and the ECRG Agreement is a new standard template agreement that will be used across the State for all grantees, the revisions to the Agreement that may be recommended by the City and County are limited. Summary Report Pursuant to Section 33433 The California Health and Safety Code (“H&SC”), Section 33433, requires that if a Housing Successor of a former redevelopment agency wishes to sell or lease property to which it holds title and if that property was acquired in whole or in part with property tax increment funds, the Housing Successor must first secure approval of the proposed sale or lease agreement from its local legislative body after a public hearing. The Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, wishes to lease the property at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13). The property was originally purchased with Low and Moderate Income Housing Asset Funds (also known as property tax increment funds). Therefore, a resolution and summary report pursuant to H&SC Section 33433 has been prepared (Exhibits 14 and 15). The Housing Authority has also conducted the required 14-day public notice period. Notice of the time and place of the hearing was published in the OC Register once per week for two successive weeks, on June 7, 2022, and June 13, 2022, as specified in Government Code section 6066, prior to the public hearing. Project Description The Crossroads at Washington will be 100% affordable to households earning no more than 30 percent of Area Median Income (AMI) of which 43 units will be set-aside for permanent supportive housing, with one exempt 2-bedroom managers unit. The large bedroom units align with the City’s priorities and needs while the permanent supportive housing units meets the County’s priorities for their financial contribution and property. The unit mix and rent restrictions are as follows: Bedroom Size 30% AMI (PSH) 30% AMI Manager’s Unit Total Units Studios 16 16 One-Bedroom 26 26 Two-Bedroom 1 20 1 22 Three-Bedroom 17 17 Four-Bedroom 5 5 TOTAL 43 42 1 86 Related has partnered with A Community of Friends (“ACOF”) as its non-profit partner to develop the Crossroads at Washington (the “Project”) to provide the services and expertise for serving the permanent supportive housing units. [Any future reference to “Developer” refers to Washington Santa Ana Housing Partners, L.P., a California limited partnership formed by the Developer.] ACOF is one of the most experienced developers Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 13 2 7 6 6 of permanent supportive housing in Los Angeles County and Southern California, with a long track record of delivering high quality supportive housing for people who were formerly homeless. ACOF has completed 50 housing developments with supportive housing for homeless individuals and families. The Crossroads at Washington will be a new transit-oriented affordable housing community on 2.286 acres located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701. The site is currently vacant, and positioned within walking distance from the Santa Ana Regional Transportation Center – a key transit hub for not only Orange County, but all of Southern California. The Project is located on two (2) contiguous undeveloped parcels, one fronting E. Washington Avenue on the northern half of the site (Housing Authority-owned parcel) and one parcel directly south of the City parcel (County- owned parcel). The five original buildings located on the site were demolished in the 1990s by Caltrans during a freeway-widening project. As a vacant and undeveloped site, there is an opportunity to create a newly designed site that will truly meet the needs of the local community. The entire site is designated District Center (DC) in the City of Santa Ana’s 1998 General Plan and zoned Transit Village (TV) in the Transit Zoning Code. The Project includes the development of two residential buildings, of which one building will be subdivided into two (2) residential portions, with 86 units surrounding two interior, landscaped courtyard/amenity spaces. Developed at an overall density of 37.7 units per acre, there will be 16 studios, 26 one-bedroom units, 22 two-bedroom units, 17 three- bedroom units, and 5 four-bedroom units. All units will be flat apartments located on the first, second, third, and fourth floors. Currently, the buildings have been designed to buffer courtyards, open green areas, and the pool area from highway noise and visual pollution. In addition, a proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate 5 ramp. Approximately 5,800 square foot of interior community amenities and leasing offices is designed to accommodate supportive and management services. The Project also includes approximately 1,060 square feet of community service retail/commercial space. One vehicular entry point to the site is provided off of E. Washington Avenue. The entry point has a small driveway roundabout with deliberate urban greening features, to reduce vehicle speeds and create a welcoming and aesthetically pleasing entrance and pickup/drop-off area for pedestrians, bike riders, and motor vehicles alike. Careful consideration for the character and scale of the surrounding neighborhood and buildings were taken into account, to ensure that the Project’s architecture and massing blends-in with the existing surrounding uses. The Project proposes a Mission Revival architectural style to complement adjoining neighborhoods and buildings. In particular, the design is envisioned to complement nearby buildings, similar to the Santa Ana Regional Transportation Center and the Triada at the Station District Apartments (also developed by Related), which are part of Santa Ana’s extensive history of prominent architecture. Overall, the layout of the buildings and common areas are designed to create several unique areas to best utilize outdoor space. Outdoor amenities include a pool, tot-lot, dog wash, and a BBQ and picnic area. Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 14 2 7 6 6 The proposed Site Plan includes approximately 120 surface parking spaces, of which 38 spaces would be tandem spaces, which will be assigned to the three-bedroom and four- bedroom apartments, along with some two-bedroom apartments. Residents will not be charged for parking. As a transit-oriented development, the Project is at the start of the OC Streetcar and directly across the street from the Santa Ana Regional Transportation Center. A total of 120 parking spaces will be sufficient for this type of transit-oriented development. FISCAL IMPACT Funds for the HOME Investment Partnerships Program Loan Agreement in the amount of $2,706,740.10 (90% of the original award amount) are available in the HOME Investment Partnerships Program, Loans and Grants account (no. 13018780-69152) for expenditure in the current fiscal year. The remaining $300,748.90 (10%) will be budgeted and included in the FY 2022-23 annual budget. Funds for the Neighborhood Stabilization Program Loan Agreement in the amount of $1,637,420 (100% of the original award amount) are available in the Neighborhood Stabilization Program 1, 2, and 3, Loans and Grants accounts (nos. 14218760-69152, 14218761-69152, and 14218762-69152) for expenditure in the current fiscal year. Recognize and appropriate Neighborhood Stabilization Program 1-3 revenue from prior year fund balance of $237,371 and grant funds of $246,501. This additional funding is to complete the necessary $1,637,420 (ttached as Exhibit 16). Appropriation Adjustment From Accounting Unit Amount To Accounting Unit Amount 14218760-69152 $240,042 Federal Grant Direct 14218002-52000 $246,501 Neighborhood Stabilization Program 1 & 3 14218762-69152 $6,459 14218760-69152 $103,004 14218761-69152 $121,549 Prior Year Fund Balance 14218002-50001 $237,371 Neighborhood Stabilization Program 1-3 14218761-69152 $12,818 The total estimated development impact fees to be deferred for the project is estimated to be $652,717 as follows: Fee Description Factor Factor Total Transit Zoning Code Traffic Impact Mitigation Fair Share $1,333.54 per unit 86 Units $114,685 Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 15 2 7 6 6 Drainage Area Assessment Fee $7,748.21 per acre 2.286 Acres $17,712 Sewer Connection Fee $49.00 per F.U.562 F.U. (est.)$25,774 Park Acquisition and Development Fee $400,448 Fire Facilities $0.94psf 100,104 SF $94,098 TOTAL $652,717 The final fee amount to be deferred will be calculated at the time of the final inspection or issuance of a certificate of occupancy for the project, whichever comes first. There is no negative fiscal impact as the deferred amount will be paid back to the City. However, it should be noted that the FY 21-22 deferred amount may be received in FY 22-23. Each project-based voucher is estimated to be valued at $1,255 monthly or $15,060 annually, based on HUD’s renewal funding of vouchers from May 9, 2022. The approximate value of the eight additional project-based vouchers on an annual basis totals $120,480. The approximate value of the combined 15 project-based vouchers on an annual basis totals $225,900. The actual annual expenditure for the 15 project-based vouchers may be different based on when the development of the project is completed and the units are leased. Funds will be budgeted in future fiscal years in the Housing Choice Voucher Program, Project Based Vouchers account (no. 13618760-69171). If the City receives an award of funds from DTSC’s Office of Brownfields Equitable Communities Revitalization Grant, the grant funds will be appropriated by the City Manager in the FY 22-23 Budget. Fiscal Impact Verified By: Kathryn Downs, CPA, Executive Director – Finance and Management Services Agency EXHIBITS 1.Staff Report from July 2, 2019 2. Pre-Commitment Letter 3.Staff Report from August 17, 2021 4. First Amended and Restated Pre-Commitment Letter 5. HOME Investment Partnerships Program Loan Agreement 6. Neighborhood Stabilization Program Loan Agreement 7. Subordination Agreement with U.S. Bank, National Association 8. Subordination Agreement with the County of Orange Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 16 2 7 6 6 9. Development Impact Fee Deferral Agreement 10.Staff Report from February 18, 2020 11.Revised Ground Lease 12.Land Use Covenant 13.Equitable Community Revitalization Grant Agreement 14.Summary Report Pursuant to Section 33433 15.Resolution Submitted By: Steven A. Mendoza, Assistant City Manager lr-)SU:-U\NCE NOT REQUIR!:OWUnf< MtW PHr)CEF.:nCU.:1":JK 0: GOUN1�,IL MAYOR � "Tr. JUL 2 2 2019 Miguel A. Pulido MAYOR PRO TEM Juan Villegas COUNCILMEMBERS Cecilia Iglesias David Penaloza Vicente Sarmiento Jose Solorio CITY OF SANTA ANA COMMUNITY DEVELOPMENT AGENCY 20 Civic Center Plaza M-25 • P.O. Box 1988 Santa Ana, California 92702 July 2, 2019 Liane T akano Southern California Director (714)647-5360 www.santa-ana.org The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Dora Leong Gallo Chief Executive Officer A Community of Friends 3701 Wilshire Blvd., Suite 700 Los Angeles, CA 90010 Re: Crossroads at Washington A-2019-109 CITY MANAGER Kristine Ridge CITY A HORNEY Sonia R. Carvalho ACTING CLERK OF THE COUNCIL Norma Mitre-Ramirez 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 Pre-Commitment Letter for: NSP Loan, HOME Loan, and Lease Agreement Dear Ms. Takano and Ms. Gallo, The Related Companies of California and A Community of Friends (collectively referred to as the "Developer") requested financial assistance in connection with the proposed development of an eighty-six (86) unit affordable housing complex, with eighty-five (85) units restricted to extremely-low income households, to be located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14) ("Project"). The site consists of two adjacent parcels. The Housing Authority of the City of Santa Ana ("Housing Authority") owns one parcel at 1126 E. Washington Ave. (APN 398-092-14) totaling approximately 1.43 acres of land area ("Housing Authority Parcel"). The County of Orange ("County") owns an adjacent parcel (APN 398-092-13) totaling approximately .85 acres of land area ("County Parcel"). The Housing Authority and County will work together to merge their respective parcels with joint ownership for purposes of master leasing the parcels to the Developer to construct the Project over a single parcel ("Property"). SANTA ANA CITY COUNCIL Miguel A Pulido Juan Villega s Vi ce nte Sarmiento Dav id Penaloza Jose Solorio Mayor Mayor Pro Tern, Ward 5 Ward 1 Ward 2 Ward 3 mpul1do@santa-ana .org jVlll egas@santa-ana.org v sa rm1ento@santa-ana.org dpenatoza@sant a-ana .org 1solon9@san ta-ana.org Va cant Ward 4 Cec1l 1a Iglesias Ward 6 c1gles 1as@sanla-an a.org EXHIBIT 2 Pag� 12 The City of Santa Ana ("City") and the Housing Authority have reviewed the Developer's request for assistance, and at the City Council/Housing Authority meeting on July 2, 2019, the City Council and Housing Authority Board authorized and approved issuance of this pre commitment letter evidencing the preliminary award of (collectively, the "City Assistance"): - A loan in the maximum amount of $963,951.00 from the Neighborhood Stabilization Program ("NSP") held by the City for the Project ("NSP Loan"); -A loan in the maximum amount of $3,007,489.00 from the HOME Investment Partnerships Program ("HOME") held by the City for the Project ("HOME Loan"); and, -A 62 -year ground lease for the Housing Authority portion of the Property located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs: 398- 092-13 and 398-092-14); to be used for development of an eighty-six (86) unit affordable housing complex, with eighty-five (85) units restricted to extremely-low income households ("Ground Lease"). This letter shall evidence the City's pre-commitment of the City Assistance to the Developer for the Project subject to the conditions described below. NSP and HOME Loans: The amount of the proposed NSP and HOME Loans has been determined based upon the City's review of the Developer's request for the receipt of the City Assistance and the development proforma and projected cash flows for the Project submitted by the Developer to the City ("Proforma"). The City Manager has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the City Assistance is not increased or extended. The NSP and HOME Loans shall include the following terms: •The NSP Loan shall be for a maximum principal amount of $963,951.00, or as much thereof as is disbursed for hard and soft costs in constructing the Project, provided from NSP funds. •The HOME Loan shall be for a maximum principal amount of $3,007,489.00, or as much thereof as is disbursed for hard and soft costs in constructing the Project, prov ided from HOME funds. •3% simple interest per annum. •Repayment from 33.3% of Residual Receipts (pro-rata with payments due in connection with other financing provided by other public agencies) (after payment of operating expenses including social services expenses and monitoring fees, debt service, any deferred developer fee, and partnership fees to be described in the EXHIBIT 2 Page 13 Agreement), with 33.4% to the County, and the remaining 33.3% to be disbursed to the Developer. •Remaining principal and accrued interest due upon the 55th anniversary of the issuance of Certificate of Occupancy or earlier upon sale, refinancing or default. On that date, the City and Housing Authority agree to review the performance of the Property and consider in good faith any reasonable request by Developer to modify the terms or extend the term of the City Promissory Notes. Additionally, the City will receive 33.3% of the net proceeds received from any sale or refinancing of the Project in order to repay any outstanding principal or interest due on the City Promissory Notes, after payment of outstanding conventional debt and payment in full of any deferred developer fee and establishment of any reserves and transaction costs. •Cost savings from the Project, if any, will be applied first to pay down the NSP and HOME Loans, subject to compliance with the Tax Credit Allocation Committee ("TCAC") Regulations and California Health and Safety Code, as applicable. •After all other funding sources have been secured through enforceable funding commitments, a HOME Subsidy Layering Review is required in order to confirm the amount of HOME funds committed to the Project. The HOME Loan shall also require specific HOME designated units in the Project. Based on a preliminary HOME Cost Allocation Analysis, the City must designate at least sixteen (16) units in the Project as HOME assisted-units per the following preliminary unit mix: •Three (3) studio units; •Five (5) one-bedroom units; •Four ( 4) two-bedroom units; •Three (3) three-bedroom units; and, •One (1) four-bedroom unit. As least 20% of the HOME designated units must be designated as Low HOME units. This equates to four (4) Low HOME units based on a sixteen (16) unit HOME requirement. The remainder of the HOME designated units can be restricted as High HOME units. This is subject to change based on a final HOME Cost Allocation Analysis to be completed after the HOME Subsidy Layering Review has been performed. Ground Lease: The Project will be located on the Property at 1126 and 1146 E. Washington Avenue, currently owned by the Housing Authority, as well as the adjacent parcel owned by the County (APNs: 398-092-13 and 398-092-14 ). The Housing Authority will be working with the County to draft and negotiate the necessary documents to join ownership so that the EXHIBIT 2 Pag€ 14 Project may be constructed over the combined Property under a master lease with the Housing Authority and County, as joint owners. The ground lease payment will be structured as capitalized ground rent payment based on the appraised fair market value of the Property. The Developer estimates the current value of the Property at $5,580,000. This figure will need to be confirmed through an appraisal, but based on the Developer's assessment, the capitalized ground rent payments are estimated as follows: •The capitalized ground rent payment for the County parcel is estimated at $2,500,000; and, •The capitalized ground rent payments for the Housing Authority parcel is estimated at $3,080,000. These amounts will be paid at closing with funds provided by loans made by the City and County which will be secured by promissory notes on the Property and be repaid through a share of the Project's Residual Receipts as noted above (i.e., 33.4% to the County and 33.3% to the Housing Authority). This will not be a cash transaction; the closing escrow statement will show a credit and debit of $3,080,000. Based on the above, the Housing Authority Board authorized a preliminary award of a 62- year lease of the Housing Authority portion of the Property to the Developer for the Project. After Developer secures a commitment from the County for a 62-year lease of the County portion of the Property, staff will return to the Housing Authority for consideration of a 62-year Ground Lease Agreement. There will only be one Ground Lease Agreement that will have all three parties: the County, City (as tenants in common) and the Developer. The Ground Lease Agreement will require the successful development of the Project by the Developer. General Provisions: The City's obligation to provide the City Assistance to the Project is subject to each of the following conditions: •Developer must provide proof that it has secured all of its remaining financing for the development of the Project in the form of enforceable funding commitments, which may include 9% or 4% Federal Low Income Housing Tax Credits, State Housing Tax Credits, a loan of affordable housing funds from the County of Orange, Section 8 project-based vouchers from the Orange County Housing Authority, or any other funding sources necessary in the Project's capital stack to close on their financing, before staff will return to the City Council for consideration of the NSP and HOME Loan Agreements. •Developer must provide proof that the County has approved or committed to approve a 62-year ground lease for the County portion of the Property located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs: 398-092-13 and 398- EXHIBIT 2 PngE 15 092-14) before staff will return to the Housing Authority for consideration of the Ground Lease Agreement. •All of the affordable units (less 1 manager's unit) in the Project will be restricted to extremely low-income households. •The rent standards for the Project must be in compliance with the strictest of the standards imposed by TCAC and HOME Program regulations, or other funding sources contributed to the Project, as applicable. •All provided funding and Project requirements shall conform to the City's adopted Affordable Housing Funds Policies and Procedures, unless alternative requirements are expressly provided in the executed NSP and HOME Loan Agreements, Ground Lease Agreement, or any other documents related to the development of the Project. •Approval of all required entitlements and discretionary actions, to allow the construction of an 86-unit affordable housing complex to be located at 1126 and 1146 E.Washington Avenue, Santa Ana, CA 92701. •The City's obligation to provide the NSP Loan and HOME Loan is and shall remain subject to all covenants, conditions, and restrictions set forth in the Loan Agreements, and in particular City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. •Review and approval of the documents evidencing the NSP Loan and HOME Loan by the City Council. •Review and approval of the documents evidencing the Ground Lease by the Housing Authority and the County. •Project funding is contingent on the successful execution of a 62-year Ground Lease Agreement by the Developer with the Housing Authority and County. •Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176. Developer, at its sole cost and expense, will be responsible for securing any and all permits and discretionary approvals that may be required for the Project by the City, Housing Authority, County, or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Notably, this pre-commitment letter shall not obligate the City or any department thereof to approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the construction, rehabilitation, installation or operation of the Project. This pre-commitment letter for the Project will expire on July 2, 2022. EXHIBIT 2 16 If you have any questions or require any additional information regarding this pre commitment letter, please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-2241 or by e-mail at jbrown@santa-ana.org. Si ncerely, On behalf of the City of Santa Ana: City Manager Attest: Norma Mitre Acting Clerk of the Council On behalf of the Housing Authority of the City of Santa Ana: Steven A. Mendoza Housing Authority Executive Director Attest: Norma Mitre Acting Recording Secretary EXHIBIT 2 r w� (o 1c c1&1J'"' svim11) flt\ MAYOR Vicente Sarmiento MAYOR PRO TEM David Penaloza COUNCILMEMBERS Phil Bacerra Ir:: .;,.,,:'./A;,: wr. Johnathan Ryan Hernandez Jessie Lopez Nelida Mendoza Thai Viet Phan August 17, 2021 Liane Takano :. · ... �QUIRED ·' '.. '.JROCEFJ . JOU�C 1 L CITY OF SANTA ANA COMMUNllY DEVELOPMENT AGENCY 20 Civic Center Plaza • P.O. Box 1988 Santa Ana, California 92702 {714) 647·5360 www.santa•ana.org Southern California Director The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Dora Leong Gallo Chief Executive Officer A Community of Friends 3701 Wilshire Blvd., Suite 700 Los Angeles, CA 90010 Re: Crossroads at Washington 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 A-2021-173 CITY MANAGER Kristine Ridge CITY A HORNEY Sonia R. Carvalho CLERK OF THE COUNCIL Daisy Gomez First Amended and Restated Pre-Commitment Letter for: NSP Loan, HOME Loan, Lease Agreement, and Seven (7) Project -Based Vouchers Dear Ms. Takano and Ms. Gallo, The Related Companies of California and A Community of Friends ( collectively referred to as the "Developer") requested financial assistance in connection with the proposed development of an eighty-six (86) unit affordable housing complex, with eighty-five (85) units restricted to extremely-low income households, to be located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14) ("Project"). The site consists of two adjacent parcels. The Housing Authority of the City of Santa Ana ("Housing Authority") owns one parcel at 1126 E. Washington Ave. (APN 398-092-14) totaling approximately 1.43 acres of land area ("Housing Authority Parcel"). The County of Orange ("County") owns an adjacent parcel (APN 398-092-13) totaling approximately .85 acres of land area ("County Parcel"). The Housing Authority and County have merged their respective parcels with joint ownership for purposes of master leasing the parcels to the Developer to construct the Project over a single parcel ("Property"). SANTA ANA CITY COUNCIL Vicente Sannienlo David Penaloza Thai Viet Phan Jessie Lopez Phil Bacerra Johnathan Ryan Hernandez Nehda Mendoza Mayor Mayor Pro Tern, Ward 2 Ward 1 Ward 3 Ward 4 Ward 5 Ward 6 ysarmiento@santa-ana ora dpena1oza(@santa-ana.org tphan@sanla-ana om /essielooez@santa -ana org pbacerra@santa-ana.om jryanhemandez@santa-ana.om nmendgza@santa-ana.org EXHIBIT 4 The City of Santa Ana ("City") and the Housing Authority have reviewed the Developer's request for assistance, and at the City Council/Housing Authority meeting on July 2, 2019, the City Council and Housing Authority Board authorized and approved issuance of this pre commitment letter evidencing the preliminary award of (collectively, the "City Assistance"): -A loan in the maximum amount of $963,951.00 from the Neighborhood Stabilization Program ("NSP'') held by the City for the Project ("NSP Loan"); -A loan in the maximum amount of $3,007 ,489.00 from the HOME Investment Partnerships Program ("HOME") held by the City for the Project ("HOME Loan"); and, -A 62-year ground lease for the Housing Authority portion of the Property located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs: 398- 092-13 and 398-092-14 ); to be used for development of an eighty-six (86) unit affordable housing complex, with eighty-five (85) units restricted to extremely-low income households ("Ground Lease"). On August 17, 2021, the City Council and the Housing Authority Board authorized and approved issuance of this amended and restated pre-commitment letter evidencing an additional award of: -$333,742 of NSP funds to the existing preliminary award of $963,951 for a total of $1,297,693 in NSP funds; and, -Seven (7) Project-Based Vouchers (PBVs). This amended and restated letter shall evidence the City's pre-commitment of the City Assistance to the Developer for the Project subject to the conditions described below. NSP and HOME Loans: The amount of the proposed NSP and HOME Loans has been determined based upon the City's review of the Developer's request fo r the receipt of the City Assistance and the development proforma and projected cash flows for the Project submitted by the Developer to the City ("Prof orma"). The City Manager has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the City Assistance is not increased or extended. The NSP and HOME Loans shall include the following tenns: •The NSP Loan shall be for a maximum principal amount of $1,297,693.00, or as much thereof as is disbursed for hard and soft costs in constructing the Project, provided from NSP funds. •The HOME Loan shall be for a maximum principal amount of $3,007,489.00, or as much thereof as is disbursed for hard and soft costs in constructing the Project, provided from HOME funds. EXHIBIT 4 •3% simple interest per annum. •Repayment from 33.3% of Residual Receipts (pro-rata with payments due in connection with other financing provided by other public agencies) {after payment of operating expenses including social services expenses and monitoring fees, debt service, any deferred developer fee, and partnership fees to be described in the Agreement), with 33.4% to the County, and the remaining 33.3% to be disbursed to the Developer. •Remaining principal and accrued interest due upon the 55th anniversary of the issuance of Certificate of Occupancy or earlier upon sale, refinancing or default. On that date, the City and Housing Authority agree to review the performance of the Property and consider in good faith any reasonable request by Developer to modify the terms or extend the term of the City Promissory Notes. Additionally, the City will receive 33.3% of the net proceeds received from any sale or refinancing of the Project in order to repay any outstanding principal or interest due on the City Promissory Notes, after payment of outstanding conventional debt and payment in full of any deferred developer fee and establishment of any reserves and transaction costs. •Cost savings from the Project, if any, will be applied first to pay down the NSP and HOME Loans, subject to compliance with the Tax Credit Allocation Committee ("TCAC") Regulations and California Health and Safety Code, as applicable. •After all other funding sources have been secured through enforceable funding commitments, a HOME Subsidy Layering Review is required in order to confirm the amount of HOME funds committed to the Project. The HOME Loan shall also require specific HOME designated units in the Project. Based on a preliminary HOME Cost Allocation Analysis, the City must designate at least sixteen (16) units in the Project as HOME assisted-units per the following preliminary unit mix: •Three (3) studio units; •Five (5) one-bedroom units; •Four (4) two-bedroom units; •Three (3) three-bedroom units; and, •One (1) four-bedroom unit. As least 20% of the HOME designated units must be designated as Low HOME units. This equates to four (4) Low HOME units based on a sixteen (16) unit HOME requir ement. The remainder of the HOME designated units can be restricted as High HOME units. This is subject to change based on a final HOME Cost Allocation Analysis to be completed after the HOME Subsidy Layering Review has been performed. EXHIBIT 4 Ground Lease: The Project will be located on the Property at 1126 and 1146 E. Washington Avenue, currently owned by the Housing Authority, as well as the adjacent parcel owned by the County (APNs: 398-0 92-13 and 398-092-14 ). The Housing Authority will be working with the County to draft and negotiate the necessary documents to join ownership so that the Project may be constructed over the combined Property under a master lease with the Housing Authority and County, as joint owners. The ground lease payment will be structured as capitalized ground rent payment based on the appraised fair market value of the Property. The Developer estimates the current value of the Property at $5,580,000. This figure will need to be confirmed through an appraisal, but based on the Developer's assessment, the capitalized ground rent payments are estimated as follows: •The capitalized ground rent payment for the County parcel is estimated at $2,500,000; and, •The capitalized ground rent payments for the Housing Authority parcel is estimated at $3,080,000. These amounts will be paid at closing with funds provided by loans made by the City and County which will be secured by promissory notes on the Property and be repaid through a share of the Project's Residual Receipts as noted above (i.e., 33.4% to the County and 33.3% to the Housing Authority). This will not be a cash transaction; the closing escrow statement will show a credit and debit of $3,080,000. Based on the above, the Housing Authority Board authorized a preliminary award of a 62- year lease of the Housing Authority portion of the Property to the Developer for the Project. After Developer secures a commitment from the County for a 62-year lease of the County portion of the Property, staff will return to the Housing Authority for consideration of a 62-year Ground Lease Agreement. There will only be one Ground Lease Agreement that will have all three parties: the County, City (as tenants in common) and the Developer. The Ground Lease Agreement will require the successful development of the Project by the Developer. Project-Based Vouchers: •Funding Source: The seven (7) PBVs will be funded out of the Housing Choice Voucher Program annual budget authority received by the Housing Authority from HUD. •Rents: The Project-Based Voucher Housing Assistance Payments (HAP) Contract rents below are preliminary and contingent upon a reasonable rent determination to be conducted by the Housing Authority at the time of execution of the HAP Contract: o Two PBVs for the 3-bedroom Units:$2,937 o Five PBVs for the 4-bedroom Units:$3,382 EXHIBIT 4 In accordance with HUD regulations and SAHA's Administrative Plan, these rents are subject to review prior to the execution of a HAP contract. •Annual Amount: The Project will receive PBVs for seven (7) units: 30% AMI Unit Size No. Units Proposed Rent Three-Bedroom 2 $2,937 Four-Bedroom 5 $3,382 Total 7 •Term: The HAP Contract will have a term of twenty (20) years. Any time before the expiration of the HAP Contract, the Developer may request an additional twenty (20) years, subject to a determination by the Housing Authority that it is appropriate to continue providing affordable housing for low-income families or to expand housing opportunities and HUD funding. Subsequent extensions are subject to the same requirements. •Units Receiving Assistance: The maximum number of units receiving assistance from the Housing Authority will be seven (7). General Provisions: The City's obligation·to provide the City Assistance to·the Project is subject to each of the following conditions: •Developer must provide proof that it has secured all of its remaining financing for the development of the Project in the form of enforceable funding commitments, which may include 9% or 4% Federal Low Income Housing Tax Credits, State Housing Tax Credits, a loan of affordable housing funds from the County of Orange, Section 8 project-based vouchers from the Orange County Housing Authority, or any other fu nding sources necessary in the Project's capital stack to close on their financing, before staff will return to the City Council for consideration of the NSP and HOME Loan Agreements. •Developer must provide proof that the County has approved or committed to approve a 62-year ground lease for the County portion of the Property located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs: 398-092-13 and 398- 092-14) before staff will return to the Housing Authority for consideration of the Ground Lease Agreement. •All of the affordable units (less 1 manager's unit) in the Project will be restricted to extremely low-income households. EXHIBIT 4 •The rent standards for the Project must be in compliance with the strictest of the standards imposed by TCAC and HOME Program regulations, or other funding sources contributed to the Project, as applicable. •All provided funding and Project requirements shall conform to the City's adopted Affordable Housing Funds Policies and Procedures, unless alternative requirements are expressly provided in the executed NSP and HOME Loan Agreements, Ground Lease Agreement, or any other documents related to the development of the Project. •Approval of all required entitlements and discretionary actions, to allow the construction of an 86-unit affordable housing complex to be located at 1126 and 1146 E.Washington Avenue, Santa Ana, CA 92701. •The City's obligation to provide the NSP Loan and HOME Loan is and shall remain subject to all covenants, conditions, and restrictions set forth in the Loan Agreements, and in particular City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. •Review and approval of the documents evidencing the NSP Loan and HOME Loan by the City Council. •Review and approval of the documents evidencing the Ground Lease by the Housing Authority and the County. •The Housing Authority's obligation to provide the seven (7) PBVs is and shall remain subject to the City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. •Project funding is contingent on the successful execution of a 62-year Ground Lease Agreement by the Developer with the Housing Authority and County. •Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176. Developer, at its sole cost and expense, will be responsible for securing any and all permits and discretionary approvals that may be required for the Project by the City, Housing Authority, County, or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Notably, this first amended and restated pre-commitment letter shall not obligate the City or any department thereof to· approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the construction, rehabilitation, installation or operation of the Project. This first amended and restated pre-commitment letter for the project will expire on August 17, 2023. EXHIBIT 4 A-2021-173 If you have any questions or require any additional information regarding this pre commitment letter, please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-2241 or by e-mail at jbrown@santa-ana.org . Sincerely, On behalf of the City of Santa Ana: Kristine Ridge City Manager Attest: Da Clerk of th On behalf of the Housing Authority of the City of Santa Ana: Steven A. Mendoza Housing Authority Executive Director Attest: EXHIBIT 4 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] HOME LOAN AGREEMENT by and between the CITY OF SANTA ANA And Washington Santa Ana Housing Partners, L.P. a California limited partnership (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) Dated: June 21, 2022 EXHIBIT 5 i The Crossroads at Washington City HOME Loan Agreement TABLE OF CONTENTS Section 1. DEFINITIONS AND INTERPRETATION ............................................. 2 1.1. Defined Terms. ................................................................................................... 2 1.2. Singular and Plural Terms. ................................................................................... 8 1.3. References and Other Terms. ............................................................................... 8 1.4. Exhibits Incorporated.. ......................................................................................... 8 Section 2. [RESERVED]............................................................................................ 8 Section 3. SCOPE OF WORK/ PROJECT BUDGET ............................................... 8 Section 4. [RESERVED]............................................................................................ 9 Section 5. LOANS...................................................................................................... 9 Section 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS ............. 9 Section 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY ....................................................................................................... 14 Section 8. RESERVED. ........................................................................................... 20 Section 9. GENERAL PROVISIONS AND WARRANTIES ................................. 20 Section 10. CONDITIONS FOR CONSTRUCTION ................................................ 24 Section 11. FEDERAL (HOME PROGRAM) COVENANTS ................................. 26 Section 12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR OF PROPERTY ....................................................................................... 31 Section 13. NONDISCRIMINATION COVENANTS .............................................. 34 Section 14. ENVIRONMENTAL MATTERS .......................................................... 35 Section 15. OTHER AFFIRMATIVE COVENANTS .............................................. 36 Section 16. OTHER NEGATIVE COVENANTS ..................................................... 38 Section 17. CERTIFICATE OF COMPLETION ...................................................... 39 Section 18. INDEMNIFICATION ............................................................................. 39 Section 19. INSURANCE, CASUALTY AND CONDEMNATION ....................... 42 Section 20. DEFAULTS AND REMEDIES .............................................................. 46 Section 21. MISCELLANEOUS................................................................................ 49 EXHIBIT 5 1 The Crossroads at Washington City HOME Loan Agreement LOAN AGREEMENT HOME PROGRAM THIS LOAN AGREEMENT (the "Agreement") dated, for identification purposes only, as of June 21, 2022, is made and entered into by and between the City of Santa Ana, a charter city and municipal corporation (referred to herein as “City”) and Washington Santa Ana Housing Partners, L.P., a California limited partnership (referred to herein as “Developer”), with reference to the following: RECITALS: A. City has received an allocation of funds from the United States Department of Housing and Urban Development ("HUD") under the HOME Investment Partnerships Program (the "HOME Program") (42 U.S.C. §12701, et seq.,) to be used in accordance with applicable statutory requirements and regulations (the "HOME Regulations") (24 CFR Part 92); B. The Housing Authority of the City of Santa Ana (“Housing Authority”) owns one parcel located at 1136 East Washington Avenue (APN 398-092-14) totaling approximately 1.43 acres of land area (“Housing Authority Parcel”). The County of Orange (“County”) owns an adjacent parcel (APN 398-092-13) totaling approximately 0.85 acres of land area (“County Parcel”). The two parcels will be merged into one parcel (“Property”) and co- owned by the Housing Authority and the County as Tenants-In-Common. C. The Housing Authority and the County will ground lease the Property to the Developer (the “Ground Lease”) for sixty-two (62) years from the Certificate of Completion, but no more than sixty-five (65) years from the date of execution of the Ground Lease. D. In furtherance of the HOME Program, Developer has applied to the City for a loan with which to: 1. provide deeper affordability for a longer term, as well as acquire and construct the Property, and 2. thereafter to maintain, operate and professionally manage the Property as decent, safe, sanitary and affordable rental housing. E. City, on certain terms and conditions, desires to make such loan to Developer in order to make possible the construction of the Property, to expand the supply of decent, safe, sanitary and affordable housing. F. If there is any discrepancy between Federal and State guidelines with regard to any of the terms and conditions contained herein, the more stringent shall apply. G. This Agreement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Agreement, the Affordability Restrictions on Transfer of Property, the City/HOME Loan Note and the City/HOME Loan Deed of EXHIBIT 5 2 The Crossroads at Washington City HOME Loan Agreement Trust provide a means of enforcement by the City if Developer is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c) (13)]. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Developer agree as follows: Section 1. DEFINITIONS AND INTERPRETATION 1.1. Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above and in all other Loan Documents, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Section 1. "Affordable Housing" means housing operated in accordance with the requirements of 24 CFR 92.252 and the rents governed by HUD. “Affordability Period” means the period beginning upon the issuance of the Certificate of Completion and ending on the date which is sixty-two (62) years after the issuance of the Certificate of Completion during which the Affordability Restrictions on Transfer of Property remain in effect. "Affordability Restrictions on Transfer of Property" means that certain document affecting real property benefiting the City, attached hereto as Exhibit F. “Affordable Rent” means the monthly rents that are set forth in more detail in Section 7 of this Agreement. "Building Permit" means the building permit(s) issued by City and required for the construction, if any. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public to conduct City affairs. "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 31. "Certificate of Completion" has the meaning set forth in Article 17. "City" means the City of Santa Ana, California, a charter city and municipal corporation. "City/HOME Loan" means the loan to be made to Developer by City from HOME funds pursuant to Article 5 of this Agreement. EXHIBIT 5 3 The Crossroads at Washington City HOME Loan Agreement "City/HOME Loan Deed of Trust" means the deed of trust encumbering the Property, in the form attached hereto as Exhibit D, to be executed by Developer pursuant to Section 5.B.2 in order to secure the City/HOME Loan Note. "City/HOME Loan Note" means that certain promissory note in the original principal amount of $3,007,489.00, in the form attached hereto as Exhibit E, to be executed by Developer in favor of City to evidence the obligation of Developer to repay the City/HOME Loan. "Close of Escrow" shall mean the date upon which the City/HOME Loan Deed of Trust is recorded in the Official Records of the County. "Closing Statement" means the final statement of Developer's Escrow account for the purchase and sale of the Property pursuant to the Purchase Contract. “Construction Period” means the period of time commencing with the Close of Escrow and ending on the Conversion Date. “Conversion Date” means the date on which the Senior Construction Loan is purchased by the Senior Permanent Lender and it converts from a construction loan to a permanent loan. "County" means the County of Orange, California. "Developer" means Washington Santa Ana Housing Partners, L.P., a California limited partnership, its successors and assigns. "Developer's Representative" shall mean the President of the Administrative General Partner or his/her designee. “Environmental Reports” [list to be provided under separate cover] "Escrow Holder" means Old Republic . "Event of Default" has the meaning set forth in Section 20.1. "Executive Director" means the Executive Director of the Community Development Agency, or his/her designee. "Extremely Low Income" means an adjusted income that does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. “General Partner(s)” means the General Partner(s) of Developer, Supportive Housing LLC (the “Managing General Partner”), Related/Washington Santa Ana Development Co., LLC (the “Administrative General Partner”), and their respective successors and assigns. EXHIBIT 5 4 The Crossroads at Washington City HOME Loan Agreement "Governmental Authority" means any governmental or quasi-governmental agency, board, bureau, commission, department, court, administrative tribunal or other instrumentality or authority, and any public utility. "Hazardous Materials" means any flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended including: (i) poses a hazard to the Project or to persons on the Project or (ii) causes the Project to be in violation of any Hazardous Substance Law; (iii) asbestos in any form; (iv) urea formaldehyde foam insulation; (v) transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls; (vi) radon gas; (vii) any chemical, material, or substance defined as or included in the definition of “hazardous substance,” “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous waste,” or “toxic substances” or words of similar import under any applicable local, state, or federal law or under the regulations adopted or publications promulgated pursuant to those laws, including, but not limited to, any Hazardous Substance Law, Code of Civil Procedure § 564, as amended from time to time, Code of Civil Procedure § 726.5, as amended from time to time, Code of Civil Procedure §736, as amended from time to time, and Civil Code § 2929.5, as amended from time to time; (viii) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any governmental authority or which may pose a hazard to the health and safety of the occupants of the Project or the owners or occupants of property adjacent to or surrounding the Project, or any other person coming on the Project or any adjacent property; and (ix) any other chemical, material, or substance that may pose a hazard to the environment flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including, without limitation the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et. seq., as amended. The term Hazardous Substance shall not include materials or substances commonly used in the construction and operation of an apartment complex in accordance with applicable Hazardous Substance Law. EXHIBIT 5 5 The Crossroads at Washington City HOME Loan Agreement “Hazardous Substance Law” means any federal, state, or local law, ordinance, regulation, or policy relating to the environment, health, and safety, any Hazardous Materials (including, without limitation, the use, handling, transportation, production, disposal, discharge, or storage of the substance), industrial hygiene, soil, groundwater, and indoor and ambient air conditions or the environmental conditions on the Project, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 [42 USCS §§ 9601 et seq.], as amended from time to time; the Hazardous Substances Transportation Act [49 USCS §§ 1801 et seq.], as amended from time to time; the Resource Conservation and Recovery Act [42 USCS §§ 6901 et seq.], as amended from time to time; the Federal Water Pollution Control Act [33 USCS §§ 1251 et seq.], as amended from time to time; the Hazardous Substance Account Act [Health and Safety Code §§ 25300 et seq.], as amended from time to time; the Hazardous Waste Control Law [Health and Safety Code §§ 25100 et seq.], as amended from time to time; the Medical Waste Management Act [Health and Safety Code §§ 25015 et seq.], as amended from time to time; and the Porter-Cologne Water Quality Control Act [Water Code §§ 13000 et seq.], as amended from time to time. “HOME Compliance Period” is for a period of twenty (20) years from the issuance of the Certificate of Completion. "HOME Program" has the meaning set forth in Recital "A" above. "HOME Regulations" has the meaning set forth in Recital "A" above and summarized in Exhibit G. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "Improvements" means all improvements and fixtures now and hereafter comprising any portion of the Property, including, without limitation, landscaping, trees and plant materials; and offsite improvements (including, without limitation, streets, curbs, storm drains, and adjacent street lighting). "Indemnitees" has the meaning set forth in Section 14.5. "Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments, injunctions, decrees or awards of the United States or any state, county, municipality or other Governmental Authority. "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest). “Limited Partner” means the Tax Credit Investor and any other Limited Partner(s) or Special Limited Partner(s) of Developer, and their successors and assigns. “Loan Documents” means, collectively, this Agreement, the City/HOME EXHIBIT 5 6 The Crossroads at Washington City HOME Loan Agreement Loan Note, the City/HOME Loan Deed of Trust, the Affordability Restrictions on Transfer of Property, and any other agreement, document, or instrument that the City requires in connection with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement. “Low Income” means an adjusted income that does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. “Median Income for the Area” means the median income for the Orange County, California PMSA as most recently determined by HUD. Also may be referred to interchangeably in the Loan Documents as “Area Median Income” or “AMI”. 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 City shall provide the Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HUD and the State. "Operating Reserves" shall mean reserves maintained during the Term of Agreement and funded out of Residual Receipts, loan advances, equity, or other sources and set aside for taxes and assessments, insurance premiums, operating expenses, and debt service. Operating Reserves shall not exceed the amount required to pay three (3) months of operating expenses and three (3) months of mandatory debt service, or such higher amount required by a project lender or by the Tax Credit Investor. “Partnership Agreement” means the Agreement of Amended and Restated Agreement of Limited Partnership of Borrower, dated as of [ _________ ], as said Partnership Agreement may be amended from time to time. "Permitted Encumbrances for the Affordable Housing Restrictions" means, collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the Executive Director in writing. "Permitted Encumbrances for the City Loan Deed of Trust" means, collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the Executive Director in writing. "Project" means the acquisition of a leasehold interest and construction of the Property by Developer pursuant to this Agreement. "Project Budget" means the line-item budget for the Project attached hereto as Exhibit C, as modified from time to time in accordance with this Agreement. "Project Costs" means all costs of any nature incurred in connection with the Project in accordance with generally accepted accounting principles. "Property" means the Property that is located at 1126, 1136 and 1146 East Washington Avenue, within the City of Santa Ana, and is more fully described in the “Legal EXHIBIT 5 7 The Crossroads at Washington City HOME Loan Agreement Description” of the Property attached hereto as Exhibit A and incorporated herein by reference. “Replacement Reserves” shall mean reserves maintained during the Term of Agreement and funded out of Residual Receipts, loan advances, equity, or other sources and set aside for replacement of roofing, furniture, fixtures, equipment and other capital expenditures. The annual amount set aside for Replacement Reserves shall be a minimum of two hundred fifty dollars ($250) per unit but shall not exceed five hundred dollars ($500) per unit and may increase by 3% per year, or such higher amount as may be required by the Tax Credit Investor or the Senior Lender and approved by City (such approval not to be unreasonably withheld or delayed). “Residual Receipts” has the meaning set forth in the City/HOME Loan Note. “Senior Construction Lender” means U.S. Bank National Association. or such senior construction lender designated by the Developer and approved in advance by the City for the Project. “Senior Construction Loan” means the construction loan made by Senior Construction Lender to Borrower. "Senior Lender" means the Senior Construction Lender prior to the Conversion Date and, thereafter, the Senior Permanent Lender during the remainder of the Term of Agreement, or any other holder of the Senior Loan Note(s) or any refinancing of the Senior Loan Note(s). "Senior Loan" shall mean the Senior Construction Loan being made by Senior Lender concurrent to the City Loan for payment of a portion of the acquisition of a leasehold interest in the Project (and related costs) and new construction costs, the Senior Permanent Loan and shall include any subsequent loan that refinances the initial Senior Loan. "Senior Loan Deed of Trust" means the deed of trust securing the Senior Loan by encumbering the Property, as the same may be amended and restated from time to time. "Senior Loan Documents" means, collectively, the loan agreement governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document or instrument that the Senior Lender requires in connection with the Senior Loan, as the same may be amended and restated from time to time. "Senior Loan Note" means the promissory note evidencing the Senior Loan from Senior Lender, as the same may be amended and restated from time to time. "Senior Permanent Lender” means California Community Reinvestment Corporation, a California nonprofit public benefit corporation, or such senior permanent lender as may be designated by Developer and approved in advance by the City as the senior permanent lender for the Project. EXHIBIT 5 8 The Crossroads at Washington City HOME Loan Agreement “Senior Permanent Loan” means the Senior Construction Loan following its conversion from a construction to a permanent loan following the satisfaction of certain conversion conditions and the purchase of such Senior Construction Loan by Senior Permanent Lender. “Tax Credit Investor” means U.S. Bancorp Community Development Corporation, a Minnesota corporation. “Tax Credit Rules” means the provisions of Section 42 of the Internal Revenue Code and/or, if applicable, California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5, et seq., as the foregoing may be amended from time to time, to the extent applicable to the Project and the rules and regulations implementing the foregoing, including the regulations set forth in Title 4 Cal. Code Regs. Section 10300, et seq. “Term of Agreement” the terms and conditions contained herein shall commence upon the date first written above and remain in effect for sixty-two (62) years from the issuance of the Certificate of Completion. “Very Low Income” means an adjusted income that does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. 1.2. Singular and Plural Terms. Any defined term used in the plural in this Agreement or any other City Loan Document shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class. 1.3. References and Other Terms. Any reference to this Agreement or any Loan Document shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The term "document" is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms "including" and "include” mean "including (include) without limitation." 1.4. Exhibits Incorporated. All attachments and exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference. Section 2. [RESERVED] Section 3. SCOPE OF WORK/ PROJECT BUDGET EXHIBIT 5 9 The Crossroads at Washington City HOME Loan Agreement Developer shall comply with this Section until the Certificate of Completion is issued. A “Scope of Work” for the Property is attached hereto as Exhibit B. Any change to the Scope of Work requested by the Developer, which would result in a change to the Project Budget in excess of ten percent (10%) of any individual line item or in excess of five percent (5%) of the aggregate budget, shall be subject to the prior written approval of the Executive Director. A line-item budget for the Project, including a summary statement of sources and uses of funds, is incorporated into Exhibit C (the "Project Budget"). Any material change to the Project Budget in excess of ten percent (10%) of any individual line item or in excess of five percent (5%) of the aggregate budget shall be subject to the prior written approval of the Executive Director which approval will not be unreasonably withheld, conditioned or delayed and if not granted or denied within five (5) Business Days, shall be deemed approved; provided, however, that in all events, Developer shall at all times obtain and maintain all required permits and approvals from the City’s Planning and Building Agency. Notwithstanding the foregoing, the City’s approval of a change order shall not be required unless the approval of the Senior Lender is required with respect to such change order. Section 4. [RESERVED] Section 5. LOANS 5.1. CITY LOAN: (a) Amount and Purpose. Subject to the terms and conditions of this Agreement, City agrees to make a loan of HOME funds to Developer in the principal amount of up to $3,007,489 (the "City/HOME Loan") for the construction of the Property. (b) City/HOME Loan Note and Deed of Trust. The City/HOME Loan shall be evidenced by the City/HOME Loan Note in the form attached hereto as Exhibit E. The City/HOME Loan shall be secured by the City/HOME Loan Deed of Trust in the form attached hereto as Exhibit D. The City/HOME Loan Deed of Trust shall be a deed of trust encumbering the Property, subordinate to the Senior Loan(s) made to Developer and the Senior Loan Documents. (c) City/HOME Loan Terms. The terms and conditions of the City/HOME Loan are as set forth in the City/HOME Loan Note, which is a residual receipts note. The HOME Compliance Period will end twenty (20) years from the issuance of the Certificate of Completion. Section 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS Developer shall comply with this Section until the Certificate of Completion is issued. 6.1. Conditions Precedent. City's obligation to disburse the City/HOME Loan is subject to the satisfaction, or waiver by the Executive Director, of the following EXHIBIT 5 10 The Crossroads at Washington City HOME Loan Agreement conditions precedent: (a) Loan Documents. Developer shall have delivered to the Escrow Holder, signed by the authorized officer or officers of Developer, with such signature(s) acknowledged where necessary, each of the following documents: (i) this Agreement; (ii) The City/HOME Loan Note; (iii) The City/HOME Loan Deed of Trust; (iv) The Affordability Restrictions on Transfer of Property; (v) The Project Budget; (vi) The Ground Lease; and (vii) All other documents and instruments reasonably required by the City to be executed and delivered, all in form and substance reasonabl y satisfactory to the City. The City has received and approved all required Environmental Reports. (b) Title Insurance. City shall have received an LP-10 ALTA Lender’s loan policy of title insurance (2006 edition), or evidence of a commitment therefore satisfactory to City, issued by First American Title Insurance Company and in form and substance satisfactory to City, together with all endorsements and binders required, naming City as the insured, in a policy amount of not less than the City/HOME Loan Amount, showing Developer as the ground lessee of the Property and insuring the City/HOME Loan Deed of Trust to be a valid lien on the Property. This Agreement, the City/HOME Loan Note, and City/HOME Loan Deed of Trust shall be subordinate to the Senior Loan Note, Senior Loan Deed of Trust and the other Senior Loan Documents. (c) Intentionally Omitted. (d) Management Plan. The Developer shall have submitted and the City shall have approved a Management Plan ("Management Plan"). The Management Plan shall include a management contract with a manager approved in writing by the City for management of the Project and a plan for long-term marketing, operation, maintenance, repair and security of the Project, method of selection of tenants, and for rental policies in compliance with any applicable requirements, policies and procedures and with the Affordability Restrictions on Transfer of Property, along with any other policies or procedures required by the City. The Management Plan shall also include an initial budget for the Project. City hereby approves John Stewart Company as the initial property manager. (e) Documents Recorded. This Agreement, the City/HOME Loan Deed EXHIBIT 5 11 The Crossroads at Washington City HOME Loan Agreement of Trust and the Affordability Restrictions on Transfer of Property shall have been recorded in the Official Records of the County. This Agreement, and the City/HOME Loan Deed of Trust shall be subordinate to the Senior Loan Note, the Senior Loan Deed of Trust, and the other Senior Loan Documents. (f) Request for Notice. For the benefit of City, Escrow Holder shall have recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default"). (g) Insurance. City shall have received evidence satisfactory to the City that all of the policies of insurance required by Section 19 of this Agreement are in full force and effect. (h) Representations and Warranties. The representations and warranties of Developer contained in this Agreement and the other Loan Documents shall be correct in all material respects as of the Close of Escrow as though made on and as of that date, and if requested by the Executive Director, City shall have received a certificate to that effect signed by Developer's Representative. (i) No Default. No Event of Default by Developer shall have occurred and be continuing, and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer under this Agreement, and if requested by the Executive Director, City shall have received a certificate to that effect signed by Developer's Representative. 6.2. Disbursement Procedures for Loan. The City/HOME Loan proceeds shall be disbursed through Escrow to finance the construction of the Property (as evidenced in Exhibit C). The City/HOME Loan proceeds shall not be used for any purpose other than for eligible construction costs, including a developer fee and soft costs related to development of the Project (costs all subject to City’s prior review). The City allows for eligible costs to be paid by HOME loan funds that were incurred not more than 24 months prior to the HOME funds commitment date of this loan agreement in accordance with HOME regulations. Ninety percent (90%) of the City/HOME Loan proceeds will be disbursed by City to Developer after execution and recording of this Agreement, with ten percent (10%) held back by the City and not disbursed to Developer until after completion of construction on the Project and issuance of a Certificate of Completion. 6.3. First Disbursement. The City's obligation to make the first disbursement of the construction portion is subject to satisfaction of the following conditions precedent: (a) General Contractor. If the Executive Director has not yet approved the General Contractor, the Executive Director shall have approved the identity and qualifications of the General Contractor which approval will not be unreasonably withheld, conditioned or delayed. (b) Construction Contract. If the Executive Director has not yet approved the Construction Contract, the Executive Director shall have approved the EXHIBIT 5 12 The Crossroads at Washington City HOME Loan Agreement Construction Contract which approval will not be unreasonably withheld, conditioned or delayed. 6.4. Termination for Failure of Condition. If (a) any of the conditions set forth herein are not timely satisfied within no more than ninety (90) days of the date of this Agreement or waived by the Executive Director, and (b) City is not in default under this Agreement, City may terminate this Agreement without any further liability on its part by giving written notice of termination to Developer. Upon the giving of such notice, all principal, interest and other amounts owing under the City/HOME Loan Note shall be immediately due and payable, regardless of any other specified due date. 6.5. [Reserved.] 6.6. [Reserved.] 6.7. Waiver of Conditions. The conditions set forth pertaining to City’s obligation to make disbursements of the rehabilitation or construction portion are for City's benefit only and the Executive Director may waive all or any part of such rights by written notice to Developer. 6.8. Waiver of Disbursement Conditions. A waiver of a disbursement condition may only be provided with written approval by the City. 6.9. Modification of Disbursement Conditions and Procedures. The Executive Director shall have the authority to modify the disbursement conditions and procedures set forth herein in order to conform them to the payment provisions of the Construction Contract. 6.10. Other Terms and Conditions of Loan. (a) The City/HOME Loan Note shall become immediately due and payable, in the event of any of the following: (i) failure to complete the Project within four (4) years of the Close of Escrow; (ii) HOME assisted units must achieve initial occupancy within 18 months of the issuance of the Certificate of Completion; (iii) violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; (iv) an Event of Default by Developer which is not timely cured after expiration of any applicable notice and cure periods pursuant to the terms of this Agreement. 6.11. Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all recording fees and charges on any document recorded pursuant to this Agreement, and (c) the premium for the title insurance required hereunder. 6.12. Approval of Additional Financing. Except as to the Senior Loan, the EXHIBIT 5 13 The Crossroads at Washington City HOME Loan Agreement loans secured by permitted encumbrances for the City Loan Deed of Trust and as otherwise described herein or in the policy of title insurance issued to the City at loan closing, the Developer shall not place or permit (either voluntarily or involuntarily) to be placed any encumbrances, including, but not limited to any additional liens or financing of any kind on the Project without the prior written discretionary consent of the City. 6.13. Cost Savings Obligation. (a) Subject to compliance with the Tax Credit Rules and the approval of the California Tax Credit Allocation Committee (“TCAC”), Developer hereby agrees to provide and pay to the City the payment described in this Section 6.13 in connection with Cost Savings, if any, from the Project in an amount to be determined based on the “Audit” (as defined in Section 6.13(b) below and in accordance with 6.13) to be conducted upon completion of construction for the Project. Payment of the City Share of Cost Savings (defined below) shall be made at the time set forth therefore in Section 6.13(d) below. Provided that the payment is timely and fully made in accordance with Section 6.13(d), the amount paid for the City Share of Cost Savings shall be credited against the amount then outstanding on the City/HOME Loan Note. (b) Audit to Determine Cost Savings and City Share of Cost Savings. The actual amount of “Cost Savings” (as defined below) to be paid to the City and retained by the Developer shall be determined after the Audit, as hereafter defined and described, and the amount of such Cost Savings shall be equal to the amount by which the total sources of permanent financing for the Project exceed the costs of development incurred for the Project including without limitation payment of the Developer Fee (resulting amount constituting “Cost Savings”). From the total amount of Cost Savings, the Developer shall retain fifty percent (50%) and pay to City fifty percent (50%) (“City Share of Cost Savings”). If any of the other soft lenders request a share of Cost Savings, the City shall split the City Share of the Cost Savings (50%) on a pro rata basis with the other soft lender(s) that are requesting a share of Cost Savings. The pro rata distribution shall be based on the initial principal balances of each respective soft loan of the soft lender(s) that are requesting a share of Cost Savings. If none of the other soft lenders request a share of the Cost Savings, the City shall receive the full 50% of the Cost Savings. Within one hundred and eighty (180) days following the issuance of Form 8609 by TCAC, Developer shall cause its certified public accountant(s) to perform a final audit of the costs of development of the Project in accordance with the requirements of the Tax Credits an d generally accepted auditing standards (GAAP) (“Audit”). If the Audit determines that the total sources of permanent financing for the Project (including long-term permanent debt and equity) exceed the total development cost for the Project required in connection with the development of the Project, such excess shall be considered the “Cost Savings” for the Project. (c) Allocation of Cost Savings Amount. First to Pay the City Share of Cost Savings as Payment of Principal on City/HOME Loan Note. Once determined by the Audit pursuant to Section 6.13 above, the full amount of Cost Savings shall be allocated and remitted in the following order: (a) first, Developer shall retain fifty (50%) of Cost EXHIBIT 5 14 The Crossroads at Washington City HOME Loan Agreement Savings, and (b) second, Developer shall pay to the City the City Share of Cost Savings which shall be utilized as principal payment due on the City/HOME Loan Note. (d) Timing of Allocation and Payment of Cost Savings. In the event of any Cost Savings, the payment of the City Share of Cost Savings shall become due and payable no later than sixty (60) days after Developer receives its final Tax Credit equity payment for the Project, and each of such payments shall be allocated and remitted in a lump sum, and as applicable credited toward the respective amount outstanding under the City/HOME Loan Note. 6.14. Standard Form Leases. On or before issuance of the Certificate of Completion, Developer shall submit to City for its written approval a standard form of residential lease to be used for leasing of the Project (the “Standard Lease”). The Standard Lease shall be in compliance with all applicable laws and Developer shall be obligated to revise said Standard Lease from time to time to comply with any changes in said applicable laws. 6.15. Leasing Program. Developer shall market and lease the Project consistent with the Marketing Plan described in Exhibit G. 6.16. No Changes. Developer shall not materially modify the approved Standard Lease or materially deviate from the approved rental rate schedule for the Units without the City’s prior written consent in each instance. 6.17. Landlord’s Obligations. Developer shall timely and in good faith, perform all obligations required to be performed by it as landlord under any lease affecting any part of the Project or any space within the Project. If any tenant at any time claims any breach of landlord’s obligations and the amount of such claim (in excess of available insurance coverage) is $10,000 or more, Developer shall promptly notify City of such claim. Section 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 7.1. Use Covenants and Restrictions. (a) Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assigns and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely- low- or very-low or low income households at rents affordable to such households for sixty-two (62) years from the issuance of the Certificate of Completion. The HOME restrictions for the City’s twelve (12) HOME assisted units shall be enforced until the date that is twenty (20) years after the date on which the Certificate of Completion is issued. The City permits the Developer to limit the eligibility and/or give preference to a particular segment of the population in accordance with 24 CFR 92.253(d). (b) The Project shall consist of eighty-six (86) units, including one (1) on-site manager’s unit(s). The City’s HOME assistance shall require twelve (12) HOME EXHIBIT 5 15 The Crossroads at Washington City HOME Loan Agreement assisted units. The HOME assisted units shall be six (6) 2-bedroom units, four (4) 3- bedroom units, and two (2) 4-bedroom unit, fixed, and shall be distributed throughout the complex with comparable amenities to the other units. The County’s HOME assistance shall require forty-three (43) HOME assisted units. In total, there will be fifty-five (55) HOME assisted units in the Project. There shall not be any overlap between the County’s HOME assisted units and the City’s HOME assisted units. (c) At initial lease up, households in the HOME assisted units cannot earn more than the Very-Low Income limits (50% of AMI) as published by HUD in compliance with the HOME Program. Rental increases shall be in conformance with federal and state law. After the twenty (20) year HOME Compliance Period, the City shall require that the HOME assisted units remain affordable, with rents calculated based on assumed household size at the same income levels. (d) All of the HOME units will be restricted to occupancy by families earning at initial lease up no more than the Very Low income limits (50% of AMI) as published by HUD, and the rents must not exceed the Low HOME rents adjusted for family size appropriate to the unit as published by HUD. (e) Maximum Occupancy will be two (2) people per room plus one (1). Example for a two-bedroom unit, five (5) people would be maximum occupancy. (f) Rents for the HOME assisted units shall be governed by the HOME Program regulations at 24 CFR section 92.252. (g) Developer must have a written lease between tenant and owner for a period of at least one year, unless a shorter period is mutually agreed upon. Leases must be consistent with the HOME Program regulations at 24 CFR section 92.209(g). 7.2. Affordability Levels/Unit Mix: The affordability levels/unit mix for the Project is as follows: Unit Size 30% TCAC AMI No. Units Current Rent Studio 16 $711 1 Bedroom 26 $762 2 Bedroom 21 $915 3 Bedroom 17 $1,057 4 Bedroom 5 $1,179 Total 85 The remaining unit will be a 2-bedroom unit reserved for the on-site manager. HOME Assisted Units EXHIBIT 5 16 The Crossroads at Washington City HOME Loan Agreement Total # of Units Unit Type Level of Affordability # of HOME Assisted Units % Share of HOME Assisted Unit Type 16 Studio Very-Low Income (50% AMI) (Low HOME) 0 0% 26 1 Bed 0 0% 21 2 Bed 6 50% 17 3 Bed 4 33% 5 4 Bed 2 17% (1) In no event shall the rent charged to the HOME assisted units be more than that amount of the Low HOME rent as published by HUD, as amended from time to time. (2) At the time of project completion, the Developer shall provide to the City the address and/or unit number of each of the HOME fixed units. (3) Annually with the financial statements, the Developer shall provide an annual report of rents and occupancy of all units, including the HOME assisted units, to verify compliance with affordability requirements. For the HOME assisted units, information on unit substitution and filling vacancies shall be provided to ensure that the project maintains the required unit mix. Except with respect to the HOME assisted units during the HOME Compliance Period, the affordable rents charged at the Project must comply with the most stringent of the standards set forth by TCAC as defined in Affordability Restrictions on Transfer of Property. A utility allowance must be deducted from the maximum affordable rent charged at the Project for each unit. Utility allowances must be based on project-specific allowances for the HOME assisted units. TCAC provides a California Utility Allowance Calculator (CUAC) that must be used to calculate the utility allowances for the HOME-assisted units. Initial rents may be recalculated to allowable rental amounts at the time of initial lease-up following completion of construction in accordance with any changes in allowable rent and income tables as published by HUD. 7.3. Rent Increases. On an annual basis, the City shall provide Developer with the maximum allowable schedule of rents for the Property in accordance with changes in allowable rent and income tables published by HUD and TCAC, provided however that the rent for the HOME assisted units shall in no event be higher than the rent for the equivalent non-HOME assisted unit within the Project. In no event can Developer charge any tenant more than such amount. All rent increases are subject to City approval pursuant to the terms of this Section. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in Section 7.1 and 7.2 above. EXHIBIT 5 17 The Crossroads at Washington City HOME Loan Agreement Subject to the applicable requirements and provisions of, and changes to, Section 42 of the Code, if, upon recertification of the income of any tenant, the Developer determines that such tenant has an adjusted income exceeding 30% of the applicable Median Income for the Area, in each case, adjusted for household size, such tenant may be permitted to continue to occupy the unit at the rental rate as provided for in Sections 7.1 and 7.2 above, as applicable, until the tenant chooses to vacate the unit. After the unit is vacated, the Developer shall re-rent the unit to a tenant pursuant to the terms, covenants and conditions of this Agreement. 7.4. Prohibited Fees. The Developer and subsequent owner is prohibited from charging fees that are not customary, consistent with HOME Regulations 24 CFR section 92.504(c)(3)(xi). The Developer and subsequent owner can charge reasonable application fees to prospective tenants; other fees only to the extent that they are reasonable and customary for the project area; and fees for services provided to tenants, provided that these services are not mandatory. 7.5. Operation and Maintenance of the Property. Solely at Developer’s expense, Developer agrees to maintain the Property in a clean and orderly condition and in good condition and repair and keep the Property free from any accumulation of debris and waste materials. If at any time Developer fails to maintain, or cause to be maintained, the Property as required by this section, and said condition is not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from the date of written notice from the City, unless such condition cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure, the City may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for such maintenance. The City shall inspect the Property annually after the date of issuance of the Certificate of Completion as described in Article 17 of this Agreement. During the Affordability Period, the Property must meet all applicable State and local codes. The Property must be free of all health and safety defects during the Affordability Period. (a) Operation. During the Term of Agreement, Developer shall at all times operate on the Project an affordable housing rental facility in compliance with this Agreement and the Affordability Restrictions on Transfer of Property. (b) Maintenance. During the Term of Agreement, Developer agrees to maintain all interior and exterior improvements, including landscaping (and all abutting ground, sidewalks, roads, parking and landscape areas) on the Project in good condit ion, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with any Management Plan approved by the City under this Loan Agreement (such approval not to be unreasonably withheld or delayed) (including without limi tation any landscape and signage plans), as the same may be amended from time to time, and all other applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having jurisdiction and all their respective departments, bureaus, and officials. Developer acknowledges the great emphasis the City places on quality maintenance to protect its investment and to provide EXHIBIT 5 18 The Crossroads at Washington City HOME Loan Agreement quality affordable housing for its constituents and to ensure that all City-subsidized affordable housing projects within the City are not allowed to deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free from all graffiti and any accumulation of debris or waste material. Developer shall promptly make all repairs and replacements necessary to keep the Project in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. Developer shall not commit or permit any waste or deterioration of the Project, shall not abandon any portion of the Project, and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of damage to the Project. In the event that Developer breaches any of the covenants contained in this Section 7.5 and such default continues for a period of five (5) days after written notice from the City (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from the City (with respect to landscaping and building improvements), then City, in addition to whatever other remedies it may have under this Agreement, the other Loan Documents or at law or in equity, shall have the right to en ter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permit ted (but not required) to enter upon the Project and perform all acts and work necess ary to protect, maintain and preserve the improvements and landscaped areas on the Project, in the amount of the expenditure arising from such acts and work of protection, maintenance, and preservation by City and/or reasonable costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by Developer to City upon demand. (c) Removal of Personal Property. During the Term of Agreement, Developer shall not cause or permit the removal from the Project of any items of Developer’s personal property (other than tools and equipment used in the operation of the Project) unless (i) no Event of Default remains uncured and (ii) Developer promptly substitutes and installs on the Project other items of equal or greater value in the operation of the Project, all of which shall be free of liens and shall be subject to the liens of the Deed of Trust and the Financing Statement and executes and delivers to City all documents required by City in connection with the attachment of such liens to such items. Developer shall keep detailed records of such removal and shall make such records available to City upon written request from time to time. 7.6. Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, mental or physical disability, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any person claiming under or through him establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect for the term of the Agreement. EXHIBIT 5 19 The Crossroads at Washington City HOME Loan Agreement 7.7. Loss of Project-Based Voucher Subsidy. It is anticipated that during the Term of Agreement the Project will maintain not less than fifteen (15) Project-Based Voucher (“PBV”) Restricted Units (“PBV Restricted Units”) provided by the Housing Authority and forty three (43) Project-Based Vouchers provided by Orange County (the “County PBV Restricted Units”), supported by Project-Based Section 8 rental subsidy payments (the "Rental Subsidy"). If, during the Term of Agreement, there is a reduction, termination or nonrenewal of the Housing Authority’s or County’s Rental Subsidy through no fault of Developer, such that the Rental Subsidy shown on the Project Budget is no longer available (or available in a lesser amount), Developer may request approval of the City (a) to allow households with adjusted incomes that do not exceed sixty percent (60%) of AMI, adjusted for actual household size, to occupy the extremely-low income units (i.e., a unit previously restricted to households with adjusted incomes that do not exceed 30% of AMI), and (b) to increase the rent on one or more of the Restricted Units, to rents that are affordable to households with an adjusted income that does not exceed sixty percent (60%) of AMI, adjusted for household size appropriate for the Restricted Unit. The rent increase is subject to the following requirements: (a) concurrently with the request, Developer shall provide the City with evidence of the anticipated reduction, termination, or nonrenewal of the Rental Subsidy, (b) a Management Plan (as defined in Section 6.1(d) of this Agreement) for the Project for the City’s approval pursuant to Sections 6.1(d) and Exhibit F of this Agreement, showing the impact of the loss or reduction of the Rental Subsidy, (c) a proposed operating budget reflecting the rent increases (the “Operating Budget”), and (d) a description of efforts to obtain alternate sources of rent. The number of the Restricted Units subject to the rent increase and the amount of the proposed increase may not be greater than the number or amount required to ensure that the Project generates sufficient income to cover its operating costs, required deposits to replacement reserves, and debt service on approved financing as shown on the Operating Budget, and as is necessary to maintain the financial stability of the Project. In addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described above, Developer hereby agrees to the following: (a) Developer shall use good faith commercially reasonable efforts to obtain alternative sources of rental subsidies and shall provide the City with annual progress reports on efforts to obtain alternative sources of rental subsidies that would allow the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall reduce the rents back to the original restrictions to the extent that the alternative rental subsidies provide sufficient income to cover the operating costs, required replacement reserves and debt service of the Project as shown on the Operating Budget. (b) Developer shall provide tenants in the Restricted Units with notice of any rent increase pursuant to this Section 7.7, and shall notify the tenant that if they have received a tenant-based voucher from the Housing Authority they may use the tenant-based voucher for their Restricted Unit. (c) All rent increases for the Restricted Units are subject to City approval pursuant to the terms of this Section 7.7. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a EXHIBIT 5 20 The Crossroads at Washington City HOME Loan Agreement schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in this Section 7.7. Notwithstanding the foregoing, rent increases for the Restricted Units shall be subject to review and approval of the City. Developer shall give tenants of all Restricted Units written notice at least sixty (60) days prior to any rent increase. 7.8. Reserved. Section 8. RESERVED. Section 9. GENERAL PROVISIONS AND WARRANTIES 9.1. As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows, which representations and warranties are made solely by Developer and not by or on behalf of any partner of Developer: Formation, Qualification and Compliance. Supportive Housing LLC, the managing general partner of Developer: (a) is a limited liability company, validly existing and in good standing under the laws of the State of California; (b) has all requisite authority to conduct its business and own and lease its properties; and, (c) is qualified and in good standing in every jurisdiction in which the nature of its business makes qualification necessary or where failure to qualify could have a material adverse effect on its financial condition or the performance of its obligations under the Loan Documents. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with, any Governmental Authority that are necessary for the transaction of its business. 9.2. Execution and Performance of Loan Documents. (a) Developer has all requisite authority to execute and perform its obligations under the Loan Documents. (b) The execution and delivery of Developer of, and the performance by Developer of its obligations under, each Loan Document has been authorized by all necessary action and does not and will not: (i) require any consent or approval not heretofore obtained of any person having any interest in Developer; (ii) violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws or other governing document applicable to Developer; (iii) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the City Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; EXHIBIT 5 21 The Crossroads at Washington City HOME Loan Agreement (iv) violate any provision of any law presently in effect; or (v) constitute a breach or default under, or permit the acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or document to which Developer is a party or by which Developer or any of its property is bound. (c) Developer is not in default, in any respect that is materially adverse to the interests of City under the Loan Documents or that would have any material adverse effect on the financial condition of Developer or the conduct of its business, under any law, contract, lease or other agreement or document described in subsection (b). (d) No approval, license, exemption or other authorization from, or filing, registration or qualification with, any Governmental Authority is required which has not been previously obtained in connection with: (i) the execution of Developer of, and the performance by Developer of its obligations under, the Loan Documents; and (ii) the creation of the liens described in the Loan Documents. 9.3. Financial and Other Information. To the best of Developer’s knowledge, all financial information furnished to City with respect to Developer in connection with the City/HOME Loan (a) is complete and correct in all material respects as of the date of preparation thereof, (b) accurately presents the financial condition of Developer, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied or in accordance with such other principles or methods as are reasonably acceptable to City. To the best of Developer’s knowledge, all other documents and information furnished to City with respect to Developer, in connection with the City/HOME Loan, are correct and complete in all material respects insofar as completeness is necessary to give the City accurate knowledge of the subject matter. To the best of Developer’s knowledge Developer has no material liability or contingent liability not disclosed to City in writing and there is no material lien, claim, charge or other right of others of any kinds (including liens or retained security titles of conditional vendors) on any property of Developer not disclosed in such financial statements or otherwise disclosed to City in writing. 9.4. No Material Adverse Change. There has been no material adverse change in the condition, financial or otherwise, of Developer since the dates of the latest financial statements furnished to City. Since those dates, Developer has not entered into any material transaction not disclosed in such financial statements or otherwise disclosed to City in writing. 9.5. Tax Liability. Developer has filed all required federal, state and local tax returns and has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to City in writing) other than taxes being promptly and actively contested in good faith and by appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities (including contested liabilities) in accordance with generally EXHIBIT 5 22 The Crossroads at Washington City HOME Loan Agreement accepted accounting principles or in accordance with such other principles or methods as are reasonably acceptable to City. 9.6. Governmental Requirements. To the best of Developer’s knowledge, Developer is in compliance with all laws relating to the Property and all Governmental Authority approvals, including zoning, land use, planning requirements, and requirements arising from or relating to the adoption or amendment of, any applicable general plan, subdivision and parcel map requirement; environmental requirements, including the requirements of the California Environmental Quality Act and the National Environmental Policy Act and the preparation and approval of all required environmental impact statements and reports; use, occupancy and building permit requirements; and public utilities requirements. 9.7. Rights of Others. Developer is in compliance with all covenants, conditions, restrictions, easements, rights of way and other rights of third parties relating to the Property. 9.8. Litigation. There are no material actions or proceedings pending or, to the best of the Developer’s knowledge, threatened against or affecting Developer or any property of Developer before any Governmental Authority, except as disclosed to City in writing prior to the execution of this Agreement. 9.9. Bankruptcy. To the best of Developer’s knowledge, no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer. 9.10. Information Accurate. To the best of Developer’s knowledge, all information, regardless of its form, conveyed by Developer to City, by whatever means, is accurate, correct and sufficiently complete to give City true and accurate knowledge of its subject matter, and does not contain any material misrepresentation or omission. 9.11. Conflicts of Interest. No member, official or employee of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she has a direct or indirect financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give, any third party any money or other consideration for obtaining this Agreement. 9.12. Nonliability of City Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer in the event of any default or breach by the City or for any amount that may become due to Developer or on any obligations under the terms of this Agreement. 9.13. Transfers. Developer expressly acknowledges and agrees that the City has only agreed to assist the Developer as a means by which to induce the acquisition/construction/development of the Property. During the Term of Agreement, EXHIBIT 5 23 The Crossroads at Washington City HOME Loan Agreement except for a Permitted Transfer or except as otherwise permitted under the Loan Documents, Developer shall not sell or otherwise transfer the Project or any portion thereof, and none of the constituent general partners of Developer shall sell or otherwise transfer their interests in Developer, and none of the constituent general partners in a partnership that is a general partner in Developer shall sell or otherwise transfer their interest in such partnership without first obtaining the approval of the City, which consent the City may withhold or grant in the exercise of its reasonable and good faith discretion. The City shall not approve any such transfer request if the Developer is in default under any of the Loan Documents or the Management Plan. For purposes hereof, “Permitted Transfer” shall mean: (a) The granting of easements or licenses to any appropriate governmental agency or utility or permits to facilitate the development and/or operation of the Property; (b) A sale or transfer in connection with a foreclosure or deed in lieu of foreclosure of any senior deed of trust so long as the City is given notice as provided in Section 21.2 in order to exercise its remedies under Section 20.2; (c) The lease of any individual residential unit in the Project; (d) (i) A transfer of the Developer’s interest in the Property by foreclosure or deed in lieu of foreclosure to any bona fide third-party lender holding a lien encumbering the Property (or its nominee); and, (ii) following a foreclosure or a transfer of the Property by deed in lieu thereof, the first subsequent transfer to a third-party; (e) A transfer of limited partnership interests in Developer; (f) Transfer of the Property pursuant to the terms of a purchase option or right of first refusal executed in connection with Developer’s amended and restated agreement of limited partnership; and (g) The removal of the general partner of Developer as permitted under Developer’s Partnership Agreement. 9.14. Applicable Law. This Agreement shall be interpreted, governed and enforced under federal and State of California laws. 9.15. Third Parties. This Agreement is made for the sole benefit of Developer and the City and their successors and assigns, and no other person or persons shall have any rights or remedies under or by reason of this Agreement or any right to the exercise of any right or power of the City hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to any claimant for labor performed or materials furnished in connection with the construction of the Property. 9.16. Control of Property. The parties acknowledge that the City has not at any time participated in any manner in the management or operation of the Property, and will not so participate at any time hereafter. EXHIBIT 5 24 The Crossroads at Washington City HOME Loan Agreement Section 10. CONDITIONS FOR CONSTRUCTION Developer shall comply with this Section until the Certificate of Completion is issued. 10.1. Permits and Approvals. Developer shall diligently obtain all permits, including all building permits, licenses, approvals, exemptions and other authorizations of Governmental Agencies required in connection with the construction of the Property. 10.2. Commencement and Completion of Construction. The construction shall be considered complete for purposes of this Agreement only when: (a) all work described has been completed and fully paid for; and, (b) all work requiring inspection or certification by Governmental Authority has been completed and all requisite certificates, approvals and other necessary authorizations for use of the Property as an affordable rental housing development (including required final certificates of occupancy) have been obtained. 10.3. RESERVED. 10.4. Entry and Inspection. At all times prior to completion of the construction, upon reasonable notice of no less than 48 hours, City and their agents shall have: (a) the right of free access to the Property and all sites away from the Property where materials for the construction are stored; (b) the right to inspect all labor performed and materials furnished for the construction; and, (c) the right to inspect and copy all documents pertaining to the construction. 10.5. Compliance with Section 3 Clause. Section 3 of the Housing and Urban Development Act of 1968, 12 U.S.C. 170lu, as amended by Section 915 of the Housing and Community Development Act of 1992, requires that economic opportunities generated by HUD financial assistance for housing and community development programs be targeted toward low- and very low- income persons. Whenever HUD assistance generates opportunities for employment or contracting, state and local grantees, as well as other recipients of HUD housing assistance funds must, to the greatest extent feasible, provide these opportunities to low- and very low- income persons and to businesses owned by or employing low- and very low- income persons. Section 3 applies to projects for which HUD’s share of project costs exceeds $200,000 and contracts and subcontracts awarded on projects for which HUD’s share or project costs exceeds $200,000 and the contract or subcontract exceeds $100,000. For purposes of this Section 3 Clause and compliance thereto, whenever the word “contractor” is used it shall mean and include, as applicable, the Developer, and its contractor and subcontractor(s), if any. The particular text to be utilized in any and all contracts of any contractor doing work covered by Section 3 shall be in substantially the form of the following, as reasonably determined by the City, or as directed by HUD or its representative, and shall be executed by the applicable contractor under penalty of perjury: (a) “The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (“Section 3”). The purpose of Section 3 is to ensure that EXHIBIT 5 25 The Crossroads at Washington City HOME Loan Agreement employment and other economic opportunities generated by HUD assistance or HUD- assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to low- and very low-income persons [inclusive of Very Low Income Persons, Very Low Income Households, and Very Low Income Tenants served by the Project], particularly persons who are recipients of HUD assistance for housing. (b) The parties to this contract agree to comply with HUD’s regulations in 24 CFR part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the part 135 regulations. (c) The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers’ representative of the contractor’s commitments under this Section 3 clause, and will post copies of notices in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference, shall set forth minimum number of job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each; and the name and location of person(s) taking applications for each of the position; and the anticipated date the work shall begin. (d) The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR part 135. (e) The contractor will certify that any vacant employment positions, including training positions, that are filled (a) after the contractor is selected but before the contract is executed, and (b) with persons other than those to whom the regulations of 24 CFR part 135 require employment opportunities to be directed, were not filled to circumvent the contractor’s obligations under 24 CFR part 135. (f) Noncompliance with HUD’s regulations in 24 CFR part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts.” After the foregoing Section 3 Clause, there shall be a signature block for the contractor, as applicable, the following text shall be included immediately above the signature block: “The contractor/provider by his/her signature affixed hereto declares under penalty of perjury that contractor has read the requirements of the Section 3 Clause and accepts all its requirements contained therein for all of his/her operations related to this contract.” EXHIBIT 5 26 The Crossroads at Washington City HOME Loan Agreement To the extent applicable, the Developer shall comply and/or cause compliance with Section 3 Clause requirements for the Project. For example, when and if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, rather than volunteer labor or materials, Section 3 is applicable and all disclosure and reporting requirements apply. 10.6. Construction Information. From time to time during the course of the construction, within ten (10) Business Days following City’s written demand therefore, Developer shall furnish requested reports of project costs, progress schedules and contractors’ costs breakdowns for the construction, itemized as to trade description and item, showing the name of the contractor(s) and/or subcontractor(s), and including such indirect costs as real estate taxes, legal and accounting fees, insurance, architects’ an d engineers’ fees, loan fees, interest during construction and contractors’ overhead. 10.7. Protection Against Liens. Developer shall diligently file a valid Notice of Completion upon completion of the construction, diligently file a notice of cessation in the event of a cessation of labor on the construction for a period of thirty (30) days or more, and take all actions reasonably required to prevent the assertion of claims of lien against the Property. In the event that any claim of lien is asserted against the property or any stop notice or claim is asserted against the City by any person furnishing labor or materials to the Property, Developer shall immediately give written notice of the same to City and shall, promptly and in any event within ten (10) Business Days after written demand therefor, (a) pay and discharge the same, (b) effect the release thereof by delivering to City a surety bond complying with the requirement of applicable laws for such release, or (c) take such other action as City may reasonably require to release City from any obligation or liability with respect to such stop notice or claim. Nothing in this Section 10.7 shall limit or prohibit Developer’s right to contest any claim of lien, stop notice or claim described herein in good faith. 10.8. General Contractors who are Related Parties to the Developer. If the Project is developed with general contractors who are Related Parties to the Developer, the Developer must be audited to the subcontractor level by an outside auditing firm approved by the City. The Developer shall pay for the audit to the subcontractor level by an outside auditing firm. Section 11. FEDERAL (HOME PROGRAM) COVENANTS 11.1. The Developer shall carry out the design, construction and operation of the Project, and operate the Program, in conformity with all applicable laws, regulations, and rules of governmental agencies having jurisdiction, including without limitation and to the extent applicable, the HOME Requirements and the legal requirements set forth in “Exhibit G” attached to this Agreement and the statutes referenced therein. For purposes of this paragraph, “HOME Requirements” mean the requirements of the HOME Investment Partnership Act, as amended (42 U.S.C. § 12741, et seq.), and the implementing regulations (24 C.F.R. § 92, et seq.), and the legal requirements summarized or referenced in Exhibit G attached hereto and incorporated herein by this reference. EXHIBIT 5 27 The Crossroads at Washington City HOME Loan Agreement 11.1.5 Reserved. 11.2. Qualification as Affordable Housing. As more particularly provided in the Affordability Restrictions on Transfer of Property, Developer shall use, manage and operate the Property in accordance with the requirements of 24 CFR 92.252 so as to qualify the housing on the Property as Affordable Housing with affordable rents. 11.3. Tenant and Participant Protection. Developer shall comply with the requirements of 24 CFR 92.253. 11.4. Local Preference. Except with regard to persons experiencing homelessness referred off of the County of Orange coordinated entry system due to the layer of forty-three (43) PBVs provided by the Orange County Housing Authority, and subject to compliance with the HOME Regulations and applicable California and federal fair housing laws, and the requirements of Section 142(d) and Section 42 of the Internal Revenue Code local preference for Santa Ana residents and workers in tenant selection shall be a requirement of the Project. Subject to applicable laws and regulations governing nondiscrimination and preferences in housing occupancy required by Section 142(d) and Section 42 of the Internal Revenue Code, HUD or the State of California, as well as the City of Santa Ana Affordable Housing Funds Policies and Procedures, the Developer shall give preference in leasing units in the following order of priority: (a) First priority shall be given to persons who have been permanently displaced or face permanent displacement from housing in Santa Ana as a result of any of the following: (i) A redevelopment project undertaken pursuant to California’s Community Redevelopment Law (Health & Safety Code Sections 33000, et seq.) -- applicable only to projects funded by the Low and Moderate Income Housing Asset Fund; (ii) Ellis Act, owner-occupancy, or removal permit eviction; (iii) Earthquake, fire, flood, or other natural disaster; (iv) Cancellation of a Housing Choice Voucher HAP Contract by property owner; or (v) Governmental Action, such as Code Enforcement. (b) Second priority shall be given to persons who are either: (i) Residents of Santa Ana; and/or (ii) Working in Santa Ana at least 32 hours per week for at least the last 6 months. 11.5. Handicapped Accessibility. Developer shall comply with: (a) Section 504 EXHIBIT 5 28 The Crossroads at Washington City HOME Loan Agreement of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C governing accessibility of projects assisted under the HOME Program; and, (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36, in order to provide handicapped accessibility to the extent readily achievable. 11.6. Use of Debarred. Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 11.7. Maintenance of Drug-Free Workplace. Developer shall certify that Developer will provide a drug-free workplace in accordance with 24 CFR 84.13. 11.8. Lead-Based Paint. Developer shall comply with the requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing regulations at 24 CFR 35, as applicable. 11.9. Affirmative Marketing. Developer shall implement and perform such affirmative marketing procedures and requirements for the Property (24 CFR 92.351) in compliance with the City’s adopted Program. 11.10. Equal Opportunity and Fair Housing. Developer shall carry out the construction and perform its obligations under this Agreement in compliance with all of the state and federal laws and regulations regarding equal opportunity and fair housing described in 24 CFR 92.350. 11.11. Property Standards. Developer shall cause the Property to meet the housing quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal codes and ordinances, including zoning ordinances. 11.12. Displacement and Relocation. Developer acknowledges and agrees that, pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part, City must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of the Project. Furthermore, to the extent feasible, any existing residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary and affordable dwelling unit on the Property upon completion of the construction. Developer agrees to cooperate full y and completely with City in meeting the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably required by the Executive Director in connection therewith. All applicable state guidelines must also be followed. (a) Developer acknowledges and agrees that if the Project requires temporary or permanent relocation of existing residential or commercial tenants it will hire a Relocation Consultant to provide relocation services, pursuant to the Uniform Relocation Act and Real Property Acquisition Policies Act of 1970 (“URA”) and 24 CFR 92.253. (b) If a Relocation Consultant is required to be retained pursuant to Section 11.12(a), the City, Developer, and Relocation Consultant will meet periodically EXHIBIT 5 29 The Crossroads at Washington City HOME Loan Agreement during the relocation to provide updates and review tenant files, including at Project approval and prior to final benefit calculations. The Developer and Relocation Consultant shall carry out activity in compliance with URA and the City’s Acquisition and Relocation Policy and Procedures Manual (“Manual”). (c) If a Relocation Consultant is required to be retained pursuant to Section 11.12(a), the Developer and Relocation Consultant shall maintain accurate records and files pertaining to the temporary and permanent relocation of tenants, in accordance with URA and the City’s Manual. (d) If a Relocation Consultant is required to be retained pursuant to Section 11.12(a), the Developer and Relocation Consultant shall provide all relocation and tenant files to the City once relocation is complete at the Project. (e) Developer Responsible for Administration of Relocation. Developer acknowledges that former tenants and occupants of the Property may be eligible for advisory assistance, monetary payments, and other benefits under the Relocation Laws. Developer shall be fully responsible for administering determinations of eligibility, the extent of advisory assistance, and the scope and amount of benefits and monetary payments pursuant to the applicable Relocation Laws, subject to the right, but not obligation, to oversee Relocation by the City. Developer shall cause to be provided and shall pay Relocation assistance and benefits, if any, in accordance with and to the extent required by applicable Relocation Laws to each eligible tenant/occupant that is required to vacate the Property as a result of implementation of the Project. The City’s rights are limited to determining compliance with Relocation Laws. Developer is and shall remain solely responsible to pay all out-of-pocket costs for direct payments, if any, to eligible person(s), household(s) and business(es) for Relocation assistance and benefits due and paid and for any other costs incurred related to Relocation, including a Relocation consultant, and any and all costs or fees incurred therefor. (f) Indemnification by Developer Relating to Relocation. Developer hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for, and defend the Indemnitees from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including without limitation penalties, fines, and monetary sanctions), losses, costs, or expenses, including without limitation consultants’ and attorneys’ fees, or relocation benefits claimed or payable under the Relocation Laws (for purposes of this Section 11.12, the foregoing shall be referred to as “Liabilities”) which may now or in the future be incurred or suffered by Indemnitees by reason of, or resulting, in full or in part, or in any respect whatsoever from the Relocation of residents of the current site pursuant to or resulting from the implementation of this Agreement, except to the extent arising out of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the City of any representation, warranty or covenant contained in this Agreement. At the request of Developer, the City shall cooperate with and assist Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, City liability, deficiency, fine, penalty, punitive damage, or expense; provided that City shall not be obligated to incur any expense in connection with such cooperation or assistance. EXHIBIT 5 30 The Crossroads at Washington City HOME Loan Agreement (g) Release. Developer, on behalf of itself and its affiliates, and any and all successors and assigns hereby fully and finally releases the Indemnitees from any and all manner of actions, causes of action, suits, obligations, liabilities, judgments, executions, debts, claims and demands of every kind and nature whatsoever, known and unknown, which Developer and any of its affiliates, successors or assigns may now have or hereafter obtain against the Indemnitees by reason of, arising out of, relating to, or resulting from in full or in part, the election of Developer to proceed with the Project pursuant to this Agreement except to the extent arising out of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the City of any representation, warranty or covenant contained in this Agreement (collectively, “Claims”), which release shall include but not be limited to any Claims for Relocation assistance or benefits under federal, state, local, or any other applicable laws or Governmental Requirements, except to the extent arising out of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the City of any representation, warranty or covenant contained in this Agreement. The parties agree that, with respect to the release of Claims as set forth above, all rights under Section 1542 of the California Civil Code and any similar law of any state or territory of the United States are expressly waived. Section 1542 reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” 11.13. Other Program Requirements. Developer shall carry out each activity in compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except that Developer does not assume City's responsibilities for environmental review in 24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359. 11.14. Request for Disbursements of Funds. Notwithstanding anything contained in this Agreement to the contrary, Developer may not request disbursements of funds under this Agreement until the funds are needed for payment of eligible costs (such funds shall be used solely towards the acquisition and construction of the Property). The amount of each request shall be limited to the amount needed. 11.15. Eligible Costs. Developer shall use HOME Funds to pay costs defined as "eligible costs" pursuant to 24 CFR 92.206. 11.16. Records and Reports. Developer shall maintain and from time to time submit to City such records, reports and information as the Executive Director may reasonably require in order to permit City to meet the record keeping and reporting requirements required of it pursuant to 24 CFR 92.508. 11.17. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Developer shall comply with the requirements and standards of 2 CFR 200. 11.18. Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations EXHIBIT 5 31 The Crossroads at Washington City HOME Loan Agreement pertaining to conflict of interest. 11.19. Monitoring. Developer shall allow the City to conduct periodic inspections of the City’s HOME assisted units on the Property as required by the Program after the date of construction completion, with reasonable advance written notice of not less than 48 hours. Developer shall cure any defects or deficiencies found by the City while conducting such inspections within two weeks of written notice thereof, or such longer period as is reasonable within the sole discretion of the City. Not less than once per year, the City shall review Developer’s activities and operations under the Agreement and Developer’s compliance with the HOME Requirements. Such review may include an on-site inspection of the Project units (including unit interiors). If such an on-site inspection of the Project units is to be undertaken, the City shall coordinate such inspection with Developer. The monitoring required pursuant to this paragraph shall be in compliance with the requirements of 24 C.F.R. § 92.504. 11.20. Recertification of Tenant Income. (a) Developer shall take all necessary steps to review the income of all tenants prior to renting to them, as well as reviewing current tenants on an annual basis, in accordance with HOME regulations and guidelines. Every fifth (5th) year, Developer shall require new original income documents to be submitted by tenants. Tenants in the City’s HOME assisted units whose incomes no longer comply with federal income guidelines shall have their rents adjusted in accordance with federal HOME guidelines (24 CFR 92.252-92.253). (b) HOME assisted units continue to qualify as affordable housing despite a temporary non-compliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section (24 CFR 92.252-92.253) until the non-compliance is corrected. 11.21. Other HOME Program Requirements. Developer shall comply with all other applicable requirements of the HOME Program. 11.22. Controlling Covenants. If there is a discrepancy between State of California and Federal law with regard to any of the aforementioned covenants, the more stringent shall apply. 11.23. Faith Based Activities. To the extent applicable to the Project, in accordance with 24 CFR 92.257, Developer will comply with the restrictions on the use of HOME funds for faith based activities as set forth in Section 92.257. Section 12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR OF PROPERTY 12.1. Maintenance. Developer shall maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise EXHIBIT 5 32 The Crossroads at Washington City HOME Loan Agreement required to maintain) in good condition and repair; shall operate the Property in a businesslike manner; shall prudently preserve and protect its own as well as the City's interests in connection with the Property; shall not commit or permit any waste or deterioration of the Property (except for normal wear and tear); shall not abandon any portion of the Property or leave the Property unguarded or unprotected; and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any damage to the Property or of any other impairment of City's interests under the Loan Documents. Without limiting the generality of the foregoing, and except as otherwise agreed by City in writing from time to time, Developer shall promptly and faithfully perform and observe each of the following provisions: 12.2. Alterations and Repair. Developer shall not remove, demolish or materially alter any Improvement without City’s prior consent, except to make non - structural repairs that preserve or increase the Property's value, and shall promptly restore, in a good and professional manner, any Improvement (or other aspect or portion of the Property) that is damaged or destroyed from any cause. 12.3. Compliance. Developer shall comply with all laws and requirements of Governmental Authority (including, without limitation, all requirements relating to the obtaining of Governmental Authority approvals), all Governmental Authority approvals and all rights of third parties, relating to Developer, the Property or Developer's business thereon. 12.4. Taxes and Impositions. Developer shall pay, prior to delinquency, all of the following (collectively, the "Impositions"): (a) all general and special real property taxes and assessments imposed on the Property; (b) all other taxes and assessments and charges of every kind that are assessed upon the Property (or upon th e owner and/or operator of the Property) and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property), including, without limitation, non-governmental levies and assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, taxes and assessments imposed on City (other than City's income or franchise taxes) which are measured by or based upon (in whole or in part) the amount of the obligations secured by the Property. If permitted by law, Developer may pay any Imposition in installments (together with any accrued interest). 12.5. Right to Contest. Developer shall not be required to pay any Imposition so long as: (a) its validity is being actively contested in good faith and by appropriate proceedings; (b) Developer has demonstrated to City's reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair City’s interests under the Loan Documents; and, (c) Developer has furnished City with a bond or other security satisfactory in an amount not less than 100% of the applicable claim (including interest and penalties). 12.6. Evidence of Payment. Upon demand by City from time to time, Developer shall deliver to City, within thirty (30) days following the due date of any Imposition, EXHIBIT 5 33 The Crossroads at Washington City HOME Loan Agreement evidence of payment reasonably satisfactory to City. 12.7. Books, Records and Annual Statement. Developer shall maintain complete books of account and other records reflecting the construction and operation of the Project in accordance with generally accepted accounting principles applied on a consistent basis. During the Term of Agreement, the amount of the Residual Receipts shall be determined on the basis of an annual audited financial statement (”Annual Statement”), for the preceding year, beginning with the first year of operation of all or any part of the Project, prepared at the Developer’s expense by an independent certified public account firm acceptable to the City. Such Annual Statement shall be prepared based on the guidelines, and taking into account the information, set forth on Exhibit C, attached hereto and incorporated herein. During the Term of Agreement, the Developer shall submit the Annual Statement and any payment to the City not later than one hundred twenty (120) days after closing of the Developer’s previous year’s books. The first Annual Statement submitted by the Developer for the City/HOME Loan shall include the period from the Completion of Construction to the close of that year’s books. The City shall review and approve such statement (such approval not to be unreasonably withheld or delayed), or request revisions, within ninety (90) days after receipt. In the event that Developer’s calculation of Residual Receipts is found to be incorrect as a result of a City review, and has underreported, Developer shall pay to the City the full amount of additional amounts owed within thirty (30) days of notice of such error. The terms of this subsection shall not be the exclusive method by which the City may review Residual Receipts payments by the Developer. In the event the discovery occurs at any time subsequent to the ninety (90) day period for that year’s books, Developer shall pay to the City the full amount of such additional amounts owed within thirty (30) days after the error is discovered. Notwithstanding the foregoing, no previous action or inaction by the City shall prohibit the City from requesting repayment of any unpaid, owed amounts of Residual Receipts at any time during the term of this Agreement or thereafter within ten (10) years of when such unpaid Residual Receipts were due. The Developer shall pay to the City the full amount of such additional amounts owed within thirty (30) days of notice of such errors for periods prior to the previous year. 12.8. Project Operating Account. Developer shall establish an interest bearing account to be known as the Operating Reserve Account. Upon the Conversion Date, Developer shall deposit an amount into the Operating Reserve Account sufficient to pay at least three (3) months of operating expenses and three (3) months of mandatory debt service payments (“Target Balance”), or such greater amount as may be required by a senior lender or tax credit investor. Funds shall be invested subject to the prior written approval of the City, and any earnings shall become and remain a part of the Operating Reserve. Funds may be drawn only when revenue is insufficient to pay operating expenses and may be used as permitted under Borrower’s Partnership Agreement. At the time of any withdrawals from the Operating Reserve Account, written notice shall be provided to the City which provides a detailed narrative of the nature of the operating deficits that are being cured, including all necessary amounts to cure them. EXHIBIT 5 34 The Crossroads at Washington City HOME Loan Agreement If the balance in the Operating Reserve Account falls below the amount required to pay three (3) months of operating expenses and three (3) months of mandatory debt service payments, then Developer shall apply Residual Receipts, when and if available, or other funds, to the replenishment of Operating Reserves until the Target Balance is achieved. 12.9. Replacement Reserve Account. At or before the Conversion Date, Developer shall establish an interest bearing account to be known as the Replacement Reserve Account. Annually prior to March 31 of each year, Developer shall deposit into the Replacement Reserve Account an amount equal to a minimum of two hundred fifty dollars ($250) per unit but shall not exceed five hundred dollars ($500) per unit, which amounts may increase by 3% annually, or such higher amount as may be required by the Tax Credit Investor or Senior Lender and approved by City; provided, however, that City acknowledges that the Tax Credit Investor and/or Senior Lender will require an annual deposit of funds into the Replacement Reserve Account for all units, and City hereby approves such requirement and agrees that any replacement reserve established by Developer and held by the Tax Credit Investor and/or Senior Lender shall satisfy the requirements of this Section 12.9. The funds in the Replacement Reserve Account shall be held in an interest bearing account , subject to the prior written approval of the City, and any earnings shall become and remain a part of the Replacement Reserve. The Developer shall not draw funds from the Replacement Reserve Account without the prior written approval of the City. Funds may only be drawn from the Replacement Reserve Account to replace or maintain Project assets that have a useful life of more than one (1) year in accordance with Generally Accepted Accounting Principles (“GAAP”), and have been or will be depreciated on the Partnership Tax Return, Form 1040P, filed with the Internal Revenue Service by the Developer’s accountant. In the event of a failure by the Developer to adequately maintain the Project, or pay operating expenses, mandatory debt service payments, or other payments required under the Loan Documents or Senior Loan Documents, or during the continuance of an event of default by Developer under the Loan Documents or Senior Loan Documents that would provide for the acceleration of the City/HOME Loan or Senior Loan, then the City may, after delivery of notice to Developer and the expiration of any applicable cure periods and subject to the rights of any Senior Lender, apply the funds in the Replacement Reserve Account to the City/HOME Loan, the Senior Loan, or use such funds for the maintenance, improvement, or continued operation of the Project. Section 13. NONDISCRIMINATION COVENANTS 13.1. Obligation to Refrain from Discrimination. Developer covenants and agrees that: (a) In Use of Property. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, mental or physical disability, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall EXHIBIT 5 35 The Crossroads at Washington City HOME Loan Agreement Developer or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendors of the Property. (b) In Affordable Housing Restrictions. The foregoing covenant shall: (a) be included in the Affordability Restrictions on Transfer of Property; (b) run with the land; and, (c) remain effective for the term of the Agreement. (c) In Employment. In construction of the Property, Developer shall not discriminate against any employee or applicant because of race, color, creed, religion, sex, marital status, mental or physical disability, national origin, or ancestry. Developer shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, religion, sex, marital status, national origin, or ancestry. (d) In all Contracts. Developer shall cause the foregoing covenants to be inserted in all contracts for any work covered by this Agreement so that such provisions will be binding upon each contractor and subcontractor for the benefit of City, provided that the foregoing covenant shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. Section 14. ENVIRONMENTAL MATTERS 14.1. Representation and Warranty. Except as disclosed in writing to the City including the Environmental Reports prepared on behalf of Developer and delivered to the City, and except for the Existing Hazardous Materials (as such term is defined in the Ground Lease) Developer has no knowledge: (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials in violation of applicable law, or of the transportation to or from the Property of any Hazardous Materials; (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the Property; or, (c) that there are any underground storage tanks located in, on or under the Property. 14.2. Compliance with Environmental Laws. Developer shall: (a) comply with all environmental laws and environmental permits applicable to the Construction of the Property; (b) immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance; (c) keep the Property free and clear of any environmental claims or liens imposed pursuant to any environmental law; and, (d) obtain and renew all environmental permits required for ownership or use of the Property. 14.3. Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property, or transport or permit the transportation of Hazardous Materials to or from the Property except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine construction, operation and maintenance of the Property. 14.4. Notice of Environmental Matters. Developer shall immediately advise EXHIBIT 5 36 The Crossroads at Washington City HOME Loan Agreement City in writing of any of the following: (a) any pending or threatened environmental claim against Developer or the Property; (b) any condition or occurrence that: (i) results in noncompliance with any applicable environmental law; (ii) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law; or, (iii) could reasonably be anticipated to form the basis of an environmental claim against the Property or Developer. 14.5. Environmental Indemnification by the Developer. Developer agrees to defend, indemnify and hold harmless the City and their respective officers, directors, employees and agents (collectively the "Indemnitees") from and against any and all obligations (including removal and remediation), losses, claims (including third party claims), suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including consultants, and attorneys' fees) of whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or asserted against the Indemnitees directly or indirectly based on, or arising or resulting from the actual or alleged presence of Hazardous Materials on the Property other than arising from the gross negligence, willful misconduct and/or illegal actions of any Indemnitee and the Existing Hazardous Materials (as such term is defined in the Ground Lease). Section 15. OTHER AFFIRMATIVE COVENANTS While any obligation of Developer under the City/HOME Loan Note or Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that the Executive Director otherwise consents in writing: 15.1. Existence. Developer’s Managing General Partner shall maintain its existence in good standing under the laws of the State of California, and Developer shall provide documentation of such status annually to the City. 15.2. Protection of Lien. Developer shall maintain the lien of the City Deed of Trust as a valid second priority deed of trust on the Property and take all actions, and execute and deliver to City all documents, reasonably required by City from time to time in connection therewith. 15.3. Notice of Certain Matters. Developer shall give notice to City, within ten (10) days of Developer's learning thereof, of each of the following: (a) any filed litigation or claim affecting or relating to the Property and involving an amount in excess of $25,000; and any litigation or claim that might subject Developer or any general partner of Developer to liability in excess of $50,000, whether covered by insurance or not; (b) any material dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which would reasonably be expected to have a material adverse effect on the Property; (c) any change in Developer's principal place of business; EXHIBIT 5 37 The Crossroads at Washington City HOME Loan Agreement (d) any aspect of the Improvements that is not in substantial conformity with the plans or code; (e) any Event of Default or event which, with the giving of notice or the passage of time or both, would constitute an Event of Default; (f) any material default by Developer or any other party under any Senior Loan document, or the receipt by Developer of any notice of default under any Senior Loan document; (g) the creation or imposition of any mechanics’ or materialmans’ lien or other lien against the Property which might materially affect the Property; and/or (h) any material adverse change in the financial condition of Developer. 15.4. Further Assurances. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under the Loan Documents; to protect and further the validity, priority and enforceability of the City Deed of Trust; to subject to the Deed of Trust any property intended by the terms of any Loan Document(s) to be covered by the City Deed of Trust or otherwise to carry out the purposes of the Loan Documents and the transactions contemplated thereunder. Notwithstanding anything to the contrary set forth herein, the Developer shall have no obligation to execute any document, or take any action, which would: (i) change a material term of any Loan Document; (ii) change or impair any material right of Developer; and/or, (iii) increase the liability of Developer or any partner thereof. 15.5. Annual Financial Statements. Developer shall deliver to City, within one hundred twenty (120) days after the end of each Calendar Year following issuance of a Certificate of Completion: (a) a certified public accountant reviewed balance sheet for Developer as of the end of such Calendar Year and a certified public accountant reviewed statement of profit and loss for Developer and for Developer's operations in connection with the Property for such Calendar Year, together with all supporting schedules; (b) a certificate of such certified public accountant that such documents were reviewed by such certified public accountant in accordance with generally accepted accounting principles and otherwise comply with generally accepted accounting principles review requirements; and, (c) a certificate of Developer's Managing General Partner that such documents: (i) were prepared in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City; (ii) fairly present Developer's financial condition; (iii) show all material liabilities, direct and contingent; and, (iv) fairly present the results of Developer's operations. Developer shall also provide the City with any other annual audit reports issued by other monitoring agencies upon written request. 15.6. Audits and Access to Records. Developer agrees that City, the U.S. Department of Housing and Urban Development, the Comptroller General of the United EXHIBIT 5 38 The Crossroads at Washington City HOME Loan Agreement States or any of their authorized representatives shall have the right of access, upon reasonable notice, to any books, documents, papers, or other records of Developer that are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all books and records pertaining to this Agreement for a period of not less than five (5) years after all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state laws, regulations or policies, and when a period of affordability or recapture applies to Developer's activities, for a period of not less than five (5) years after the Affordability Period ends. Section 16. OTHER NEGATIVE COVENANTS While any obligation of Developer under the City/HOME Loan Note or City/HOME Loan Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that the Executive Director otherwise consents in writing: 16.1. Default on Senior Loan. Developer shall not default on any of the Senior Loan Documents, provided however, that Developer shall have such period as is provided in the Senior Loan Documents during which to effectuate a cure. 16.2. Sale or Lease of Property. Unless and until Developer has received a Certificate of Completion for the construction from City, except for a Permitted Transfer, Developer shall not sell, lease, sublease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of the Executive Director, which consent may be withheld in the Executive Director's sole and absolute discretion. In connection with the foregoing consent requirements, Developer acknowledges that City relied upon Developer's particular expertise in entering into this Agreement and continues to rely on such expertise to ensure the satisfactory completion of the construction. Notwithstanding anything to the contrary contained herein, a "transfer” shall not include: (i) a transfer of any general partner’s interest in Developer when made in connection with the exercise by the Developer’s Limited Partner of its rights upon a default by a general partner under the Developer’s Partnership Agreement or upon a general partner’s withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the managing general partner of Developer pursuant to the right of first refusal or to the general partners of Developer pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner’s interest in accordance with the Partnership Agreement; and, (iv) any sale, transfer or other disposition of an interest in a limited partn er of the Developer. EXHIBIT 5 39 The Crossroads at Washington City HOME Loan Agreement Section 17. CERTIFICATE OF COMPLETION Upon satisfactory completion of the construction and upon the request of Developer, or at its own election, the City shall issue a certificate of completion (“Certificate of Completion”). Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction. If City declines to furnish a Certificate of Completion after written request from Developer, the Executive Director shall, within thirty (30) days after receipt of the request, provide Developer with a written statement of the reasons therefore. The statement shall contain a description of the action(s) Developer must take to obtain a Certificate of Completion. If the reason therefore is that the Developer has not completed a minor portion of the Construction, City may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with City of a bond or other form of security acceptable to the Executive Director in the amount of the fair value of the uncompleted work. A Certificate of Completion is not evidence of compliance with or satisfaction of the Loan Documents or any obligation of Developer to any other party whatsoever, including any holder of a mortgage or deed of trust. A Certificate of Completion is not "notice of completion” referred to in Section 3093 of the California Civil Code. A Certificate of Occupancy issued by the City will also meet the same purpose and requirement as the Certificate of Completion. Section 18. INDEMNIFICATION 18.1. Nonliability of City. Developer acknowledges and agrees that: (a) The relationship between Developer and City is and shall remain solely that of borrower and lender, City neither undertakes nor assumes any responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in connection with the construction, including matters relating to: (i) the performance of the construction work, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, or (iii) the progress of the construction; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledges that any review, inspection, supervision, approval or information supplied to Developer by City in connection with such matters is solely for the protection of City and that neither Developer nor any third party is entitled to rely on it; (b) Notwithstanding any other provision of any Loan Document: (i) the City is not a partner, joint venture, alter-ego, manager, controlling person or other business associate or participant of any kind of Developer and City does not intend to ever assume any such status; (ii) City’s activities in connection with the City/HOME Loan shall not be “outside the scope of the activities of a lender of money” within the meaning of California Civil Code Section 3434, as modified or recodified from time to time, and City does not intend to ever assume any responsibility to any person for the quality or safety of the Property; and, (iii) City shall not be deemed responsible for or a participant in any acts, EXHIBIT 5 40 The Crossroads at Washington City HOME Loan Agreement omissions or decisions of Developer; (c) City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construction on, or occupancy or use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer’s agents, employees, independent contractors, licensees or invitees; or, (iii) any accident on the Property or any fire or other casualty or hazard thereon; and (d) By accepting or approving anything required to be performed or given to City under the Loan Documents, including any certificate, financial statement, survey, appraisal or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone. 18.2. Indemnity. Developer shall defend (by counsel reasonably satisfactory to City), indemnify and save and hold harmless the Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys' fees and court costs) arising from or relating to: (i) a breach of this Agreement by Developer; (ii) the making of the City/HOME Loan; (iii) a claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Property; or, (vi) the ownership, occupancy or use of the Property. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of illegal conduct, gross negligence or willful misconduct of City. Developer's obligations under this Section shall survive the cancellation of the City/HOME Loan Note, release and reconveyance of the City Deed of Trust, issuance of the Certificate of Completion, and termination of this Agreement. (a) Notwithstanding the foregoing, neither Developer, nor any of its partners, shall be personally liable for any indemnification obligation hereunder which would result as the repayment of principal and/or interest under the City/HOME Loan. (b) To the fullest extent permitted by law, the Developer agrees to indemnify, hold harmless and defend the City and its elected officials, officers, governing members, employees, attorneys and agents (collectively, the "Indemnified Parties"), from and against any and all losses, damages, claims, actions, liabilities, reasonable costs and expenses of any and every conceivable nature, kind or character (including, without limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject to under any statutory law (including federal or state securities laws) or at common law or otherwise, arising out of or based upon or in any way relating to: (i) the Loan Documents or the execution or amendment thereof or in connection with the transactions contemplated thereby; EXHIBIT 5 41 The Crossroads at Washington City HOME Loan Agreement (ii) Developer’s ownership or operation of the Project or any act or omission of the Developer or any of its agents, contractors, servants, employees or licensees in connection with the City/HOME Loan or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation, operation or rehabilitation of, the Project or any part thereof; (iii) any lien or charge upon payments by the Developer to the City, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the City in respect of any portion of the Project; (iv) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from the Project or any part thereof; (v) any untrue or misleading statement of a material fact by the Developer contained in any Loan Document or any of the documents or instruments relating to said Loan Documents that the City relied upon in making the City/HOME Loan, except to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Developer, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment and payment for counsel selected by the Indemnified Party, and shall assume the payment of all reasonable expenses related thereto, with full power to litigate, compromise or settle the same; provided that the Indemnified Party shall have the right to review and approve or disapprove in its reasonable discretion any such compromise or settlement; and, (vi) Notwithstanding anything in this Section 18.2 to the contrary, if judgment is entered against Developer and City by a court of competent jurisdiction because of the concurrent active negligence of City or Indemnified Parties, Developer and City agree that liability will be apportioned as determined b y the court. Neither Party shall request a jury apportionment. 18.3. Reimbursement of City. Developer shall reimburse City immediately upon written demand for all costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Loan Documents and all related matters including all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Loan Documents. Such reimbursement obligations shall bear interest from the date occurring twenty (20) days after City gives written demand to Developer at the rate of Interest defined in the Note and shall be secured by the City Deed of Trust. Such reimbursement obligations shall survive the cancellation of the City/HOME Loan Note, release and reconveyance of the City/HOME Loan Deed of Trust, issuance of a Certificate of Completion, and termination of this Agreement EXHIBIT 5 42 The Crossroads at Washington City HOME Loan Agreement Subsequent to the making and disbursement of this Loan, the Developer shall pay for any subsequent revisions, transfers, extensions, renewals, modifications, refinancing or "workouts," and providing estoppels or subordinations of the City/HOME Loan (collectively, “Changes”), and in the exercise of any of City's rights or remedies under this Agreement. The City will receive from Developer in connection with any request by Developer for a Change, a nonrefundable fee in the amount of Five Hundred Dollars ($500) and Developer shall reimburse City for all of the City’s reasonable out-of-pocket expenses (including reasonable attorney’s fees) incurred in the administration and review of such Changes, to the extent such expenses exceed Five Hundred Dollars ($500). Section 19. INSURANCE, CASUALTY AND CONDEMNATION 19.1. Prior to undertaking performance of work under this Agreement, Developer shall maintain and shall require its subcontractors, if any, to obtain and maintain insurance as described below: a. Minimum Scope and Limit of Insurance – Coverage shall be at least as broad as: 1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. 2. Automobile Liability: Insurance Services Office Form Number CA 00 01 covering any auto (Code 1), or if Developer has no owned autos, hired (Code 8), and non-owned autos (Code 9), with a limit no less than $1,000,000 per accident for bodily injury and property damage. 3. Workers’ Compensation: Insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. 4. Professional Liability (Errors & Omissions): Insurance appropriate to the Developer’s profession, with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. 5. Broader Coverage: If Developer maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by Developer. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be EXHIBIT 5 43 The Crossroads at Washington City HOME Loan Agreement available to the City. b. Other Insurance Provisions – The insurance policies are to contain, or be endorsed to contain, the following provisions: 1. Additional Insured Status: The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Developer including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to Developer’s insurance (at least as broad as ISO Form CG 20 10 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used). 2. Primary Coverage: For any claims related to this Agreement, Developer’s insurance coverage shall be primary coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of Developer’s insurance and shall not contribute with it. 3. Notice of Cancellation: Each insurance policy required above shall state that coverage shall not be canceled, except with notice to the City. 4. Waiver of Subrogation: Developer hereby grants to City a waiver of any right to subrogation which any insurer of said Developer may acquire against the City by virtue of the payment of any loss under such insurance. Developer agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. 5. Self-Insured Retentions: Self-insured retentions must be declared to and approved by the City. The City may require Developer to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City. 6. Acceptability of Insurers: Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City. 7. Claims Made Policies: If any of the required policies provide coverage on a claims-made basis: EXHIBIT 5 44 The Crossroads at Washington City HOME Loan Agreement i. The Retroactive Date must be shown and must be before the date of the Agreement or the beginning of work. ii. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the work. iii. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Developer must purchase “extended reporting” coverage for a minimum of five (5) years after completion of work. 8. Verification of Coverage: Developer shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive Developer’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. 9. Subcontractors: Developer shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Developer shall ensure that City is an additional insured on insurance required from subcontractors. 10. Special Risks or Circumstances: City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances. 19.2. Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi-public use of any portion of the Property (collectively, "Condemnation"), and shall provide City with copies of all documents which pertain to any such casualty or Condemnation. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and/or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed. 19.3. Delivery of Proceeds to City. If the proceeds from any casualty insurance is in excess of $500,000, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt. EXHIBIT 5 45 The Crossroads at Washington City HOME Loan Agreement 19.4. Application of Casualty Insurance Proceeds. Subject to the rights of the Senior Lender, any proceeds collected (the "Proceeds") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions") within ninety (90) days (unless extended by mutual agreement of Developer and City) following the occurrence of the damage for which the Proceeds are collected: (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within two years (or such longer time period reasonably determined by City), to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of: (i) plans and specifications reasonably satisfactory to City; and, (ii) a construction contract in form and content, and with a contractor, reasonably satisfactory to City. (b) To the extent that the Proceeds are insufficient to accomplish the restoration required above, Developer shall deliver to City (the "Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to City as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. (c) Developer shall execute such documents as City reasonably requires to evidence and secure Developer's obligation to use all amounts disbursed for the diligent restoration of the Property. (d) No Event of Default shall remain uncured. 19.5. Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance with then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer up to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall either be paid to Developer or applied by City against any obligations to City that are secured by a lien on the Property, as they elect in their sole and absolute discretion. 19.6. Failure to Satisfy Conditions. In the event that Developer fails to fulfill the Restoration Conditions within ninety (90) days, unless extended, following the date on which the damage occurs, the Proceeds shall be applied by City against any obligations to City that are secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in their sole and absolute discretion, subject to the rights of the Senior Lender. 19.7. Condemnation; Treatment of Compensation. Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation"). Subject to any superior rights of Senior Lender, Developer shall deliver EXHIBIT 5 46 The Crossroads at Washington City HOME Loan Agreement such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City’s reasonable judgment Developer’s security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to reduce the unpaid obligations secured in such order as City may determine, and without any adjustment in the amount or due dates of payments due under the City/HOME Loan Note. If so applied, any award in excess of the unpaid balance of the City/HOME Loan Note and other sums due to City shall be paid to Developer or Developer’s assignee. City shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. (a) Notwithstanding the foregoing, as long as the Developer is not in default under the Loan Documents, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. Section 20. DEFAULTS AND REMEDIES 20.1. Events of Default. The occurrence of any of the following, whatever the reason therefore, shall constitute an Event of Default by Developer: (a) Developer fails to make any payment of principal or interest under the City/HOME Loan Note when due, and such failure is not cured within thirty (30) Business Days after Developer's receipt of written notice that such payment was not received when due; (b) Developer fails to perform any other obligation for the payment of money under any Loan Document, and such failure is not cured within thirty (30) Business Days after Developer's receipt of written notice that such obligation was not performed when due; (c) Developer fails to perform any obligation (other than the obligations described in subparagraphs (a) and (b) above) under any Loan Document, and such failure is not cured within thirty (30) days after Developer's receipt of written notice that such obligation was not performed; provided that, if cure cannot reasonably be effected within such thirty (30)-day period, such failure shall not be an Event of Default so long as Developer (in any event, within ten (10) days after receipt of such notice) commences to cure, and thereafter diligently (in any event within one hundred and twenty (120) days after receipt of such notice) prosecutes such cure to completion; (d) Any representation or warranty in any Loan Document proves to have been incorrect in any material respect when made; (e) Reserved; (f) Work on the construction ceases for ninety (90) consecutive days for any reason (other than governmental orders, decrees or regulations, acts of God or any other deity, quarantine restrictions, epidemics, supply shortages, strikes or other causes EXHIBIT 5 47 The Crossroads at Washington City HOME Loan Agreement beyond Developer's reasonable control), provided that the same do not, in the aggregate and in the City’s reasonable judgment, threaten to delay the completion of the construction beyond the required completion date set forth in this Agreement; (g) Developer is enjoined or otherwise prohibited by any Governmental Authority from constructing and/or occupying the improvements and such injunction or prohibition continues unstayed for ninety (90) days or more for any reason; (h) Developer is dissolved, liquidated or terminated, or all or substantially all of the assets of Developer are sold or otherwise transferred without the Executive Director's prior written consent; (i) Developer is the subject of an order for relief by a bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or makes an as signment for the benefit of creditors; or Developer applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver, trustee, cust odian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of Developer and the appointment continues undischarged or unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part of its property; or any similar proceeding is instituted without the consent of Developer and continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of attachment or execution, or similar process is issued or levied against any property of Developer and is not released, vacated or fully bonded within ninety (90) days after its issue or levy; (j) Any of the Senior Loan documents is amended, supplemented or otherwise modified without City's prior written consent, to the extent the City’s consent is required pursuant to any subordination agreement between the City and the Senior Lender; (k) Senior Loan Document Breach. Any default or breach of Developer that continues uncured after the expiration of any applicable cure period under any other loan document including, but not limited to, the Senior Loan Documents (including but not limited to the Senior Loan Deed of Trust); (l) Voluntary Suspension. The voluntary suspension of Developer's business or the dissolution or termination of the Partnership (if any) constituting Developer; (m) Unauthorized Transfer. Developer’s sale or other transfer of the Property or the Project in violation of such terms herein; (n) Fraud or Material Misstatement or Omissions. Any fraudulent act or intentional material omission of Developer's, or intentional material misrepresentation of Developer's, pertaining to or made in connection with the City/HOME Loan, Loan Documents or the Project; or, EXHIBIT 5 48 The Crossroads at Washington City HOME Loan Agreement (o) Project Monies. Developer’s intentional misapplication or embezzlement of Project monies. 20.2. Remedies Upon Default. Upon the occurrence and during the continuance of any Event of Default, City may, at its option and in its absolute discretion, do any or all of the following: (a) By written notice to Developer, declare the principal of all amounts owing under the Loan Documents, together with all accrued interest and other amounts owing in connection therewith, to be immediately due and payable, regardless of any other specified due date; provided that any Event of Default described in Section 20.1 shall automatically, without notice or other action on City's part, cause all such amounts to be immediately due and payable; (b) In its own right or by a court-appointed receiver, take possession of the Property, enter into contracts for and otherwise proceed with the completion of the construction by expenditure of its own funds; (c) Exercise any of its rights under the Loan Documents and any rights provided by law, including, without limitation, the right to seek specific performance and the right to foreclose on any security and exercise any other rights with respect to any security, all in such order and manner as City elects in its sole and absolute discretion; (d) Suspend or terminate the award of HOME funds if Developer fails to comply with any term of that award; and, (e) Right to Cure at Developer's Expense. The City shall have the right to cure any monetary Event of Default by Developer under a loan other than the City/HOME Loan. The Developer agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Developer upon demand therefore, together with interest thereon at the rate of twelve percent (12%) per annum (which rate shall in no event exceed the maximum rate permitted by law and if it does, said rate shall be reduced to the maximum rate then permitted by law), from th e date of expenditure until the date of reimbursement. 20.3. Cumulative Remedies: No Waiver. City's rights and remedies under the Loan Documents are cumulative and in addition to all rights and remedies provided by law. The exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the City in the exercise of any other right or remedy. No waiver of any default shall be implied from any omission by City to take action on account of such default if such default persists or is repeated. No waiver of any default shall affect any default other than the default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent breach of the same provision. City's consent to or approval of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary City's consent to or approval of any subsequent act. The City's acceptance of the late performance of any obligation shall not constitute a waiver by EXHIBIT 5 49 The Crossroads at Washington City HOME Loan Agreement City of the right to require prompt performance of all further obligations; City's acceptance of any performance following the sending or filing of any notice of default shall not constitute a waiver of either party's right to proceed with the exercise of its remedies for any unfulfilled obligations; and City's acceptance of any partial performance shall not constitute a waiver by City of any rights. 20.4. Nonrecourse Liability. Neither Developer, nor any other party, including any partner of Developer, shall have any personal liability under this Agreement, or the attached City/HOME Loan Note and City/HOME Loan Deed of Trust, and any judgment, decree or order for the payment of money obtained in any action to enforce the obligation of Developer to repay the City/HOME Loan or any other amount evidenced or secured by such documents shall be enforceable against Developer only to the extent of Developer’s interest in the Property. 20.5. Limited Partner Cure. The City shall provide the Developer’s Limited Partner with an opportunity to cure any default. Any cure made or tendered by Limited Partner shall be accepted as if made by Developer. Section 21. MISCELLANEOUS 21.1. Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any other claim by developer against City, in connection with the City/HOME Loan or otherwise, Developer hereby waives any right it might otherwise have: (a) to offset any such obligation, liability or claim against Developer's obligations under the Loan Documents ; or, (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under the Loan Documents. 21.2. Notices. All notices, demands, approvals and other communications provided for in the Loan Documents shall be in writing and be delivered to the appropriate party by personal service or U.S. mail at its address as follows: If to Developer: Washington Santa Ana Housing Partners, L.P. c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo President and Chief Executive Officer With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor EXHIBIT 5 50 The Crossroads at Washington City HOME Loan Agreement Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. With a copy to: U.S. Bancorp Community Development Corporation 1307 Washington Ave., Suite 300 St. Louis, MO 63103 USB Project No: 28339 Attn: Director of LIHTC Asset Management If to City: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 With a copy to: City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 Addresses for notice may be changed as required by written notice to all other parties. All notices personally served shall be effective when actually received. All notices mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing notwithstanding, the non-receipt of any notice as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such notice. 21.3. Survival of Representations and Warranties. All representations and warranties in the Loan Documents shall survive the making of the City/HOME Loan described herein and have been or will be relied on by City notwithstanding any investigation made by either party. 21.4. No Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Developer and the City, and no other person shall have any rights hereunder or by reason hereof. 21.5. Reserved. 21.6. Prior Agreements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement between the City and Developer with respect to the City/HOME Loan and the Property, and all prior negotiations, understandings and agreements are superseded b y this Agreement and such other Loan Documents. No modification of any Loan Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. EXHIBIT 5 51 The Crossroads at Washington City HOME Loan Agreement 21.7. Governing Law. All of the Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California and Federal law, whichever is more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Agreement or the Loan Documents. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue. 21.8. Severability of Provisions. No provision of any Loan Document that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of the Loan Documents are hereby declared to be severable. 21.9. Headings. Article and section headings are included in the Loan Documents for convenience of reference only and shall not be used in construing the Loan Documents. 21.10. Conflicts. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, this Agreement, unless otherwise expressly provided, shall prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed. 21.11. Time of the Essence. Time is of the essence under this Agreement and in the performance of every term, covenant, and obligation contained herein. 21.12. Conflict of Interest. No member, official or employee of the City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement that is prohibited by law. 21.13. Warranty Against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement. 21.14. Reserved. 21.15. Plans and Data. As additional collateral for the City/HOME Loan, Developer hereby grants to the City a security interest in all plans and data concerning the Property, subject to the rights of any Senior Lender. Such right of City shall be subject to any right of the preparer of the plans to their use. 21.16. Authority to Enter Agreement. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and attorney’s fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. EXHIBIT 5 52 The Crossroads at Washington City HOME Loan Agreement {signatures on following page} EXHIBIT 5 EXHIBIT 5 53 The Crossroads at Washington City HOME Loan Agreement IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date set forth at the beginning of this Agreement. DEVELOPER Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 5 54 The Crossroads at Washington City HOME Loan Agreement ATTEST: CITY OF SANTA ANA ___________________________ _______________________ Daisy Gomez Kristine Ridge Clerk of the Council City Manager Dated: Dated: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: ________________________ Ryan O. Hodge Assistant City Attorney Dated: RECOMMENDED FOR APPROVAL: _______________________________ Steven A. Mendoza Executive Director Community Development Agency June 13, 2022 EXHIBIT 5 55 The Crossroads at Washington City HOME Loan Agreement EXHIBITS A. Legal Description B. Scope of Work C. Project Budget D. City/HOME Loan Deed of Trust E. City/HOME Loan Note F. Affordability Restrictions on Transfer of Property G. Additional Terms and Conditions Federal HOME Investment Partnership (HOME) Funds EXHIBIT 5 Exhibit A: Legal Description EXHIBIT 5 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 5 Exhibit B: Scope of Work EXHIBIT 5 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 1 Project Description Narrative Overview/Current Use of Property The proposed project, The Crossroads at Washington, (the “Project”) will be located at 1136 & 1146 E. Washington Avenue, Santa Ana, CA 92701 (the “Property”). The 2.29 acre site includes two (2) parcels that will be merged into one (1) parcel prior to the completion of construction. The current APNs associated with the Project are APN 398-092-014 (“North Parcel”) and APN 398-092-013 (“South Parcel”). The Property is currently vacant and underutilized. The immediate perimeter of the site is bounded by the Santa Ana Freeway to the north and east, light industrial use buildings to the west, and Santa Ana Boulevard to the south. Along with environmental remediation activities to prepare the site for its intended use, there is an asphalt pad on the site that will be removed in order to begin construction. Ownership and Conveyance of Land The North Parcel is currently owned by the Housing Authority of the City of Santa Ana (“Agency”), while the South Parcel is owned by the County of Orange (“County”). The parcels will be merged into one parcel and co-owned by both the Housing Authority of the City of Santa Ana and the County of Orange as Tenants-in-Common. Washington Santa Ana Housing Partners, L.P. (the “Partnership”) entered into an Option Agreement with the Housing Authority of the City of Santa Ana and County of Orange on February 25, 2020. Upon satisfactorily meeting conditions to the Option Agreement, the site will be leased to the Partnership for a period of sixty-two (62) years from the date of the Certificate of Occupancy, not to exceed sixty-five (65) years from the date of execution of the Ground Lease. Design Description and Project Characteristics The Project is an eighty-six (86) unit, affordable housing project with forty-three (43) units dedicated for permanent supportive housing and one (1) unit dedicated as Manager’s unit. Of the forty-three (43) permanent supportive housing units, twenty (20) will be set aside for Mental Health Services Act (“MHSA”) tenants. The breakdown of the bedroom types are sixteen (16) studio units, twenty-six (26) one-bedroom units, twenty-two (22) two-bedroom units, seventeen (17) three-bedroom units, and five (5) four-bedroom units. Its purpose is to provide housing to families with incomes at thirty percent (30%) of the Area Median Income (“AMI”), and to special needs populations with incomes at or below thirty percent (30%) of AMI. Tucked away in Santa Ana’s historic “Logan neighborhood,” the Project is designed in accordance with the architectural legacy of Santa Ana and the City’s Transit Zoning Code (SD 84 Specific Plan) and will incorporate a Mission Revival architectural design style. The Project is designed as Type VA construction with two (2) buildings. Building 1 (1136 E. EXHIBIT 5 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 2 Washington Avenue) is four (4) stories with an elevator. Building 2 (1146 E. Washington Avenue) ranges from two (2) to three (3) stories and has two (2) elevators. Building 1 has a total of thirty-five (35) units and Building 2 has a total of fifty-one (51) units. Each building is comprised of stacked flats. The Project will include approximately 5,811 square feet of Community Area with leasing and management offices, as well as 1,060 square feet of retail for a community serving use. The proposed design of the Project will feature an inward-facing orientation that creates buffered courtyards in order to accommodate for the adjacent Santa Ana Freeway to the east of the project and the industrial building backdrop to the west. The Project is designed to keep in mind its urban context as well as the needs of its future families and special needs residents. The Project includes multiple on-site amenities for its residents, including a pool, tot lot, courtyards, laundries, leasing/management offices, BBQ pavilion, and a dog run. The Project was fully entitled on February 24, 2020. Parking The Project will provide one hundred and twenty (120) parking spaces in an on-grade parking lot, which includes accessible parking and Electric Vehicle (“EV”) parking. Thirty-eight (38) of the one hundred and twenty (120) spaces utilize tandem parking. Landscaping The landscaping concept consists of a drought-tolerant and native plant palette where feasible that complements the Project architecture and is consistent with the overall landscape in the adjacent neighborhood. Floor Plans and Unit Amenities The design of the space considers layouts to ensure livability for residents. Units meet or exceed established minimum requirements for area and amenities. The breakdown of unit type by square footage is summarized below: Sixteen (16) studio/one bath units at 400 ft2. Twenty-six (26) one-bedroom/one bath units at 600 ft2. Twenty-two (22) two-bedroom/one bath units at 815 ft2. Seventeen (17) three-bedroom/two bath units at 1,100 ft2. Five (5) four-bedroom/two bath units at 1,300 ft2. Unit amenities include: Bathroom fixtures and finishes. Kitchen fixtures, finishes, and cabinets. Energy Star rated appliances including stove/oven and refrigerators. Energy efficient lighting. EXHIBIT 5 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 3 Energy efficient windows. Floor and window coverings. Central heating/air conditioning. Storage closets. Coat closets. Ceiling Fans. Dishwashers. Accessible features include: The Project will comply with accessibility requirements. The Project will provide ten percent (10%) of all units as accessible to people with mobility impairments, and an additional four percent (4%) of all units as accessible to people with vision and hearing impairments. Recreational Amenities and On-Site Services The design for the recreational amenities and on-site services will reflect the interests and needs of the resident population. Various amenities are provided in the design, including a computer room, community room/lounge and kitchen, fitness room, pool, and outdoor courtyards with seating areas and barbeque areas. The design encourages interaction amongst all residents through easy access and visual links to common spaces. Because there are two (2) target populations (families and special needs populations), a mix of the units has been spread across the residential buildings as to ensure integration and prevent isolation of a group within the Project. The tot lot, however, is strategically situated next to the residential building that has a higher share of larger family bedroom units. While the Project has a high density of dwelling units, a large portion of the ground floor is dedicated to services, common areas and on-site amenities. Demolition & Remediation Costs The site is currently vacant. The site will be remediated in accordance with the Removal Action Workplan (“RAW”) as approved by the Department of Toxic Substances Control (“DTSC”). The RAW is a proposed cleanup plan to address areas of soil contaminated with arsenic, lead, chromium, and petroleum hydrocarbons, and an area of soil vapor contaminated with tetrachloroethylene (“PCE”), prior to residential development. Services The Project will engage the social service provider A Community of Friends (“ACOF”) to provide a range of services available to residents. Adult Educational, Health, Wellness, and Skill Building Classes – examples of classes may include, but are not limited to, the following areas: financial literacy, computer training, resume building, nutrition, health information/awareness, and cooking. Service Coordinator – responsibilities include, but are not limited to, providing individual case management referrals and supportive services for tenants. EXHIBIT 5 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 4 Case Manager – responsibilities include, but are not limited to, providing individual case management referrals and supportive services for tenants; process housing applications using the Coordinated Entry System (“CES”), Family Solutions Center (“FSC”), and interview potential tenants for permanent supportive housing; and developing Individual Service Plans in collaboration with tenants. Please note that because the project contains less than seventy-five percent (75%) Special Needs units, and is fifty percent (50%) Special Needs and fifty-percent (50%) Large Family, services are provided proportionally for each population type. In addition to the services provided by ACOF, the Orange County Health Care Agency (“OCHCA”) will provide individualized services for the twenty (20) Mental Health Services Act tenants. Project Population Type As described above, the Project consists of eighty-six (86) units. Of the eighty (86) units, forty- three (43) units are dedicated for permanent supportive housing and one (1) unit dedicated as Manager’s unit. Of the forty-three (43) permanent supportive housing units, twenty (20) will be set aside for Mental Health Services Act (“MHSA”) tenants. Development & Management Teams The Project is controlled by the Partnership. The “for profit” administrative general partner is Related/Washington Santa Ana Development Co., LLC, an affiliate of Related. The “not for profit” managing general partner will be Supportive Housing LLC, whose member is A Community of Friends. The John Stewart Company (“JSCo”) will manage the Project. Related/Washington Santa Ana Development Co., LLC, will own a .0075% interest and Supportive Housing LLC will own a .0025% interest and act as the Managing General Partner. Income Catergory Total Units General Affordable MHSA Units General PSH Units Total PSH Units Type (PSH vs Family) Studio 30% TC 16 0 - 16 16 PSH 1 Bedroom 30% TC 26 0 20 6 26 PSH 2 Bedrooms 30% TC 21 20 - 1 1 PSH 2 Bedrooms Manager 1 1 - 3 Bedrooms 30% TC 17 17 - - 0 Family 4 Bedrooms 30% TC 5 5 - - 0 Family Total 86 43 20 23 43 EXHIBIT 5 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 5 EXHIBIT 5 DRAFT 6/9/22 Refernce Number Description Value 01-7123 Site Controls / Field Engineering 55,775$ 02-0002 General Overtime Hour Allowance 200,000$ 03-3000 Cast-In-Place Concrete 1,352,273$ 03-3116 Lightweight Concrete 172,500$ 04-2000 Masonry 207,202$ 05-1200 Structural Steel Framing 559,545$ 05-7000 Misc. & Ornamental Metals 204,801$ 06-1000 Rough Carpentry 5,416,400$ 06-2000 Finish Carpentry 112,826$ 06-2200 Countertops 223,792$ 06-4100 Cabinets 412,672$ 07-1000 Waterproofing 184,821$ 07-2100 Building Insulation 221,087$ 07-4600 Cladding/Siding 190,085$ 07-4000 Roofing 383,260$ 07-6000 Flashing / Sheetmetal 193,012$ 07-9000 Caulking, Sealant & Fire Stopping 43,866$ 07-9500 Expansion Controls 24,829$ 08-1000 Doors and Trim 843,400$ 08-3100 Access Doors 16,059$ 08-5200 Wood & Plastic Windows 720,447$ 08-8000 Glass & Glazing 81,078$ 09-2200 Drywall & Metal Stud 2,275,000$ 09-2400 Cement Plastering 1,546,500$ 09-3000 Ceramic Tile 33,533$ 09-6200 Special Flooring 15,549$ 09-6500 Resilient Flooring & Carpet 627,142$ 09-7710 Fiber Reinforced Panel 5,000$ 09-9000 Painting & Wall Covering 720,698$ 10-1400 Signs 43,866$ 10-2100 Toilet Compartments & Accessories 51,900$ 10-2600 Wall & Corner Guards 7,500$ 10-4400 Fire Extinguisher 6,141$ 10-5500 Mail Chutes/Boxes 25,800$ 10-7313 Canopies/Awnings 22,814$ 11-4000 Appliances 231,000$ The Crossroads at Washington Schedule of Values Exhibit B - Scope of Work EXHIBIT 5 12-2000 Window Treatment 45,150$ 13-1100 Swimming Pool & Spa 165,000$ 14-2000 Elevators 250,000$ 14-9000 Chutes 70,300$ 21-1000 Fire Sprinkler Systems 514,000$ 22-0000 Plumbing 2,261,098$ 23-0000 HVAC 1,112,000$ 26-0000 Electrical 1,752,800$ 26-0001 Light Fixture Allowance 400,000$ 26-0002 Dry Utility Allowance 100,000$ 27-1000 Low Voltage Systems Allowance 298,560$ 27-1001 Electronic Hardware Allowance 42,000$ 28-4600 Fire Alarm Systems 210,559$ 31-0001 Earthwork 302,247$ 31-2500 Erosion Control 36,999$ 32-1216 Asphaltic Concrete Paving 95,564$ 32-1313 Site Concrete 322,023$ 32-1700 Pavement Marking 13,650$ 32-1800 Playfield Equipment 149,840$ 32-3300 Site/Street Furnishings 62,205$ 32-8000 Irrigation/Landscaping 415,097$ 33-0001 Site Utilities (Storm Drain/Sewer/Water) Allowance 1,023,250$ Trade Subtotal 27,074,515$ General Conditions & General Requirements 2,376,385$ Contractor Fee 1,178,036$ Insurance 434,931$ Mark Up Subtotal 3,989,352$ Contract Value Total 31,063,867$ EXHIBIT 5 Exhibit C: Project Budget EXHIBIT 5 Project Data Basis Calculations Project Type Special Needs Total Eligible Basis $42,311,860 County Orange Adjusted Threshold Basis Limit $49,190,316 Site Control Type Ground Lease Total Eligible Basis as a % of Threshold Basis Limit 86.02% Total Units 86 Parking Spaces 120 Permanent Sources Interest Rate Term (Years)Amount Debt Service Land Area 2.29 Acres Tax Credit Equity 24,696,393 n/a Net Residential Area 65,130 SF Permanent Loan Note A 6.02%15 Yr / 40 Yr Amort 490,000 32,435 Recreation Building 6,141 SF Permanent Loan Note B (SAHA PBV Tranche B Loan)6.02%15 Yr / 40 Yr Amort 4,894,000 323,949 Retail Building/Space 1,443 SF Permanent Loan Note B (OCHA PBV Tranche B Loan)6.02%15 Yr / 40 Yr Amort 6,442,000 426,415 Construction Months 16 Months City Residual Receipts Loan (Land Value)3.00%62 4,108,136 n/a City Residual Receipts Loan 3.00%55 4,644,909 n/a Orange County Residual Receipts Loan (Land Value)3.00%62 2,341,864 n/a Operating Economic Assumptions Orange County PSH Loan 3.00%55 2,650,701 n/a Residential Vacancy Rate (General Affordable Units)5.00%OCHFT MHSA Loan (2021 PSH NOFA)3.00%55 2,500,000 n/a Residential Vacancy Rate (PSH Units)10.00%Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)300,000 n/a Unit Weighted Vacancy 7.53%GP Equity 100 n/a Retail Vacancy Rate 0.0%Total 53,068,103 782,799 Income Inflator 3.0% Expense Inflator 3.0%Sources and Uses Property Tax Inflator 2.0%Total Permanent Sources 53,068,103 Replacement Reserve Inflator (every 5 Years)10.0%Total Development Cost 53,068,103 CPI 3.0%Over/(Under)- Stabilized Cash Flow Year 1 Cost Efficiency / Credit Reduction / Public Funds Gross Scheduled Rent 833,928 Cost Efficiency 13% Project Based Voucher Overhang (OCHA)939,708 Credit Reduction 0% Laundry Income 6,192 Public Funds Development Ratio 25% Vacancy & Collection (134,704)38% Effective Gross Income 1,645,124 Operating Expenses (744,794) Net Operating Income 900,330 Debt Service (combined)(782,799)Cash Flow 117,532 DCR 1.15 Related Companies of California PROJECT SUMMARY The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 5 Total Number Income Rent Gross Utility Net Net Rent Monthly Annual Square Of Units Category Restriction SF Rent Allowance Rent Per SqFt Rent Rent Unit %Footage Studio 16 30% AMI TCAC 400 $711 $36 $675 $1.69 $10,800 $129,600 19%6,400 16 1 Bedroom 26 30% AMI TCAC 600 $762 $45 $717 $1.20 $18,642 $223,704 30%15,600 26 2 Bedrooms 21 30% AMI TCAC 815 $915 $60 $855 $1.05 $17,955 $215,460 24%17,115 1 Manager 815 $0 $0 0 n/a $0 $0 1%815 22 3 Bedrooms 17 30% AMI TCAC 1,100 $1,057 $76 $981 $0.89 $16,677 $200,124 20%18,700 17 4 Bedrooms 5 30% AMI TCAC 1,300 $1,179 $95 $1,084 $0.83 $5,420 $65,040 6%6,500 5 Unit Distribution Summary Summary Income Units Total %Unit Size Units Total % Total SF 65,130 30% AMI 85 100%Studio 16 19% Avg. Unit SF 757 35% AMI 0 0%1 Bedroom 26 30% Monthly Rent $69,494 40% AMI 0 0%2 Bedrooms 22 26% Annual Rent $833,928 45% AMI 0 0%3 Bedrooms 17 20% Avg. Rent (excl. manager's)$818 50% AMI 0 0%4 Bedrooms 5 6% Avg. Rent PSF (excl. manager's)$1.08 60% AMI 0 0%Total 86 100% Bedrooms 157 Market 0 0% Subtotal 85 100% Manager 1 Total 86 Related Companies of California UNIT DISTRIBUTION The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 5 The Crossroads at Washington - Updated Closing Proforma (v04r) PBV Overhang Calculation - Separated by AHAP SEPARATED OCHA 2021 Income Catergory PBS8 Units Payment Standard TCAC Gross Rents Per Unit Overhang Monthly Overhang Annual Overhang Studio 30% TC 16 1,682 711 971 15,536 186,432 1 Bedroom 30% TC 26 1,867 762 1,105 28,730 344,760 2 Bedrooms 30% TC 1 2,278 915 1,363 1,363 16,356 Total 43 Gross Overhang 45,629 547,548 Less Vacancy 10.00%(4,563) (54,755) Less Monitoring Fee (197) (2,365) Less Management Fee - - Net Overhang 40,869 490,428 DCR 1.15 Interest Rate 6.02% Term (months)480 Maximum Loan Amount 6,442,663 Actual Loan Amount (Rounded Down)6,442,000 Annual Payment 426,415 SAHA 2021 Income Catergory PBS8 Units Payment Standard TCAC Gross Rents Per Unit Overhang Monthly Overhang Annual Overhang 3 Bedrooms 30% TC 10 3,114 1,057 2,057 20,570 246,840 4 Bedrooms . 30% TC 5 3,601 1,179 2,422 12,110 145,320 Total 15 32,680 392,160 Less Vacancy 5.00%(1,634) (19,608) Net Overhang 31,046 372,552 DCR 1.15 Interest Rate 6.02% Term (months)480 Maximum Loan Amount 4,894,146 Actual Loan Amount (Rounded Down)4,894,000 Annual Payment 323,949 EXHIBIT 5 Related Companies of California Operating Expense Budget (86 units) RENTING Advertising 672 Misc. Renting 699 TOTAL RENTING 1,371 ADMINISTRATION Office 5,913 Legal 3,010 Audit 12,000 Telephone/Computer 16,931 Tenant Relations 2,956 Misc. Administrative 11,234 TOTAL ADMINISTRATION 52,044 MANAGEMENT FEE Contract Management 54,696 TOTAL MANAGEMENT 54,696 OPERATING Electricity 10,000 Water 24,725 Gas 10,402 Sewer 18,505 Exterminating 4,300 Rubbish Removal 23,220 Misc. Operating 1,075 TOTAL OPERATING 92,227 MAINTENANCE Security 29,348 Grounds 26,875 Pool 6,000 Repairs 26,875 Elevator 19,350 Unit Turns 5,375 Misc. Maintenance 9,138 TOTAL MAINTENANCE 122,960 SALARIES AND BENEFITS Office Salaries 67,080 Maintenance Salaries 62,608 Payroll Taxes and Benefits 51,875 TOTAL SALARIES AND BENEFITS 181,563 TAXES AND INSURANCE Real Estate Taxes 4,500 Business Taxes and Licenses 369 Insurance 51,600 TOTAL TAXES AND INSURANCE 56,469 RESERVES AND OTHER EXPENSES Replacement Reserves 25,800 Replacement Reserves (Add'l MHSA Units)4,000 PSH Monitoring Fee (OCHA/OCCS: $55/unit/yr x 43 units)2,365 PSH Monitoring Fee (OCHFT: $65/unit/yr x 20 units)1,300 Annual Environmental Monitoring Fees 10,000 Social Programs 140,000 TOTAL RESERVES AND OTHER COSTS 183,465 TOTAL OPERATING EXPENSES 744,794 ANNUAL OPERATING EXPENSE BUDGET The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 5 PROJECT BUDGET 86 units Commercial/TCAC Budget Residential Retail Eligible Basis ACQUISITION COSTS 6,450,000 6,450,000 0 0 PROFESSIONAL FEES 2,672,000 2,672,000 0 2,669,431 FEES AND PERMITS 2,630,000 2,630,000 0 2,630,000 CONSTRUCTION COSTS Offsite Improvements/Site Improvements/Landscaping 3,687,814 3,687,814 0 3,687,814 Residential Structures/Non-Residential Structures/Community Building 23,212,137 22,751,496 460,642 22,751,496 General Conditions / Contractor Profit 3,674,454 3,611,532 62,922 3,611,532 Contractor Insurance 311,124 305,796 5,328 305,796 Contractor / Construction Contingency 2,109,175 2,073,057 36,118 2,073,057 Remediation 850,000 850,000 0 0 TOTAL CONSTRUCTION COSTS 33,844,705 33,279,695 565,010 32,429,695 GAP/CONSTRUCTION/PERMANENT LOAN FEES 557,000 557,000 0 57,234 CONSTRUCTION LOAN INTEREST/POST-CONSTRUCTION INTEREST 2,382,000 2,382,000 0 960,000 OTHER SOFT COSTS 1,643,500 1,643,500 0 1,058,500 RESERVES 381,898 381,898 0 0 DEVELOPER FEE 2,507,000 2,507,000 0 2,507,000 TOTAL DEVELOPMENT COSTS 53,068,103 52,503,093 565,010 42,311,860 / TOTAL ELIGIBLE BASIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California EXHIBIT 5 Total Project Cost $53,068,103 Total Permanent Sources (28,371,710) Funding Shortfall $24,696,393 Total Qualified Basis $29,829,544 Annual Federal Credits - Calculated $2,684,659 Annual Federal Credits - Awarded $2,684,659 Total Federal Credits (10 Years)$26,846,590 Federal Tax Credit Price $0.920 Federal Tax Credit Investor Equity $24,696,393 Total Tax Credit Investor Equity (Federal + State+ Acquisition)$24,696,393 Threshold Basis Limits (Year 2022)9% Limits Units Limit Total Efficiency 16 308,882 4,942,112 1 Bedroom 26 356,138 9,259,588 2 Bedrooms 22 429,600 9,451,200 3 Bedrooms 17 549,888 9,348,096 4 Bedrooms 5 612,610 3,063,050 86 36,064,046 Special Features Threshold Basis Limit Increases 10% Increase: 95% of the project's upper floor units are serviced by an elevator 3,606,405 20% Increase: State or Federal Prevailing Wage Requirement 7,212,809 Total Percentage Increase to Unadjusted Eligible Basis (Combined not to exceed 39%)10,819,214 Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis max.)850,000 Development Impact Fees 1,457,057 Adjusted Threshold Basis Limit $49,190,316 Total Eligible Basis $42,311,860 Over /(Under) Basis Limit ($6,878,456) Related Companies of California TAX CREDIT CALCULATION The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 5 Construction Sources and Uses Construction Sources Construction Loan 35,033,056 City Residual Receipts Loan (Land Value)4,108,136 Tax Credit Equity 2,469,639 City Residual Receipts Loan 4,644,909 Orange County Residual Receipts Loan (Land Value)2,341,864 OCHFT MHSA Loan (2021 PSH NOFA)2,500,000 Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)300,000 GP Equity 100 1,253,500 Operating Deficit Reserve 381,898 Deferred TCAC Monitoring Fee 35,000 Total Construction Sources 53,068,103 Construction Uses Total Development Cost 53,068,103 Amount Over/(Under)- Permanent Sources and Uses Sources Tax Credit Equity 24,696,393 Permanent Loan Note A 490,000 Permanent Loan Note B (SAHA PBV Tranche B Loan)4,894,000 Permanent Loan Note B (OCHA PBV Tranche B Loan)6,442,000 City Residual Receipts Loan (Land Value)4,108,136 City Residual Receipts Loan 4,644,909 Orange County Residual Receipts Loan (Land Value)2,341,864 Orange County PSH Loan 2,650,701 OCHFT MHSA Loan (2021 PSH NOFA)2,500,000 Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)300,000 GP Equity 100 Total Permanent Sources 53,068,103 Uses Total Development Cost 53,068,103 Amount Over/(Under)- Deferred Developer Fee (50% of $2,507,000) SOURCES AND USES OF FUNDS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California EXHIBIT 5 3%/3% Cash Flow Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 INCOME Gross Rental Income 833,928 858,946 884,714 911,256 938,593 966,751 995,754 1,025,626 1,056,395 1,088,087 1,120,729 1,154,351 1,188,982 1,224,651 1,261,391 Project Based Voucher Overhang (SAHA)392,160 403,925 416,043 428,524 441,380 454,621 468,260 482,307 496,777 511,680 527,030 542,841 559,126 575,900 593,177 Project Based Voucher Overhang (OCHA)547,548 563,974 580,894 598,320 616,270 634,758 653,801 673,415 693,617 714,426 735,859 757,934 780,673 804,093 828,215 Vacancy @ 7.57%(134,237)(138,265)(142,412)(146,685)(151,085)(155,618)(160,286)(165,095)(170,048)(175,149)(180,404)(185,816)(191,390)(197,132)(203,046) Laundry Income 6,192 6,378 6,569 6,766 6,969 7,178 7,394 7,615 7,844 8,079 8,322 8,571 8,828 9,093 9,366 Unit Weighted Vacancy @ 7.53%(466)(480)(495)(509)(525)(540)(557)(573)(591)(608)(627)(645)(665)(685)(705) EFFECTIVE GROSS INCOME 1,645,124 1,694,478 1,745,312 1,797,672 1,851,602 1,907,150 1,964,365 2,023,295 2,083,994 2,146,514 2,210,910 2,277,237 2,345,554 2,415,921 2,488,398 EXPENSES Administrative (52,044)(53,605)(55,213)(56,870)(58,576)(60,333)(62,143)(64,007)(65,927)(67,905)(69,942)(72,041)(74,202)(76,428)(78,721) Management Fee (54,696)(56,337)(58,027)(59,768)(61,561)(63,408)(65,310)(67,269)(69,287)(71,366)(73,507)(75,712)(77,983)(80,323)(82,733) Operating (92,227)(94,994)(97,843)(100,779)(103,802)(106,916)(110,124)(113,427)(116,830)(120,335)(123,945)(127,663)(131,493)(135,438)(139,501) Maintenance (122,960)(126,649)(130,448)(134,362)(138,393)(142,544)(146,821)(151,225)(155,762)(160,435)(165,248)(170,205)(175,312)(180,571)(185,988) Salaries (181,563)(187,010)(192,620)(198,399)(204,351)(210,482)(216,796)(223,300)(229,999)(236,899)(244,006)(251,326)(258,866)(266,632)(274,631) Taxes (escalated at 2.00%)(4,869)(4,966)(5,065)(5,167)(5,270)(5,375)(5,483)(5,593)(5,704)(5,819)(5,935)(6,054)(6,175)(6,298)(6,424) Insurance (51,600)(53,148)(54,742)(56,385)(58,076)(59,819)(61,613)(63,461)(65,365)(67,326)(69,346)(71,426)(73,569)(75,776)(78,050) Renting (1,371)(1,412)(1,454)(1,498)(1,543)(1,589)(1,637)(1,686)(1,736)(1,788)(1,842)(1,897)(1,954)(2,013)(2,073) Social Programs (140,000)(144,200)(148,526)(152,982)(157,571)(162,298)(167,167)(172,182)(177,348)(182,668)(188,148)(193,793)(199,607)(205,595)(211,763) Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%)(1,300)(1,326)(1,353)(1,380)(1,407)(1,435)(1,464)(1,493)(1,523)(1,554)(1,585)(1,616)(1,649)(1,682)(1,715) Other Expenses: Annual Environmental Monitoring Fees (10,000)(10,300)(10,609)(10,927)(11,255)(11,593)(11,941)(12,299)(12,668)(13,048)(13,439)(13,842)(14,258)(14,685)(15,126) Replacement Reserves (escalated at 10% every 5 years)(29,800)(29,800)(29,800)(29,800)(29,800)(32,780)(32,780)(32,780)(32,780)(32,780)(36,058)(36,058)(36,058)(36,058)(36,058) TOTAL OPERATING EXPENSES Op Exp / Income: 45% (744,794)(766,111)(788,067)(810,680)(833,970)(860,937)(885,643)(911,088)(937,295)(964,288)(995,366)(1,023,999)(1,053,490)(1,083,864)(1,115,147) NET OPERATING INCOME 900,330 928,367 957,246 986,992 1,017,632 1,046,213 1,078,722 1,112,207 1,146,699 1,182,226 1,215,543 1,253,238 1,292,064 1,332,057 1,373,251 DEBT SERVICE Permanent Loan Note A (32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435) Permanent Loan Note B (SAHA PBV Tranche B Loan)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949) Permanent Loan Note B (OCHA PBV Tranche B Loan)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415) Conventional Refinance Loan 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash Flow After Debt Service 117,532 145,568 174,447 204,194 234,834 263,415 295,923 329,409 363,900 399,428 432,745 470,439 509,265 549,258 590,452 SLP Fee (5,000)(5,150)(5,305)(5,464)(5,628)(5,796)(5,970)(6,149)(6,334)(6,524)(6,720)(6,921)(7,129)(7,343)(7,563) Partnership Administration Fee (20,000)(20,600)(21,218)(21,855)(22,510)(23,185)(23,881)(24,597)(25,335)(26,095)(26,878)(27,685)(28,515)(29,371)(30,252) Cash Flow After Fees 92,532 119,818 147,925 176,875 206,696 234,433 266,072 298,662 332,231 366,809 399,147 435,833 473,621 512,545 552,638 12,520 16,211 20,014 23,931 27,966 31,719 36,000 40,409 44,951 49,629 54,005 58,968 64,081 69,348 74,772 Only after County Cash Loan is paid off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 21,938 28,408 35,072 41,936 49,006 55,582 63,083 70,810 78,769 86,967 94,634 103,332 112,292 121,520 131,026 Only after City Cash Loan is paid off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11,808 15,290 18,876 22,571 26,376 29,916 33,953 38,112 42,395 46,808 50,934 55,616 60,438 65,405 70,521 Total Residual Receipts Payments 46,266 59,909 73,962 88,438 103,348 117,216 133,036 149,331 166,116 183,404 199,573 217,917 236,811 256,272 276,319 Orange County PSH Loan Beginning Loan Balance 2,650,701 2,717,702 2,781,012 2,840,519 2,896,108 2,947,663 2,995,466 3,038,987 3,078,099 3,112,669 3,142,561 3,168,077 3,188,629 3,204,069 3,214,243 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 Cash Flow Payment (12,520)(16,211)(20,014)(23,931)(27,966)(31,719)(36,000)(40,409)(44,951)(49,629)(54,005)(58,968)(64,081)(69,348)(74,772) Ending Loan Balance 2,717,702 2,781,012 2,840,519 2,896,108 2,947,663 2,995,466 3,038,987 3,078,099 3,112,669 3,142,561 3,168,077 3,188,629 3,204,069 3,214,243 3,218,992 Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance 2,341,864 2,412,120 2,482,376 2,552,632 2,622,888 2,693,144 2,763,400 2,833,655 2,903,911 2,974,167 3,044,423 3,114,679 3,184,935 3,255,191 3,325,447 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 Cash Flow Payment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ending Loan Balance 2,412,120 2,482,376 2,552,632 2,622,888 2,693,144 2,763,400 2,833,655 2,903,911 2,974,167 3,044,423 3,114,679 3,184,935 3,255,191 3,325,447 3,395,703 City Residual Receipts Loan Beginning Loan Balance 4,644,909 4,762,318 4,873,257 4,977,533 5,074,944 5,165,286 5,249,051 5,325,315 5,393,852 5,454,430 5,506,810 5,551,523 5,587,538 5,614,594 5,632,421 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 Cash Flow Payment (21,938)(28,408)(35,072)(41,936)(49,006)(55,582)(63,083)(70,810)(78,769)(86,967)(94,634)(103,332)(112,292)(121,520)(131,026) Ending Loan Balance 4,762,318 4,873,257 4,977,533 5,074,944 5,165,286 5,249,051 5,325,315 5,393,852 5,454,430 5,506,810 5,551,523 5,587,538 5,614,594 5,632,421 5,640,743 City Residual Receipts Loan (Land Value) Beginning Loan Balance 4,108,136 4,231,380 4,354,624 4,477,868 4,601,112 4,724,356 4,847,600 4,970,845 5,094,089 5,217,333 5,340,577 5,463,821 5,587,065 5,710,309 5,833,553 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 Cash Flow Payment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ending Loan Balance 4,231,380 4,354,624 4,477,868 4,601,112 4,724,356 4,847,600 4,970,845 5,094,089 5,217,333 5,340,577 5,463,821 5,587,065 5,710,309 5,833,553 5,956,797 OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance 2,500,000 2,563,192 2,622,902 2,679,026 2,731,455 2,780,079 2,825,164 2,866,211 2,903,099 2,935,704 2,963,896 2,987,961 3,007,345 3,021,908 3,031,503 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 Cash Flow Payment (11,808)(15,290)(18,876)(22,571)(26,376)(29,916)(33,953)(38,112)(42,395)(46,808)(50,934)(55,616)(60,438)(65,405)(70,521) Ending Loan Balance 2,563,192 2,622,902 2,679,026 2,731,455 2,780,079 2,825,164 2,866,211 2,903,099 2,935,704 2,963,896 2,987,961 3,007,345 3,021,908 3,031,503 3,035,982 DCR 1.15 1.19 1.22 1.26 1.30 1.34 1.38 1.42 1.46 1.51 1.55 1.60 1.65 1.70 1.75 Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California EXHIBIT 5 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1,299,233 1,338,210 1,378,356 1,419,707 1,462,298 1,506,167 1,551,352 1,597,892 1,645,829 1,695,204 1,746,060 1,798,442 1,852,395 1,907,967 1,965,206 610,973 629,302 648,181 667,626 687,655 708,285 729,533 751,419 773,962 797,181 821,096 845,729 871,101 897,234 924,151 853,062 878,654 905,013 932,164 960,129 988,933 1,018,601 1,049,159 1,080,633 1,113,052 1,146,444 1,180,837 1,216,262 1,252,750 1,290,333 (209,137)(215,412)(221,874)(228,530)(235,386)(242,448)(249,721)(257,213)(264,929)(272,877)(281,063)(289,495)(298,180)(307,125)(316,339) 9,647 9,936 10,234 10,541 10,858 11,183 11,519 11,865 12,220 12,587 12,965 13,354 13,754 14,167 14,592 (726)(748)(771)(794)(818)(842)(867)(893)(920)(948)(976)(1,005)(1,036)(1,067)(1,099) 2,563,050 2,639,942 2,719,140 2,800,714 2,884,736 2,971,278 3,060,416 3,152,228 3,246,795 3,344,199 3,444,525 3,547,861 3,654,297 3,763,926 3,876,843 (81,082)(83,515)(86,020)(88,601)(91,259)(93,997)(96,817)(99,721)(102,713)(105,794)(108,968)(112,237)(115,604)(119,072)(122,645) (85,215)(87,771)(90,404)(93,116)(95,910)(98,787)(101,751)(104,803)(107,947)(111,186)(114,521)(117,957)(121,496)(125,140)(128,895) (143,686)(147,997)(152,437)(157,010)(161,720)(166,572)(171,569)(176,716)(182,017)(187,478)(193,102)(198,895)(204,862)(211,008)(217,338) (191,568)(197,315)(203,234)(209,331)(215,611)(222,079)(228,742)(235,604)(242,672)(249,952)(257,451)(265,174)(273,130)(281,324)(289,763) (282,870)(291,356)(300,096)(309,099)(318,372)(327,923)(337,761)(347,894)(358,331)(369,081)(380,153)(391,558)(403,304)(415,403)(427,866) (6,553)(6,684)(6,817)(6,954)(7,093)(7,235)(7,379)(7,527)(7,677)(7,831)(7,988)(8,147)(8,310)(8,477)(8,646) (80,391)(82,803)(85,287)(87,846)(90,481)(93,195)(95,991)(98,871)(101,837)(104,892)(108,039)(111,280)(114,619)(118,057)(121,599) (2,135)(2,199)(2,265)(2,333)(2,403)(2,476)(2,550)(2,626)(2,705)(2,786)(2,870)(2,956)(3,045)(3,136)(3,230) (218,115)(224,659)(231,399)(238,341)(245,491)(252,856)(260,441)(268,254)(276,302)(284,591)(293,129)(301,923)(310,980)(320,310)(329,919) (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) (1,750)(1,785)(1,820)(1,857)(1,894)(1,932)(1,970)(2,010)(2,050)(2,091)(2,133)(2,175)(2,219)(2,263)(2,309) (15,580)(16,047)(16,528)(17,024)(17,535)(18,061)(18,603)(19,161)(19,736)(20,328)(20,938)(21,566)(22,213)(22,879)(23,566) (39,664)(39,664)(39,664)(39,664)(39,664)(43,630)(43,630)(43,630)(43,630)(43,630)(47,993)(47,993)(47,993)(47,993)(47,993) (1,150,973)(1,184,159)(1,218,338)(1,253,541)(1,289,798)(1,331,108)(1,369,569)(1,409,183)(1,449,983)(1,492,006)(1,539,650)(1,584,227)(1,630,140)(1,677,428)(1,726,133) 1,412,077 1,455,783 1,500,802 1,547,173 1,594,938 1,640,170 1,690,847 1,743,045 1,796,812 1,852,194 1,904,875 1,963,634 2,024,157 2,086,497 2,150,710 (32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435) (323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949) (426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 629,278 672,984 718,004 764,375 812,139 857,371 908,048 960,247 1,014,013 1,069,395 1,122,077 1,180,835 1,241,358 1,303,699 1,367,912 (7,790)(8,024)(8,264)(8,512)(8,768)(9,031)(9,301)(9,581)(9,868)(10,164)(10,469)(10,783)(11,106)(11,440)(11,783) (31,159)(32,094)(33,057)(34,049)(35,070)(36,122)(37,206)(38,322)(39,472)(40,656)(41,876)(43,132)(44,426)(45,759)(47,131) 590,329 632,867 676,682 721,814 768,301 812,219 861,541 912,344 964,674 1,018,575 1,069,732 1,126,920 1,185,826 1,246,501 1,308,998 79,872 85,627 91,555 97,662 103,952 109,894 116,567 123,441 130,521 137,814 144,735 152,473 160,443 168,652 177,108 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 139,962 150,047 160,436 171,136 182,158 192,570 204,264 216,309 228,716 241,495 253,624 267,183 281,149 295,535 310,352 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 75,331 80,759 86,350 92,109 98,042 103,646 109,940 116,423 123,100 129,979 136,507 143,804 151,321 159,064 167,039 295,165 316,433 338,341 360,907 384,151 406,109 430,770 456,172 482,337 509,288 534,866 563,460 592,913 623,250 654,499 3,218,992 3,218,641 3,212,535 3,200,500 3,182,360 3,157,929 3,127,557 3,090,511 3,046,591 2,995,591 2,937,299 2,872,085 2,799,133 2,718,211 2,629,080 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 78,872 (79,872)(85,627)(91,555)(97,662)(103,952)(109,894)(116,567)(123,441)(130,521)(137,814)(144,735)(152,473)(160,443)(168,652)(177,108) 3,218,641 3,212,535 3,200,500 3,182,360 3,157,929 3,127,557 3,090,511 3,046,591 2,995,591 2,937,299 2,872,085 2,799,133 2,718,211 2,629,080 2,530,844 3,395,703 3,465,959 3,536,215 3,606,471 3,676,726 3,746,982 3,817,238 3,887,494 3,957,750 4,028,006 4,098,262 4,168,518 4,238,774 4,309,030 4,379,286 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,465,959 3,536,215 3,606,471 3,676,726 3,746,982 3,817,238 3,887,494 3,957,750 4,028,006 4,098,262 4,168,518 4,238,774 4,309,030 4,379,286 4,449,542 5,640,743 5,640,128 5,629,428 5,608,340 5,576,552 5,533,741 5,480,518 5,415,602 5,338,640 5,249,272 5,147,124 5,032,847 4,905,011 4,763,209 4,607,022 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 138,211 (139,962)(150,047)(160,436)(171,136)(182,158)(192,570)(204,264)(216,309)(228,716)(241,495)(253,624)(267,183)(281,149)(295,535)(310,352) 5,640,128 5,629,428 5,608,340 5,576,552 5,533,741 5,480,518 5,415,602 5,338,640 5,249,272 5,147,124 5,032,847 4,905,011 4,763,209 4,607,022 4,434,880 5,956,797 6,080,041 6,203,285 6,326,529 6,449,774 6,573,018 6,696,262 6,819,506 6,942,750 7,065,994 7,189,238 7,312,482 7,435,726 7,558,970 7,682,214 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6,080,041 6,203,285 6,326,529 6,449,774 6,573,018 6,696,262 6,819,506 6,942,750 7,065,994 7,189,238 7,312,482 7,435,726 7,558,970 7,682,214 7,805,458 3,035,982 3,035,651 3,029,892 3,018,541 3,001,432 2,978,391 2,949,745 2,914,805 2,873,383 2,825,282 2,770,304 2,708,797 2,639,993 2,563,672 2,479,608 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 74,388 (75,331)(80,759)(86,350)(92,109)(98,042)(103,646)(109,940)(116,423)(123,100)(129,979)(136,507)(143,804)(151,321)(159,064)(167,039) 3,035,651 3,029,892 3,018,541 3,001,432 2,978,391 2,949,745 2,914,805 2,873,383 2,825,282 2,770,304 2,708,797 2,639,993 2,563,672 2,479,608 2,386,958 1.80 1.86 1.92 1.98 2.04 2.10 2.16 2.23 2.30 2.37 2.43 2.51 2.59 2.67 2.75 EXHIBIT 5 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 2,024,162 2,084,887 2,147,434 2,211,857 2,278,212 2,346,559 2,416,955 2,489,464 2,564,148 2,641,072 2,720,305 2,801,914 2,885,971 2,972,550 3,061,727 951,875 980,432 1,009,844 1,040,140 1,071,344 1,103,484 1,136,589 1,170,686 1,205,807 1,241,981 1,279,241 1,317,618 1,357,147 1,397,861 1,439,797 1,329,043 1,368,914 1,409,981 1,452,281 1,495,849 1,540,725 1,586,947 1,634,555 1,683,592 1,734,099 1,786,122 1,839,706 1,894,897 1,951,744 2,010,296 (325,829)(335,604)(345,672)(356,043)(366,724)(377,726)(389,057)(400,729)(412,751)(425,133)(437,887)(451,024)(464,555)(478,491)(492,846) 15,030 15,480 15,945 16,423 16,916 17,423 17,946 18,485 19,039 19,610 20,199 20,804 21,429 22,071 22,734 (1,132)(1,166)(1,201)(1,237)(1,274)(1,312)(1,351)(1,392)(1,434)(1,477)(1,521)(1,566)(1,613)(1,662)(1,712) 3,993,149 4,112,943 4,236,331 4,363,421 4,494,324 4,629,154 4,768,028 4,911,069 5,058,401 5,210,153 5,366,458 5,527,452 5,693,275 5,864,073 6,039,996 (126,324)(130,114)(134,017)(138,037)(142,179)(146,444)(150,837)(155,362)(160,023)(164,824)(169,769)(174,862)(180,108)(185,511)(191,076) (132,762)(136,744)(140,847)(145,072)(149,424)(153,907)(158,524)(163,280)(168,178)(173,224)(178,420)(183,773)(189,286)(194,965)(200,814) (223,859)(230,574)(237,492)(244,616)(251,955)(259,513)(267,299)(275,318)(283,577)(292,085)(300,847)(309,873)(319,169)(328,744)(338,606) (298,456)(307,410)(316,632)(326,131)(335,915)(345,993)(356,372)(367,063)(378,075)(389,418)(401,100)(413,133)(425,527)(438,293)(451,442) (440,702)(453,923)(467,540)(481,566)(496,013)(510,894)(526,221)(542,007)(558,268)(575,016)(592,266)(610,034)(628,335)(647,185)(666,601) (8,819)(8,995)(9,175)(9,359)(9,546)(9,737)(9,932)(10,130)(10,333)(10,540)(10,750)(10,965)(11,185)(11,408)(11,637) (125,247)(129,004)(132,874)(136,860)(140,966)(145,195)(149,551)(154,038)(158,659)(163,419)(168,321)(173,371)(178,572)(183,929)(189,447) (3,327)(3,427)(3,529)(3,635)(3,744)(3,857)(3,972)(4,092)(4,214)(4,341)(4,471)(4,605)(4,743)(4,886)(5,032) (339,817)(350,011)(360,512)(371,327)(382,467)(393,941)(405,759)(417,932)(430,470)(443,384)(456,685)(470,386)(484,497)(499,032)(514,003) (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) (2,355)(2,402)(2,450)(2,499)(2,549)(2,600)(2,652)(2,705)(2,759)(2,814)(2,870)(2,928)(2,986)(3,046)(3,107) (24,273)(25,001)(25,751)(26,523)(27,319)(28,139)(28,983)(29,852)(30,748)(31,670)(32,620)(33,599)(34,607)(35,645)(36,715) (52,793)(52,793)(52,793)(52,793)(52,793)(58,072)(58,072)(58,072)(58,072)(58,072)(63,879)(63,879)(63,879)(63,879)(63,879) (1,781,096)(1,832,762)(1,885,977)(1,940,785)(1,997,235)(2,060,656)(2,120,539)(2,182,216)(2,245,741)(2,311,169)(2,384,365)(2,453,772)(2,525,259)(2,598,888)(2,674,723) 2,212,053 2,280,181 2,350,355 2,422,636 2,497,089 2,568,498 2,647,489 2,728,853 2,812,660 2,898,984 2,982,093 3,073,679 3,168,016 3,265,185 3,365,273 (32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)0 0 0 0 0 (323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)0 0 0 0 0 (426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,429,254 1,497,382 1,567,556 1,639,838 1,714,290 1,785,699 1,864,691 1,946,054 2,029,861 2,116,185 2,982,093 3,073,679 3,168,016 3,265,185 3,365,273 (12,136)(12,500)(12,875)(13,262)(13,660)(14,069)(14,491)(14,926)(15,374)(15,835)(16,310)(16,799)(17,303)(17,823)(18,357) (48,545)(50,002)(51,502)(53,047)(54,638)(56,277)(57,966)(59,705)(61,496)(63,341)(65,241)(67,198)(69,214)(71,290)(73,429) 1,368,573 1,434,880 1,503,179 1,573,530 1,645,993 1,715,353 1,792,234 1,871,424 1,952,992 2,037,010 2,900,542 2,989,682 3,081,498 3,176,072 3,273,486 185,168 194,140 203,381 212,899 222,704 232,088 242,490 253,204 264,241 275,608 392,445 404,505 416,928 0 0 0 0 0 0 0 0 0 0 0 0 0 0 366,338 429,724 442,904 324,477 340,198 356,391 373,070 390,251 406,695 424,923 443,698 463,037 482,957 687,693 708,828 730,597 0 0 0 0 0 0 0 0 0 0 0 0 0 0 641,946 753,019 776,115 174,641 183,102 191,818 200,795 210,042 218,893 228,704 238,809 249,218 259,939 370,133 381,508 393,224 0 0 684,286 717,440 751,590 786,765 822,996 857,676 896,117 935,712 976,496 1,018,505 1,450,271 1,494,841 2,549,034 1,182,743 1,219,020 2,530,844 2,421,601 2,300,109 2,165,732 2,017,804 1,855,635 1,679,216 1,487,103 1,278,511 1,052,626 808,596 440,409 49,116 0 0 75,925 72,648 69,003 64,972 60,534 55,669 50,376 44,613 38,355 31,579 24,258 13,212 1,473 0 0 (185,168)(194,140)(203,381)(212,899)(222,704)(232,088)(242,490)(253,204)(264,241)(275,608)(392,445)(404,505)(50,590)0 0 2,421,601 2,300,109 2,165,732 2,017,804 1,855,635 1,679,216 1,487,103 1,278,511 1,052,626 808,596 440,409 49,116 0 0 0 4,449,542 4,519,798 4,590,053 4,660,309 4,730,565 4,800,821 4,871,077 4,941,333 5,011,589 5,081,845 5,152,101 5,222,357 5,292,613 4,996,530 4,637,062 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 0 0 0 0 0 0 0 0 0 0 0 0 (366,338)(429,724)(442,904) 4,519,798 4,590,053 4,660,309 4,730,565 4,800,821 4,871,077 4,941,333 5,011,589 5,081,845 5,152,101 5,222,357 5,292,613 4,996,530 4,637,062 4,264,414 4,434,880 4,243,450 4,030,556 3,795,082 3,535,864 3,251,689 2,942,545 2,605,898 2,240,376 1,844,550 1,416,929 771,744 86,068 0 0 133,046 127,304 120,917 113,852 106,076 97,551 88,276 78,177 67,211 55,337 42,508 23,152 2,582 0 0 (324,477)(340,198)(356,391)(373,070)(390,251)(406,695)(424,923)(443,698)(463,037)(482,957)(687,693)(708,828)(88,650)0 0 4,243,450 4,030,556 3,795,082 3,535,864 3,251,689 2,942,545 2,605,898 2,240,376 1,844,550 1,416,929 771,744 86,068 0 0 0 7,805,458 7,928,702 8,051,947 8,175,191 8,298,435 8,421,679 8,544,923 8,668,167 8,791,411 8,914,655 9,037,899 9,161,143 9,284,387 8,765,685 8,135,910 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 0 0 0 0 0 0 0 0 0 0 0 0 (641,946)(753,019)(776,115) 7,928,702 8,051,947 8,175,191 8,298,435 8,421,679 8,544,923 8,668,167 8,791,411 8,914,655 9,037,899 9,161,143 9,284,387 8,765,685 8,135,910 7,483,039 2,386,958 2,283,925 2,169,341 2,042,603 1,903,086 1,750,136 1,583,747 1,402,556 1,205,824 992,781 762,625 415,371 46,324 0 0 71,609 68,518 65,080 61,278 57,093 52,504 47,512 42,077 36,175 29,783 22,879 12,461 1,390 0 0 (174,641)(183,102)(191,818)(200,795)(210,042)(218,893)(228,704)(238,809)(249,218)(259,939)(370,133)(381,508)(47,714)0 0 2,283,925 2,169,341 2,042,603 1,903,086 1,750,136 1,583,747 1,402,556 1,205,824 992,781 762,625 415,371 46,324 0 0 0 2.83 2.91 3.00 3.09 3.19 3.28 3.38 3.49 3.59 3.70 0.00 0.00 0.00 0.00 0.00 EXHIBIT 5 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 46 47 48 49 50 51 52 53 54 55 3,153,579 3,248,186 3,345,632 3,446,001 3,549,381 3,655,862 3,765,538 3,878,504 3,994,859 4,114,705 1,482,991 1,527,480 1,573,305 1,620,504 1,669,119 1,719,193 1,770,768 1,823,891 1,878,608 1,934,966 2,070,605 2,132,723 2,196,705 2,262,606 2,330,484 2,400,399 2,472,411 2,546,583 2,622,981 2,701,670 (507,632)(522,861)(538,546)(554,703)(571,344)(588,484)(606,139)(624,323)(643,053)(662,344) 23,416 24,118 24,842 25,587 26,355 27,145 27,960 28,798 29,662 30,552 (1,763)(1,816)(1,870)(1,927)(1,984)(2,044)(2,105)(2,168)(2,233)(2,300) 6,221,196 6,407,831 6,600,066 6,798,068 7,002,010 7,212,071 7,428,433 7,651,286 7,880,824 8,117,249 (196,808)(202,713)(208,794)(215,058)(221,510)(228,155)(235,000)(242,050)(249,311)(256,790)Refi Loan (206,838)(213,043)(219,435)(226,018)(232,798)(239,782)(246,976)(254,385)(262,016)(269,877)Year 55 NOI 4,533,855 (348,764)(359,227)(370,004)(381,104)(392,537)(404,313)(416,443)(428,936)(441,804)(455,058)Year of Refinancing 55 (464,985)(478,935)(493,303)(508,102)(523,345)(539,045)(555,216)(571,873)(589,029)(606,700)Interest Rate 6.50% (686,599)(707,197)(728,412)(750,265)(772,773)(795,956)(819,835)(844,430)(869,763)(895,855)Term (years)5 years (11,869)(12,107)(12,349)(12,596)(12,848)(13,105)(13,367)(13,634)(13,907)(14,185)DCR 1.2 (195,130)(200,984)(207,014)(213,224)(219,621)(226,210)(232,996)(239,986)(247,185)(254,601)Max Refi Loan 16,091,620 (5,183)(5,339)(5,499)(5,664)(5,834)(6,009)(6,189)(6,375)(6,566)(6,763) (529,423)(545,306)(561,665)(578,515)(595,871)(613,747)(632,159)(651,124)(670,658)(690,777)Loan Balances (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)Orange County PSH Loan 0 (3,169)(3,233)(3,297)(3,363)(3,430)(3,499)(3,569)(3,640)(3,713)(3,787)Orange County Residual Receipts Loan (Land Value)0 (37,816)(38,950)(40,119)(41,323)(42,562)(43,839)(45,154)(46,509)(47,904)(49,341) (70,267)(70,267)(70,267)(70,267)(70,267)(77,294)(77,294)(77,294)(77,294)(77,294)City Residual Receipts Loan (Land Value)0 (2,759,218)(2,839,665)(2,922,523)(3,007,863)(3,095,760)(3,193,318)(3,286,562)(3,382,599)(3,481,515)(3,583,394)City Residual Receipts Loan 0 OCHFT MHSA Loan (2021 PSH NOFA)0 3,461,978 3,568,166 3,677,544 3,790,206 3,906,250 4,018,753 4,141,871 4,268,686 4,399,309 4,533,855 Total Loan Balances (Actual Refi Loan Amount)0 Balance after Payoff (Can't be below 0)16,091,620 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 3,461,978 3,568,166 3,677,544 3,790,206 3,906,250 4,018,753 4,141,871 4,268,686 4,399,309 4,533,855 (18,908)(19,475)(20,059)(20,661)(21,281)(21,920)(22,577)(23,254)(23,952)(24,671) (75,632)(77,901)(80,238)(82,645)(85,124)(87,678)(90,308)(93,018)(95,808)(98,682) 3,367,438 3,470,790 3,577,246 3,686,899 3,799,845 3,909,155 4,028,986 4,152,414 4,279,549 4,410,502 0 0 0 0 0 0 0 0 0 0 455,616 469,600 484,003 498,839 514,121 528,910 545,124 561,824 579,025 596,743 0 0 0 0 0 0 0 0 0 0 798,390 822,894 848,134 874,132 900,910 926,827 955,238 984,502 1,014,644 1,045,692 0 0 0 0 0 0 0 0 0 0 1,254,006 1,292,494 1,332,137 1,372,971 1,415,031 1,455,737 1,500,361 1,546,325 1,593,669 1,642,435 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 4,264,414 3,879,054 3,479,710 3,065,963 2,637,380 2,193,515 1,730,410 1,237,199 712,491 154,841 70,256 70,256 70,256 70,256 70,256 65,805 51,912 37,116 21,375 4,645 (455,616)(469,600)(484,003)(498,839)(514,121)(528,910)(545,124)(561,824)(579,025)(159,486) 3,879,054 3,479,710 3,065,963 2,637,380 2,193,515 1,730,410 1,237,199 712,491 154,841 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 7,483,039 6,807,892 6,108,242 5,383,352 4,632,464 3,854,798 3,043,615 2,179,685 1,260,574 283,748 123,244 123,244 123,244 123,244 123,244 115,644 91,308 65,391 37,817 8,512 (798,390)(822,894)(848,134)(874,132)(900,910)(926,827)(955,238)(984,502)(1,014,644)(292,260) 6,807,892 6,108,242 5,383,352 4,632,464 3,854,798 3,043,615 2,179,685 1,260,574 283,748 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 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 EXHIBIT 5 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 56 57 58 59 60 61 62 4,238,146 4,365,290 4,496,249 4,631,137 4,770,071 4,913,173 5,060,568 1,993,015 2,052,806 2,114,390 2,177,822 2,243,156 2,310,451 2,379,765 2,782,720 2,866,202 2,952,188 3,040,754 3,131,976 3,225,935 3,322,714 (682,214)(702,681)(723,761)(745,474)(767,838)(790,873)(814,600) 31,469 32,413 33,385 34,387 35,418 36,481 37,575 (2,369)(2,440)(2,514)(2,589)(2,667)(2,747)(2,829) 8,360,767 8,611,590 8,869,937 9,136,035 9,410,116 9,692,420 9,983,192 (264,494)(272,429)(280,602)(289,020)(297,690)(306,621)(315,820) (277,973)(286,312)(294,902)(303,749)(312,861)(322,247)(331,915) (468,710)(482,771)(497,254)(512,172)(527,537)(543,363)(559,664) (624,901)(643,648)(662,957)(682,846)(703,332)(724,432)(746,164) (922,731)(950,413)(978,925)(1,008,293)(1,038,542)(1,069,698)(1,101,789) (14,469)(14,758)(15,053)(15,354)(15,661)(15,974)(16,294) (262,239)(270,106)(278,209)(286,555)(295,152)(304,007)(313,127) (6,966)(7,175)(7,390)(7,612)(7,840)(8,075)(8,317) (711,501)(732,846)(754,831)(777,476)(800,800)(824,824)(849,569) (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) (3,863)(3,941)(4,019)(4,100)(4,182)(4,265)(4,351) (50,821)(52,346)(53,917)(55,534)(57,200)(58,916)(60,684) (85,023)(85,023)(85,023)(85,023)(85,023)(93,525)(93,525) (3,696,056)(3,804,133)(3,915,448)(4,030,099)(4,148,186)(4,278,314)(4,403,584) 4,664,711 4,807,457 4,954,489 5,105,936 5,261,930 5,414,106 5,579,608 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (3,778,212)(3,778,212)(3,778,212)(3,778,212)(3,778,212)0 0 886,498 1,029,244 1,176,277 1,327,724 1,483,718 5,414,106 5,579,608 (25,411)(26,173)(26,958)(27,767)(28,600)(29,458)(30,342) (101,643)(104,692)(107,833)(111,068)(114,400)(117,832)(121,367) 759,445 898,379 1,041,486 1,188,889 1,340,718 5,266,816 5,427,900 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 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 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 0 0 0 0 0 0 0 0 1.23 1.27 1.31 1.35 1.39 0.00 0.00 EXHIBIT 5 Exhibit D: City/HOME Loan Deed of Trust EXHIBIT 5 1 The Crossroads at Washington City HOME Deed of Trust FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council _________________________________________________________________ CITY HOME DEED OF TRUST AND ASSIGNMENT OF RENTS (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) THIS DEED OF TRUST AND ASSIGNMENT OF RENTS (“Deed of Trust”) is made as of this 21st day of June, 2022, by Washington Santa Ana Housing Partners, L.P., a California limited partnership, (“Trustor”), to [ ______ ], as trustee (“Trustee”), for the benefit of the City of Santa Ana, a charter city and municipal corporation , as beneficiary (“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 AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor’s leasehold interest in the property located in the City of Santa Ana, State of California, that is described in Exhibit A, attached hereto and incorporated herein by this reference (the “Property”), on which Trustor intended to construct and operate an apartment complex commonly known as Crossroads at Washington. 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, hereditament and appurtenances thereof and thereto; TOGETHER WITH any and all buildings, improvements and landscaping 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 (sometimes collectively referred to as the “Improvements”); EXHIBIT 5 2 The Crossroads at Washington City HOME Deed of Trust 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, strips and gores of land adjacent to or used in connection with the Property and/or Improvements; 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 oil, gas and mineral rights (including royalty and leasehold rights relating thereto), all water and water rights and shares of stock relating thereto, a ll leases of all or any portion of the Property or Improvements entered into by Trustor as lessor or lessee, all options to purchase or lease all or any portion of the Property and/or Improvements, all deposits made with or other security given by Trustor to third parties including, 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 and proceeding or purchase in lieu thereof of the whole or any part of such property; and TOGETHER WITH all articles of personal property or fixtures now or hereafter attached to, located on, installed in or used in and about the Property and/or Improvements, including without limitation, all partitions, generators, screens, boilers, furnaces, pipes, plumbing, elevators, cleaning and sprinkler systems, fire extinguishing machinery and equipment, water tanks, heating, ventilating, air conditioning and air cooling machinery and, equipment, gas and electric machinery and equipment and other appliances, machinery and equipment and other fixtures of every nature, all of which shall remain real property, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the Property in any manner. TOGETHER WITH all present and future accounts, general intangibles, chattel paper, deposit accounts, investment property, instruments and documents as those terms are defined in the California Commercial Code, now or hereafter relating or arising with respect to the Property and/or Improvements and/or the use thereof or any improvements thereto, including without limitation: (i) all rights to the payment of money, including escrow proceeds arising out of the sale or other disposition of all or any portion of the Property and/or Improvements; (ii) all deposit accounts and other accounts and funds created under or pursuant to the Loan Agreement (as defined below), and the other Loan Documents, all amounts now or hereafter on deposit herein, and all interest and other earnings thereon with the exception of the operating reserve created pursuant to Borrower’s Partnership Agreement (as defined in the Loan Agreement); (iii) all use permits, occupancy permits, construction and building permits, and all other permits and approvals required by any governmental or quasi-governmental authority in connection with the development, construction, use, occupancy or operation of the Property and/or Improvements; (iv) any and all agreements relating to the occupancy and/or operation of the Property and/or Improvements, including without limitation service, property management, landscaping, gardening, consulting and other contracts of every nature (to the extent the same are assignable); (v) all lease or rental agreements; (vi) all names under which the Property and/or Improvements EXHIBIT 5 3 The Crossroads at Washington City HOME Deed of Trust are now or hereafter known and all rights to carry on business under any such names or any variant thereof; (vii) all trademarks relating to the Property and/or Improvements and/or the use, occupancy or operation thereof; (viii) all goodwill relating to the Property and/or Improvements and/or the use, occupancy or operation thereof; (ix) all insurance proceeds and condemnation awards arising out of or incidental to the ownership, use, occupancy or operation of the Property and/or Improvements; (x) all reserves, deferred payments, deposits, refunds, cost savings, bonds, insurance policies and payments of any kind relating to the Property and/or Improvements; (xi) all water stock, if any, relating to any Property and/or Improvements; (xii) all supplements, modifications and amendments to the foregoing and all present and future accessions, additions, attachments, replacements and substitutions of or to any or all of the foregoing; and (xiii) all cash and noncash proceeds and products of any or all of the foregoing, including without limitation all monies, deposit accounts, insurance proceeds and other tangible or intangible property received upon a sale or other disposition of any of the foregoing, whether voluntary or involuntary; and TOGETHER WITH all present and future goods, equipment and inventory, as those terms are defined in the California Commercial Code, and all other present and future personal property of any kind or nature whatsoever, now or hereafter located at, upon or about the Property and/or Improvements, or used or to be used in connection with or relating or arising with respect to the Property and/or Improvements, the use thereof or any improvements thereto. 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. FOR THE PURPOSE OF SECURING: (a) Payment of and performance of all indebtedness of Trustor to Beneficiary as set forth in the Loan Agreement (defined in Section 1.5 below) and the Note (defined in Section 1.6 below) in the original principal amount of $3,007,489 until paid or canceled. Said principal and other payments shall be due and payable as provided in the Loan Agreement and the Note. The Loan Agreement and the Note and all their terms are incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced; (b) Payment and performance of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust with interest thereon as provided herein; (c) Payment and performance of every other obligation, covenant or agreement of Trustor contained in this Deed of Trust and in the other “Loan Documents” (as such term is defined in the Loan Agreement); (d) Payment and performance of all renewals, extensions, supplements, amendments and other modifications of any of the foregoing, including without limitation modifications that are evidenced by new or additional documents or that change the rate of interest on any obligation. All of the foregoing obligations are referred to collectively herein as the “Obligations”. EXHIBIT 5 4 The Crossroads at Washington City HOME Deed of Trust AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: Section 1. DEFINITIONS 1.1 Defined Terms. In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall have the following meanings in this Deed of Trust: “Debt Instrument” means any debt, loan, mortgage, deed of trust, regulatory agreement or security instrument relating to the Property or the Security, including, but not limited to, the Loan Documents. “Environmental Reports” [list to be provided under separate cover] “Hazardous Substance” means: (a) any oil, flammable substance, explosive, radioactive material, hazardous waste or substance, toxic waste or substance or any other waste, material, or pollutant that (i) poses a hazard to the Property or to persons on the Property or (ii) causes the Property to be in violation of any Hazardous Substance Law; (b) asbestos in any form; (c) urea formaldehyde foam insulation; (d) transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls; (e) radon gas; (f) any chemical, material, or substance defined as or included in the definition of “hazardous substance,” “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous waste,” or “toxic substances” or words of similar import under any applicable local, state, or federal law or under the regulations adopted or publications promulgated pursuant to those laws, including, but not limited to, any Hazardous Substance Law, Code of Civil Procedure § 564, as amended from time to time, Code of Civil Procedure § 726.5, as amended from time to time, Code of Civil Procedure §736, as amended from time to time, and Civil Code § 2929.5, as amended from time to time; (g) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any governmental authority with authority over the Property or which may pose a hazard to the health and safety of the occupants of the Property or the owners or occupants of property adjacent to or surrounding the Property, or any other person coming on the Property or any adjacent property; and EXHIBIT 5 5 The Crossroads at Washington City HOME Deed of Trust (h) any other chemical, material, or substance that may pose a hazard to the environment. The term Hazardous Substance shall not include materials or substances commonly used in the construction and operation of an apartment complex in accordance with applicable Hazardous Substance Law. “Hazardous Substance Claim” means any enforcement, cleanup, removal, remedial, or other governmental, regulatory, or private actions, agreements, or orders threatened, instituted, or completed pursuant to any Hazardous Substance Law together with all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost-recovery compensation, loss, or injury resulting from the presence, release or discharge of any Hazardous Substance. “Hazardous Substance Law” means any federal, state, or local law, ordinance, regulation, or policy relating to the environment, health, and safety, any Hazardous Substance (including, without limitation, the use, handling, transportation, production, disposal, discharge, or storage of the substance), industrial hygiene, soil, groundwater, and indoor and ambient air conditions or the environmental conditions on the Property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 [42 USCS §§ 9601 et seq.], as amended from time to time; the Hazardous Substances Transportation Act [49 USCS §§ 1801 et seq.], as amended from time to time; the Resource Conservation and Recovery Act [42 USCS §§ 6901 et seq.], as amended from time to time; the Federal Water Pollution Control Act [33 USCS §§ 1251 et seq.], as amended from time to time; the Hazardous Substance Account Act [Health and Safety Code §§ 25300 et seq.], as amended from time to time; the Hazardous Waste Control Law [Health and Safety Code §§ 25100 et seq.], as amended from time to time; the Medical Waste Management Act [Health and Safety Code §§ 25015 et seq.], as amended from time to time; and the Porter-Cologne Water Quality Control Act [Water Code §§ 13000 et seq.], as amended from time to time. “Loan Agreement” means that certain Loan Agreement, which terms and provision are incorporated into this Deed of Trust by reference, of even date herewith between Trustor and Beneficiary. “Note” means that certain promissory note of even date herewith executed by the Trustor, the payment of which is secured by this deed of Trust. “Principal” means the aggregate of all principal and interest due under the Note. “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment, including continuing migration, of Hazardous Substances that goes into the soil, surface water, or groundwater of the Property, whether or not caused by, contributed to, permitted by, acquiesced to, or known to Trustor. Section 2. GENERAL COVENANTS OF TRUSTOR REGARDING THE PROPERTY, IMPROVEMENTS AND SECURITY EXHIBIT 5 6 The Crossroads at Washington City HOME Deed of Trust 2.1. Payment of Secured Obligations. Trustor shall duly and punctually pay and perform all Obligations, including but not limited to all terms, covenants, conditions and agreements set forth in the Debt Instruments, the Loan Agreement, the Note and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof. 2.2. Maintenance, Repair and Modification. (a) The Trustor agrees that at all times prior to full payment of the sum owed under the 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 and repair and in a prudent and businesslike manner. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals to the Security, which are necessary or appropriate. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security. (b) Trustor shall not remove, demolish or substantially alter any of the Improvements, other than to make repairs in the ordinary course of business of a non-structural nature which serve to preserve or increase the value of the Security without Beneficiary’s prior written consent, which consent shall not be unreasonably withheld so long as Trustor provides reasonable evidence to Beneficiary that, following such demolition and restoration and/or alteration, the Improvements shall have a fair market value at least equal to their fair market value prior to such demolition and restoration and/or alteration; Trustor shall complete promptly and in a good and workmanlike manner any Improvement which may now or hereafter be constructed and promptly restore in like manner any Improvement which may be damaged or destroyed thereon from any cause whatsoever, and pay when due all claims for la bor performed and materials furnished therefor; Trustor shall comply with all laws, ordinances, rules, regulations, covenants, conditions, restrictions and orders of any governmental authority now or hereafter affecting the conduct or operation of Trustor’s business or the security or any part thereof or requiring any alteration or improvement to be made thereon; Trustor shall not commit, suffer or permit any act to be done in, upon or to the Security or any part thereof in violation of any such laws, ordinances, rules, regulations or orders, or any covenant, condition or restriction now or hereafter affecting the Security; Trustor shall not commit or permit any waste or deterioration of the Security, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Trustor will not take (or fail to take) any action, which if taken (or not so taken) would increase in any way the risk of fire or other hazard occurring to or affecting the Security or otherwise would impair the security of Beneficiary in the Security; Trustor shall comply with the provisions of all leases, if any, constituting a portion of the Security; Trustor shall not abandon the Security or any portion thereof or leave the Security unprotected, unguarded, vacant or deserted; Trustor shall not initiate, join in or consent to any change in any zoning ordinance, general plan, specific plan, private restrictive covenant or other public or private restriction limiting the uses which may b e made of the Security by Trustor or by the owner thereof; Trustor shall secure and maintain in full force all permits necessary for the use, occupancy and operation of the Security; except as otherwise prohibited or restricted by the Loan Agreement and the other instruments and documents executed in connection with the transaction to which the Loan Agreement pertains or EXHIBIT 5 7 The Crossroads at Washington City HOME Deed of Trust any of them, Trustor shall do any and all other acts which may be reasonably necessary to protect or preserve the value of the Security and the rights of Trustee and Beneficiary with respect thereto. 2.3. 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 and telegraph, or those required by law. 2.4. Agreement to Pay Attorneys’ Fees and Expenses. In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or incur 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 paid by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such expenses are paid at the Agreed Rate (as defined in Section 3.1(d) below). 2.5. Payment of the Principal. The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and by the times set out therein. 2.6. Fixture Filing and Security Agreement. (a) To the maximum extent permitted by law, the personal property subj ect to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixture filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement under the California Commercial Code and Trustor hereby grants to Beneficiary a security interest in all of Trustor’s right, title and interest, whether now existing or hereafter arising, in and to any portion of the Property which constitutes personal property (the “Personal Property”). (b) Trustor hereby represents and warrants to Beneficiary that: (1) Trustor is the owner of the Personal Property and no other person has any right, title, claim or interest (by way of security interest or other lien or charge or otherwise) in, against or to the Personal Property other than any senior lender or lien holder approved in writing by Beneficiary; (2) the Personal Property is free from all liens, security interests, encumbrances and adverse interests, except Permitted Encumbrances (hereinafter defined); (3) no financing statement or similar filing covering any of the Personal Property, and naming any secured party other than Beneficiary and the holders of Permitted Encumbrances, is on file in any public office; (4) each account, general intangible, chattel paper, deposit account, instrument, document, agreement, contract or right to the payment of money constituting Personal Property (collectively, the "Rights to Payme nt"), if EXHIBIT 5 8 The Crossroads at Washington City HOME Deed of Trust any, is genuine and enforceable in accordance with its terms against the party obligated to pay the same and (5) the Personal Property is not used nor was the Personal Property purchased for personal or family use by Trustor. (c) Trustor hereby agrees: (1) to pay, prior to delinquency, all taxes, assessments, charges, encumbrances and liens now or hereafter imposed upon or affecting all or any part of the Personal Property; (2) not to amend, modify, supplement, terminate or cancel any of the Personal Property; (3) without the prior written consent of Beneficiary, not to remove all or any part of the tangible Personal Property from the Property; (4) to give Beneficiary thirty (30) days' prior written notice of any change in Trustor's residence, principal place of business, chief executive office or trade names or styles; (5) to appear in and defend any action or proceeding which may affect the Personal Property (including, without limitation, actions, proceedings and claims which may affect Trustor's title to the Personal Property or the validity or priority of Beneficiary's security interest in the Personal Property); (6) to indemnify Beneficiary against all claims, demands and liabilities of every kind caused by the Personal Property; and (7) upon not less than 72 hours’ prior written notice and during regular business hours, to permit Beneficiary to enter Trustor's premises to inspect the Personal Property; provided, that Trustor shall have the right to require that a representative of Trustor be present during any such entry made while any construction and/or rehabilitation work is occurring. Trustor further agrees (8) to fully and timely perform all of its obligations under and with respect to all Rights of Payment and to diligently enforce all of the obligations of each obligor thereunder; (9) not to amend, modify, supplement, cancel or terminate any of the Rights to Payment in any material respect without the prior written consent of Beneficiary; (10) to keep the Rights to Payment and all proceeds fre e and clear of all defaults, defenses, rights of offset and counterclaim; (11) to take or bring, in Beneficiary's name or in the name of Trustor, as Beneficiary may require, all actions, suits or proceedings reasonably deemed necessary by Beneficiary to effect collection or to realize upon Rights to Payment; and (12) not to commingle Rights to Payment or collections thereunder with other property. (d) As soon as practicable, and in any event within ten (10) days, Trustor shall notify Beneficiary of: (1) any attachment or other legal process levied against any of the Personal Property; (2) any information received by Trustor which may in any manner materially and adversely affect the value of the Personal Property or the rights and remedies of Beneficiary with respect thereto; and (3) the removal of any of the Personal Property to a new location other than in the ordinary course of business and the removal of any records of Trustor relating to the Personal Property to any location other than the Land and Improvements. (e) Trustor hereby irrevocably constitutes and appoints Beneficiary as its attorney-in- fact to, after the occurrence and during the occurrence of an Event of Default: (1) perform any obligation of Trustor hereunder in Trustor's name or otherwise; (2) give notice of Beneficiary's rights in the Rights to Payment, to enforce the same, and make extension agreements with respect thereto; (3) release persons liable on the Rights to Payment and to give receipts and acquittances and compromise disputes in connection therewith; (4) release security for the Rights to Payment; (5) resort to security for the Rights to Payment in any order; (5) prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, financing statements, continuation statements, termination statements, and other documents to perfect preserve or release Beneficiary's interest in the Rights to Payment; and (6) do all acts and things EXHIBIT 5 9 The Crossroads at Washington City HOME Deed of Trust and execute all documents in the name of Trustor or otherwise, deemed by Benefici ary as necessary, proper and convenient in connection with the preservation, perfection or enforcement of its rights hereunder. The power of attorney granted hereunder is coupled with an interest and is irrevocable. 2.7. 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 Trusto r agrees to perform all acts that 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 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. 2.8. Operation of the Security. The Trustor agrees and covenants to operate the Security in full compliance with the Loan Agreement and the Debt Instruments. 2.9. Inspection of the Security. The Trustor covenants and agrees that at any and all reasonable times during regular business hours and upon not less than 72 hours’ prior written notice, the Beneficiary and its duly authorized agents, attorney’s experts, engineers, accountants and representatives, shall have the right, without payment of charges or fees, to inspect all or any portion of the Security, including, but not limited to, the right to inspect and copy all reports and records pertaining thereto provided, that Trustor shall have the right to require that a representative of Trustor be present during any entry onto the Property made while any construction and/or rehabilitation work is occurring. 2.10. Nondiscrimination. The Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, age, marital status, national origin, ancestry or disability in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants shall run with the land. 2.11. Subrogation and Waiver of Offset. (a) Trustor waives any and all right to claim or recover against Beneficiary, its officers, employees, agents and representatives, for loss of or damage to Trustor, the Security, EXHIBIT 5 10 The Crossroads at Washington City HOME Deed of Trust Trustor’s property or the property of others under Trustor’s control from any cause insured against or required to be insured against by the provisions of this Deed of Trust; provided, however, that this waiver of subrogation shall not be effective with respect to any policy of insurance permitted or required by this Deed of Trust if (i) such policy prohibits, or if coverage thereunder would be reduced as a result of, such waiver of subrogation and (ii) Trustor is unable to obtain from a carrier issuing such insurance a policy that, by special endorsement or otherwise, permits such a waiver of subrogation. (b) Except as otherwise specifically provided herein, all amounts payable by Trustor pursuant to this Deed of Trust shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Trustor hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of or any condemnation or similar taking of the Security or any part thereof; (ii) any restriction or prevention of or interference by any third party with any use of the Security or any part thereof; (iii) any title defect or encumbrance or any eviction from the Security or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Beneficiary, or any action taken with respect to this Deed of Trust by any trustee or receiver of Beneficiary, or by any court, in any such proceeding; (v) any claim which Trustor has or might have against Beneficiary; (vi) any default or failure on the part of Beneficiary to perform or comply with any of the terms hereof or of any other agreement with Trustor; or (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing. Except as expressly provided herein, Trustor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Trustor. 2.12. Utilities. Trustor shall pay or cause to be paid when due all utility charges which are incurred for the benefit of the Security or which may become a charge or lien against the Security for gas, electricity, water, sewer services or other fees and charges for utilities furnished to the Security and all other assessments or charges of a similar nature, whether public or private, affecting or related to the Security or any portion thereof, whether or not such taxes, assessments or charges are or may become liens thereon. 2.13. Actions by Beneficiary to Preserve Property. If Trustor fails to make any payment or to do any act as and in the manner provided in this Deed of Trust, Beneficiary and Trustee, and each of them, each in its own discretion, without obligation to do so, without releasing Trustor from any Obligation, and subject only to the notice and cure provisions of the Loan Agreement, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. In connection therewith (without limiting their general and other powers, whether conferred herein, in another Loan Document or by law), Beneficiary and Trustee shall each and are hereby given the right, but not the obligation: (i) to enter upon and take possession of the Security; (ii) to make additions, alterations, repairs and improvements to the Security which either of them consider necessary or EXHIBIT 5 11 The Crossroads at Washington City HOME Deed of Trust proper to keep the Security in good condition and repair; (iii) to appear and participate in any action or proceeding which may affect the security hereof or the rights or powers of Beneficiary or Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in the judgment of either may affect the security of this Deed of Trust or be prior or superior hereto; and (v) in exercising such powers to pay necessary expenses, including employment of counsel or other necessary or desirable consultants. Trustor shall reimburse Beneficiary on demand for all costs incurred by Beneficiary in connection with actions which Beneficiary reasonably deems advisable to protect its interest under the Loan Agreement and all such amounts shall bear interest at the Agreed Rate following demand and be secured hereby. 2.14. Transfer of Property by Trustor. Prior to repayment of the Note, Trustor agrees that Trustor shall not sell or transfer the Security or any interest therein or sell or transfer all or substantially all of the assets of Trustor or any of them except as may be provided in the Loan Agreement. 2.15. Additional Security. No other security now existing, or hereafter taken, to secure the Obligations secured hereby or the liability of any maker, surety guarantor or endorser with respect to such Obligations, or any of them, shall be impaired or affected by the execution of this Deed of Trust; and all additional security shall be taken, considered and held as cumulative. The taking of additional security, execution of partial releases of the Security, or any extension of the time of payment of the indebtedness shall not diminish the force, effect or lien of this Deed of Trust and shall not affect or impair the liability of any maker, surety, guarantor or endorser for the payment of said indebtedness. In the event Beneficiary at any time holds additional security for any of the Obligations secured hereby, it may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently, or after a sale is made hereunder. 2.16. Liens. Trustor shall not cause, incur suffer or permit to exist or become effective any lien, encumbrance or charge upon all or any part of the Property, the Improvements or any interest therein other than (a) easements, rights of way, covenants, conditions, restrictions, liens, and other title limitations approved in writing by Beneficiary prior to the execution of this Deed of Trust, (b) immaterial easements and rights of way which are required by governmental authorities as a condition to the use and operation of the Improvements which are approved in writing by Beneficiary after the execution of this Deed of Trust, (c) easements, rights of way, covenants, conditions, restrictions, liens and other title limitations allowed pursuant to Section 2.3 hereof and (d) deeds of trust, regulatory agreements and covenants contained in that certain lender’s title policy issued to the Beneficiary in connection with the Loan on or about the date hereof (the “Permitted Encumbrances”). Trustor shall pay and promptly discharge, at Trustor’s cost and expense, all liens, encumbrances and charges upon the Security, or any part thereof or interest therein other than the Permitted Encumbrances; provided, that the existence of any mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s lien or right thereto shall not constitute a violation of this Section if payment is not yet due under the contract which is the foundation thereof. Trustor shall have the right to contest in good faith the validity of any such EXHIBIT 5 12 The Crossroads at Washington City HOME Deed of Trust lien, encumbrance or charge, provided Trustor shall first deposit with the Beneficiary a bond or other security reasonably satisfactory to Beneficiary in such amounts as Beneficiary shall reasonably require, but not more than one hundred fifty percent (150%) of the amount of the claim or shall post a bond authorized by statute in lieu thereof, and provided further that Trustor shall thereafter diligently proceed to cause such lien, encumbrance or charge to be removed and discharged. If Trustor shall fail to remove and discharge any such lien, encumbrance, or charge, then, in addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to, discharge the same, without inquiring into the validity of such lien, encumbrance or charge nor into the existence of any defense or offset thereto, either by paying the amount claimed to be due, or by procuring the discharge of such lien, encumbrance or charge by depositing in court a bond or the amount claimed, or otherwise giving security for such claim, in such manner as is or may be prescribed by law. Trustor shall, promptly upon demand therefor by Beneficiary, pay to Beneficiary an amount equal to all costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing right to discharge any such lien, encumbrance or charge, together with interest thereon from the date of such expenditure at the Agreed Rate and, until paid, such sums shall be secured hereby. 2.17. Beneficiary’s Powers. Without affecting the liability of any other person liable for the payment of any Obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Security not then or theretofore released as security for the full amount of all unpaid Obligations, Beneficiary may, from time to time and without notice: (a) release any person so liable, (b) extend the maturity or alter any of the terms of any such Obligation (to the extent that Beneficiary is so allowed under the Loan Agreement), (c) grant other indulgences, (d) release or reconvey, or cause to be released or reconveyed at any time at Beneficiary's option any parcel, portion or all of the Security, (e) take or release any other or additional security for any Obligation herein mentioned, or (f) make compositions or other arrangements with debtors in relation thereto. By accepting payment or performance of any Obligation secured by this Deed of Trust after the payment or performance thereof is due or after the filing of notice of default and election to sell (other than satisfaction in full of the Obligations), Beneficiary shall not have thereby waived its right to require prompt payment or performance, when due, of all other Obligations secured hereby, or to declare a default for fail ure so to pay or perform, or to proceed with the sale under any notice of default and election to sell theretofore given by Beneficiary, or with respect to any unpaid balance of the indebtedness secured hereby. The acceptance by Beneficiary of any sum in an amount less than the sum then due shall not constitute a waiver of the obligation of Trustor to pay the entire sum then due. Trustor’s failure to pay the entire sum then due shall continue to be a default, notwithstanding the acceptance of partial payment, and, until the entire sum then due shall have been paid, Beneficiary or Trustee shall at all times be entitled to declare a default and to exercise all the remedies herein conferred, and the right to proceed with a sale under any notice of default and election to sell shall in no way be impaired, whether or not such amounts are received prior or subsequent to such notice. No delay or omission of Trustee or Beneficiary in the exercise of any other right or power hereunder shall impair such right or power or any other right or power nor shall the same be construed to be a waiver of any default or any acquiescence therein. 2.18. Suits to Protect Property. EXHIBIT 5 13 The Crossroads at Washington City HOME Deed of Trust Trustor agrees to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or any additional or other security for the obligations secured, the interest of Beneficiary of the rights, powers and duties of Trustee, and to pay all costs and expenses, including without limitation, cost of evidence of title and reasonable attorneys’ fees, in any action or proceeding in which Beneficiary or Trustee may appear to be made a party, including, but not limited to, foreclosure or other proceeding commenced by those claiming a right to any part of the Property under subordinate liens, in any action to partition or condemn all or part of the Property, whether pursued to final judgment, and in any exercise of the power of sale in this Deed of Trust, whether the sale is actually consummated. Section 3. TAXES AND INSURANCE; ADVANCES 3.1. Taxes, Other Governmental Charges and Utility Charges. (a) Trustor shall pay, prior to delinquency, all real property taxes and assessments, general and special, and all other charges of any kind, including without limitation non- governmental levies or assessments such as maintenance charges, levies or other charges resulting from covenants, conditions and restrictions affecting the Security, which are assessed or imposed upon the Security or upon Trustor as owner or operator of the Security, or become due and payable, and which create or may create a lien upon the Security, or any part thereof, or upon any personal property, equipment or other facility used in the operation or maintenance thereof (all the above collectively hereinafter referred to as “Impositions”); provided, however, that if, by law, any Imposition is payable, or may at the option of the taxpayer be paid, in installments, Trustor may pay the same in installments (together with any interest charged) as the same become due and before any fine, penalty or cost may be added thereto for the nonpayment of any such installment. Notwithstanding the foregoing, Trustor shall have the right to diligently contest, in good faith and by appropriate proceedings, the validity of any Imposition, so long as Trustor demonstrates to Beneficiary that Trustor is maintaining sufficient reserves for the payment of all contested liabilities and so long as the security and value of Beneficiary’s interest under this Deed of Trust are not impaired as a result of such contest. (b) If at any time after the date hereof there shall be assessed or imposed (1) a tax or assessment on the Security in lieu of or in addition to the Impositions payable by Trustor pursuant to this Section 3.1 hereof, or (2) a license fee, tax or assessment imposed on Beneficiary and measured by or based in whole or in part upon the amount of the outstanding Obligations secured hereby, then all such taxes, assessments or fees shall be deemed to be included within the term “Impositions” as defined in this Section and Trustor shall pay and discharge the same as herein provided with respect to the payment of Impositions. If Trustor fails to pay such Impositions prior to delinquency or if Trustor is prohibited by law from paying such Impositions, Beneficiary may at its option declare all Obligations secured hereby, together with all accrued interest thereon, immediately due and payable. Anything to the contrary herein notwithstanding, Trustor shall have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax levied on Beneficiary or on the Obligations secured hereby. (c) Trustor shall deliver to Beneficiary within thirty (30) days after the date upon which any such Imposition is due and payable by Trustor official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Beneficiary, evidencing the payment EXHIBIT 5 14 The Crossroads at Washington City HOME Deed of Trust thereof. Trustor shall not suffer, permit or initiate the joint assessment of any real and personal property which may constitute all or a portion of the Security and the personal property or suffer, permit or initiate any other procedure whereby the lien of real property taxes and the lien of personal property taxes shall be assessed, levied or charged to the Security as a single Lien. Trustor shall cause to be furnished to Beneficiary a tax reporting service, covering the Property, of a type and duration, and with a company, reasonably satisfactory to Beneficiary. (d) In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within fifteen (15) 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 lesser of twelve percent (12%) per annum or the maximum rate permitted by law (hereinafter the “Agreed Rate”), shall become an additional Obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts. 3.2. Insurance. (a) Trustor agrees to provide insurance conforming in all respects to that required under the Loan Agreement at all times until all amounts secured by this Deed of Trust have been paid and all other Obligations secured hereunder fulfilled, and this Deed of Trust reconveyed. All such insurance policies and coverages shall be maintained at Trustor’s sole cost and expense. (b) All said insurance shall have attached thereto a lender’s loss payable endorsement for the benefit of Beneficiary in form reasonably satisfactory to the Beneficiary and/or shall name Beneficiary as an additional insured, as Beneficiary may require, and shall contain an endorsement or agreement by the insurer that any loss shall be payable in accordance with the terms of such policies notwithstanding any act or negligence of Trustor or any party holding under Trustor which might otherwise result in forfeiture of said insurance and the further agreement of the insurer waiving all rights of setoff, counterclaim and deduction against Trustor. At Beneficiary’s option, Trustor shall furnish Beneficiary with an original of all required policies of insurance and/or a certificate of insurance with all required endorsements for each required policy setting forth the coverage, the limits of liability, the deductible, if any, the name of the carrier, the policy number, and the period of cover age, which certificates and endorsements shall be executed by authorized officials of the companies issuing such insurance, or any agents or attorneys-in-fact authorized to issue said certificates and endorsements (in which event each such certificate and endorsements shall be accompanied by a notarized affidavit, agency agreement or power of attorney evidencing the authority of the signatory to issue such certificate on behalf of the insurer named therein), accompanied by a certificate from Trustor that the insurance satisfies the requirements of the Loan Agreement, and that Beneficiary may conclusively rely on such certificates. If Beneficiary consents (which consent shall not be unreasonably withheld or delayed), Trustor may provide any of the required insurance through blanket policies carried by Trustor and covering more than one location; provided, however, all such policies shall be in form and substance and issued by companies reasonably satisfactory to Beneficiary. (c) At least thirty (30) days prior to the expiration of each required policy, Trustor shall deliver to Beneficiary evidence reasonably satisfactory to Beneficiary of the payment of EXHIBIT 5 15 The Crossroads at Washington City HOME Deed of Trust premium and the renewal or replacement of such policy continuing insurance in form as required by this Deed of Trust or the Loan Agreement. All such policies shall contain a provision that, notwithstanding any contrary agreement between Trustor and the insurance company, such policies will not be canceled, allowed to lapse without renewal, surrendered or materially amended (which term shall include any reduction in the scope, or limits of coverage), other than for nonpayment, without at least thirty (30) days prior written notice to Beneficiary. (d) In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Trustor in and to all policies of insurance required by Section 3.2 hereof and any unearned premiums paid thereon shall, without further act, be assigned to and shall inure to the benefit of and pass to the successor in interest to Trustor or the purchaser or grantee of the Property, and Trustor hereby appoints Beneficiary its lawful attorney-in-fact to execute an assignment thereof and any other document necessary to effect such transfer. 3.3. Advances. In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust or shall fail to keep the Security in accordance with the Loan Agreement, the Beneficiary, after at least twenty (20) days prior written notice to Trustor, may (but shall be under no Obligation to) take out the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Beneficiary shall become an additional Obligation of the Trustor to the Beneficiary (together with any applicable interest) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the Agreed Rate. Section 4. DAMAGE, DESTRUCTION OR CONDEMNATION 4.1. Casualties. Trustor shall give prompt written notice to Beneficiary upon the occurrence of casualty to or in connection with the Security or any part thereof, whether or not covered by insurance. In the event of such casualty Trustor hereby absolutely and unconditionally assigns to Beneficiary all insurance proceeds which it may be entitled to receive and such proceeds shall be delivered to and held by Beneficiary to be applied to Beneficiary’s expenses in settling, prosecuting or defending any insurance claim, and then to the restoration of any portion of the Security that has been damaged or destroyed to the same condition, character and value as existed prior to such damage or destruction so long as the following conditions are satisfied: (i) Trustor is not in default hereunder (other than any default resulting from such casualty), (ii) Beneficiary’s security is not materially impaired, (iii) all income (from the Security or otherwise) required to pay all debt service and operating expenses of the Security during such restoration and thereafter will be equal to or greater than the income which was required to pay such debt service and operating expenses prior to the casualty, (iv) Trustor evidences to the reasonable satisfaction of Beneficiary that the insurance required to be maintained hereunder will be available to the Trustor during restoration and thereafter, (v) Beneficiary shall have approved the plans and specifications for such restoration, which approval shall not be unreasonably withheld or EXHIBIT 5 16 The Crossroads at Washington City HOME Deed of Trust delayed, and (vi) in the event that in Beneficiary’s reasonable judgment the insurance proceeds and any amounts deposited with a senior lender are not sufficient to accomplish restoration, Trustor deposits with the Beneficiary or senior lender, if and to the extent required by that senior lender pursuant to the terms of the senior debt instrument, within five days of demand by Beneficiary, the additional amounts necessary to accomplish restoration. Proceeds disbursed for restoration will be released to Trustor in accordance with Beneficiary’s then current customary disbursement procedures. In the event any of the conditions set forth above are not satisfied or if the insurance proceeds shall not be applied to the restoration of the Security within thirty days after receipt of such proceeds by Beneficiary, Beneficiary may release such proceeds to Trustor without such release being deemed a payment of any indebtedness secured hereby, rather than apply such proceeds to the restoration of the Security. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If the Security is restored at a cost less than the available insurance proceeds, then such excess proceeds shall, if Trustor is not then in default hereunder, be paid over to Trustor. Beneficiary may commence, appear in, defend or prosecute any assigned claim or action, and may adjust, compromise, settle and collect all claims, proceeds and awards assigned to Beneficiary, but shall not be responsible for any failure to collect any claim, proceeds or award, regardless of the cause of the failure. 4.2. Condemnation. Promptly upon its obtaining knowledge of the institution or the threatened institution of any proceeding for the condemnation or other taking for public or quasi-public use of the Security or any part thereof, or if the same be taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner, or should Trustor receive any notice or other information regarding such proceedings, action, taking or damage, Trustor shall promptly notify Trustee and Beneficiary of such fact. Trustor shall then, if requested by Beneficiary, file or defend its right thereunder and prosecute the same with due diligence to its final disposition and shall cause any award or settlement to be paid to Beneficiary in accordance with the provisions of the Loan Agreement. At Beneficiary’s option, Beneficiary or Trustor may be the nominal party in such proceeding but in any event Beneficiary shall be entitle d, without regard to the adequacy of its security, to participate in, appear in, prosecute and settle, jointly with Trustor to control the same and to be represented therein by counsel of its choice, and Trustor will deliver, or cause to be delivered, to Beneficiary such instruments as may be requested by it from time to time to permit such participation. Trustor and Beneficiary agree to act in good faith with respect to any consent, settlement, or award arising out of said prosecution. If the Security or any part thereof is taken or diminished in value, or if a consent settlement is entered, by or under threat of such proceedings, all compensation, awards, damages, rights of action proceeds and settlements payable to Trustor by virtue of its interest in the security shall be and hereby are assigned, transferred and set over into Beneficiary to be held by it, in trust, subject to the lien and security interest of this Deed of Trust. All such proceeds shall be first applied to reimburse Trustee and Beneficiary, for all costs and expenses, including reasonable attorneys’ fees, incurred in connection with the collection of such award or settlement , and then to the restoration of any portion of the Security that has been taken to the similar condition, character and value as existed prior to such taking so long as the following conditions are satisfied: (i) Trustor is not in default hereunder, (ii) Beneficiary’s security is not materially impaired, (iii) all income (from the Security or otherwise) required to pay all debt service and EXHIBIT 5 17 The Crossroads at Washington City HOME Deed of Trust operating expenses of the Security during such restoration and thereafter will be equal to or greater than the income which was required to pay such debt service and operating expenses prior to the casualty, (iv) Trustor evidences to the reasonable satisfaction of Beneficiary that the insurance required to be maintained hereunder will be available to the Trustor during restoration and thereafter, (v) Beneficiary shall have approved the plans and specifications for such restoration, and (vi) in the event that in Beneficiary’s reasonable judgment the insurance proceeds and any amounts deposited with a senior lender are not sufficient to accomplish restoration, Trustor deposits with the Beneficiary or senior lender, if and to the extent required by that senior lender pursuant to the terms of the senior Debt Instrument, within five days of demand by Beneficiary, the additional amounts necessary to accomplish restoration. Application or release of proceeds as provided herein shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Section 5. ENVIRONMENTAL COVENANTS OF TRUSTOR 5.1. Disclosures By Trustor. Except as disclosed in writing to, and acknowledged and accepted in writing by Beneficiary, Trustor represents and warrants that: (a) during the period of Trustor’s ownership of the Property (1) there has been no use, generation, manufacture, storage, treatment, disposal, discharge, Release, or threatened Release of any Hazardous Substance by any person on or around the Property except in such small quantities as are customary and usual in the ordinary course of constructing, using and operating a residential housing business on the Property and in strict compliance with all Hazardous Substances Laws, and (2) there have been no Hazardous Substances transported over or through the Property; (b) Trustor has no knowledge of, or reason to believe that, there has been: (1) any use, generation, manufacture, storage, treatment, disposal, Release, or threatened Release of any hazardous waste or substance by any prior owners or prior occupants of the Property or by any third parties onto the Property, or (2) any actual or threatened litigation or claims of any kind by any person relating to these matters; (c) to Trustor’s knowledge, no Hazardous Substances in excess of permitted levels or reportable quantities under applicable Hazardous Substance Laws are present in or about the Property or any nearby real property that could migrate to the Property; (d) to Trustor’s knowledge, no Release or threatened Release exists or has occurred; EXHIBIT 5 18 The Crossroads at Washington City HOME Deed of Trust (e) to Trustor’s knowledge, no underground storage tanks of any kind are or ever have been located in or about the Property; (f) the Property and all of Trustor’s contemplated operations and activities at, and Trustor’s contemplated use and occupancy of, the Property comply with all applicable Hazardous Substance Laws; (g) Trustor is now in strict compliance with, every permit, license, and approval required by all applicable Hazardous Substance Laws for all activities and operations at, and the use and occupancy of, the Property; (h) to Trustor’s knowledge, there are no Hazardous Substance Claims pending or threatened with regard to Property or against Trustor; (i) to Trustor’s knowledge the Property has not been nor is it within 2,000 feet of any other property designated as “hazardous waste property” or “border zone property” pursuant to Health and Safety Code §§ 25220 et seq., and no proceedings for a determination of this designation are pending or threatened; (j) to Trustor’s knowledge, there exists no occurrence or condition on any real property adjoining or within 2,000 feet of the Property that would cause the Property or any part of it to be designated as “hazardous waste property” or “border zone property” under the provisions of Health and Safety Code §§ 25220 et seq., and any regulation adopted in accordance with that section; (k) that the Trustor’s use of the Property shall be residential housing; (l) to Trustor’s knowledge, any written disclosure submitted by or on behalf of Trustor to Beneficiary concerning any Release or threatened Release, past or present compliance by Trustor or other person of any Hazardous Substance Laws applicable to the Property, the past and present use and occupancy of the Property, and an y environmental concerns relating to the Property, was true and complete when submitted and continues to be true and complete as of the date of this Deed of Trust. As used in this Section 5.1, phrases such as “to Trustor’s knowledge,” shall refer to the actual knowledge of the Trustor, and its agents, directors and other associates, without duty of inquiry or investigation other than the ordering of a Phase I Environmental Assessment as required pursuant to the Loan Agreement. 5.2. Covenants of Trustor. Trustor agrees, except in the ordinary course of business and in strict compliance with all applicable Hazardous Substance Laws, as follows: (a) not to cause or permit the property to be used as a site for the use, generation, manufacture, storage, treatment, Release, discharge, disposal, transportation, or presence of any Hazardous Substance, other than Existing Hazardous Materials(as such term is defined in the Ground Lease); EXHIBIT 5 19 The Crossroads at Washington City HOME Deed of Trust (b) not to cause, contribute to, permit, or acquiesce in any Release or threatened Release; (c) not to change or modify the use of the Property without the prior written consent of Beneficiary; (d) to comply with and to use reasonable commercial efforts to cause the Property and every invitee or occupant of the Property to comply with all Hazardous S ubstance Laws; (e) to promptly upon Trustor’s discovery thereof (other than Hazardous Substances that were known prior to Loan closing as disclosed in the Environmental Reports), notify Beneficiary in writing of and to provide Beneficiary with a reasonably detailed description of: (1) any noncompliance of the Property with any Hazardous Substance Laws; (2) any Hazardous Substance Claim; (3) any Release or Threatened Release; (4) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that would cause the Property or any part of it to be designated as “hazardous waste property” or “border zone property” under the provisions of Health and Safety Code §§ 25220 et seq., and any regulation adopted in accordance with that section; (f) if Trustor discovers a Release or the presence of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law, to: (1) notify Beneficiary of that discovery together with a reasonably detailed description; (2) engage promptly after a request by Beneficiary, a qualified environmental engineer reasonably satisfactory to Beneficiary to investigate these matters and prepare and submit to Beneficiary a written report containing the findings and conclusions resulting from that investigation, all at the sole expense of Trustor, and (3) Except as otherwise provided in the Ground Lease, if the Release of Hazardous Substances results in (i) injury to any person, (ii) injury to or contamination of the Property (or a portion thereof), or (iii) injury to or contamination of any real or personal property wherever situated take, at Trustor’s sole expense, all necessary actions to remedy, repair, clean up, or detoxify any Release of Hazardous Substance, including, but not limited to, any remedial action required by any Hazardous Substance Laws or any judgment, consent, decree, settlement, or compromise in respect of any Hazardous Substance Claims, these actions to be performed: A. in accordance with Hazardous Substance Laws, EXHIBIT 5 20 The Crossroads at Washington City HOME Deed of Trust B. in a good and proper manner, C. under the supervision of a qualified environmental engineer approved in writing by Beneficiary (such approval not to be unreasonably withheld or delayed), D. in accordance with plans and specifications for these actions approved in writing by Beneficiary (such approval not to be unreasonably withheld or delayed), and E. using licensed and insured qualified contractors approved in writing by Beneficiary; (g) promptly furnish to Beneficiary copies of all written communications received by Trustor from any governmental authority or other person or given by Trustor to any person and any other information Beneficiary may reasonably request concerning any Release, threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law; and (h) keep Beneficiary generally informed regarding any Release, threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law. 5.3. Rights of Beneficiary. Upon Beneficiary’s reasonable belief of the existence of a past or present Release or threatened Release not previously disclosed by Trustor in connection with the making of the Loan, the Environmental Reports or the execution of this Deed of Trust or upon Beneficiary’s reasonable belief that Trustor has failed to comply with any environmental provision of this Deed of Trust or any other Loan Document and upon not less than 72 hours’ prior written notice (except in the case of an emergency) to Trustor, Beneficiary or its representatives, employees, and agents, may from time to time and at all reasonable times during regular business hours (or at any time in the case of an emergency) enter and inspect the Property and every part of it (including all samples of building materials, soil, and groundwater and all books, records, and files of Trustor relating to the Property) and perform those acts and things that Beneficiary reasonably deems necessary to inspect, investigate, assess, and protect the Security of this Deed of Trust, for the purpose of determining: (a) the existence, location, nature, and magnitude of any past or present Release or threatened Release, (b) the presence of any Hazardous Substances on or about the Property in violation of any Hazardous Substance Law, and (c) the compliance by Trustor of every environmental provision of this Deed of Trust and every other Loan Document. In furtherance of the purposes above, without limitation of any of its other rights, Beneficiary may: EXHIBIT 5 21 The Crossroads at Washington City HOME Deed of Trust (1) obtain a court order to enforce Beneficiary’s right to enter and inspect the Property under Civil Code § 2929.5; and (2) have a receiver appointed under Code of Civil Procedure § 564 to enforce Beneficiary’s right to enter and inspect the Property for the purpose set forth above. All reasonable costs and expenses incurred by Beneficiary with respect to the audits, tests, inspections, and examinations that Beneficiary or its agents, representatives, or employees may conduct, including the reasonable fees of the engineers, laboratories, contractors, consultants, and attorneys, will be paid by Trustor. All reasonable costs or expenses incurred by Trustee and Beneficiary pursuant to this Section (including without limitation court costs, consultant’s fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest at the Agreed Rate from the date they are incurred until those sums have been paid in full. Except as provided by law, any inspections or tests made by Beneficiary or its representatives, employees, and agents will be for Beneficiary’s purposes only and will not be construed to create any responsibility or liability on the part of Beneficiary to Trustor or to any other person. Beneficiary will have the right, but not the obligation, to communicate with any governmental authority regarding any fact or reasonable belief of Beneficiary that constitutes or could constitute a breach of any of Trustor’s obligations under any environmental provision contained in this Deed of Trust or any Loan Document. 5.4. Waiver and Indemnity. Except as otherwise provided in the Ground Lease, Trustor: (a) releases and waives any future claims against Beneficiary for indemnity or contribution in the event Trustor becomes liable for cleanup or other costs under any Hazardous Substance Laws or under any Hazardous Substance Claim except to the extent such liability arises out of the gross negligence or willful misconduct or Beneficiary; (b) agrees to reimburse Beneficiar y, on demand, for all costs and expenses incurred by Beneficiary in connection with any review, approval, consent, or inspection relating to the environmental provisions in this Deed of Trust together with interest, after demand, at the Agreed Rate; and (c) agrees to indemnify, defend, and hold Beneficiary and Trustee harmless from all losses, costs, claims, damages, penalties, liabilities, causes of action, judgments, court costs, reasonable attorney fees and other legal expenses, costs of evidence of title, cost of evidence of value, and other expenses (collectively, “Expenses”), including, but not limited to, any Expenses incurred or accruing after the foreclosure of the lien of this Deed of Trust, which either may suffer or incur and which directly or indirectly arises out of or is in any way connected with the breach of any environmental provision either in this Deed of Trust or in any Loan Document or as a consequence of any Release or threatened Release or the presence, use, generation, manufacture, storage, disposal, transportation, Release, or threatened Release of any Hazardous Substance on or about the Property (but excluding any Existing Hazardous Materials), including the soils and groundwater, caused or permitted by Trustor, including, without limitation, to the extent required by an environmental agency with jurisdiction over the EXHIBIT 5 22 The Crossroads at Washington City HOME Deed of Trust Property, the cost of any required or necessary repair, cleanup, remedy, or detoxification of any hazardous Substance and the preparation of any closure, remedial action, or other required plans. Trustor’s obligations will survive the satisfaction, release, or cancellation of the indebtedness, the release and reconveyance or partial release and reconveyance of this Deed of Trust, and the foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust, for any liability accruing or arising prior to such satisfaction, release, or cancellation of the indebtedness, the release and reconveyance or partial release and reconveyance of this Deed of Trust, and the foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust. 5.5. Additional Covenants of Trustor. (a) Trustor and Beneficiary agree that: (1) this Section is intended as Beneficiary’s written request for information and Trustor’s written response concerning the environmental condition of the Property as provided by Code of Civil Procedure § 726.5; and (2) each representation, warranty, covenant, or indemnity made by Trustor in this Section or in any other provision of this Deed of Trust or any Loan Document that relates to the environmental condition of the Property is intended by Trustor and Beneficiary to be an “environmental provision” for purposes of Code of Civil Procedure § 736 and will survive the payment of the indebtedness and the termination or expiration of this Deed of Trust and will not be affected by Lender’s acquisition of any interest in the Property, whether by full credit bid at foreclosure, deed in lieu of that, or otherwise. If there is any transfer of any portion of Trustor’s interest in the Property, any successor-in-interest to Trustor agrees by its succession to that interest that the written request made pursuant to this Section will be deemed remade to the successor-in-interest without any further or additional action on the part of Beneficiary and that by assuming the debt secured by this Deed of Trust or by accepting the interest of Trustor subject to the lien of this Deed of Trust, the successor remakes each of the representations and warranties in this Deed of Trust and agrees to be bound by each covenant in this Deed of Trust, including, but not limited to, any indemnity provision. (b) Even though Trustor may have provided Beneficiary with an environmental site assessment or other environmental report together with other relevant information regarding the environmental condition of the Property, Trustor acknowledges and agrees that Beneficiary is not accepting the Property as security for the Loan based on that assessment, report, or information. Rather, Beneficiary has relied on the representations and warranties of Trustor in this Deed of Trust, and Beneficiary is not waiving any of its rights and remedies in the environmental provisions of this Deed of Trust or any other Loan Document. (c) Beneficiary or its agents, representatives, and employees may seek a judgment that Trustor has breached its covenants, representations, or warranties in Section 2 of this Deed of Trust or any other covenants, representations, or warranties that are deemed to be “environmental provisions” pursuant to Code of Civil Procedure § 736 (each an “Environmental Provision”), by commencing and maintaining an action or actions in any court of competent jurisdiction pursuant to Code of Civil Procedure § 736, whether commenced prior to or after foreclosure of the lien of this Deed of Trust. Beneficiary or its agents, representatives, EXHIBIT 5 23 The Crossroads at Washington City HOME Deed of Trust and employees may also seek an injunction to cause Trustor to abate any action in violation of any Environmental Provision and may seek the recovery of all costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses actually incurred by Beneficiary (collectively, “Environmental Costs”) incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action required by any Hazardous Substances Law or any Hazardous Substance Claim. It will be conclusively presumed between Beneficiary and Trustor that all Environmental Costs incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action of or to the Property were made by Beneficiary in good faith. All reasonable Environmental Costs incurred by Beneficiary under this Section (including without limitation court costs, consultant fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest at the Agreed Rate from the date of expenditure until those sums have been paid in full. Beneficiary will be entitled to bid, at any trustee’s or foreclosure sale of the Property, the amount of the costs, expenses, and interest in addition to the amount of other indebtedness. (d) Beneficiary or its agents, representatives, and employees may waive its lien against the Property or any portion of it, including but not limited to the Improvements, to the extent that the Property or any portion of the Security is found to be environmentally impaired in accordance with Code of Civil Procedure § 726.5, and to exercise all rights and remedies of an unsecured creditor against Trustor and all of Trustor’s assets and property for the recovery of any deficiency and Environmental Costs, including, but not limited to, seeking an attachment order under Code of Civil Procedure § 483.010. As between Beneficiary and Trustor, for purposes of Code of Civil Procedure § 726.5, Trustor will have the burden of proving that Trustor or any related party (or any affiliate or agent of Trustor or any related party) was not in any way negligent in permitting the Release or threatened Release of the Hazardous Substances. Section 6. ASSIGNMENTS OF RENTS, ISSUES AND PROFITS 6.1. Assignment. Trustor hereby absolutely, irrevocably and unconditionally assigns to Beneficiary, as security for the Obligations, all rents, profits, deposits, royalties, income and other issues and similar benefits derived from the Security (collectively, the “Rents”), and hereby confers upon Beneficiary the right, power and authority to collect such Rents. Trustor irrevocably appoints Beneficiary its true and lawful attorney-in-fact, at the option of Beneficiary, at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in its name or in the name of Trustor, for all Rents, and apply the same to the Obligations secured hereby; provided, however, that Trustor shall have the right, as between Trustor and Beneficiary, to collect the Rents but not more than one (1) month in advance of the date due unless the written approval of Beneficiary has first been obtained, with the exception of security deposits and “first and last months’ rent” collected from tenants in connection with Trustor’s ordinary leasing of residential apartments within the Property), and to retain and enjoy the same, so long as an Event of Default shall not have occurred hereunder and be continuing. 6.2. Collection Upon Default. EXHIBIT 5 24 The Crossroads at Washington City HOME Deed of Trust While any Event of Default remains uncured, Beneficiary may, at any time without notice, either in person, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the Obligations hereby secured, enter upon and take possession of the Security, or any part thereof, and, with or without taking possession of the Security or any part thereof, in its own name sue for or otherwise collect such Rents (including those past due and unpaid, and all prepaid Rents and all other monies which may have been or may hereafter be deposited with Trustor by any tenant to secure the payment of any Rent or for any services thereafter to be rendered by Trustor for any other obligation of any tenant to Trustor arising under any lease, and Trustor agrees that, upon the occurrence of any Event or Default hereunder, Trustor shall promptly deliver all Rents and other moneys to Beneficiary), and Beneficiary may apply the same, less costs and expenses of operation and collection, including, without limitation, reasonable attorneys fees, whether or not suit is brought or prosecuted to judgment, against any indebtedness or Obligation of Trustor secured hereby, and in such order as Beneficiary may determine notwithstanding that said indebtedness or the performance of said Obligation may not then be due. The collection of Rents, or the entering upon and taking possession of the Security, or the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default or be deemed or construed to make Beneficiary a mortgagee - in-possession of the Security or any portion thereof. 6.3. Further Assignments. Upon demand of Beneficiary, Trustor shall, from time to time hereafter, execute, and deliver to Beneficiary recordable assignments of Trustor’s interest in any or all leases, subleases, contracts, rights, licenses and permits now or hereafter affecting the Security or any portion thereof. Such assignments shall be made by instruments in form and substance reasonably satisfactory to Beneficiary; provided, however, that no such assignment shall be construed as imposing upon Beneficiary any obligation with respect thereto. Beneficiary may, at its option, exercise its rights hereunder or under any such specific assignment and such exercise shall not constitute a waiver of any right hereunder or under any such specific assignment. Section 7. EVENTS OF DEFAULT 7.1. Events of Default. Each of the following shall constitute Events of Default: (1) the occurrence of an “Event of Default” as defined in the Loan Agreement or as defined in any Debt Instrument; or (2) the failure to make any payment or perform any of Trustor’s other Obligations now or hereafter secured by this Deed of Trust (subject to written notice and expiration of any applicable cure period) and if no cure period is provided, a cure period equal to those granted to the limited partner under Section 7.12. 7.2. Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default, the unpaid Principal of the Note and any other indebtedness and other Obligations secured hereby shall immediately EXHIBIT 5 25 The Crossroads at Washington City HOME Deed of Trust become due and payable without presentment, protest notice or demand, all of which are hereby expressly waived, upon written notice by the Beneficiary to the Trustor and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right. 7.3. The Beneficiary’s Right to Enter and Take Possession. If an Event of Default shall have occurred and be 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 Security 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 which it reasonably deems necessary to preserve the value or marketability of the Security, or part thereof or interest therein, increase the income therefrom or protect the security thereof and, with or without taking possession of the Security, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection including without limitation reasonable attorneys fees, against any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Security the collection of such Rents and the application thereof as aforesaid shall not cure or waive any Event of Default or notice of default hereunder or invalidate any act done in response to such Event of Default or pursuant to such notice of default, and, notwithstanding the continuance in possession of the Security, Beneficiary shall 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; (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, which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of Orange County; 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 all or any portion of the Obligations secured hereby, or provided by law. 7.4. Foreclosure by Power of Sale. Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust, the Loan Agreement and the Note which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid Principal amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. EXHIBIT 5 26 The Crossroads at Washington City HOME Deed of Trust (a) Upon receipt of such notice from the Beneficiary (“Notice of Default”), Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and election to sell 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 Default and after notice of sale having been given as required by law (“Notice of Sale”), 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 shall deem expedient and in such order as it may determine unless specified otherwise to 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 shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale. (b) 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 Note; (2) all other sums then secured hereby; and (3) the remainder, if an y, to Trustor. (c) Trustee may postpone sale of all or any portion of the Security 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. 7.5. Receiver If an Event of Default shall have occurred and be 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, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall 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 shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated. 7.6. Application of Funds After Default. Except as otherwise herein provided, upon the occurrence of an Event of Default hereunder, and while such Event of Default remains uncured, Beneficiary may, at any time without notice, apply any or all sums or amounts received and held by Beneficiary to pay insurance premiums, Impositions, or either of them, or as Rents or income of the Security, or as insurance or condemnation proceeds, and all other sums or amounts received by Beneficiary from or on account of Trustor or the Security, or otherwise, against any indebtedness or Obligation of the Trustor secured hereby, in such manner and order as Beneficiary may elect. The receipt, use or application of any such sum or amount shall not be construed to affect the EXHIBIT 5 27 The Crossroads at Washington City HOME Deed of Trust maturity of any indebtedness secured by this Deed of Trust, or any of the rights or powers of Beneficiary under the terms of the Loan Agreement, this Deed of Trust or the Note, or any of the Obligations of Trustor or any guarantor under any other instruments or documents now or hereafter delivered in connection with the Loan Agreement or to cure or waive any default or notice of default under the Loan Agreement or any such instruments or documents; or to invalidate any act of Trustee or Beneficiary. 7.7. Costs of Enforcement. If any Event of Default occurs, Beneficiary and Trustee, and each of them, may employ an attorney or attorneys to protect their rights hereunder. Trustor promises to pay to Beneficiary, on demand, the reasonable fees and expenses of such attorneys and all other reasonable costs of enforcing the Obligations secured hereby, including, without limitation, recording fees, the expense of a trustee, sale guarantee, Trustee’s fees and expenses, receivers fees and expenses, and all other reasonable expenses, of whatever kind or nature, incurred by Beneficiary and Trustee, and each of them, in connection with the enforcement of the Obligations secured hereby, whether or not such enforcement includes the filing of a lawsuit. Until paid, such sums shall be secured hereby and shall bear interest at the Agreed Rate. 7.8. 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 shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. 7.9. No Waiver. (a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall 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. No consent or waiver, expressed or implied, by the Beneficiary to or any breach by the Trustor in the performance of the Obligations hereunder shall be deemed or construed to be a consent to or waiver of 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, shall 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 of any sums secured hereby, (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 Loan Agreement, (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 Loan Agreement, (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 shall not release, discharge, EXHIBIT 5 28 The Crossroads at Washington City HOME Deed of Trust 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 shall 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 shall the lien of this Deed of Trust be altered thereby. 7.10. Suits to Protect the Security. The Beneficiary shall have power to: (1) institute and maintain such suits and proceedings as it may in its reasonable discretion 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, (2) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (3) restrain the enforcement of or compliance with any legislation or other 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. 7.11. 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 Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary in order to have the claims of the Beneficiary all owed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date. 7.12. Limited Partner Cure Rights. Notwithstanding anything to the contrary in this Deed of Trust, Beneficiary shall give the investor limited partner of Trustor the following notice at the address provided in Section 8.3(b) and cure rights: (a) Beneficiary will give the limited partner a copy of any notice (at the limited partner's address provided in a notice by Trustor to Beneficiary) that Beneficiary gives to Trustor under this Deed of Trust, provided that Trustor has provided the address and contact information for the investor limited partner in writing to Beneficiary; (b) Beneficiary will give the limited partner thirty (30) days after the limited partner's receipt of such notice to cure a non-payment of any sum due under this Deed of Trust; (c) Beneficiary will give the limited partner sixty (60) days after the limited partner's receipt of such notice to cure any other default under this Deed of Trust; (d) If a non-monetary default is incapable of being cured within sixty (60) days, Beneficiary will give the limited partner such additional time as is reasonably necessary to cure EXHIBIT 5 29 The Crossroads at Washington City HOME Deed of Trust such default provided the limited partner has commenced to cure such default and is diligently proceeding to cure such default through the end of such period; and (e) If the limited partner makes any such payment or otherwise cures such default, the Beneficiary will accept such action as curing such default as if such payment or cure were made by Trustor. Section 8. MISCELLANEOUS 8.1. Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor. 8.2. Reconveyance by Trustee. Upon written request of Beneficiary stating that all sums secured hereby have been paid, 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 reconvey, without warranty, the Security to Trustor, or to the person or persons legally entitled thereto. 8.3. Notices. (a) If at any time after the execution of this Deed of Trust it shall become 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 shall be in writing and shall be served personally or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and: (1) if intended for Beneficiary shall be addressed to: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 (2) if intended for Trustors shall be addressed to: Trustor: Washington Santa Ana Housing Partners, L.P. With a copy to: Any notice, demand or communication shall 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 EXHIBIT 5 30 The Crossroads at Washington City HOME Deed of Trust return receipt. 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 l east ten (10) days prior to the date such change is desired to be effective. 8.4. Successors and Joint Trustors. All Obligations of Trustor secured by this Deed of Trust, shall also apply to and bind any permitted 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 shall be deemed to be a joint and several Obligation of the Trustor and such transferee. Where Trustor is more than one entity or person, all Obligations of Trustor shall be deemed to be a joint and several Obligation of each and every entity and person comprising Trustor. 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. 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 shall not affect the balance of the terms and provisions hereof, which terms and provisions shall 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, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. 8.7. Governing Law and Venue. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. In the event of any legal action to enforce or interpret this Deed of Trust, the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California, and the parties hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. 8.8. Gender and Number. In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires. 8.9. Deed of Trust, Mortgage. Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to a mortgage. EXHIBIT 5 31 The Crossroads at Washington City HOME Deed of Trust 8.10. Actions. Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security. 8.11. Substitution of Trustee. Beneficiary may from time to time substitute a successor o r 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 shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall 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 City or counties in which the Security is situated, shall be conclusive proof of proper appointment of the successor trustee. 8.12. 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 pending sale under this Deed of Trust or of any action of proceedings in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 8.13. Conflicts. If any term or provision of this Deed of Trust conflicts with any term of provision of the Loan Agreement, the term or provision of the Loan Agreement shall control to the extent of such conflict. 8.14. Statements by Trustor. Trustor shall, at its cost, within ten (10) days after notice thereof from Beneficiary, deliver to Beneficiary a written statement setting forth to the best of its knowledge and information, the amounts then unpaid and secured by this Deed of Trust and stating whether Trustor is aware of any offset or defense against such amounts. 8.15. Beneficiary Statements. For any statement or accounting requested by Trustor or any other entitled person pursuant to Section 2943 or Section 2954 of the California C ivil Code or pursuant to any other provision of applicable law, or for any other document or instrument furnished to Trustor by Beneficiary, Beneficiary may charge the maximum amount permitted by law at the time of the request therefor, or if there be no such maximum, then in accordance with Beneficiary’s customary charges therefor or the actual cost to Beneficiary therefor, whichever is greater. 8.16. Statute of Limitations. EXHIBIT 5 32 The Crossroads at Washington City HOME Deed of Trust Except insofar as now or hereafter prohibited by law, the right to plead, use or assert any statute of limitations as a plea or defense or bar of any kind, or for any purpose, to any debt, demand or obligation secured or to be secured hereby, or to any complaint or other pleading or proceeding filed, instituted or maintained for the purpose of enforcing this Deed of Trust or any rights hereunder, is hereby waived by Trustor. 8.17. Trust Irrevocable; No Offset. The Trust created hereby is irrevocable by Trustor. No offset or claim that Trustor now has or may in the future have against Beneficiary shall relieve Trustor from paying the indebtedness or performing any other Obligation contained herein or secured hereby. 8.18. Corrections. Trustor shall, upon request of Beneficiary, promptly correct any defect, error or omission which may be discovered in the contents hereof or in the execution or acknowledgment hereof, and will execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or as may be reasonably requested by Beneficiary to carry out more effectively the purposes thereof, to subject to, the lien and security interest hereby created any of Trustor’s properties, rights or interests covered or intended to be covered hereby, or to perfect and maintain such lien and security interest. 8.19. Further Assurance. Trustor, Beneficiary and Trustee agree to do or cause to be done such further acts and things and to execute and deliver or to cause to be executed and delivered such additional assignments, agreements, powers and instruments, as any of them may reasonably require to keep valid and effective the charges and liens hereof, to carry into effect the purposes of this Deed of Trust or to better assure and confirm unto any of them their rights, powers and remedies hereunder; and, upon request by Beneficiary, shall supply evidence of fulfillment of each of the covenants herein contained concerning which a request for such evidence has been made. 8.20. Waiver of Jury Trial. Unless prohibited by Federal, State or local laws, each party acknowledges that it is aware of and has had the advice of counsel of its choice with respect to its rights to trial by jury, and each party, for itself and its successors and assigns, does hereby expressly and knowingly waive and release all such rights to trial by jury in any action, proceeding or counterclaim brought by any party hereto against the other (and/or against its officers, directors, employees, agents, or subsidiary or affiliated entities) on or with regard to any matters whatsoever arising out of or in any way connected with this Deed of Trust and/or any claim of injury or damage to the fullest extent permitted by applicable law. 8.21. Tax Credits. Beneficiary agrees that the lien of this Deed of Trust shall be subordinate to any extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Security; provided that EXHIBIT 5 33 The Crossroads at Washington City HOME Deed of Trust such Extended Use Agreement, by its terms, must terminate upon foreclosure under this Instrument or upon a transfer of the Security by instrument in lieu of foreclosure, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code. Section 9. WAIVERS 9.1. Waivers and Related Matters. (a) To the fullest extent allowed by law, Trustor hereby waives: (i) presentment, demand, protest, notice of dishonor, notice of protest and all other notices and demands of every kind, and all suretyship defenses of every kind that would otherwise be available in connection with this Deed of Trust, and (ii) all rights of redemption, valuation, appraisement, stay of executive, notice of election to mature or declare due the whole of the Obligation and marshaling in the event of foreclosure of the liens hereby created. (b) Trustor hereby authorizes Beneficiary, at any time and from time to time without notice and without affecting this Deed of Trust in any way, to: (i) accept new or additional instruments, documents, agreements, security or guaranties in connection with all or any part of the Obligations; (ii) accept partial payments on the Obligations; and (iii) waive, release, reconvey, terminate, abandon, subordinate, exchange, substitute, transfer, compound, compromise, liquidate and enforce all or any part of the Obligations and any security or guaranties therefor, and apply any such security and direct the order or manner of sale thereof and bid and purchase at any such sale. (c) Trustor hereby waives any right to require Beneficiary to (i) proceed against any person; (ii) proceed or exhaust any collateral held from any person; or (iii) pursue any other remedy in Beneficiary’s power. Upon the occurrence of any Event of Default, Beneficiary is hereby expressly given the right, at its option, to proceed in the enforcement of this Deed of Trust, independently of any other remedy or security Beneficiary may at any time hold in connection with the Obligations, and Beneficiary shall not in any way be obligated or otherwise required to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce this Deed of Trust. (d) Trustor hereby waives any defense arising by reason of: (i) any disability or other defense of Trustor or any other person; (ii) the cessation from any cause whatsoever, other than full payment and performance of the Obligations, of the Obligations of Trustor or any other person; or (iii) any act or omission by Beneficiary which directly or indirectly results in or aids in the discharge or release of Trustor, or any other person, any Obligation, or any collateral by operation of law or otherwise. The waivers set forth in this Section 9 shall also apply, to the fullest extent permitted by law to all other real and/or personal property of Trustor now or hereafter assigned to Beneficiary as security for the Obligations. Trustor warrants and agrees that each, of the waivers set forth above are made with Trustor’s full knowledge of their significance and consequences, with the understanding that events giving rise to any defense waived may diminish, destroy or otherwise adversely affect rights which Trustor otherwise may have against Beneficiary or others, or against collateral, and that under the circumstances, the waivers are reasonable and not contrary EXHIBIT 5 34 The Crossroads at Washington City HOME Deed of Trust to public policy or law. If any of the waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective to the maximum extent permitted by law. {signatures on following page} EXHIBIT 5 The Crossroads at Washington Exhibit A City HOME Deed of Trust IN WITNESS WHEREOF, Trustor has executed this City Deed of Trust as of the date first written above. TRUSTOR: Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 5 The Crossroads at Washington Exhibit A City HOME Deed of Trust EXHIBIT A LEGAL DESCRIPTION EXHIBIT 5 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 5 Exhibit E: City/HOME Loan Note EXHIBIT 5 1 The Crossroads at Washington City HOME Loan Note CITY HOME LOAN NOTE SECURED BY SUBORDINATED DEED OF TRUST TO THE CITY OF SANTA ANA, CALIFORNIA (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) $3,007,489 June 21, 2022 Santa Ana, California 1. PRINCIPAL AMOUNT OF LOAN. For value received, WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership (“Borrower”) promises to pay to the order of THE CITY OF SANTA ANA (“City"), at 20 Civic Center Plaza, 6th Floor, Santa Ana, California 92701, or at such other place as the City may from time to time designate in writing, or to the assignee of the City, the principal sum of THREE MILLION, SEVEN THOUSAND, FOUR HUNDRED AND EIGHTY-NINE DOLLARS AND NO CENTS ($3,007,489.00) or so much thereof as shall be disbursed hereunder, with three percent (3%) simple interest per annum and commencing from the date of issuance of the Certificate of Completion. City and Borrower have heretofore entered into that certain Loan Agreement dated concurrently herewith (the "Loan Agreement"), pertaining to the construction of certain real property described in the Loan Agreement as the "Property," commonly known as 1126, 1136 and 1146 East Washington Avenue, Santa Ana, California, and the operation of the Property as affordable housing for Extremely-Low Income households. This City HOME Loan Note (the “Note”) is made pursuant to, entitled to the benefits of and referred to as the City/HOME Loan Note in the Loan Agreement; that certain “Affordability Restrictions on Transfer of Property” between Borrower and City, dated on or about the date hereof; and that certain Subordinated City/HOME Deed of Trust and Assignment of Rents by Borrower for the benefit of City, dated on or about the date hereof (the "City Deed of Trust"). This Note, the Loan Agreement, the City Deed of Trust and the Affordability Restrictions on Transfer of Property are sometimes collectively referred to herein as the "Loan Documents." The Loan Documents and the rights and responsibilities thereto inure to the benefit of the City. Any capitalized term that is not otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreement. 2. DEFINITIONS. For the purpose of calculating the payments to be made by Borrower to City pursuant to this Note, the following terms shall have the following respective meanings: "City Loan" shall mean the loan evidenced by this Note. "City’s Percentage" with reference to the Residual Receipts, shall mean 23.71% of the total Residual Receipts from the Property, as further described in Section 5 hereof. EXHIBIT 5 2 The Crossroads at Washington City HOME Loan Note “Calendar Year” means each consecutive twelve (12) month period from January 1 to December 31. "Closing Costs" shall mean: (i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a result of the Sale, which shall not in any event exceed the customary amount charged-for similar transactions in the immediate marketplace, costs of title insurance premiums, documentary stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably incurred with respect to the Property, in each case actually paid by Borrower as a condition of the Sale. (ii) In the case of a Refinancing, the reasonable and necessary costs of consummating such Refinancing, including, without limitation, loan fees, loan repayment charges, costs of title insurance premiums, escrow fees, recording fees, attorneys' fees and costs of Lender required repairs or reserves. “CPI” means United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index of Urban Wage Earners and Clerical Workers, Subgroup “All Items,” for the Los Angeles-Riverside-Orange County area, 1982-84 = 100, or successor or equivalent index in case such index is no longer published. "Gross Revenues" shall mean all revenues and receipts of every kind actually received by Borrower from operating the Property, and all parts thereof, including, but not limited to, income from both cash and credit transactions, rental payments from leased and/or subleased spaces, governmental assistance housing payments or other operating subsidies, and parking fees and charges (but not including security deposits and other tenant deposits, except to the extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues does not include any insurance proceeds other than any rental interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at the time cash proceeds (principal, interest and/or other) are received. Borrower shall establish and maintain accounts for the Gross Revenues (the '"Project Accounts") that are segregated from revenues and income received by Borrower from all other projects. Gross Revenues shall also include all interest earned on the Project Accounts to the extent interest is released from the Project Accounts. Gross Revenues do not include the proceeds of any loans or capital contributions made to Borrower, Refinancing Proceeds or Sale Proceeds. “Ground Lease” shall mean the lease between the Housing Authority of the City of Santa Ana (“Agency’) and the County of Orange (“County") as tenants-in-common, and Washington Santa Ana Housing Partners, LP. “Ground Lessor” shall mean collectively the Housing Authority of the City of Santa Ana and the County of Orange. “Interest” shall mean that the NOTE shall bear simple interest at the rate of Three percent (3%) per annum, from the date of issuance of the Certificate of Completion. EXHIBIT 5 3 The Crossroads at Washington City HOME Loan Note “Operating Expenses” shall mean the sum of the following: (a) payments of principal and interest and all other charges payable on or with respect to the Senior Loan(s); (b) a property management fee no greater than fifty-five dollars ($55)/per unit/per year, increased annually by the lesser of: (i) three percent (3%); or (ii) prior Year CPI, beginning the year following the issuance of the first certificate of occupancy for the Project; (c) Partnership related fees that are actually incurred and are reasonable and customary to the partners of Borrower for similar projects in Southern California, and which may include: (i) the partnership management fee payable to the Administrative General Partner and/or Managing General Partner not to exceed twenty thousand dollars ($20,000) per operating year and escalating at three percent (3%) per operating year; and (ii) a limited partner asset management fee of five thousand dollars ($5,000) per year, escalating at (A) three percent (3%) per operating year; (d) Deposits into required reserves required by any lender or Borrower’s Partnership Agreement; (e) all other actual, reasonable cash operating costs and expenses, calculated on an annual basis, that are directly attributable to managing and operating the Property and the Borrower, including, without limiting the generality of the foregoing, the following: costs and expenses for real and personal property taxes, special assessments or similar charges; water, fuel, electricity and other utilities; heating, ventilation and air conditioning expenses; labor; supplies; tools; equipment; insurance; advertising and marketing; accounting and legal fees; brokerage commissions and other leasing expenses; reasonable reserves for all anticipated expenses as approved by the City; and other such items constituting operation, maintenance and repair costs actually paid by the Borrower, subject to the following conditions: (i) Depreciation, amortization, and accrued principal and interest expenses on deferred payment debt and capital improvement expenditures shall not be considered Operating Expenses, except as otherwise provided herein. (f) Any expenses, compensation or fees paid to any affiliate of Borrower shall only be included as Operating Expenses to the extent they are not in excess of the reasonable expenses, compensation or fees which would be payable to unrelated third parties in arms-length transactions for similar services in the Santa Ana, California area; (g) Any other expenses necessary to meet senior lender requirements and requirements of Borrower’s limited partner, or its assignee, as set forth in Borrow er’s Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), including, without limitation, repayment of any loans to the Borrower by a partner or tax credit recapture or deficiency payments; EXHIBIT 5 4 The Crossroads at Washington City HOME Loan Note (h) Deferred developer fees; and (i) A social services administrative fee; Director reserves the right to at any time review and approve each or any annual budget during the Term hereof, and any changes to any said annual budget reasonably requested by Director shall be promptly implemented by Borrower. Notwithstanding the foregoing, in no event shall Operating Expenses include any costs, fees, fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and accounting fees and expenses) that are due to or arising out of the Borrower’s: (a) breach or default of this Loan, any Loan Document or any Senior Loan Document; (b) fraudulent acts or willful misconduct; or (c) breach or default under any other contract, lease or agreement pertaining to the Project. "Project" shall mean the acquisition and construction of the Property by Borrower pursuant to the Loan Agreement. "Property" shall mean the real property located at 1126, 1136 and 1146 East Washington Avenue , Santa Ana, California described in the City Deed of Trust. "Refinancing" shall mean changing the then existing financing on the Property by, without limitation, modifying final maturity date of the existing Senior Loan, increasing the stated maximum principal amount of the existing Senior Loan, paying off the existing Senior Loan in full and obtaining new Senior Loan. "Refinancing Proceeds" shall be as set forth in Section 7 hereof. "Residual Receipts" shall mean the Gross Revenues from the Property, for each year, less deductions for Operating Expenses from the Property, applicable to each such year to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, conveyance or lease (other than to a tenant for occupancy or a transaction set forth in Section 11.3 hereof and Permitted Transfers as such term is defined in the Loan Agreement) of the Borrower’s leasehold interest in the Property or any portion thereof, or any interest therein by the Borrower, and includes any transfer, assignment or sale of any partnership interest in the Borrower by an individual or entity which is a general partner in the Borrower, or any interest by any individual or entity which holds an interest in any such general partner in the Borrower, which brings the cumulative total of all such direct and indirect transfers, assignments and sales by a general partner during the term of this Note to more than forty-nine percent (49%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a direct or indirect general partnership interest thereafter. Sale includes a sale in condemnation or under threat thereof. Sale does not include dedications and grants of easements to public and private utility companies of the kind customary in real estate development, nor transfers of Limited Partnership interests or transfers of General Partner interests caused by the removal of the General Partner pursuant to the terms of the Partnership Agreement. EXHIBIT 5 5 The Crossroads at Washington City HOME Loan Note "Sale Proceeds" shall be as set forth in Section 8 hereof. "Senior Loan" shall mean the senior loan being made by U.S. Bank National Association, concurrent to the City Loan for payment of a portion of costs of the acquisition of the leasehold interest in the Property and the Construction Costs, and shall include the Senior Loan following the purchase thereof by California Community Reinvestment Corporation (or its assignee) any subsequent loan that refinances the Senior Loan, and shall include any other loan recorded senior in priority to this City Loan "Term" the term for repayment of this Note shall mean sixty-two (62) years from the Certificate of Completion. 3. LOAN REPAYMENT. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 7 (Refinancing Proceeds), 8 (Sale Proceeds) and 10 (Accelerated Loan Repayment). 4. OPERATING CAPITAL IMPROVEMENT LOAN. If the replacement reserve account (“reserves”) is depleted due to unforeseen repairs and the General Partner(s) makes a loan to the Borrower, the reserves must be fully funded to the balance of the reserve prior to disbursement for such unforeseen repairs prior to repayment of said loan. Such loan shall be repaid with net cash flow prior to the Residual Receipt split. The outstanding loan balance will be reflected in the annual report. 5. ANNUAL LOAN REPAYMENT. 5.1. After any deferred developer fee has been paid, as set forth hereinabove, the Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser of the outstanding balance due under this Note, plus any accrued interest thereon, or the City’s Percentage of the Residual Receipts, as provided in this Section 5. 5.2. Within one hundred twenty (120) days after the year in which the construction of the Project is completed, and on or before the 120th day of each Calendar Year thereafter, the Borrower shall submit to the City a detailed statement of Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar Year with which to make a City Loan payment then due. 5.3. Except as otherwise provided in Section 4, the Borrower shall pay to the City the City’s Percentage of the Residual Receipts as payment of principal and interest under this Note. The Borrower shall pay 13.53% of the Residual Receipts to the County and 12.76% of the Residual Receipts to the Orange County Housing Finance Trust The remaining amount of the Residual Receipts shall remain with the Borrower to be used by Borrower in accordance with the terms of the Partnership Agreement, including, without EXHIBIT 5 6 The Crossroads at Washington City HOME Loan Note limitation, for distribution to the partners of the Borrower. 5.4. The Residual Receipts payment shall be made not later than one hundred fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to the payment of all expenses, charges, costs and fees incurred by or payable to City by Borrower pursuant to the terms of the Loan Documents; second to any accrued but unpaid interest, if any; and third, to reduce the principal balance of the City Loan. Notwithstanding anything to the contrary contained herein, after the occurrence and during the continuation of an Event of Default (as such term is defined in the Loan Agreement), all amounts received by City from any party shall be applied in such order as City, in its sole discretion, may elect. 6. RESERVED. 7. LOAN REPAYMENT FROM NET REFINANCING PROCEEDS/NET SYNDICATION PROCEEDS. The Borrower shall make a payment to the City or Agency from every approved Refinancing or Syndication that occurs during the term of this Note and the term of the Ground Lease, not to exceed (i) the outstanding balance of principal and interest on this Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease, to the extent of the City’s Percentage (23.71%) of the Net Refinancing Proceeds / Net Syndication Proceeds (if any). The “Net Refinancing Proceeds” shall be defined as the proceeds from the refinancing of any loan approved by the Ground Lessor as stipulated in the Ground Lease, net of all of the following: the amount of the financing which is satisfied out of such proceeds, closing costs, costs to rehabilitate the Project, including the costs necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), payment of outstanding deferred developer fee, the soft costs related to the rehabilitation of the Project (such as architecture, engineering and other consultant costs, and all required relocation costs), and all hard costs of the rehabilitation, all of which have been reviewed and reasonably approved by the Ground Lessor. The “Net Syndication Proceeds” shall be defined as the syndication proceeds net of final Project hard and soft construction costs, including developer fee, based on a cost certification completed at the end of construction, and syndication costs all of which has been reviewed and reasonably approved by the Ground Lessor. Such payment shall be due within 30 days of the date of such Refinancing or Syndication, and shall be applied at the City’s sole discretion to either: (i) first to any accrued but unpaid interest, then to reduce the principal balance of the City Loan; or (ii) to the unpaid amount of Agency Base Rent as outlined in the Ground Lease. The City shall not be required to reconvey the lien of the City Deed of Trust if Net Refinancing/Net Syndication Proceeds are insufficient to repay the City Loan in full. EXHIBIT 5 7 The Crossroads at Washington City HOME Loan Note 8. LOAN REPAYMENT FROM SALE PROCEEDS. The Borrower shall make a payment, not to exceed (i) the outstanding balance of principal and interest on this Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease, to the City/Agency from any approved Sale of the leasehold interest that occurs during the term of the City Loan or the Ground Lease, to the extent of the City’s Percentage (23.71%) of the Sale Proceeds, as follows. The Sale Proceeds shall be calculated as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full all amounts owing on the Senior Loan; next the Borrower shall pay to the City the City’s Percentage of the then remaining unapplied Sale Proceeds, not to exceed (i) the outstanding balance of principal and interest on this Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease. Such payment shall be due on the date of such Sale, and shall be applied at the City’s sole discretion to either: (i) first to any accrued but unpaid interest, then to reduce the principal balance of the City Loan; or (ii) to the unpaid amount of Agency Base Rent as outlined in the Ground Lease. The City shall not be required to reconvey the lien of the City Deed of Trust if Sale Proceeds are insufficient to repay the City Loan in full. 9. BUY OUT OPTION. Prior to the initial disbursement under this Note, the Borrower shall grant to the City a right of first refusal (subject to any purchase option and/or right for first refusal granted to one or more of the General Partner(s) of the Borrower and any rights of the investor limited partner of Borrower under the Partnership Agreement) (the “City Right of First Refusal”) to acquire the leasehold interest in the Property if Borrower desires to transfer the Property to an entity that is not affiliated with one or more of Borrower’s general partners. The City Right of First Refusal shall be in form and substance acceptable to the City, shall comply with all applicable Tax Credit requirements and shall, at minimum, include that the purchase price will not be less than the amount of any bona fide third party offer received by Borrower. The City Right of First Refusal is hereby subordinated to the Senior Loan Deed of Trust and the other Senior Loan Documents, and in any event, the City Right of First Refusal shall automatically terminate, without any further action by Borrower, the City or any other party upon the initial disbursement under this Note. Senior Lender is hereby made a third party beneficiary of the immediately preceding sentence, and such sentence shall not be amended or deleted without Senior Lender’s prior written consent. 10. ACCELERATED LOAN PAYMENT. The full principal amount outstanding plus accrued but unpaid interest thereon, shall be due and payable on the earlier to occur of the following: (a) Sale or Refinancing of the Property as provided further in Section 15 hereof; unless: (i) in the case of a Sale in which the Ci ty’s Percentage of the Sale Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the purchaser assumes the balance of the City Loan in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the City’s Percentage of the Refinancing EXHIBIT 5 8 The Crossroads at Washington City HOME Loan Note Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terms of this Note; (b) if an Event of Default occurs pursuant to Section 16 hereof; or (c) The date that is sixty-two (62) years after the date of execution of the Certificate of Completion. 11. PREPAYMENT. Borrower may prepay the outstanding principal balance under this Note, in whole or in part, together with any accrued but unpaid interest, if any, and other sums owed to the City under this Note, if any, at any time without penalty. In the event of prepayment by Borrower, the Loan Agreement (only with respect to any continuing obligations of Borrower that survive repayment in full of the loan) and the Affordability Restrictions on Transfer of Property shall remain intact, and shall be unaffected by the prepayment of this Note by the Borrower. 12. LAWFUL MONEY. Principal and interest are payable in lawful money of the United States of America. 13. APPLICATION OF PAYMENTS; LATE CHARGES. (a) Any payments received by the City pursuant to the terms hereof shall be applied first to sums, other than principal and interest, due the City pursuant to this Note, next to the payment of all interest accrued to the date of such payment, and the balance, if any, to the payment of principal. (b) If any payment is not received by the City within thirty (30) days following the due date thereof, then in addition to the remedies conferred upon the City pursuant to this Note and the other Loan Documents: (i) a late charge of four percent (4%) of the amount due and unpaid will be added to the delinquent amount to compensate the City for the expense of handling the delinquency; and (ii) the amount due and unpaid, excluding the late charge, shall bear interest at twelve percent (12%) per annum, or the maximum amount allowed by law, whichever is less, computed from the date on which the amount was due and payable until paid. Without prejudice to the rights of the City hereunder or under any of the other Loan Documents, Borrower shall indemnify the City against, and shall pay the City on demand, any expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when due any installment of interest and/or principal, fees, or other amounts payable to the City under this Note or any other Loan Document, to the extent that any such expense or loss is not recovered pursuant to such foregoing provisions. A certificate of the City setting forth the basis for the determination of the amounts necessary to indemnify the City in respect of such expenses or direct loss, submitted to Borrower by the City, shall be conclusive and binding for all purposes except as corrected by Borrower notice to City within ten (10) days of receipt of such certificate from City. EXHIBIT 5 9 The Crossroads at Washington City HOME Loan Note 14. SECURITY. This Note is secured by the City Deed of Trust. 15. ACCELERATION BY REASON OF TRANSFER OR FINANCING. 15.1. In order to induce City to make the City Loan evidenced hereby, Borrower agrees that in the event of any transfer of the leasehold interest in the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the absolute right at its option, upon at least 30 days’ prior written notice to Borrower, to declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. City may grant or deny such consent in its sole and absolute discretion and, if consent should be given, any such transfer shall be subject to this Section 15, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall release Borrower from all liability thereunder from and after the date of such assumption. 15.2. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of the leasehold interest in the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property, or the lease of all or substantially all of the Property. 'Transfer' shall not include the leasing of individual residential units on the Property, so long as Borrower complies with the provisions of the Loan Agreement and the Affordable Housing Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which a general partner of Borrower or an affiliate of a general partner of Borrower is a general partner, or to a corporation that is wholly owned by the Borrower or a general partner of Borrower and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan together with all accrued and unpaid interest, shall be repaid to the City at the time of each Refinancing or partial Refinancing. 15.3. For the avoidance of doubt, a "transfer” shall not include (i) a transfer of any general partner’s interest in Borrower when made in connection with the exercise by the Borrower’s limited partner (the "Limited Part ner") of its rights upon a default by a general partner under the Borrower’s Partnership Agreement or upon a general partner’s withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the managing general partner of EXHIBIT 5 10 The Crossroads at Washington City HOME Loan Note Borrower pursuant to the right of first refusal or to the general partners of Borrower pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner’s interest in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Borrower. 16. EVENT OF DEFAULT. Subject to the provisions hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default'') hereunder: (a) failure by Borrower to make any payments provided for herein, and if such default is not made good within the earlier of fifteen (15) days of written notice to Borrower of such default or thirty (30) days after such payment was due; or (b) failure by Borrower to perform any covenant or agreement in the City Deed of Trust, the Loan Agreement, or the Affordability Restrictions on Transfer of Property within thirty (30) days after written demand therefor by City (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Borrower fail to promptly commence such cure, and diligently and continuously prosecute same to completion). 17. CURE BY LIMITED PARTNER. The City acknowledges that the Limited Partner of Borrower shall have the right, but not the obligation to cure any default hereunder. Any cure made or tendered by such Limited Partner shall be accepted as if made by Borrower. 18. REMEDIES. Upon the occurrence and during the continuance of an Event of Default, after any applicable notice has been provided and the expiration of any applicable cure period therefore, City may declare all sums evidenced hereby immediately due and payable by delivery to the Trustee named in the City Deed of Trust securing this Note, and to Borrower, written declaration of default and demand for sale, and written notice of default and of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record and City may foreclose on the City Deed of Trust. City shall also deposit with Trustee the City Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. No delay or omission on the part of the City in exercising any right under this Note or under any of the other Loan Documents shall operate as a waiver of such right. 19. ATTORNEYS' FEES. If this City Loan Note is not paid when due or if any Event of Default occurs, Borrower promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. EXHIBIT 5 11 The Crossroads at Washington City HOME Loan Note 20. SEVERABILITY. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 21. CALCULATION OF INTEREST. Interest hereunder shall be calculated on the basis of a three hundred sixty (360) day year consisting of twelve (12) months of thirty (30) days each, except that interest due and payable for a period less than a full month shall be calculated by dividing (a) the product of (i) the actual number of days elapsed in such period, (ii) the outstanding principal balance hereunder during that period and (iii) the Note interest rate in effect hereunder during that period by (b) 360. 22. NUMBER AND GENDER. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires. 23. NON-RECOURSE. The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor any other party, including Borrower’s partners, shall have any personal liability for repayment of the City Loan or for any other amounts under any of the documentation evidencing, securing or describing the City Loan. The sole recourse of City under this Note and the City Deed of Trust for repayment of the City Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 24. SUBORDINATION. Any agreement by the City to subordinate the City Deed of Trust and/or Regulatory Agreements to an encumbrance securing and/or evidencing Approved Financing (each such Approved Financing, a "Senior Loan"), will be subject to the satisfaction of each of the following conditions: 1. All of the proceeds of the proposed Senior Loan, less any transaction costs, are used to provide acquisition, construction and/or permanent financing for the Project, or any combination thereof; 2. The proposed lender of a Senior Loan (each a "Senior Lender") must be a state or federally chartered financial institution, a nonprofit corporation or a public entity that is not affiliated with Borrower; EXHIBIT 5 12 The Crossroads at Washington City HOME Loan Note 3. Borrower demonstrates to the City's satisfaction that subordination of the City Deed of Trust and/or Affordability Restrictions on Transfer of Property is necessary to secure adequate acquisition, construction and/or permanent financing to ensure the viability of the Project, including the operation of the Project as affordable housing, as required by the Loan Documents. To satisfy this requirement, Borrower must provide to the City, in addition to any other information reasonably required by the City, evidence demonstrating that the proposed amount of the Senior Loan is necessary to provide adequate construction and/or permanent financing to ensure the viability of the Project, and adequate financing for the Project would no t be available without the proposed subordination; 4. The subordination agreement(s) is structured to minimize the risk that the City Deed of Trust and/or Affordability Restrictions on Transfer of Property will be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Loan. To satisfy this requirement, the subordination agreement must provide the City with adequate rights to cure any defaults by Borrower, including: (i) providing the City or its successor with copies of any notices of default at the same time and in the same manner as provided to Borrower; and (ii) providing the City with a cure period of at least sixty (60) days to cure any default; 5. The subordination(s) of the City Loan is effective only during the original term of the Senior Loan and any extension of its term that is approved in writing by the City; 6. No subordination may limit the effect of the City Deed of Trust and/or the Affordability Restrictions on Transfer of Property before a foreclosure, nor require the consent of the Senior Lender prior to the City exercising any remedies available to the City under the Loan Documents; and 7. Upon a determination by the City Executive Director that the conditions in this Section have been satisfied, the Executive Director or his/her designee, will be authorized to execute the approved subordination agreement without the necessity of any further action or approval by the City Council. Execution of any subordination agreement will evidence and constitute the determination of the City that all requirements of this Section have been satisfied or waived. Notwithstanding anything to the contrary contained in the Loan Documents, with prior 30-days written notice to City, Borrower may refinance the Senior Loan with a non- profit, commercial, governmental or institutional lender without the prior consent of the City (“Refinanced Senior Indebtedness”), and the City hereby agrees to subordinate the lien of its Deed of Trust (but not the Affordability Restrictions on Transfer of Property) the Refinanced Senior Indebtedness and the lien of any deed of trust or mortgage securing the Refinanced Senior Indebtedness, provided that the principal balance of the Refinanced Senior Indebtedness does not exceed the then outstanding principal balance of the Senior Loan plus the costs incurred in securing the Refinanced Senior Indebtedness. EXHIBIT 5 13 The Crossroads at Washington City HOME Loan Note 25. RESERVED. 26. RESERVED. 27. FORCE MAJEURE. Notwithstanding specific provisions of this Note, performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City or any other public or governmental City or entity (except that any act or failure to act of City shall not excuse performance by City); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time the party claiming such extension gives notice to the other party, provided notice by the party claiming such extension is given within thirty (30) days after the commencement of the cause. Times of performance under this Note may also be extended in writing by the City and the Borrower. 28. ASSIGNMENTS. The City, and the assignee of the City, shall have the right to assign this Note and the City Deed of Trust securing this Note, without any further act of Borrower. The assignee shall give notice to Borrower as soon as practicable after such assignment. {signatures on following page} EXHIBIT 5 14 The Crossroads at Washington City HOME Loan Note This Note is hereby agreed to and executed on the date first set forth above. “BORROWER” Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 5 Exhibit F: Affordability Restrictions on Transfer of Property EXHIBIT 5 1 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the “Restrictions”) are entered into as of June 21, 2022, by and between and Washington Santa Ana Housing Partners, L.P., a California limited partnership (“Developer”), and the City of Santa Ana, a charter city and municipal corporation (“City”). RECITALS: A. The Housing Authority of the City of Santa Ana (“Housing Authority”) owns one parcel located at 1136 East Washington Avenue (APN 398-092-14) totaling approximately 1.43 acres of land area (“Housing Authority Parcel”). The County of Orange (“County”) owns an adjacent parcel (APN 398-092-13) totaling approximately 0.85 acres of land area (“County Parcel”). The two parcels will be merged into one parcel (“Property”) and co- owned by the Housing Authority and the County as Tenants-In-Common.. The Property is located in the City of Santa Ana, more particularly described in Exhibit A, which is attached hereto and incorporated herein by this reference. B. The Housing Authority and the County will ground lease the Property to the Developer for sixty-two (62) years from the Certificate of Completion, but no more than sixty- five (65) years from the date of execution of the Ground Lease. C. The Developer and the City have entered into that certain Loan Agreement, dated on or about the date hereof (“Loan Agreement”), for the purpose of providing eighty-six (86) units of housing that will be affordable to Extremely Low Income, Very Low Income, and Low Income households (“Restricted Units”), with one un-restricted unit reserved for an on-site manager, to which these Restrictions are attached as Exhibit F (any capitalized term that is not otherwise defined in these Restrictions shall have the meaning ascribed to such term in the Loan Agreement). EXHIBIT 5 2 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property D. The Loan Agreement provides, among other things, for the use of the Property for affordable housing with all Restricted Units being restricted to Extremely Low Income, Very Low Income and Low Income households, at Affordable Rent(s). E. The Loan Agreement contains certain provisions relating to the use of the Property. NOW, THEREFORE, CITY AND DEVELOPER COVENANT AND AGREE AS FOLLOWS: 1. Developer covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property or any part thereof) that Developer, such successors, and such assigns shall use the Property exclusively to provide affordable housing of Extremely Low Income, Very Low Income and Low Income households, as provided in these Restrictions and in the Loan Agreement. 2. Developer, for itself and its successors and assigns, hereby covenants and agrees that all of the apartments in the Property (less one manager’s unit) (the “Units”) shall be rented exclusively, at Affordable Rent, to Extremely Low Income, Very Low Income and Low Income households to the extent provided for herein. Area median income levels and Affordable Rents are subject to adjustment from time to time as provided in Section 3 below. 3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 3.1. Use Covenants and Restrictions. (a) Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assigns and every successor in interest to the Property that Developer will make all Restricted Units on the Property available to Extremely Low Income, Very Low Income and Low Income households at rents affordable to such households for sixty-two (62) years from the issuance of the Certificate of Completion. The HOME restrictions for the City’s twelve (12) HOME assisted units shall be enforced until the date that is twenty (20) years after the date on which the Certificate of Completion is issued. The City permits the Developer to limit the eligibility and/or give preference to a particular segment of the population in accordance with 24 CFR 92.253(d). (b) The Project shall consist of eight y-six (86) units, including one (1) on-site manager’s unit. The City’s HOME assistance shall require twelve (12) HOME assisted units. The HOME assisted units shall be six (6) 2-bedroom units, four (4) 3- bedroom units, and two (2) 4-bedroom units, fixed, and shall be distributed throughout the complex with comparable amenities to the Restricted Units. (c) At initial lease up, households in the HOME assisted units cannot earn more than the Very-Low Income limits (50% of AMI) as published by HUD in compliance with the HOME Program for the Orange County, California PMSA, adjusted EXHIBIT 5 3 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property for household size. Rental increases shall be in conformance with federal and state law. After the twenty (20) year HOME Compliance Period, the City shall require that the HOME assisted units remain affordable, with rents calculated based on assumed household size at the same income levels (i.e. 50% of AMI). (d) All of the HOME units will be restricted to occupanc y by families earning no more than the Very-Low Income limits (50% of AMI) as published by HUD, and the rents must not exceed the Low HOME rents adjusted for family size appropriate to the unit as published by HUD. (e) Maximum Occupancy will be two (2) people per room plus one (1). Example for a two-bedroom unit, five (5) people would be maximum occupancy. (f) Developer must have a written lease between tenant and owner for a period of at least one year, unless a shorter period is mutually agreed upon. Leases must be consistent with the HOME Program regulations at 24 CFR section 92.209(g). 3.2. Affordability Levels/Unit Mix: The affordability levels/unit mix for the Restricted Units in the Project are as follows: Unit Size 30% TCAC AMI No. Units Current Rent Studio 16 $711 1 Bedroom 26 $762 2 Bedroom 21 $915 3 Bedroom 17 $1,057 4 Bedroom 5 $1,179 Total 85 The remaining unit will be an un-restricted 2-bedroom unit reserved for the onsite manager. HOME Assisted Units Total # of Units Unit Type Level of Affordability # of HOME Assisted Units % Share of HOME Assisted Unit Type 16 Studio Very-Low Income (50% AMI) (Low HOME) 0 0% 26 1 Bed 0 0% 21 2 Bed 6 50% 17 3 Bed 4 33% 5 4 Bed 2 17% EXHIBIT 5 4 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property (1) In no event shall the rent charged to the HOME assisted units be more than the amount of the Low HOME rent as published by HUD, as amended from time to time. (2) At the time of project completion, the Developer shall provide to the City the address and/or unit number of each of the HOME fixed units. (3) Annually with the financial statements, the Developer shall provide an annual report of rents and occupancy of all Restricted Units, including the HOME assisted units, to verify compliance with affordability requirements. For the HOME assisted units, information on unit substitution and filling vacancies shall be provided to ensure that the project maintains the required unit mix. Except with respect to the HOME assisted units during the HOME Compliance Period, the affordable rents charged at the Project for the Restricted Units must comply with the standards set forth by the California Tax Credit Allocation Committee (TCAC). A utility allowance must be deducted from the maximum affordable rent charged at the Project for each Restricted Unit. Utility allowances must be based on project-specific allowances for the HOME assisted units. TCAC provides a California Utility Allowance Calculator (CUAC) that must be used to calculate the utility allowances for the HOME assisted units. Initial rents may be recalculated to allowable rental amounts at the time of initial lease-up following completion of construction in accordance with any changes in allowable rent and income tables as published by HUD. The City’s HOME assistance shall require twelve (12) HOME assisted units. The County’s HOME assistance shall require forty-three (43) HOME assisted units. In total, there will be fifty-five (55) HOME assisted units in the Project. There shall not be any overlap between the County’s HOME assisted units and the City’s HOME assisted units. 3.3. Rent Increases. On an annual basis, the City shall provide Developer with the maximum allowable schedule of rents for the Property in accordance with changes in allowable rent and income tables published by HUD and TCAC, provided however that the rent for the HOME assisted units shall in no event be higher than the rent for the equivalent non-HOME assisted unit within the Project. In no event can Developer charge any tenant more than such amount. All rent increases on the Restricted Units are subject to City approval pursuant to the terms of this Section. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in Section 3.2 above. EXHIBIT 5 5 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property (a) Termination of Tenancy. Developer may not terminate the tenancy or refuse to renew the lease of tenant except for serious or repeated violation of the terms and conditions of the Lease; for violation of applicable federal, state, or local law; for completion of the transitional housing tenancy period (if the housing is transitional); or for other good cause. Any termination or refusal to renew must be preceded by not less than thirty (30) days by the Developer’s service upon the tenant of a written notice specifying the grounds for the action. (b) Non-Qualifying Adjusted Income. Subject to the applicable requirements and provisions of, and changes to, Section 42 and 142(d) of the Internal Revenue Code of 1986, as amended (the “Code”), if, upon recertification of the income of a tenant of a Restricted Unit, the Developer determines that a tenant has an adjusted income exceeding 30% of the applicable Median Income for the Area in each case, adjusted for household size as provided in Section 3.2 above, such tenant may be permitted to continue to occupy the Restricted Unit at the rental rate as provided for in Section 3.2 above, until the tenant chooses to vacate the Restricted Unit. After the Restricted Unit is vacated, the Restricted Unit shall be re-rented to a tenant pursuant to the terms, covenants and conditions of these Restrictions. 3.4. Loss of Project-Based Voucher Subsidy. It is anticipated that during the Term of Agreement the Project will maintain not less than fifteen (15) Project-Based Voucher (“PBV”) Restricted Units (“PBV Restricted Units”) provided by the Housing Authority and forty three Project-Based Vouchers provided by Orange County, supported by Project-Based Section 8 rental subsidy payments ("Rental Subsidy"). If, during the Term of Agreement, there is a reduction, termination or nonrenewal of the Housing Authority’s or County’s Rental Subsidy through no fault of Developer, such that the Rental Subsidy shown on the Project Budget is no longer available (or available in a lesser amount), Developer may request approval of the City (a) to allow households with adjusted incomes that do not exceed sixty percent (60%) of AMI, adjusted for actual household size, to occupy the extremely-low income units (i.e., a unit previously restricted to households with adjusted incomes that do not exceed 30% of AMI), and (b) to increase the rent on one or more of the Restricted Units, to rents that are affordable to households with an adjusted income that does not exceed sixty percent (60%) of AMI, adjusted for household size appropriate for the Restricted Unit. The rent increase is subject to the following requirements: (a) concurrently with the request, Developer shall provide the City with evidence of the anticipated reduction, termination, or nonrenewal of the Rental Subsidy; (b) a Management Plan (as defined in Section 6.1(d) of the Loan Agreement) for the Project for the City’s approval pursuant to Sections 6.1(d) and Exhibit G of the Loan Agreement, showing the impact of the loss or reduction of the Rental Subsidy; (c) a proposed operating budget reflecting the rent increases (the “Operating Budget”); and (d) a description of efforts to obtain alternate sources of rent. The number of the PBV Restricted Units subject to the rent increase and the amount of the proposed increase may not be greater than the number or amount required to ensure that the Project generates sufficient income to cover its operating costs, required EXHIBIT 5 6 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property deposits to replacement reserves, and debt service on approved financing as shown on the Operating Budget, and as is necessary to maintain the financial stability of the Project. In addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described above, Developer hereby agrees to the following: (a) Developer shall use good faith commercially reasonable efforts to obtain alternative sources of rental subsidies and shall provide the City with annual progress reports on efforts to obtain alternative sources of rental subsidies that would allow the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall reduce the rents back to the original restrictions to the extent that the alternative rental subsidies provide sufficient income to cover the operating costs, required replacement reserves and debt service of the Project as shown on the Operating Budget. (b) Developer shall provide tenants in the Restricted Units with notice of any rent increase pursuant to this Section 3.4, and shall notify the tenant that if they have received a tenant-based voucher from the Housing Authority of the City of Santa Ana they may use the tenant-based voucher for their Restricted Unit. (c) All rent increases for the Restricted Units are subject to City approval pursuant to the terms of this Section 3.4. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in this Section 3.4. Notwithstanding the foregoing, rent increases for the PBV Restricted Units shall be subject to review and approval of the City. Developer shall give tenants of all Restricted Units written notice at least sixty (60) days prior to any rent increase. 3.5. Reserved. 4. Developer, its successors and assigns shall not charge rents for the Units in excess of the amounts set forth herein, as adjusted on the basis of the revised schedules of area median incomes issued from time-to-time by HUD. The City shall notify Developer in writing of the adjusted allowable maximum incomes and rents. 5. Developer shall adopt and include as part of its Management Plan (described in Section 11 below), written tenant selection policies and criteria for the Units that meet the following requirements: 5.1. Are consistent with the purpose of providing housing for Extremely Low, Very Low, and Low Income households; 5.2. Are reasonably related to program eligibility and the applicants’ ability to perform the obligations of the lease; EXHIBIT 5 7 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property 5.3. Give reasonable consideration to the housing needs of households that would have a preference under 42 CFR §906.211 (Federal selection preferences for admission to Public Housing); 5.4. Provide for: (a) The selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (b) The prompt written notification to any rejected applicant of the grounds for any rejection; 5.5. Except with regard to persons experiencing homelessness referred off of the County of Orange coordinated entry system due to the layer of forty-three (43) PBVs provided by the Orange County Housing Authority, and subject to compliance with the HOME Regulations, the requirements of Section 142(d) of the Code, Section 42 of the Code, the County of Orange coordinated entry system and applicable California and federal fair housing laws, local preference for Santa Ana residents and workers in tenant selection shall be a requirement of the Project. Subject to applicable laws and regulations governing nondiscrimination and preferences in housing occupancy required by Section 142(d) of the Code, Section 42 of the Code, HUD or the State of California, as well as the City of Santa Ana Affordable Housing Funds Policies and Procedures, the Developer shall give preference in leasing units in the following order of priority: (a) First priority shall be given to persons who have been permanently displaced or face permanent displacement from housing in Santa Ana as a result of any of the following: (i) A redevelopment project undertaken pursuant to California’s Community Redevelopment Law (Health & Safety Code Sections 33000, et seq.) – applicable only to projects funded by the Low and Moderate Income Housing Asset Fund; (ii) Ellis Act, owner-occupancy, or removal permit eviction; (iii) Earthquake, fire, flood, or other natural disaster; (iv) Cancellation of a Housing Choice Voucher HAP Contract by property owner; or (v) Governmental Action, such as Code Enforcement. (b) Second priority shall be given to persons who are either: (i) Residents of Santa Ana; and/or (ii) Working in Santa Ana at least 32 hours per week for at least the last 6 months. The Restricted Units will still be available to the general public, as required under Section 142(d) of the Code and Section 42 of the Code, and these preferences do not restrict the availability of the units to the general public. EXHIBIT 5 8 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property 5.6. Carry out the Affirmative Marketing procedures of the City of Santa Ana, which are designed to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups in the housing market area to the units. Developer shall cooperate with the City to effectuate this provision prior to the initial renting, or upon occurrence of a vacancy, and the re-renting of any HOME assisted units (24 CFR 92.351). 6. Developer, its successors and assigns, shall not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 887 (Housing Choice Voucher Program) or to a holder of a comparable document evidencing participation in a HOME tenant-based assistance program because of the status of the prospective tenant as a holder of such certificate of family participation, rental voucher, or comparable HOME tenant -based assistance document. Total rents charged to the tenant for the tenant’s share of rent shall not exceed the allowable rents as described above. 7. Any lease of any of the units must be for not less than one year, unless by mutual agreement between the tenant and the Developer. Should the tenant and Developer agree to a term of less than one year, said agreement shall be expressed in some type of wri tten form, signed by the tenant, and maintained in the tenant’s rental file held by the Developer. The lease may not contain any of the following provisions (in which references to “owner” shall mean the Developer, its successors or assigns): 7.1. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; 7.2. Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing Unit after the tenant has moved out of the Unit. The owner may dispose of this personal property in accordance with state law; 7.3. Agreement by the tenant not to hold the owner or the owner’s agent legally responsible for any action or failure to act, whether intentional or negligent; 7.4. Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant; 7.5. Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; 7.6. Agreement by the tenant to waive any right to a trial by jury; 7.7. Agreement by the tenant to waive the tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and 7.8. Agreement by the tenant to pay attorney’s fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, EXHIBIT 5 9 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property may be obligated to pay costs if the tenant loses. 8. Developer, its successors or assigns, must adhere to state law requirements with regard to termination of tenancy. 9. Developer shall maintain the improvements on the Property in compliance with all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local code requirements (California Health and Safety Code section 33418), and shall keep the Property free from any unreasonable accumulation of debris or waste materials. Developer shall also maintain in a healthy condition any landscaping planted on the Property. 10. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, mental or physical disability, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations. 11. Not later than fifteen (15) business days prior to the Close of Escrow, Developer shall submit to the Executive Director a Management Plan in a form that is acceptable to the Executive Director, including, but not limited to, the components listed below. Approval of the Management Plan must be obtained from the Executive Director not later than the time for the Close of Escrow. Developer shall manage the Restricted Units in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the Executive Director, for the term of the income and rent restrictions contained in these Restrictions. The components of the Management Plan shall include: 11.1. Management Agent. Developer shall submit the name and qualifications of the proposed Management Agent. The Executive Director shall approve or disapprove the proposed Management Agent in writing based on the experience and qualifications of the Management Agent. 11.2. Management Agreement. Developer shall submit a copy of the proposed management agreement specifying the amount of the management fee, and the relationship and division of responsibilities between Developer and Management Agent. 11.3. Annual Budget and Projected Cash Flows. Prior to the Closing, and annually thereafter not less than sixty (60) days prior to the close of each calendar year thereafter until the Loan is repaid in full, Developer shall submit a projected operating budget and cash flow to the Executive Director for the following calendar year. The budget EXHIBIT 5 10 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property and cash flow shall be in a form that is acceptable to the Executive Director. 11.4. Tenant Selection Policies. Developer shall include in the Management Plan the tenant selection policies in accordance with Section 5, above. 12. If at any time the City determines that the units are not being managed or maintained in accordance with the approved Management Plan, the City shall send the Developer a detailed description of the management deficiencies (a “Deficiency Notice”). If the deficiencies set forth in the Deficiency Notice are not cured within sixty (60) days (or such longer period as may be reasonably required to cure the deficiency), with the exception of HOME regulations that require a shorter period, the Executive Director may require Developer to change management practices or to terminate the management contract and designate and retain a different management agent. The management agreement shall provide that it is subject to termination by Developer without penalty, upon thirty (30) days prior written notice, at the direction of the Executive Director upon failure to cure a Deficiency Notice within the time period specified above. Within thirty (30) days following a direction of the Executive Director to replace the management agent in accordance with the terms hereof, the Developer shall select another management agent or make other arrangements satisfactory to the Executive Director or designee for continuing management of the units. 12.1. Marketing Plan. The marketing plan will apply to all of the units in the Project, except the one manager’s unit. The Developer shall submit a marketing plan for review and approval by the Executive Director which approval will not be unreasonably withheld, conditioned or delayed. The marketing plan must contain procedures that ensure marketing of the Restricted Units to Extremely Low Income, Very Low Income, and Low Income households throughout the City. Such procedures shall be applicable for initial rent-up and ongoing marketing of the units throughout the term of these Restrictions. Developer shall advertise vacancies of the Restricted Units in general distribution newspapers that circulate throughout the City. Where the Developer utilizes other forms of advertising, such advertising shall also be distributed throughout the City. 13. The covenants established in these Restrictions and any amendments hereto approved by the City and Developer shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City and their respective successors and assigns. These Restrictions shall remain in effect for sixty-two (62) years from the issuance of the Certificate of Completion and the HOME restrictions shall remain in effect for the HOME Compliance Period. In its discretion, the City may defer repayment of the HOME Loan or the City may agree to such reasonable modifications to the requirements of these Restrictions, as they may determine are necessary for the continued maintenance and operation of the Restricted Units. The covenants against discrimination shall remain in effect for the period of these Restrictions. EXHIBIT 5 11 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property 14. Developer shall not request disbursement of HOME funds until the funds are needed to pay eligible costs. The City shall have the right to disapprove any request if the City determines the request is for an ineligible item or is otherwise not in compliance with or inconsistent with the Loan Agreement and these Restrictions [24 CFR 92.504 (c)(10)]. 15. Maintenance; Compliance with Law. During the term of these Restrictions, Developer agrees to maintain all interior and exterior improvements, including landscaping, on the Project in good condition, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with any Management Plan approved by the City under these Restrictions (including without limitation any landscaping and signage), as the same may be amended from time to time, and all other 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. Developer acknowledges the great emphasis the City places on quality maintenance to protect its investment and to provide quality low income housing for its constituents and to ensure that all City subsidized affordable housing projects within the City are not allowed to deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free from all graffiti and any accumulation of debris or waste material. Developer shall promptly make all repairs and replacements necessary to keep the Project in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that Developer breaches any of the covenants contained in this Section 15 and such default continues for a period of five (5) days after written notice from the City (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from the City (with respect to landscaping and building improvements), then the City, in addition to whatever other right or remedy it may have under the Loan Agreement, the other Loan Documents, these Restrictions or at law or in equity, shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permitted (but is not required) to enter upon the Project and perform all acts and work necessary to protect, maintain and preserve the improvements and landscaped areas on the Project. Developer shall promptly pay to the City, as applicable, the amount of the expenditure arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, including a fifteen percent (15%) administrative charge. 16. Developer shall prepare, maintain and submit to the City, as appropriate, the following records and reports in compliance with 24 CFR 92.504 (c)(12):] 16.1. Annual Reports. Developer shall file with the City an Annual Report (herein referred to as the “Annual Report”) by June 15th of each calendar year, commencing with the end of the calendar year (or portion thereof) in which the Real Estate Closing occurs. The Annual Report shall contain a certification by Developer as to such information as the City Executive Director may then require, including, but not limited to, EXHIBIT 5 12 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property the following: (a) The fiscal condition of the Project, including the Annual Budget and Project Cash Flow report required by Section 11.3 which shall include a financial statement for the previous calendar year that includes a balance sheet and a profit and loss statement indicating any surplus or deficit in operating accounts; a detailed itemized listing of income and expenses; and the amounts of any fiscal reserves. Such Annual Budget and financial statement shall be prepared in accordance with generally accepted accounting practices. The City Executive Director may require that the financial statement be audited at Developer’s expense by an independent certified public accountant acceptable to the Executive Director. (b) Any substantial physical defects in the Project, including a description of any major repair or maintenance work undertaken or needed in the previous and current years. Such statement shall describe what steps Developer has taken in order to maintain the Project in a safe and sanitary condition in accordance with applicable housing and building codes and the property standards set forth in 24 CFR 92.251. (c) The occupancy of the units indicating the income of each current resident and the current rents charged each resident and whether those rents include utilities, including records that demonstrate that the Project meets the requirements of 24 CFR 92.253 for tenant and participant protection under the HOME Program. (d) General management performance, including tenant relations and other relevant information. (e) Records that demonstrate that the units meet the affordability requirements of 24 CFR 92.252, for the required period of affordability. (f) Evidence of a currently paid hazard insurance policy in accordance with the requirements of Section 3 of the City/HOME Deed of Trust, with a loss payable endorsement naming the City as a loss payee(s) together with other approved lenders (as their interests may appear), with a “Replacement Cost Endorsement” in amount sufficient to prevent Developer or City from becoming a co-insurer under the terms of the policy, but in any event in an amount not less than 100% of the then full replacement cost, to be determined at least once annually and subject to reasonable approval by the Executive Director. (g) Evidence of a currently paid liability insurance policy, naming the City as additional insured and in a form approved by the City Attorney with coverage as described in the Loan Agreement. (h) Termite reports pertaining to the Property every fifth (5th) year. (i) Such other information as may be reasonably required by the Executive Director or his/her designee. 16.2. Records and Audits. During the HOME Compliance Period, Developer EXHIBIT 5 13 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property shall maintain the following general program records, and make them available for inspection by the City, the State or HUD: (a) records which demonstrate that the project meets the property standard specified in 24 CFR 92.251; (b) records, for each HOME assisted unit, which demonstrates that the project meets the requirements of 24 CFR 92.252; (c) records which demonstrate compliance with the tenant and participant protections, as specified in 24 Section 29.253; (d) records which demonstrate compliance with the Equal Opportunity and Fair Housing requirements outlined in these Restrictions, including: (i) data on the extent to which each racial and ethnic group and single head of household (by gender of head of household) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HOME funds; (ii) documentation of actions undertaken to meet the equal opportunity requirements of 24 CFR 92.350, which implements Section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u); (iii) documentation and data on the steps taken to implement Developer’s outreach programs to minority-owned and women-owned businesses to meet the minority outreach requirements of 24 CFR 92.350; (e) documentation of the steps taken to carry out an affirmative marketing program in accordance with 24 CFR 92.351, if applicable; [ (f) if applicable, records which demonstrate compliance with the requirements relating to relocation of displaced persons, as described in 24 CFR 92.353. At a minimum, these shall include project occupancy lists identifying the name and address of all persons occupying the project property up until the date of the Real Estate Closing (i.e., the date on which Developer obtained site control); (g) records concerning lead-based paint in accordance with 24 CFR 92.355; (h) if applicable, records which support any requests for waivers of the conflict of interest prohibition as stated in 24 CFR 92.356; (i) records of certifications of contractor qualifications as they relate to the debarment and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part 24; and (j) any other reports issued by other monitoring agencies. EXHIBIT 5 14 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property 16.3. All records pertaining to each calendar year of HOME funds must be retained for the most recent five year period, except that records of individual tenant income verifications, project rents and project inspections must be retained for the most recent five year period, until five years after the affordability period terminates (24 CFR 92.508). Developer shall cooperate with the City to retain all books and records relevant to the Loan Agreement for a minimum of five years after the expirati on of the Loan Agreement and any and all amendments hereto, or for five years after the conclusion or resolution of any and all audits or litigation relevant to the Loan Agreement, whichever is later. The City, the State, the Office of the Auditor General of HUD, and/or their representatives shall have unrestricted reasonable access to all locations, books, and records for the purpose of monitoring, auditing, or otherwise examining said locations, books, and records with or without prior notice. 16.4. If so directed by the City, the State or HUD upon termination of the Loan Agreement, Developer shall cause all records, accounts, documentation and all other materials relevant to the work to be delivered to the City, the State or HUD, as depository. 16.5. All records, accounts, documentation and other materials relevant to the Project shall be accessible at any time to the authorized representatives of the City, the State or HUD, on reasonable prior notice, for the purpose of examination or audit. 16.6. Pursuant to 24 CFR Part 44, the City shall perform an annual audit at the close of each calendar year in which these Restrictions are in effect. Developer shall reasonably cooperate with City in performing such audit. 17. If an event of default occurs under the terms of these Restrictions, prior to exercising any remedies hereunder, City shall give Developer written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Developer shall have such period to effect a cure prior to exercise of remedies by the City under these Restrictions. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Developer: (i) initiates corrective action within said period; and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Developer shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by City. Any cure made or tendered by such limited partner shall be accepted as if made by Developer. The City is a beneficiary of the terms and provisions of these Restrictions and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit these Restrictions and the covenants running with the land have been provided. Upon the occurrence of an event of default and the expiration of the notice and cure period specified above, the City shall have the right to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of these Restrictions and covenants are entitled. EXHIBIT 5 15 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property 18. Default. Each of the following shall constitute an "Event of Default" by Developer under these Restrictions: 18.1. Failure to Make Payments. Developer fails to make any payment due the City under these Restrictions within thirty (30) days after receiving written notice for said payment from the City; 18.2. Non-Monetary Failure to Perform. Developer fails to timely perform, comply with or observe any of the terms, covenants, or conditions of these Restrictions (other than those provisions elsewhere referred to in this Section 18) and such failure continues uncured or without Developer commencing to diligently cure for thirty (30) days after notice thereof in writing is given by the City to Developer, provided that if Developer has commenced cure but cannot complete such cure reasonably within thirty (30) days, Developer shall have ninety (90) days from the date of notice to cure such failure without such failure constituting an event of default; 18.3. Senior Loan Document Breach. Any default or breach of Developer which continues uncured after the expiration of any applicable cure period under the Loan Agreement (including, but not limited to, the obligations of the Developer under Section 6 of the Loan Agreement), any Loan Document or any other loan document including, b ut not limited to, the Senior Loan Documents, as defined and set forth in the Loan Agreement; 18.4. Voluntary Suspension. The voluntary suspension of Developer's business or the dissolution or termination of the partnership (if any) constituting Developer; 18.5. Unauthorized Transfer. Developer’s sale or other transfer of the Project in violation of this Agreement; 18.6. Fraud or Material Misstatement or Omissions. Any fraudulent act or intentional material omission of Developer pertaining to or made in connection with the Loan, Loan Documents or the Project that is not cured within thirty (30) days after written notice to Developer, unless such act or omission is not capable of cure; 18.7. Insolvency. A court having jurisdiction shall have made or entered any decree or order: (i) adjudging Developer to be bankrupt or insolvent; (ii) approving as properly filed a petition seeking reorganization of Developer or seeking any arrangement for Developer under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction; (iii) appointing a receiver, trustee, liquidator, or assignee of Developer in bankruptcy or insolvency or for any of their properties; or (iv) directing the winding up or liquidation of Developer, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days, unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period will apply under this section as well; or Developer shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence EXHIBIT 5 16 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note; or 18.8. Project Monies. Developer’s intentional misapplication or embezzlement of Project monies. 19. Reserved. 20. Remedies. The occurrence of any Event of Default shall, either at the option of the City or automatically where so specified, relieve the City of any obligation to make or continue the Loan and shall give the City the right to proceed with any and all remedies set forth in these Restrictions or otherwise available at law or in equity or by statute (and all of the City's rights and remedies shall be cumulative), including but not limited to the following: 20.1. Acceleration of Note. The City shall have the right to cause all indebtedness of the Developer to the City under the Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest, or dishonor. The City ma y proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party under the law, including the Uniform Commercial Code, including foreclosure under the Deed of Trust. The Developer shall be liable to pay the City on demand all expenses, costs and fees (including, without limitation, reasonable attorneys' fees and expenses) paid or incurred by the City in connection with the enforcement of this provision, provided that such expenses, costs and fees shall be subordinate to the Senior Loan made to Developer and the Senior Loan Documents. 20.2. Specific Performance. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Developer to perform its obligations and covenants under these Restrictions or to enjoin acts on things, which may be unlawful, or in violation of the provisions of these Restrictions. The Developer shall be liable to pay the City on demand all expenses, costs and fees (including, without limitation, reasonable attorneys’ fees and expenses) paid or incurred by the City in connection with the enforcement of these Restrictions. 20.3. Right to Cure at Developer's Expense. The City shall have the right to cure any monetary Event of Default by Developer under these Restrictions. The Developer agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Developer upon demand therefore, together with interest thereon at the rate of twelve percent (12%) per annum or the maximum rate permitted by law, whichever rate is lesser, from the date of expenditure until the date of reimbursement. 20.4. Remedies Cumulative. No right, power, or remedy given to the City by the terms of these Restrictions is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, EXHIBIT 5 17 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property or by any statute or otherwise against Developer and any other person. Neither the failure nor any delay on the part of the City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. 20.5. Waiver of Terms and Conditions. No waiver of any default or breach by Developer hereunder shall be implied from any omission by the City to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the City to or of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under these Restrictions or the Loan Documents, nor shall it invalidate any act done pursuant to notice of default, or prejudice the City in the exercise of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of Developer to City are paid and discharged in full. 21. The covenants and agreements contained herein shall run with the land and not be personal obligations of Developer. Upon the sale, conveyance or other transfer of the leasehold interest in the Property (a “Transfer”) and the assumption of the obligations hereunder by a transferee, Developer’s liability for performance shall be terminated as to any obligation to be performed hereunder after the date of such Transfer. 22. The Loan Agreement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Propert y, the City/HOME Loan Note and the City/HOME Deed of Trust provide a means of enforcement by the City if Developer is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c) (13)]. 23. Additional Terms. 23.1. Indemnity. To the fullest extent permitted by law, the Developer agrees to indemnify, hold harmless and defend the City and its elected officials, officers, governing members, employees, attorneys and agents (collectively, the "Indemnified Parties"), from and against any and all losses, damages, claims, actions, liabilities, costs and expenses of any and every conceivable nature, kind or character (including, without limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject to under any statutory law (including federal or state securities laws) or at common law or otherwise, arising out of or based upon or in any way relating to: (a) these Restrictions or the execution or amendment thereof in EXHIBIT 5 18 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property connection with the transactions contemplated thereby; (b) Developer’s ownership or operation of the Property and the Project or any act or omission of the Developer or any of its agents, contractors, servants, employees or licensees in connection with the Property and the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation, operation or rehabilitation of, the Project or any part thereof; (c) any lien or charge upon payments by the Developer to the City, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the City in respect of any portion of the Project; (d) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Property or the Project or any part thereof; or (e) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact by the Developer contained in any Loan Document or any of the documents or instruments relating to said Loan Documents that the City relied upon in making the Loan; except to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Developer, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment and payment for of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. 23.2. Time. Time is of the essence in these Restrictions. 23.3. Construction. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender. 23.4. Waiver of Jury Trial. Unless prohibited by Federal, State or local laws, each party to these Restrictions hereby expressly waives any right to trial by jury of any claim, demand, action or cause of action arising under any Loan Document or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to any Loan Document, or the transactions related thereto, in each case whether now existing or hereafter arising, and whether sounding in contract or tort or otherwise; and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to these Restrictions may file an original counterpart or a copy of this section with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury. EXHIBIT 5 19 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property 23.5. Nonliability. By accepting or approving anything required to be performed or given to City under these Restrictions, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone. 23.6. Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any claim by Developer against City, in connection with these Restrictions or otherwise, Developer hereby waives any right it might otherwise have: (a) to offset any such obligation, liability or claim against Developer’s obligations under these Restrictions; or (b) to claim that the existence of any such obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under these Restrictions. 24. Reserved. . 25. Notices. All notices, demands, approvals and other communications provided for in the Loan Documents shall be in writing and be delivered to the appropriate party by personal service or U.S. mail at its address as follows: If to Developer: Washington Santa Ana Housing Partners, L.P., a California limited partnership With a copy to: If to City: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 With a copy to: City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 Addresses for notice may be changed as required by written notice to all other parties. All notices personally served shall be effective when actually received. All notices mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing notwithstanding, the non-receipt of any notice as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such notice. {signatures on following page} EXHIBIT 5 20 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions on Transfer of Property to be executed on the date set forth hereinabove. ATTEST: CITY OF SANTA ANA ___________________________ _______________________ Daisy Gomez Kristine Ridge Clerk of the Council City Manager Dated: Dated: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: ________________________ Ryan O. Hodge Assistant City Attorney Dated: RECOMMENDED FOR APPROVAL: _______________________________ Steven A. Mendoza Executive Director Community Development Agency June 13, 2022 EXHIBIT 5 21 The Crossroads at Washington City HOME Affordability Restrictions on Transfer of Property DEVELOPER Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 5 Exhibit G: Additional Terms and Conditions Federal HOME Investment Partnership (HOME) Funds EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS EXHIBIT G ADDITIONAL TERMS AND CONDITIONS FEDERAL HOME INVESTMENT PARTNERSHIP (HOME) FUNDS In addition to the requirements set forth in other provisions of the Agreement, Developer shall comply, and shall cause all Developer personnel and/or subcontractors to comply, with the following regulations and requirements to the extent applicable to the Project.1 1. Use of the HOME Funds. The Loan shall be used only for eligible costs (see, e.g., 24 C.F.R. § 92.206, 92.214, 92.300(c), and 92.301), and any development work shall be completed within the times referred to in the Affordable Housing and Loan Agreement between City and Developer. 2. Affordability. The Project units shall meet the affordability requirements of the HOME Requirements (24 C.F.R. § 92.254) or this Agreement and the Regulatory Agreement, whichever is more restrictive. If the Project units do not meet the affordability requirements of the HOME Requirements for the specified time period, Developer shall repay the Loan to City promptly upon demand by City, subject to all applicable notice and cure periods. In such event, Developer shall not be released from the affordability and other covenants and restrictions set forth in this Agreement and the Regulatory Agreement, which shall continue to apply independent of the HOME Requirements. 3. Equal Opportunity and Nondiscrimination. a. Title VI of the Civil Rights Act of 1964, as amended, including Public Law 88-352 implemented in 24 CFR Part 1. This law provides in part that no person shall, on the grounds of race, color, or national origin be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. In regard to the sale or lease of the Property, Developer shall cause or require a covenant running with the land to be inserted in the deed and leases prohibiting discrimination under this Title, and providing that City and the United States are beneficiaries of and entitled to enforce such covenants. Developer shall enforce such covenant and shall not itself so discriminate. b. Fair Housing Act, Title VIII of the Civil Rights Act of 1968, as amended, including Public Law 90-234. The Fair Housing Act provides in part that there shall be no discrimination in housing practices on the basis of race, color, religion, sex, and national origin. The Fair Housing Act was amended in 1988 to provide protections from discrimination in any aspect of the sale or rental of housing for families with children and persons with disabilities. 1 This exhibit is a list and summary of some of the applicable legal requirements and is not a complete list of all Developer requirements. The description set forth next to a statute or regulation is a summary of certain provisions in the statute or regulation and is in no way intended to be a complete description or summary of the statute or regulation. In the event of any conflict between this summary and the requirements imposed by applicable laws, regulations, and requirements, the applicable laws, regulations, and requirements shall apply. EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS The Fair Housing Act also establishes requirements for the design and construction of new rental or for-sale multi-family housing to ensure a minimum level of accessibility for persons with disabilities. c. Section 109 of Title I of the Housing and Community Development Act of 1974, as amended, including 42 U.S.C. 5301 et. seq., 42 U.S.C. 6101 et. seq., and 29 U.S.C. 794. This law provides in part that no person on the grounds of race, color, national origin, sex, or religion shall be excluded from participation in, be denied the benefits of, or otherwise be subject to discrimination under any activity funded in whole or part with funds under this Title. d. Section 104(b) of Title I of the Housing and Community Development Act of 1974, as amended, including 42 U.S.C. 5301 et. seq. This law provides in part that any grant under Section 106 shall be made only if the grantee certifies to the satisfaction of the Secretary of HUD that the grantee will, among other things, affirmatively further fair housing. e. Executive Order 11246, as amended. This order includes a requirement that grantees and subrecipients and their contractors and subcontractors not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. f. Executive Order 11063, as amended, including 24 CFR Part 107. This order and its implementing regulations include requirements that all actions necessary be taken to prevent discrimination because of race, color, religion, sex, or national origin in the use, occupancy, sale, leasing, rental, or other disposition of property assisted with Federal loans, advances, grants, or contributions. g. Section 504 of the Rehabilitation Act of 1973, as amended. This Act specifies in part that no otherwise qualified individual shall solely by reason of his or her disability or handicap be excluded from participation (including employment), denied program benefits, or subjected to discrimination under any program or activity receiving Federal assistance. Developer must ensure that its programs are accessible to and usable by persons with disabilities. h. The Americans with Disabilities Act (ADA) of 1990, as amended. This Act prohibits discrimination on the basis of disability in employment by state and local governments and in places of public accommodation and commercial facilities. The ADA also requires that facilities that are newly constructed or altered, by, on behalf of, or for use of a public entity, be designed and constructed in a manner that makes the facility readily accessible to and usable by persons with disabilities. The Act defines the range of conditions that qualify as disabilities and the reasonable accommodations that must be made to assure equality of opportunity, full participation, independent living, and economic self-sufficiency for persons with disabilities. i. The Age Discrimination Act of 1975, as amended. This law provides in part that no person shall be excluded from participation in, be denied program benefits, or EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS subjected to discrimination on the basis of age under any program or activity receiving federal assistance. j. EEO/AA Statement. Developer shall, in all solicitations or advertisements for employees placed by or on behalf of Developer, state that it is an Equal Opportunity or Affirmative Action employer. k. Minority/Women Business Enterprise. Developer will use its best efforts to afford small businesses and minority and women-owned business enterprises the maximum practicable opportunity to participate in the performance of the Agreement. As used in the Agreement, the term “small business” means a business that meets the criteria set forth in Section 3(a) of the Small Business Act, as amended (15 U.S.C. 632), and “minority and women- owned business enterprise” means a business at least fifty-one percent (51%) owned and controlled by minority group members or women. For the purpose of this definition, “minority group members” are Afro-Americans, Spanish-speaking, Spanish surnamed or Spanish-heritage Americans, Asian-Americans, and American Indians. Developer may rely on written representations by businesses regarding their status as minority and female business enterprises in lieu of an independent investigation. l. Nondiscrimination. Developer shall comply with the federal requirements and nondiscrimination provisions in 24 C.F.R. § 92.350, which include requirements on nondiscrimination and equal opportunity, disclosure requirements, debarred, suspended or ineligible contractors, and maintaining a drug-free workplace. 4. Environmental. a. Air and Water. Developer shall comply with the following regulations insofar as they apply to the performance of the Agreement: Clean Air Act, 42 U.S.C. 7401, et seq.; Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq., as amended, 1318 relating to inspection, monitoring, entry, reports, and information, as well as other requirements specified in said Section 114 and Section 308, and all regulations and guidelines issued thereunder; and the U.S. Environmental Protection City regulations pursuant to 40 CFR Part 50, as amended. b. Flood Disaster Protection Act of 1973. Developer shall assure that for activities located in an area identified by FEMA as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained. c. Lead-Based Paint. Developer shall comply with the Lead-Based Paint Regulations referenced in 24 C.F.R. 92.355, including 24 C.F.R. Part 35, et. al. d. Historic Preservation. Developer shall comply with the historic preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the procedures set forth in 36 C.F.R. Part 800, Advisory Council on Historic Preservation Procedures for Protection of Historic Properties and related laws and Executive Orders, insofar as they apply to the performance of this Agreement. In general, this requires concurrence from the State Historic Preservation Officer for all rehabilitation and EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS demolition of historic properties that are fifty years old or older or that are included on a federal, state, or local historic property list. e. Limitation on Activities Pending Clearance. In accordance with 24 C.F.R. § 58.22 entitled “Limitations on activities pending clearance,” neither a recipient nor any participant in the development process, including public or private nonprofit or for-profit entities, or any of their contractors, may commit HUD assistance under a program listed in 24 C.F.R. § 58.1(b) on an activity or project until HUD or the state has approved the recipient’s Request for Release of Funds (RROF) and the related certifications have been approved. Neither a recipient nor any participant in the development process may commit non-HUD funds or undertake an activity or project that would have an adverse environmental impact or limit the choice of reasonable alternatives. Upon completion of environmental review or receipt of environmental clearance, City shall notify Developer. HUD funds shall not be utilized before this requirement is satisfied. The environmental review or violation of the provisions may result in approval, modification of cancellation of the Loan. If a project or activity is exempt under 24 C.F.R. § 58.34, or is categorically excluded (except in extraordinary circumstances) under 24 C.F.R. § 58.35(b), no RROF is required and the recipient may undertake the activity immediately after the City has documented its determination that each activity or project is exempt and meets the conditions specified for such exemption under this section by issuing a Notice to Proceed. 5. Uniform Administrative Requirements. Developer shall comply with applicable uniform administrative requirements as described in 24 C.F.R. §§ 92.205. 6. Other Program Requirements. Developer shall carry out each activity under the Agreement in accordance with all applicable federal laws and regulations described in Subpart H of 24 C.F.R. § 92 except for City’s responsibility for initiating the environmental review process under the provisions of 24 C.F.R. Part 58. 7. Project Requirements. Developer shall comply with all project requirements set forth in 24 C.F.R. §§ 92.250-92.258, as applicable in accordance with the type of project assisted. 8. Property Standards. Developer shall perform any construction work and maintain the Project units in compliance with the property standards in 24 C.F.R. § 92.251 and the lead-based paint requirements in 24 C.F.R. § 92 Part 35, Subparts A, B, J, K, M and R, as applicable. 9. Records and Reports. Developer shall provide to City all records and reports relating to the Program Activities that may be reasonably requested by City in order to enable it to perform its recordkeeping and reporting obligations pursuant to the HOME Requirements, including 24 C.F.R. §§ 92.508 and 92.509. 10. Conflict of Interest. Developer will comply with 2 C.F.R. Part 200 and 24 C.F.R. 84.42, 85.36 and 92.356, as applicable, regarding the avoidance of conflict of interest, which provisions include (but are not limited to) the following: i. Developer shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds. EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS ii. No employee, officer or agent of the Developer shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. iii. No covered persons who exercise or have exercised any functions or responsibilities with respect to HOME-assisted activities, or who are in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the HOME-assisted activity, or with respect to the proceeds from the HOME-assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a “covered person” includes any person who is an employee, agent, consultant, officer, or elected or appointed official of the Grantee, the Developer, or any designated public agency. 11. Affirmative Marketing. If the Loan will be used for housing containing 5 or more assisted units, Developer shall establish for City’s review and approval a plan and procedures to affirmatively market the units. The objective of the plan shall be to provide information and attract eligible persons from all racial, ethnic and general groups in the housing market area to the available housing. In connection therewith, Developer shall perform those affirmative marketing responsibilities set forth in 24 C.F.R. § 92.351(a) and the marketing plan shall include the following: a. methods for informing the public, owners, and potential tenants about federal fair housing loans and the City’s affirmative marketing policy; b. requirements and practices Developer must adhere to in order to carry out the affirmative marketing procedures and requirements; c. procedures to be used by Developer to inform and solicit applications from persons in the housing market area that are not likely to apply for the housing without special outreach; d. records that will be kept describing actions taken by Developer to affirmatively market units and records to assess the results of those actions; and e. a description of how Developer will assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative market ing requirements are not met. 12. Displacement. Consistent with the other goals and objectives of Subpart H of 24 C.F.R. § 92, Developer shall take all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of the Program Activities. 13. Debarment and Suspension. As required in 24 C.F.R. § 92.357, Developer shall comply with all debarment and suspension certifications. EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS 14. Enforcement of Agreement. In addition to the other provisions set forth in the Agreement, City shall have the authority to enforce Developer’s obligation to comply with the HOME Requirements. 15. Return of HOME Funds. Upon the completion of the Project or earlier termination of the Agreement, Developer shall transfer to City any HOME funds on hand for which expenses have not been incurred and any accounts receivable attributable to the use of HOME funds. In addition to the foregoing, in the event the expenses for which any disbursement of Loan funds are disbursed to Developer are not incurred by Developer within thirty (30) days after City’s (or escrow holder’s) disbursement to Developer, or such longer time as City approves in its sole discretion, City shall have the right to require that Developer immediately return the Loan proceeds to City. Disbursement of proceeds by the City to an escrow holder shall not constitute disbursement to Developer for purposes of this provision. 16. Monitoring. Not less than once per year, City shall review Developer’s activities and operations under the Agreement and Developer’s compliance with the HOME Requirements. Such review may include an on-site inspection of the Project units (including unit interiors). If such an on-site inspection of the Project units is to be undertaken, City shall coordinate such inspection with Developer. The monitoring required pursuant to this paragraph shall be in compliance with the requirements of 24 C.F.R. § 92.504. 17. Tenant Participation Plan. Developer shall provide to City for approval the form of the lease agreement to be used for the rental units, which lease must be fair and provide for a grievance procedure. In addition, Developer shall provide to City for approval a plan that provides for tenant participation in management decisions. (24 C.F.R § 92.303.) 18 Anti-Lobbying Certification. By its execution of the Agreement, Developer hereby certifies that: i. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. ii. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions. iii. It will require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. This certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. At the request of City, Developer shall execute a separate document that contains the certifications set forth above. 19. Drug-Free Workplace Requirements. Developer shall comply with and be subject to the requirements of the federal drug -free workplace requirements, which include the following actions be taken : i. Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the grantee’s workplace and specifying the actions that will be taken against employees for violation of such prohibition. ii. Establishing an ongoing drug-free awareness program to inform employees about: (a) the dangers of drug abuse in the work place; (b) the grantee’s policy of maintaining a drug-free workplace; (c) any available drug counseling, rehabilitation, and employee assistance programs; and (d) the penalties that may be imposed upon employees for drug abuse violations occurring in the workplace. iii. Making it a requirement that each employee to be engaged in the performance of the grant be given a copy of the statement required by paragraph (i). iv. Notifying the employee in the statement required by paragraph (i) that, as a condition of employment under the grant, the employee will: (a) abide by the terms of the statement; and (b) notify the employer in writing of his or her conviction for a violation of a criminal drug statute occurring in the workplace no later than five calendar days after such conviction. v. Notifying the agency in writing, within ten calendar days after receiving notice under sub-paragraph (iv) (b) from an employee or otherwise receiving actual notice of such conviction. Employers of convicted employees must provide notice, including position title, to every grant officer or other designee on whose grant activity the convicted employee was working, unless the Federal agency has designated a central point for the receipt of such notices. Notice shall include the identification number(s) of each affected grant. vi. Taking one of the following actions, within 30 calendar days of receiving notice under subparagraph (iv)(b), with respect to any employee who is so convicted: (a) taking appropriate personnel action against such an employee, up to and including termination, consistent with the requirements of the Rehabilitation Act of 1973, as amended; or (b) requiring such employee to participate satisfactorily in a drug abuse EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS assistance or rehabilitation program approved for such purposes by a Federal, State or local health, law enforcement, or other appropriate agency. vii. Making a good faith effort to continue to maintain a drug-free workplace through implementation of paragraphs (i), (ii), (iii), (iv), (v), and (vi). 20. Procurement. If applicable, Developer will comply with the procurement standards under 24 CFR 85.36 for governmental subrecipients and 24 CFR 84.40-48 for subrecipients that are non-profit organizations. Developer shall comply with all existing and future City policies concerning the purchase of equipment. 21. Hatch Act. The Developer agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Title V United States Code Section 1501 et seq. 22. Labor Provisions. a. Section 3 of the Housing and Community Development Act of 1968. Developer shall comply with and cause its contractors and subcontractors to comply with the requirements of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. § 1701u), the HUD regulations issued pursuant thereto at 24 C.F.R, Part 135, and any applicable rules and orders of HUD issued thereunder. The Section 3 clause, set forth in 24 C.F.R § 135.38 provides: i. The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. § 1701u (Section 3). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing. ii. The parties to this contract agree to comply with HUD’s regulations in 24 C.F.R. Part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the Part 135 regulations. iii. The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding if any, a notice advising the labor organization or workers’ representative of the contractor’s commitments under this Section 3 clause, and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference, shall set forth minimum number and job titles subject to hire, availability of apprenticeship and training positions, EXHIBIT 5 THE CROSSROADS AT WASHINGTON EXHIBIT G HOME FUNDING ADDITIONAL TERMS AND CONDITIONS the qualifications for each; and the name and location of the person(s) taking applications for each of the positions; and the anticipated date the work shall begin. iv. The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 C.F.R. Part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 C.F.R. Part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 C.F.R. Part 135. v. The contractor will certify that any vacant employment positions, including training positions, that are filled (1) after the contractor is selected but before the contract is executed, and (2) with persons other than those to whom the regulations of 24 C.F.R. Part 135 require employment opportunities to be directed, were not filled to circumvent the contractor’s obligations under 24 C.F.R. Part 135. vi. Noncompliance with HUD’s regulations in 24 C.F.R Part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts. Developer shall abide by the Section 3 clause set forth above and will also cause this Section 3 clause to be inserted in all contracts relating to the construction of the Project. EXHIBIT 5 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] NEIGHBORHOOD STABILIZATION PROGRAM LOAN AGREEMENT by and between the CITY OF SANTA ANA And Washington Santa Ana Housing Partners, L.P. a California limited partnership (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) Dated: June 21, 2022 EXHIBIT 6 i The Crossroads at Washington City NSP Loan Agreement TABLE OF CONTENTS Section 1. DEFINITIONS AND INTERPRETATION ................................................. 2 Section 2. [RESERVED] ............................................................................................... 8 Section 3. SCOPE OF WORK/ PROJECT BUDGET .................................................. 9 Section 4. [RESERVED] ............................................................................................... 9 Section 5. LOANS ......................................................................................................... 9 Section 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS ................ 9 Section 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY ............................................................................................................. 14 Section 8. RESERVED. ............................................................................................... 19 Section 9. GENERAL PROVISIONS AND WARRANTIES .................................... 19 Section 10. CONDITIONS FOR CONSTRUCTION ................................................... 23 Section 11. FEDERAL COVENANTS ......................................................................... 26 Section 12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR OF PROPERTY ....................................................................................... 31 Section 13. NONDISCRIMINATION COVENANTS ................................................. 34 Section 14. ENVIRONMENTAL MATTERS .............................................................. 34 Section 15. OTHER AFFIRMATIVE COVENANTS .................................................. 35 Section 16. OTHER NEGATIVE COVENANTS ......................................................... 37 Section 17. CERTIFICATE OF COMPLETION .......................................................... 38 Section 18. INDEMNIFICATION................................................................................. 38 Section 19. INSURANCE, CASUALTY AND CONDEMNATION ........................... 41 Section 20. DEFAULTS AND REMEDIES ................................................................. 45 Section 21. MISCELLANEOUS ................................................................................... 48 EXHIBIT 6 1 The Crossroads at Washington City NSP Loan Agreement LOAN AGREEMENT NEIGHBORHOOD STABILIZATION PROGRAM THIS LOAN AGREEMENT (the "Agreement") dated, for identification purposes only, as of June 21, 2022, is made and entered into by and between the City of Santa Ana, a charter city and municipal corporation (referred to herein as “City”) and Washington Santa Ana Housing Partners, L.P., a California limited partnership (referred to herein as “Developer”), with reference to the following: RECITALS: A. This Agreement is made pursuant to the authority of Title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 {February 17, 2009}) (Recovery Act) and sections 2301-2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-289 {July 30, 2008}) (HERA). Section 2301-2304 of HERA is known as the "Neighborhood Stabilization Program" or "NSP" with money funded through the Program as "NSP Funds"; B. The Housing Authority of the City of Santa Ana (“Housing Authority”) owns one parcel located at 1136 East Washington Avenue (APN 398-092-14) totaling approximately 1.43 acres of land area (“Housing Authority Parcel”). The County of Orange (“County”) owns an adjacent parcel (APN 398-092-13) totaling approximately 0.85 acres of land area (“County Parcel”). The two parcels will be merged into one parcel (“Property”) and co- owned by the Housing Authority and the County as Tenants-In-Common. C. The Housing Authority and the County will ground lease the Property to the Developer (the “Ground Lease”) for sixty-two (62) years from the Certificate of Completion, but no more than sixty-five (65) years from the date of execution of the Ground Lease. D. In furtherance of the NSP Program, Developer has applied to the City for a loan with which to: 1. provide deeper affordability for a longer term, as well as acquire and construct the Property, and 2. thereafter to maintain, operate and professionally manage the Property as decent, safe, sanitary and affordable rental housing. E. City, on certain terms and conditions, desires to make such loan to Developer in order to make possible the construction of the Property, to expand the supply of decent, safe, sanitary and affordable housing. F. If there is any discrepancy between Federal and State guidelines with regard to any of the terms and conditions contained herein, the more stringent shall apply. G. This Agreement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Agreement, the Affordability Restrictions EXHIBIT 6 2 The Crossroads at Washington City NSP Loan Agreement on Transfer of Property, the City/NSP Loan Note and the City/NSP Loan Deed of Trust provide a means of enforcement by the City if Developer is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c) (13)]. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Developer agree as follows: Section 1. DEFINITIONS AND INTERPRETATION 1.1. Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above and in all other Loan Documents, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Section 1. "Affordable Housing" means housing operated in accordance with the requirements of 24 CFR 92.252, 24 CFR 570, and the rents governed by HUD. “Affordability Period” means the period beginning upon the issuance of the Certificate of Completion and ending on the date which is sixty-two (62) years after the issuance of the Certificate of Completion during which the Affordability Restrictions on Transfer of Property remain in effect. "Affordability Restrictions on Transfer of Property" means that certain document affecting real property benefiting the City, attached hereto as Exhibit F. “Affordable Rent” means the monthly rents that are set forth in more detail in Section 7 of this Agreement. "Building Permit" means the building permit(s) issued by City and required for the construction, if any. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public to conduct City affairs. "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 31. "Certificate of Completion" has the meaning set forth in Article 17. "City" means the City of Santa Ana, California, a charter city and municipal corporation. "City/NSP Loan" means the loan to be made to Developer by City from NSP funds pursuant to Article 5 of this Agreement. EXHIBIT 6 3 The Crossroads at Washington City NSP Loan Agreement "City/NSP Loan Deed of Trust" means the deed of trust encumbering the Property, in the form attached hereto as Exhibit D, to be executed by Developer pursuant to Section 5.B.2 in order to secure the City/NSP Loan Note. "City/NSP Loan Note" means that certain promissory note in the original principal amount of $1,637,420.00, in the form attached hereto as Exhibit E, to be executed by Developer in favor of City to evidence the obligation of Developer to repay the City/NSP Loan. "Close of Escrow" shall mean the date upon which the City/NSP Loan Deed of Trust is recorded in the Official Records of the County. "Closing Statement" means the final statement of Developer's Escrow account for the purchase and sale of the Property pursuant to the Purchase Contract. “Construction Period” means the period of time commencing with the Close of Escrow and ending on the Conversion Date. “Conversion Date” means the date on which the Senior Construction Loan is purchased by the Senior Permanent Lender and it converts from a construction loan to a permanent loan. "County" means the County of Orange, California. "Developer" means Washington Santa Ana Housing Partners, L.P., a California limited partnership, its successors and assigns. "Developer's Representative" shall mean the President of the Administrative General Partner or his/her designee. “Environmental Reports” [list to be provided under separate cover] "Escrow Holder" means Old Republic . "Event of Default" has the meaning set forth in Section 20.1. "Executive Director" means the Executive Director of the Community Development Agency, or his/her designee. "Extremely Low Income" means an adjusted income that does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. “General Partner(s)” means the General Partner(s) of Developer, Supportive Housing LLC (the “Managing General Partner”), Related/Washington Santa Ana Development Co., LLC (the “Administrative General Partner”), and their respective successors and assigns. EXHIBIT 6 4 The Crossroads at Washington City NSP Loan Agreement "Governmental Authority" means any governmental or quasi-governmental agency, board, bureau, commission, department, court, administrative tribunal or other instrumentality or authority, and any public utility. "Hazardous Materials" means any flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended including: (i) poses a hazard to the Project or to persons on the Project or (ii) causes the Project to be in violation of any Hazardous Substance Law; (iii) asbestos in any form; (iv) urea formaldehyde foam insulation; (v) transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls; (vi) radon gas; (vii) any chemical, material, or substance defined as or included in the definition of “hazardous substance,” “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous waste,” or “toxic substances” or words of similar import under any applicable local, state, or federal law or under the regulations adopted or publications promulgated pursuant to those laws, including, but not limited to, any Hazardous Substance Law, Code of Civil Procedure § 564, as amended from time to time, Code of Civil Procedure § 726.5, as amended from time to time, Code of Civil Procedure §736, as amended from time to time, and Civil Code § 2929.5, as amended from time to time; (viii) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any governmental authority or which may pose a hazard to the health and safety of the occupants of the Project or the owners or occupan ts of property adjacent to or surrounding the Project, or any other person coming on the Project or any adjacent property; and (ix) any other chemical, material, or substance that may pose a hazard to the environment flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including, without limitation the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et. seq., as amended. The term Hazardous Substance shall not include materials or substances commonly used in the construction and operation of an apartment complex in accordance with applicable Hazardous Substance Law. EXHIBIT 6 5 The Crossroads at Washington City NSP Loan Agreement “Hazardous Substance Law” means any federal, state, or local law, ordinance, regulation, or policy relating to the environment, health, and safety, any Hazardous Materials (including, without limitation, the use, handling, transportation, production, disposal, discharge, or storage of the substance), industrial hygiene, soil, groundwater, and indoor and ambient air conditions or the environmental conditions on the Project, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 [42 USCS §§ 9601 et seq.], as amended from time to time; the Hazardous Substances Transportation Act [49 USCS §§ 1801 et seq.], as amended from time to time; the Resource Conservation and Recover y Act [42 USCS §§ 6901 et seq.], as amended from time to time; the Federal Water Pollution Control Act [33 USCS §§ 1251 et seq.], as amended from time to time; the Hazardous Substance Account Act [Health and Safety Code §§ 25300 et seq.], as amended from time to time; the Hazardous Waste Control Law [Health and Safety Code §§ 25100 et seq.], as amended from time to time; the Medical Waste Management Act [Health and Safety Code §§ 25015 et seq.], as amended from time to time; and the Porter-Cologne Water Quality Control Act [Water Code §§ 13000 et seq.], as amended from time to time. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "Improvements" means all improvements and fixtures now and hereafter comprising any portion of the Property, including, without limitation, landscaping, trees and plant materials; and offsite improvements (including, without limitation, streets, curbs, storm drains, and adjacent street lighting). "Indemnitees" has the meaning set forth in Section 14.5. "Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments, injunctions, decrees or awards of the United States or any state, county, municipality or other Governmental Authority. "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest). “Limited Partner” means the Tax Credit Investor and any other Limited Partner(s) or Special Limited Partner(s) of Developer, and their successors and assigns. “Loan Documents” means, collectively, this Agreement, the City/NSP Loan Note, the City/NSP Loan Deed of Trust, the Affordability Restrictions on Transfer of Property, and any other agreement, document, or instrument that the City requires in connection with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement. “Low Income” means an adjusted income that does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. EXHIBIT 6 6 The Crossroads at Washington City NSP Loan Agreement “Median Income for the Area” means the median income for the Orange County, California PMSA as most recently determined by HUD. Also may be referred to interchangeably in the Loan Documents as “Area Median Income” or “AMI”. 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 City shall provide the Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HUD and the State. "Neighborhood Stabilization Program (NSP)” has the meaning set forth in the Recitals above. “Neighborhood Stabilization Program (NSP) Regulations” has the meaning set forth in the Recitals above. "Operating Reserves" shall mean reserves maintained during the Term of Agreement and funded out of Residual Receipts, loan advances, equity, or other sources and set aside for taxes and assessments, insurance premiums, operating expenses, and debt service. Operating Reserves shall not exceed the amount required to pay three (3) months of operating expenses and three (3) months of mandatory debt service, or such higher amount required by a project lender or by the Tax Credit Investor. “Partnership Agreement” means the Agreement of Amended and Restated Agreement of Limited Partnership of Borrower, dated as of [ _________ ], as said Partnership Agreement may be amended from time to time. "Permitted Encumbrances for the Affordable Housing Restrictions" means, collectively, the Senior Loan Deed of Trust and all other title exce ptions and limitations with respect to the Property hereafter approved by the Executive Director in writing. "Permitted Encumbrances for the City Loan Deed of Trust" means, collectively, the Senior Loan Deed of Trust and all other title exceptions and lim itations with respect to the Property hereafter approved by the Executive Director in writing. "Project" means the acquisition of a leasehold interest and construction of the Property by Developer pursuant to this Agreement. "Project Budget" means the line-item budget for the Project attached hereto as Exhibit C, as modified from time to time in accordance with this Agreement. "Project Costs" means all costs of any nature incurred in connection with the Project in accordance with generally accepted accounting principles. "Property" means the Property that is located at 1126, 1136 and 1146 East Washington Avenue, within the City of Santa Ana, and is more fully described in the “Legal Description” of the Property attached hereto as Exhibit A and incorporated herein by reference. EXHIBIT 6 7 The Crossroads at Washington City NSP Loan Agreement “Replacement Reserves” shall mean reserves maintained during the Term of Agreement and funded out of Residual Receipts, loan advances, equity, or other sources and set aside for replacement of roofing, furniture, fixtures, equipment and other capital expenditures. The annual amount set aside for Replacement Reserves shall be a minimum of two hundred fifty dollars ($250) per unit but shall not exceed five hundred dollars ($500) per unit and may increase by 3% per year, or such higher amount as may be required by the Tax Credit Investor or the Senior Lender and approved by City (such approval not to be unreasonably withheld or delayed). “Residual Receipts” has the meaning set forth in the City/NSP Loan Note. "Restricted Unit” means each of the eighty-five (85) dwelling units restricted to Extremely Low Income households per this Agreement. “Senior Construction Lender” means U.S. Bank National Association. or such senior construction lender designated by the Developer and approved in advance by the City for the Project. “Senior Construction Loan” means the construction loan made by Senior Construction Lender to Borrower. "Senior Lender" means the Senior Construction Lender prior to the Conversion Date and, thereafter, the Senior Permanent Lender during the remainder of the Term of Agreement, or any other holder of the Senior Loan Note(s) or any refinancing of the Senior Loan Note(s). "Senior Loan" shall mean the Senior Construction Loan being made by Senior Lender concurrent to the City Loan for payment of a portion of the acquisition of a leasehold interest in the Project (and related costs) and new construction costs, the Senior Permanent Loan and shall include any subsequent loan that refinances the initial Senior Loan. "Senior Loan Deed of Trust" means the deed of trust securing the Senior Loan by encumbering the Property, as the same may be amended and restated from time to time. "Senior Loan Documents" means, collectively, the loan agreement governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document or instrument that the Senior Lender requires in connection with the Senior Loan, as the same may be amended and restated from time to time. "Senior Loan Note" means the promissory note evidencing the Senior Loan from Senior Lender, as the same may be amended and restated from time to time. "Senior Permanent Lender” means California Community Reinvestment Corporation, a California nonprofit public benefit corporation, or such senior permanent EXHIBIT 6 8 The Crossroads at Washington City NSP Loan Agreement lender as may be designated by Developer and approved in advance by the City as the senior permanent lender for the Project. “Senior Permanent Loan” means the Senior Construction Loan following its conversion from a construction to a permanent loan following the satisfaction of certain conversion conditions and the purchase of such Senior Construction Loan by Senior Permanent Lender. “Tax Credit Investor” means U.S. Bancorp Community Development Corporation, a Minnesota corporation. “Tax Credit Rules” means the provisions of Section 42 of the Internal Revenue Code and/or, if applicable, California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5, et seq., as the foregoing may be amended from time to time, to the extent applicable to the Project and the rules and regulations implementing the foregoing, including the regulations set forth in Title 4 Cal. Code Regs. Section 10300, et seq. “Term of Agreement” the terms and conditions contained herein shall commence upon the date first written above and remain in effect for sixty-two (62) years from the issuance of the Certificate of Completion. “Very Low Income” means an adjusted income that does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HUD. 1.2. Singular and Plural Terms. Any defined term used in the plural in this Agreement or any other City Loan Document shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class. 1.3. References and Other Terms. Any reference to this Agreement or any Loan Document shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The term "document" is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms "including" and "include” mean "including (include) without limitation." 1.4. Exhibits Incorporated. All attachments and exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference. Section 2. [RESERVED] EXHIBIT 6 9 The Crossroads at Washington City NSP Loan Agreement Section 3. SCOPE OF WORK/ PROJECT BUDGET Developer shall comply with this Section until the Certificate of Completion is issued. A “Scope of Work” for the Property is attached hereto as Exhibit B. Any change to the Scope of Work requested by the Developer, which would result in a change to the Project Budget in excess of ten percent (10%) of any individual line item or in excess of five percent (5%) of the aggregate budget, shall be subject to the prior written approval of the Executive Director. A line-item budget for the Project, including a summary statement of sources and uses of funds, is incorporated into Exhibit C (the "Project Budget"). Any material change to the Project Budget in excess of ten percent (10%) of any individual line item or in excess of five percent (5%) of the aggregate budget shall be subject to the prior written approv al of the Executive Director which approval will not be unreasonably withheld, conditioned or delayed and if not granted or denied within five (5) Business Days, shall be deemed approved; provided, however, that in all events, Developer shall at all times obtain and maintain all required permits and approvals from the City’s Planning and Building Agency. Notwithstanding the foregoing, the City’s approval of a change order shall not be required unless the approval of the Senior Lender is required with respect to such change order. Section 4. [RESERVED] Section 5. LOANS 5.1. CITY LOAN: (a) Amount and Purpose. Subject to the terms and conditions of this Agreement, City agrees to make a loan of NSP funds to Developer in the principal amount of up to $1,637,420 (the "City/NSP Loan") for the construction of the Property. (b) City/NSP Loan Note and Deed of Trust. The City/NSP Loan shall be evidenced by the City/NSP Loan Note in the form attached hereto as Exhibit E. The City/NSP Loan shall be secured by the City/NSP Loan Deed of Trust in the form attached hereto as Exhibit D. The City/NSP Loan Deed of Trust shall be a deed of trust encumbering the Property, subordinate to the Senior Loan(s) made to Developer and the Senior Loan Documents. (c) City/NSP Loan Terms. The terms and conditions of the City/NSP Loan are as set forth in the City/NSP Loan Note, which is a residual receipts note. The NSP affordability period is sixty-two (62) years after the issuance of the Certificate of Completion. Section 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS Developer shall comply with this Section until the Certificate of Completion is issued. EXHIBIT 6 10 The Crossroads at Washington City NSP Loan Agreement 6.1. Conditions Precedent. City's obligation to disburse the City/NSP Loan is subject to the satisfaction, or waiver by the Executive Director, of the following conditions precedent: (a) Loan Documents. Developer shall have delivered to the Escrow Holder, signed by the authorized officer or officers of Developer, with such signature(s) acknowledged where necessary, each of the following documents: (i) this Agreement; (ii) The City/NSP Loan Note; (iii) The City/NSP Loan Deed of Trust; (iv) The Affordability Restrictions on Transfer of Property; (v) The Project Budget; (vi) The Ground Lease; and (vii) The City has received and approved all required Environmental Reports. All other documents and instruments reasonably required by the City to be executed and delivered, all in form and substance reasonabl y satisfactory to the City. (b) Title Insurance. City shall have received an LP-10 ALTA Lender’s loan policy of title insurance (2006 edition), or evidence of a commitment therefore satisfactory to City, issued by First American Title Insurance Company and in form and substance satisfactory to City, together with all endorsements and binders required, naming City as the insured, in a policy amount of not less than the City/NSP Loan Amount, showing Developer as the ground lessee of the Property and insuring the City/NSP Loan Deed of Trust to be a valid lien on the Property. This Agreement, the City/NSP Loan Note, and City/NSP Loan Deed of Trust shall be subordinate to the Senior Loan Note, Senior Loan Deed of Trust and the other Senior Loan Documents. (c) Intentionally Omitted. (d) Management Plan. The Developer shall have submitted and the City shall have approved a Management Plan ("Management Plan"). The Management Plan shall include a management contract with a manager approved in writing by the City for management of the Project and a plan for long-term marketing, operation, maintenance, repair and security of the Project, method of selection of tenants, and for rental policies in compliance with any applicable requirements, policies and procedures and with the Affordability Restrictions on Transfer of Property, along with any other policies or procedures required by the City. The Management Plan shall also include an initial budget for the Project. City hereby approves John Stewart Company as the initial property EXHIBIT 6 11 The Crossroads at Washington City NSP Loan Agreement manager. (e) Documents Recorded. This Agreement, the City/NSP Loan Deed of Trust and the Affordability Restrictions on Transfer of Property shall have been recorded in the Official Records of the County. This Agreement, and the City/NSP Loan Deed of Trust shall be subordinate to the Senior Loan Note, the Senior Loan Deed of Trust, and the other Senior Loan Documents. (f) Request for Notice. For the benefit of City, Escrow Holder shall have recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default"). (g) Insurance. City shall have received evidence satisfactory to the City that all of the policies of insurance required by Section 19 of this Agreement are in full force and effect. (h) Representations and Warranties. The representations and warranties of Developer contained in this Agreement and the other Loan Documents shall be correct in all material respects as of the Close of Escrow as though made on and as of that date, and if requested by the Executive Director, City shall have received a certificate to that effect signed by Developer's Representative. (i) No Default. No Event of Default by Developer shall have occurred and be continuing, and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer under this Agreement, and if requested by the Executive Director, City shall have received a certificate to that effect signed by Developer's Representative. 6.2. Disbursement Procedures for Loan. The City/NSP Loan proceeds shall be disbursed through Escrow to finance the construction of the Property (as evidenced in Exhibit C). The City/NSP Loan proceeds shall not be used for any purpose other than for eligible construction costs, including a developer fee and soft costs related to development of the Project (costs all subject to City’s prior review). One hundred (100%) of the City/NSP Loan proceeds will be disbursed by City to Developer after execution and recording of this Agreement. 6.3. First Disbursement. The City's obligation to make the first disbursement of the construction portion is subject to satisfaction of the following conditions precedent: (a) General Contractor. If the Executive Director has not yet approved the General Contractor, the Executive Director shall have approved the identity and qualifications of the General Contractor which approval will not be unreasonably withheld, conditioned or delayed. (b) Construction Contract. If the Executive Director has not yet approved the Construction Contract, the Executive Director shall have approved the Construction Contract which approval will not be unreasonably withheld, conditioned or EXHIBIT 6 12 The Crossroads at Washington City NSP Loan Agreement delayed. 6.4. Termination for Failure of Condition. If (a) any of the conditions set forth herein are not timely satisfied within no more than ninety (90) days of the date of this Agreement or waived by the Executive Director, and (b) City is not in default under this Agreement, City may terminate this Agreement without any further liability on its part by giving written notice of termination to Developer. Upon the giving of such notice, all principal, interest and other amounts owing under the City/NSP Loan Note shall be immediately due and payable, regardless of any other specified due date. 6.5. [Reserved.] 6.6. [Reserved.] 6.7. Waiver of Conditions. The conditions set forth pertaining to City’s obligation to make disbursements of the rehabilitation or construction portion are for City's benefit only and the Executive Director may waive all or any part of such rights by written notice to Developer. 6.8. Waiver of Disbursement Conditions. A waiver of a disbursement condition may only be provided with written approval by the City. 6.9. Modification of Disbursement Conditions and Procedures. The Executive Director shall have the authority to modify the disbursement conditions and procedures set forth herein in order to conform them to the payment provisions of the Construction Contract. 6.10. Other Terms and Conditions of Loan. (a) The City/NSP Loan Note shall become immediately due and payable, in the event of any of the following: (i) failure to complete the Project within four (4) years of the Close of Escrow; (ii) Restricted units must achieve initial occupancy within 18 months of the issuance of the Certificate of Completion; (iii) violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; (iv) an Event of Default by Developer which is not timely cured after expiration of any applicable notice and cure periods pursuant to the terms of this Agreement. 6.11. Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all recording fees and charges on any document recorded pursuant to this Agreement, and (c) the premium for the title insurance required hereunder. 6.12. Approval of Additional Financing. Except as to the Senior Loan, the loans secured by permitted encumbrances for the City Loan Deed of Trust and as otherwise EXHIBIT 6 13 The Crossroads at Washington City NSP Loan Agreement described herein or in the policy of title insurance issued to the City at loan closing, the Developer shall not place or permit (either voluntarily or involuntarily) to be placed any encumbrances, including, but not limited to any additional liens or financing of any kind on the Project without the prior written discretionary consent of the City. 6.13. Cost Savings Obligation. (a) Subject to compliance with the Tax Credit Rules and the approval of the California Tax Credit Allocation Committee (“TCAC”), Developer hereby agrees to provide and pay to the City the payment described in this Section 6.13 in connection with Cost Savings, if any, from the Project in an amount to be determined based on the “Audit” (as defined in Section 6.13(b) below and in accordance with 6.13) to be conducted upon completion of construction for the Project. Payment of the City Share of Cost Savings (defined below) shall be made at the time set forth therefore in Section 6.13(d) below. Provided that the payment is timely and fully made in accordance with Section 6.13(d), the amount paid for the City Share of Cost Savings shall be credited against the amount then outstanding on the City/NSP Loan Note. (b) Audit to Determine Cost Savings and City Share of Cost Savings. The actual amount of “Cost Savings” (as defined below) to be paid to the City and retained by the Developer shall be determined after the Audit, as hereafter defined and described, and the amount of such Cost Savings shall be equal to the amount by which the total sources of permanent financing for the Project exceed the costs of development incurred for the Project including without limitation payment of the Developer Fee (resulting amount constituting “Cost Savings”). From the total amount of Cost Savings, the Developer shall retain fifty percent (50%) and pay to City fifty percent (50%) (“City Share of Cost Savings”). If any of the other soft lenders request a share of Cost Savings, the City shall split the City Share of the Cost Savings (50%) on a pro rata basis with the other soft lender(s) that are requesting a share of Cost Savings. The pro rata distribution shall be based on the initial principal balances of each respective soft loan of the soft lender(s) that are requesting a share of Cost Savings. If none of the other soft lenders request a share of the Cost Savings, the City shall receive the full 50% of the Cost Savings. Within one hundred and eighty (180) days following the issuance of Form 8609 by TCAC, Developer shall cause its certified public accountant(s) to perform a final audit of the costs of development of the Project in accordance with the requirements of the Tax Credits and generally accepted auditing standards (GAAP) (“Audit”). If the Audit determines that the total sources of permanent financing for the Project (including long-term permanent debt and equity) exceed the total development cost for the Project required in connection with the development of the Project, such excess shall be considered the “Cost Savings” for the Project. (c) Allocation of Cost Savings Amount. First to Pay the City Share of Cost Savings as Payment of Principal on City/NSP Loan Note. Once determined by the Audit pursuant to Section 6.13 above, the full amount of Cost Savings shall be allocated and remitted in the following order: (a) first, Developer shall retain fifty (50%) of Cost Savings, and (b) second, Developer shall pay to the City the City Share of Cost Savings EXHIBIT 6 14 The Crossroads at Washington City NSP Loan Agreement which shall be utilized as principal payment due on the City/NSP Loan Note. (d) Timing of Allocation and Payment of Cost Savings. In the event of any Cost Savings, the payment of the City Share of Cost Savings shall become due and payable no later than sixty (60) days after Developer receives its final Tax Credit equity payment for the Project, and each of such payments shall be allocated and remitted in a lump sum, and as applicable credited toward the respective amount outstanding under the City/NSP Loan Note. 6.14. Standard Form Leases. On or before issuance of the Certificate of Completion, Developer shall submit to City for its written approval a standard form of residential lease to be used for leasing of the Project (the “Standard Lease”). The Standard Lease shall be in compliance with all applicable l aws and Developer shall be obligated to revise said Standard Lease from time to time to comply with any changes in said applicable laws. 6.15. Leasing Program. Developer shall market and lease the Project consistent with the Marketing Plan approved by the City. 6.16. No Changes. Developer shall not materially modify the approved Standard Lease or materially deviate from the approved rental rate schedule for the Units without the City’s prior written consent in each instance. 6.17. Landlord’s Obligations. Developer shall timely and in good faith, perform all obligations required to be performed by it as landlord under any lease affecting any part of the Project or any space within the Project. If any tenant at any time claims any breach of landlord’s obligations and the amount of such claim (in excess of available insurance coverage) is $10,000 or more, Developer shall promptly notify City of such claim. Section 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 7.1. Use Covenants and Restrictions. (a) The Project shall consist of eighty-six (86) units, including one (1) on-site manager’s unit. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assigns and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely-low- or very-low or low income households at rents affordable to such households for sixty-two (62) years from the issuance of the Certificate of Completion. The City permits the Developer to limit the eligibility and/or give preference to a particular segment of the population in accordance with 24 CFR 92.253(d). (b) At initial lease up, households in the Restricted units cannot earn more than the Extremely Low Income limits as published by HUD for the Orange County, California PMSA, adjusted for household size. Rental increases shall be in conformance with federal and state law. EXHIBIT 6 15 The Crossroads at Washington City NSP Loan Agreement (c) Initial rents for the Restricted Units must not exceed the applicable rents for the 30% Income Level for the Extremely Low Income units as published by the California Tax Credit Allocation Committee (TCAC). (d) Forty-three (43) Extremely Low Income Units, consisting of sixteen (16) studio units, twenty-six (26) one-bedroom units, and one (1) two-bedroom unit shall be designated as permanent supportive housing (PSH) units for persons experiencing homelessness. (e) Maximum Occupancy will be two (2) people per room plus one (1). Example for a two-bedroom unit, five (5) people would be maximum occupancy. (f) Developer must have a written lease between tenant and owner for a period of at least one year, unless a shorter period is mutually agreed upon. Leases must be consistent with Section 6.14. 7.2. Affordability Levels/Unit Mix: The affordability levels/unit mix for the Restricted Units in the Project are as follows: Unit Size 30% TCAC AMI No. Units Current Rent Studio 16 $711 1 Bedroom 26 $762 2 Bedroom 21 $915 3 Bedroom 17 $1,057 4 Bedroom 5 $1,179 Total 85 The remaining unit will be a 2-bedroom unit reserved for the on-site manager. (1) Annually with the financial statements, the Developer shall provide an annual report of rents and occupancy of all units, to verify compliance with affordability requirements. The affordable rents charged at the Project must comply with the most stringent of the standards set forth by TCAC as defined in Affordability Restrictions on Transfer of Property, and during the HOME Compliance Period, the HOME requirements for the HOME assisted units. A utility allowance must be deducted from the maximum affordable rent charged at the Project for each unit. EXHIBIT 6 16 The Crossroads at Washington City NSP Loan Agreement Initial rents may be recalculated to allowable rental amounts at the time of initial lease-up following completion of construction in accordance with any changes in allowable rent and income tables as published by HUD and TCAC. 7.3. Rent Increases. On an annual basis, the City shall provide Developer with the maximum allowable schedule of rents for the Property in accordance with changes in allowable rent and income tables published by HUD and TCAC. In no event can Developer charge any tenant more than such amount. All rent increases are subject to City approval pursuant to the terms of this Section. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in Section 7.1 and 7.2 above. Subject to the applicable requirements and provisions of, and changes to, Section 42 of the Code, if, upon recertification of the income of any tenant, the Developer determines that such tenant has an adjusted income exceeding 30% of the applicable Median Income for the Area, in each case, adjusted for household size, such tenant may be permitted to continue to occupy the unit at the rental rate as provided for in Sections 7.1 and 7.2 above, as applicable, until the tenant chooses to vacate the unit. After the unit is vacated, the Developer shall re-rent the unit to a tenant pursuant to the terms, covenants and conditions of this Agreement. 7.4. Prohibited Fees. The Developer and subsequent owner is prohibited from charging fees that are not customary, consistent with 24 CFR section 92.504(c)(3)(xi). The Developer and subsequent owner can charge reasonable application fees to prospective tenants; other fees only to the extent that they are reasonable and customary for the project area; and fees for services provided to tenants, provided that these services are not mandatory. 7.5. Operation and Maintenance of the Property. Solely at Developer’s expense, Developer agrees to maintain the Property in a clean and orderly condition and in good condition and repair and keep the Property free from any accumulation of debris and waste materials. If at any time Developer fails to maintain, or cause to be maintained, the Property as required by this section, and said condition is not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from the date of written notice from the City, unless such condition cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure, the City may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for such maintenance. The City shall inspect the Property annually after the date of issuance of the Certificate of Completion as described in Article 17 of this Agreement. During the Affordability Period, the Property must meet all applicable State and local codes. The Property must be free of all health and safety defects during the Affordability Period. EXHIBIT 6 17 The Crossroads at Washington City NSP Loan Agreement (a) Operation. During the Term of Agreement, Developer shall at all times operate on the Project an affordable housing rental facility in compliance with this Agreement and the Affordability Restrictions on Transfer of Property. (b) Maintenance. During the Term of Agreement, Developer agrees to maintain all interior and exterior improvements, including landscaping (and all abutting ground, sidewalks, roads, parking and landscape areas) on the Project in good condition, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with any Management Plan approved by the City under this Loan Agreement (such approval not to be unreasonably withheld or delayed) (including without limitation any landscape and signage plans), as the same may be amended from time to time, and all other applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having jurisdiction and all their respective departments, bureaus, and officials. Developer acknowledges the great emphasis the City places on quality maintenance to protect its investment and to provide quality affordable housing for its constituents and to ensure that all City-subsidized affordable housing projects within the City are not allowed to deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free from all graffiti and any accumulation of debris or waste material. Developer shall promptly make all repairs and replacements necessary to keep the Project in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. Developer shall not commit or permit any waste or deterioration of the Project, shall not abandon any portion of the Project, and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of damage to the Project. In the event that Developer breaches any of the covenants contained in this Section 7.5 and such default continues for a period of five (5) days after written notice from the City (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from the City (with respect to landscaping and building improvements), then City, in addition to whatever other remedies it may have under this Agreement, the other Loan Documents or at law or in equity, shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permit ted (but not required) to enter upon the Project and perform all acts and work necessary to protect, maintain and preserve the improvements and landscaped areas on the Project, in the amount of the expenditure arising from such acts and work of protection, maintenance, and preservation by City and/or reasonable costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by Developer to City upon demand. (c) Removal of Personal Property. During the Term of Agreement, Developer shall not cause or permit the removal from the Project of any items of Developer’s personal property (other than tools and equipment used in the operation of the Project) unless (i) no Event of Default remains uncured and (ii) Developer promptly substitutes and installs on the Project other items of equal or greater value in the operation of the Project, all of which shall be free of liens and shall be subject to the liens of the Deed of Trust and the Financing Statement and executes and delivers to City all documents EXHIBIT 6 18 The Crossroads at Washington City NSP Loan Agreement required by City in connection with the attachment of such liens to such items. Developer shall keep detailed records of such removal and shall make such records available to City upon written request from time to time. 7.6. Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, mental or physical disability, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any person claiming under or through him establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect for the term of the Agreement. 7.7. Loss of Project-Based Voucher Subsidy. It is anticipated that during the Term of Agreement the Project will maintain not less than fifteen (15) Project-Based Voucher (“PBV”) Restricted Units (“PBV Restricted Units”) provided by the Housing Authority, supported by Project-Based Section 8 rental subsidy payments and forty three (43) Project-Based Vouchers provided by Orange County (the “County PBV Restricted Units”) (the "Rental Subsidy"). If, during the Term of Agreement, there is a reduction, termination or nonrenewal of the Housing Authority’s or County’s Rental Subsidy through no fault of Developer, such that the Rental Subsidy shown on the Project Budget is no longer available (or available in a lesser amount), Developer may request approval of the City (a) to allow households with adjusted incomes that do not exceed sixty percent (60%) of AMI, adjusted for actual household size, to occupy the extremely-low income units (i.e., a unit previously restricted to households with adjusted incomes that do not exceed 30% of AMI), and (b) to increase the rent on one or more of the Restricted Units, to rents that are affordable to households with an adjusted income that does not exceed sixty percent (60%) of AMI, adjusted for household size appropriate for the Restricted Unit. The rent increase is subject to the following requirements: (a) concurrently with the request, Developer shall provide the City with evidence of the anticipated reduction, termination, or nonrenewal of the Rental Subsidy, (b) a Management Plan (as defined in Section 6.1(d) of this Agreement) for the Project for the City’s approval pursuant to Sections 6.1(d) and Exhibit F of this Agreement, showing the impact of the loss or reduction of the Rental Subsidy, (c) a proposed operating budget reflecting the rent increases (the “Operating Budget”), and (d) a description of efforts to obtain alternate sources of rent. The number of the Restricted Units subject to the rent increase and the amount of the proposed increase may not be greater than the number or amount required to ensure that the Project generates sufficient income to cover its operating costs, required deposits to replacement reserves, and debt service on approved financing as shown on the Operating Budget, and as is necessary to maintain the financial stability of the Project. In addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described above, Developer hereby agrees to the following: EXHIBIT 6 19 The Crossroads at Washington City NSP Loan Agreement (a) Developer shall use good faith commercially reasonable efforts to obtain alternative sources of rental subsidies and shall provide the City with annual progress reports on efforts to obtain alternative sources of rental subsidies that would allow the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall reduce the rents back to the original restrictions to the extent that the alternative rental subsidies provide sufficient income to cover the operating costs, required replacement reserves and debt service of the Project as shown on the Operating Budget. (b) Developer shall provide tenants in the Restricted Units with notice of any rent increase pursuant to this Section 7.7, and shall notify the tenant that if they have received a tenant-based voucher from the Housing Authority they may use the tenant-based voucher for their Restricted Unit. (c) All rent increases for the Restricted Units are subject to City approval pursuant to the terms of this Section 7.7. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in this Section 7.7. Notwithstanding the foregoing, rent increases for the PBV Restricted Units shall be subject to review and approval of the City. Developer shall give tenants of all Restricted Units written notice at least sixty (60) days prior to any rent increase. 7.8. Reserved. Section 8. RESERVED. Section 9. GENERAL PROVISIONS AND WARRANTIES 9.1. As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows, which representations and warranties are made solely by Developer and not by or on behalf of any partner of Developer: Formation, Qualification and Compliance. Supportive Housing LLC, the managing general partner of Developer: (a) is a limited liability company, validly existing and in good standing under the laws of the State of California; (b) has all requisite authority to conduct its business and own and lease its properties; and, (c) is qualified and in good standing in every jurisdiction in which the nature of its business makes qualification necessary or where failure to qualify could have a material adverse effect on its financial condition or the performance of its obligations under the Loan Documents. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with, any Governmental Authority that are necessary for the transaction of its business. 9.2. Execution and Performance of Loan Documents. (a) Developer has all requisite authority to execute and perform its EXHIBIT 6 20 The Crossroads at Washington City NSP Loan Agreement obligations under the Loan Documents. (b) The execution and delivery of Developer of, and the performance by Developer of its obligations under, each Loan Document has been authorized by all necessary action and does not and will not: (i) require any consent or approval not heretofore obtained of any person having any interest in Developer; (ii) violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws or other governing document applicable to Developer; (iii) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the City Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; (iv) violate any provision of any law presently in effect; or (v) constitute a breach or default under, or permit the acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or document to which Developer is a party or by which Developer or any of its property is bound. (c) Developer is not in default, in any respect that is materially adverse to the interests of City under the Loan Documents or that would have any material adverse effect on the financial condition of Developer or the conduct of its business, under any law, contract, lease or other agreement or document described in subsection (b). (d) No approval, license, exemption or other authorization from, or filing, registration or qualification with, any Governmental Authority is required which has not been previously obtained in connection with: (i) the execution of Developer of, and the performance by Developer of its obligations under, the Loan Documents; and (ii) the creation of the liens described in the Loan Documents. 9.3. Financial and Other Information. To the best of Developer’s knowledge, all financial information furnished to City with respect to Developer in connection with the City/NSP Loan (a) is complete and correct in all material respects as of the date of preparation thereof, (b) accurately presents the financial condition of Developer, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied or in accordance with such other principles or methods as are reasonably acceptable to City. To the best of Developer’s knowledge, all other documents and information furnished to City with respect to Developer, in connection with the City/NSP Loan, are correct and complete in all material respects insofar as completeness is necessary to give the City accurate knowledge of the subject matter. To the best of Developer’s knowledge EXHIBIT 6 21 The Crossroads at Washington City NSP Loan Agreement Developer has no material liability or contingent liability not disclosed to City in writing and there is no material lien, claim, charge or other right of others of any kinds (including liens or retained security titles of conditional vendors) on any property of Developer not disclosed in such financial statements or otherwise disclosed to City in writing. 9.4. No Material Adverse Change. There has been no material adverse change in the condition, financial or otherwise, of Developer since the dates of the latest financial statements furnished to City. Since those dates, Developer has not entered into any material transaction not disclosed in such financial statements or otherwise disclosed to City in writing. 9.5. Tax Liability. Developer has filed all required federal, state and local tax returns and has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to City in writing) other than taxes being promptly and actively contested in good faith and by appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities (including contested liabilities) in accordance with generally accepted accounting principles or in accordance with such other principles or methods as are reasonably acceptable to City. 9.6. Governmental Requirements. To the best of Developer’s knowledge, Developer is in compliance with all laws relating to the Property and all Governmental Authority approvals, including zoning, land use, planning requirements, and requirements arising from or relating to the adoption or amendment of, any applicable general plan, subdivision and parcel map requirement; environmental requirements, including the requirements of the California Environmental Quality Act and the National Environmental Policy Act and the preparation and approval of all required environmental impact statements and reports; use, occupancy and building permit requirements; and public utilities requirements. 9.7. Rights of Others. Developer is in compliance with all covenants, conditions, restrictions, easements, rights of way and other rights of third parties relating to the Property. 9.8. Litigation. There are no material actions or proceedings pending or, to the best of the Developer’s knowledge, threatened against or affecting Developer or any property of Developer before any Governmental Authority, except as disclosed to City in writing prior to the execution of this Agreement. 9.9. Bankruptcy. To the best of Developer’s knowledge, no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer. 9.10. Information Accurate. To the best of Developer’s knowledge, all information, regardless of its form, conveyed by Developer to City, by whatever means, is accurate, correct and sufficiently complete to give City true and accurate knowledge of its subject matter, and does not contain any material misrepresentation or omission. EXHIBIT 6 22 The Crossroads at Washington City NSP Loan Agreement 9.11. Conflicts of Interest. No member, official or employee of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she has a direct or indirect financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give, any third party any money or other consideration for obtaining this Agreement. 9.12. Nonliability of City Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer in the event of any default or breach by the City or for any amount that may become due to Developer or on any obligations under the terms of this Agreement. 9.13. Transfers. Developer expressly acknowledges and agrees that the City has only agreed to assist the Developer as a means by which to induce the acquisition/construction/development of the Property. During the Term of Agreement, except for a Permitted Transfer or except as otherwise permitted under the Loan Documents, Developer shall not sell or otherwise transfer the Project or any portion thereof, and none of the constituent general partners of Developer shall sell or otherwise transfer their interests in Developer, and none of the constituent general partners in a partnership that is a general partner in Developer shall sell or otherwise transfer their interest in such partnership without first obtaining the approval of the City, which consent the City may withhold or grant in the exercise of its reasonable and good faith discretion. The City shall not approve any such transfer request if the Developer is in default under any of the Loan Documents or the Management Plan. For purposes hereof, “Permitted Transfer” shall mean: (a) The granting of easements or licenses to any appropriate governmental agency or utility or permits to facilitate the development and/or operation of the Property; (b) A sale or transfer in connection with a foreclosure or deed in lieu of foreclosure of any senior deed of trust so long as the City is given notice as provided in Section 21.2 in order to exercise its remedies under Section 20.2; (c) The lease of any individual residential unit in the Project; (d) (i) A transfer of the Developer’s interest in the Property by foreclosure or deed in lieu of foreclosure to any bona fide third-party lender holding a lien encumbering the Property (or its nominee); and, (ii) following a foreclosure or a transfer of the Property by deed in lieu thereof, the first subsequent transfer to a third-party; (e) A transfer of limited partnership interests in Developer; (f) Transfer of the Property pursuant to the terms of a purchase option or right of first refusal executed in connection with Developer’s amended and restated agreement of limited partnership; and EXHIBIT 6 23 The Crossroads at Washington City NSP Loan Agreement (g) The removal of the general partner of Developer as permitted under Developer’s Partnership Agreement. 9.14. Applicable Law. This Agreement shall be interpreted, governed and enforced under federal and State of California laws. 9.15. Third Parties. This Agreement is made for the sole benefit of Developer and the City and their successors and assigns, and no other person or persons shall have any rights or remedies under or by reason of this Agreement or any right to the exercise of any right or power of the City hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to any claimant for labor performed or materials furnished in connection with the construction of the Property. 9.16. Control of Property. The parties acknowledge that the City has not at any time participated in any manner in the management or operation of the Property, and will not so participate at any time hereafter. Section 10. CONDITIONS FOR CONSTRUCTION Developer shall comply with this Section until the Certificate of Completion is issued. 10.1. Permits and Approvals. Developer shall diligently obtain all permits, including all building permits, licenses, approvals, exemptions and other authorizations of Governmental Agencies required in connection with the construction of the Property. 10.2. Commencement and Completion of Construction. The construction shall be considered complete for purposes of this Agreement only when: (a) all work described has been completed and fully paid for; and, (b) all work requiring inspection or certification by Governmental Authority has been completed and all requisite certificates, approvals and other necessary authorizations for use of the Property as an affordable rental housing development (including required final certificates of occupancy) have been obtained. 10.3. RESERVED. 10.4. Entry and Inspection. At all times prior to completion of the construction, upon reasonable notice of no less than 48 hours, City and their agents shall have: (a) the right of free access to the Property and all sites away from the Property where materials for the construction are stored; (b) the right to inspect all labor performed and materials furnished for the construction; and, (c) the right to inspect and copy all documents pertaining to the construction. 10.5. Compliance with Section 3 Clause. Section 3 of the Housing and Urban Development Act of 1968, 12 U.S.C. 170lu, as amended by Section 915 of the Housing and Community Development Act of 1992, requires that economic opportunities generated by HUD financial assistance for housing and community development programs be targeted toward low- and very low- income persons. Whenever HUD assistance generates opportunities for employment or contracting, state and local grantees, as well as other EXHIBIT 6 24 The Crossroads at Washington City NSP Loan Agreement recipients of HUD housing assistance funds must, to the greatest extent feasible, provide these opportunities to low- and very low- income persons and to businesses owned by or employing low- and very low- income persons. Section 3 applies to projects for which HUD’s share of project costs exceeds $200,000 and contracts and subcontracts awarded on projects for which HUD’s share or project costs exceeds $200,000 and the contract or subcontract exceeds $100,000. For purposes of this Section 3 Clause and compliance thereto, whenever the word “contractor” is used it shall mean and include, as applicable, the Developer, and its contractor and subcontractor(s), if any. The particular text to be utilized in any and all contracts of any contractor doing work covered by Section 3 shall be in substantially the form of the following, as reasonably determined by the City, or as directed by HUD or its representative, and shall be executed by the applicable contractor under penalty of perjury: (a) “The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (“Section 3”). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD- assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to low- and very low-income persons [inclusive of Very Low Income Persons, Very Low Income Households, and Very Low Income Tenants served by the Project], particularly persons who are recipients of HUD assistance for housing. (b) The parties to this contract agree to comply with HUD’s regulations in 24 CFR part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the part 135 regulations. (c) The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers’ representative of the contractor’s commitments under this Section 3 clause, and will post copies of notices in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference, shall set forth minimum number of job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each; and the name and location of person(s) taking applications for each of the position; and the anticipated date the work shall begin. (d) The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR part 135. (e) The contractor will certify that any vacant employment positions, EXHIBIT 6 25 The Crossroads at Washington City NSP Loan Agreement including training positions, that are filled (a) after the contractor is selected but before the contract is executed, and (b) with persons other than those to whom the regulations of 24 CFR part 135 require employment opportunities to be directed, were not filled to circumvent the contractor’s obligations under 24 CFR part 135. (f) Noncompliance with HUD’s regulations in 24 CFR part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts.” After the foregoing Section 3 Clause, there shall be a signature block for the contractor, as applicable, the following text shall be included immediately above the signature block: “The contractor/provider by his/her signature affixed hereto declares under penalty of perjury that contractor has read the requirements of the Section 3 Clause and accepts all its requirements contained therein for all of his/her operations related to this contract.” To the extent applicable, the Developer shall comply and/or cause compliance with Section 3 Clause requirements for the Project. For example, when and if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, rather than volunteer labor or materials, Section 3 is applicable and all disclosure and reporting requirements apply. 10.6. Construction Information. From time to time during the course of the construction, within ten (10) Business Days following City’s written demand therefore, Developer shall furnish requested reports of project costs, progress schedules and contractors’ costs breakdowns for the construction, itemized as to trade description and item, showing the name of the contractor(s) and/or subcontractor(s), and including such indirect costs as real estate taxes, legal and accounting fees, insurance, architects’ an d engineers’ fees, loan fees, interest during construction and contractors’ overhead. 10.7. Protection Against Liens. Developer shall diligently file a valid Notice of Completion upon completion of the construction, diligently file a notice of cessation in the event of a cessation of labor on the construction for a period of thirty (30) days or more, and take all actions reasonably required to prevent the assertion of claims of lien against the Property. In the event that any claim of lien is asserted against the property or any stop notice or claim is asserted against the City by any person furnishing labor or materials to the Property, Developer shall immediately give written notice of the same to City and shall, promptly and in any event within ten (10) Business Days after written demand therefor, (a) pay and discharge the same, (b) effect the release thereof by delivering to City a surety bond complying with the requirement of applicable laws for such release, or (c) take such other action as City may reasonably require to release City from any obligation or liability with respect to such stop notice or claim. Nothing in this Section 10.7 shall limit or prohibit Developer’s right to contest any claim of lien, stop notice or claim described herein in good faith. 10.8. General Contractors who are Related Parties to the Developer. If the Project is developed with general contractors who are Related Parties to the Developer, the EXHIBIT 6 26 The Crossroads at Washington City NSP Loan Agreement Developer must be audited to the subcontractor level by an outside auditing firm approved by the City. The Developer shall pay for the audit to the subcontractor level by an outside auditing firm. Section 11. FEDERAL COVENANTS 11.1. The Developer shall carry out the design, construction and operation of the Project, and operate the Program, in conformity with all applicable laws, regulations, and rules of governmental agencies having jurisdiction, including without limitation and to the extent applicable, the NSP Requirements pursuant to the authority of Title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 {February 17, 2009}) (Recovery Act) and sections 2301-2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-289 {July 30, 2008}) (HERA). 11.1.5 Reserved. 11.2. Qualification as Affordable Housing. As more particularly provided in the Affordability Restrictions on Transfer of Property, Developer shall use, manage and operate the Property in accordance with the requirements of 24 CFR 92.252, 24 CFR 570 so as to qualify the housing on the Property as Affordable Housing with affordable rents. 11.3. Tenant and Participant Protection. Developer shall comply with the requirements of 24 CFR 92.253. 11.4. Local Preference. Except with regard to persons experiencing homelessness referred off of the County of Orange coordinated entry system due to the layer of forty-three (43) PBVs provided by the Orange County Housing Authority, and subject to compliance with the NSP Regulations and applicable California and federal fair housing laws, and the requirements of Section 142(d) and Section 42 of the Internal Revenue Code local preference for Santa Ana residents and workers in tenant selection shall be a requirement of the Project. Subject to applicable laws and regulations governing nondiscrimination and preferences in housing occupancy required by Section 142(d) and Section 42 of the Internal Revenue Code, HUD or the State of California, as well as the City of Santa Ana Affordable Housing Funds Policies and Procedures, the Developer shall give preference in leasing units in the following order of priority: (a) First priority shall be given to persons who have been permanently displaced or face permanent displacement from housing in Santa Ana as a result of any of the following: (i) A redevelopment project undertaken pursuant to California’s Community Redevelopment Law (Health & Safety Code Sections 33000, et seq.) -- applicable only to projects funded by the Low and Moderate Income Housing Asset Fund; (ii) Ellis Act, owner-occupancy, or removal permit eviction; (iii) Earthquake, fire, flood, or other natural disaster; EXHIBIT 6 27 The Crossroads at Washington City NSP Loan Agreement (iv) Cancellation of a Housing Choice Voucher HAP Contract by property owner; or (v) Governmental Action, such as Code Enforcement. (b) Second priority shall be given to persons who are either: (i) Residents of Santa Ana; and/or (ii) Working in Santa Ana at least 32 hours per week for at least the last 6 months. 11.5. Handicapped Accessibility. Developer shall comply with: (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations; and, (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36, in order to provide handicapped accessibility to the extent readily achievable. 11.6. Use of Debarred. Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 11.7. Maintenance of Drug-Free Workplace. Developer shall certify that Developer will provide a drug-free workplace in accordance with 24 CFR 84.13. 11.8. Lead-Based Paint. Developer shall comply with the requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing regulations at 24 CFR 35, as applicable. 11.9. Affirmative Marketing. Developer shall implement and perform such affirmative marketing procedures and requirements for the Property (24 CFR 92.351) in compliance with the City’s adopted Program. 11.10. Equal Opportunity and Fair Housing. Developer shall carry out the construction and perform its obligations under this Agreement in compliance with all of the state and federal laws and regulations regarding equal opportunity and fair housing described in 24 CFR 92.350. 11.11. Property Standards. Developer shall cause the Property to meet the housing quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal codes and ordinances, including zoning ordinances. 11.12. Displacement and Relocation. Developer acknowledges and agrees that, pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part, City must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of the Project. Furthermore, to the extent feasible, any existing residential tenants must be provided a reasonable opportunity to lease and occupy a EXHIBIT 6 28 The Crossroads at Washington City NSP Loan Agreement suitable, decent, safe, sanitary and affordable dwelling unit on the Property upon completion of the construction. Developer agrees to cooperate fully and completely with City in meeting the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably required by the Executive Director in connection therewith. All applicable state guidelines must also be followed. (a) Developer acknowledges and agrees that if the Project requires temporary or permanent relocation of existing residential or commercial tenants it will hire a Relocation Consultant to provide relocation services, pursuant to the Uniform Relocation Act and Real Property Acquisition Policies Act of 1970 (“URA”) and 24 CFR 92.253. (b) If a Relocation Consultant is required to be retained pursuant to Section 11.12(a), the City, Developer, and Relocation Consultant will meet periodically during the relocation to provide updates and review tenant files, including at Project approval and prior to final benefit calculations. The Developer and Relocation Consultant shall carry out activity in compliance with URA and the City’s Acquisition and Relocation Policy and Procedures Manual (“Manual”). (c) If a Relocation Consultant is required to be retained pursuant to Section 11.12(a), the Developer and Relocation Consultant shall maintain accurate records and files pertaining to the temporary and permanent relocation of tenants, in accordance with URA and the City’s Manual. (d) If a Relocation Consultant is required to be retained pursuant to Section 11.12(a), the Developer and Relocation Consultant shall provide all relocation and tenant files to the City once relocation is complete at the Project. (e) Developer Responsible for Administration of Relocation. Developer acknowledges that former tenants and occupants of the Property may be eligible for advisory assistance, monetary payments, and other benefits under the Relocation Laws. Developer shall be fully responsible for administering determinations of eligibility, the extent of advisory assistance, and the scope and amount of benefits and monetary payments pursuant to the applicable Relocation Laws, subject to the right, but not obligation, to oversee Relocation by the City. Developer shall cause to be provided and shall pay Relocation assistance and benefits, if any, in accordance with and to the extent required by applicable Relocation Laws to each eligible tenant/occupant that is required to vacate the Property as a result of implementation of the Project. The City’s rights are limited to determining compliance with Relocation Laws. Developer is and shall remain solely responsible to pay all out-of-pocket costs for direct payments, if any, to eligible person(s), household(s) and business(es) for Relocation assistance and benefits due and paid and for any other costs incurred related to Relocation, including a Relocation consultant, and any and all costs or fees incurred therefor. (f) Indemnification by Developer Relating to Relocation. Developer hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for, and defend the Indemnitees from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including without limitation penalties, fines, and monetary sanctions), losses, costs, or expenses, including without limitation consultants’ and attorneys’ fees, or EXHIBIT 6 29 The Crossroads at Washington City NSP Loan Agreement relocation benefits claimed or payable under the Relocation Laws (for purposes of this Section 11.12, the foregoing shall be referred to as “Liabilities”) which may now or in the future be incurred or suffered by Indemnitees by reason of, or resulting, in full or in part, or in any respect whatsoever from the Relocation of residents of the current site pursuant to or resulting from the implementation of this Agreement, except to the extent arising out of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the City of any representation, warranty or covenant contained in this Agreement. At the request of Developer, the City shall cooperate with and assist Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, City liability, deficiency, fine, penalty, punitive damage, or expense; provided that City shall not be obligated to incur any expense in connection with such cooperation or assistance. (g) Release. Developer, on behalf of itself and its affiliates, and any and all successors and assigns hereby fully and finally releases the Indemnitees from any and all manner of actions, causes of action, suits, obligations, liabilities, judgments, executions, debts, claims and demands of every kind and nature whatsoever, known and unknown, which Developer and any of its affiliates, successors or assigns may now have or hereafter obtain against the Indemnitees by reason of, arising out of, relating to, or resulting from in full or in part, the election of Developer to proceed with the Project pursuant to this Agreement except to the extent arising out of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the City of any representation, warranty or covenant contained in this Agreement (collectively, “Claims”), which release shall include but not be limited to any Claims for Relocation assistance or benefits under federal, state, local, or any other applicable laws or Governmental Requirements, except to the extent arising out of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the City of any representation, warranty or covenant contained in this Agreement. The parties agree that, with respect to the release of Claims as set forth above, all rights under Section 1542 of the California Civil Code and any similar law of any state or territory of the United States are expressly waived. Section 1542 reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” 11.13. Other Program Requirements. Developer shall carry out each activity in compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except that Developer does not assume City's responsibilities for environmental review in 24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359. 11.14. Request for Disbursements of Funds. Notwithstanding anything contained in this Agreement to the contrary, Developer may not request disbursements of funds under this Agreement until the funds are needed for payment of eligible costs (such funds shall be used solely towards the acquisition and construction of the Property). The amount of each request shall be limited to the amount needed. 11.15. Eligible Costs. Developer shall use NSP Funds to pay costs defined as EXHIBIT 6 30 The Crossroads at Washington City NSP Loan Agreement "eligible costs" pursuant to 24 CFR 92.206. 11.16. Records and Reports. Developer shall maintain and from time to time submit to City such records, reports and information as the Executive Director may reasonably require in order to permit City to meet the record keeping and reporting requirements required of it pursuant to 24 CFR 92.508. 11.17. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Developer shall comply with the requirements and standards of 2 CFR 200. 11.18. Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to conflict of interest. 11.19. Monitoring. Developer shall allow the City to conduct periodic inspections of the Restricted Units on the Property as required by the NSP Program after the date of construction completion, with reasonable advance written notice of not less than 48 hours. Developer shall cure any defects or deficiencies found by the City while conducting such inspections within two weeks of written notice thereof, or such longer period as is reasonable within the sole discretion of the City. Not less than once per year, the City shall review Developer’s activities and operations under the Agreement and Developer’s compliance with the requirements set forth in the Agreement. Such review may include an on-site inspection of the Project units (including unit interiors). If such an on-site inspection of the Project units is to be undertaken, the City shall coordinate such inspection with Developer. The monitoring required pursuant to this paragraph shall be in compliance with the requirements of 24 C.F.R. § 92.504. 11.20. Recertification of Tenant Income. (a) Developer shall take all necessary steps to review the income of all tenants prior to renting to them, as well as reviewing current tenants on an annual basis, in accordance with federal and state regulations and guidelines. Every fifth (5th) year, Developer shall require new original income documents to be submitted by tenants. Tenants in the Restricted Units whose incomes no longer comply with federal income guidelines shall have their rents adjusted in accordance with federal guidelines (24 CFR 92.252-92.253). (b) Restricted Units continue to qualify as affordable housing despite a temporary non-compliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section (24 CFR 92.252-92.253) until the non-compliance is corrected. 11.21. Intentionally Omitted. 11.22. Controlling Covenants. If there is a discrepancy between State of California and Federal law with regard to any of the aforementioned covenants, the more EXHIBIT 6 31 The Crossroads at Washington City NSP Loan Agreement stringent shall apply. 11.23. Faith Based Activities. To the extent applicable to the Project, in accordance with 24 CFR 92.257, Developer will comply with the restrictions on the use of NSP funds for faith based activities as set forth in Section 92.257. Section 12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND REPAIR OF PROPERTY 12.1. Maintenance. Developer shall maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise required to maintain) in good condition and repair; shall operate the Property in a businesslike manner; shall prudently preserve and protect its own as well as the City's interests in connection with the Property; shall not commit or permit any waste or deterioration of the Property (except for normal wear and tear); shall not abandon any portion of the Property or leave the Property unguarded or unprotected; and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any damage to the Property or of any other impairment of City's interests under the Loan Documents. Without limiting the generality of the foregoing, and except as otherwise agreed by City in writing from time to time, Developer shall promptly and faithfully perform and observe each of the following provisions: 12.2. Alterations and Repair. Developer shall not remove, demolish or materially alter any Improvement without City’s prior consent, except to make non - structural repairs that preserve or increase the Property's value, and shall promptly restore, in a good and professional manner, any Improvement (or other aspect or portion of the Property) that is damaged or destroyed from any cause. 12.3. Compliance. Developer shall comply with all laws and requirements of Governmental Authority (including, without limitation, all requirements relating to the obtaining of Governmental Authority approvals), all Governmental Authority approvals and all rights of third parties, relating to Developer, the Property or Developer's business thereon. 12.4. Taxes and Impositions. Developer shall pay, prior to delinquency, all of the following (collectively, the "Impositions"): (a) all general and special real property taxes and assessments imposed on the Property; (b) all other taxes and assessments and charges of every kind that are assessed upon the Property (or upon the owner and/or operator of the Property) and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property), including, without limitation, non-governmental levies and assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, taxes and assessments imposed on City (other than City's income or franchise taxes) which are measured by or based upon (in whole or in part) the amount of the obligations secured by the Property. If permitted by law, Developer may pay any Imposition in installments (together with any accrued interest). 12.5. Right to Contest. Developer shall not be required to pay any Imposition EXHIBIT 6 32 The Crossroads at Washington City NSP Loan Agreement so long as: (a) its validity is being actively contested in good faith and by appropriate proceedings; (b) Developer has demonstrated to City's reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair City’s interests under the Loan Documents; and, (c) Developer has furnished City with a bond or other security satisfactory in an amount not less than 100% of the applicable claim (including interest and penalties). 12.6. Evidence of Payment. Upon demand by City from time to time, Developer shall deliver to City, within thirty (30) days following the due date of any Imposition, evidence of payment reasonably satisfactory to City. 12.7. Books, Records and Annual Statement. Developer shall maintain complete books of account and other records reflecting the construction and operation of the Project in accordance with generally accepted accounting principles applied on a consistent basis. During the Term of Agreement, the amount of the Residual Receipts shall be determined on the basis of an annual audited financial statement (”Annual Statement”), for the preceding year, beginning with the first year of operation of all or any part of the Project, prepared at the Developer’s expense by an independent certified public account firm acceptable to the City. Such Annual Statement shall be prepared based on the guidelines, and taking into account the information, set forth on Exhibit C, attached hereto and incorporated herein. During the Term of Agreement, the Developer shall submit the Annual Statement and any payment to the City not later than one hundred twenty (120) days after closing of the Developer’s previous year’s books. The first Annual Statement submitted by the Developer for the City/NSP Loan shall include the period from the Completion of Construction to the close of that year’s books. The City shall review and approve such statement (such approval not to be unreasonably withheld or delayed), or request revisions, within ninety (90) days after receipt. In the event that Developer’s calculation of Residual Receipts is found to be incorrect as a result of a City review, and has underreported, Developer shall pay to the City the full amount of additional amounts owed within thirty (30) days of notice of such error. The terms of this subsection shall not be the exclusive method by which the City may review Residual Receipts payments by the Developer. In the event the discovery occurs at any time subsequent to the ninety (90) day period for that year’s books, Developer shall pay to the City the full amount of such additional amounts owed within thirty (30) days after the error is discovered. Notwithstanding the foregoing, no previous action or inaction by the City shall prohibit the City from requesting repayment of any unpaid, owed amounts of Residual Receipts at any time during the term of this Agreement or thereafter within ten (10) years of when such Residual Receipts were due. The Developer shall pay to the City the full amount of such additional amounts owed within thirty (30) days of notice of such errors for periods prior to the previous year. 12.8. Project Operating Account. Developer shall establish an interest bearing account to be known as the Operating Reserve Account. Upon the Conversion Date, Developer shall deposit an amount into the Operating Reserve Account sufficient to pay at least three (3) months of operating expenses and three (3) months of mandatory debt service payments (“Target Balance”), or such greater amount as may be required by a EXHIBIT 6 33 The Crossroads at Washington City NSP Loan Agreement senior lender or tax credit investor. Funds shall be invested subject to the prior written approval of the City, and any earnings shall become and remain a part of the Operating Reserve. Funds may be drawn only when revenue is insufficient to pay operating expenses and may be used as permitted under Borrower’s Partnership Agreement. At the time of any withdrawals from the Operating Reserve Account, written notice shall be provided to the Ci ty which provides a detailed narrative of the nature of the operating deficits that are being cured, including all necessary amounts to cure them. If the balance in the Operating Reserve Account falls below the amount required to pay three (3) months of operating expenses and three (3) months of mandatory debt service payments, then Developer shall apply Residual Receipts, when and if available, or other funds, to the replenishment of Operating Reserves until the Target Balance is achieved. 12.9. Replacement Reserve Account. At or before the Conversion Date, Developer shall establish an interest bearing account to be known as the Replacement Reserve Account. Annually prior to March 31 of each year, Developer shall deposit into the Replacement Reserve Account an amount equal to a minimum of two hundred fifty dollars ($250) per unit but shall not exceed five hundred dollars ($500) per unit, which amounts may increase by 3% annually, or such higher amount as may be required by the Tax Credit Investor or Senior Lender and approved by City; provided, however, that City acknowledges that the Tax Credit Investor and/or Senior Lender will require an annual deposit of funds into the Replacement Reserve Account for all units, and City hereby approves such requirement and agrees that any replacement reserve established by Developer and held by the Tax Credit Investor and/or Senior Lender shall satisfy the requirements of this Section 12.9. The funds in the Replacement Reserve Account shall be held in an interest bearing account , subject to the prior written approval of the City, and any earnings shall become and remain a part of the Replacement Reserve. The Developer shall not draw funds from the Replacement Reserve Account without the prior written approval of the City. Funds may only be drawn from the Replacement Reserve Account to replace or maintain Project assets that have a useful life of more than one (1) year in accordance with Generally Accepted Accounting Principles (“GAAP”), and have been or will be depreciated on the Partnership Tax Return, Form 1040P, filed with the Internal Revenue Service by the Developer’s accountant. In the event of a failure by the Developer to adequately maintain the Project, or pay operating expenses, mandatory debt service payments, or other payments required under the Loan Documents or Senior Loan Documents, or during the continuance of an event of default by Developer under the Loan Documents or Senior Loan Documents that would provide for the acceleration of the City/NSP Loan or Senior Loan, then the City may, after delivery of notice to Developer and the expiration of any applicable cure periods and subject to the rights of any Senior Lender, apply the funds in the Replacement Reserve Account to the City/NSP Loan, the Senior Loan, or use such funds for the maintenance, improvement, or continued operation of the Project. EXHIBIT 6 34 The Crossroads at Washington City NSP Loan Agreement Section 13. NONDISCRIMINATION COVENANTS 13.1. Obligation to Refrain from Discrimination. Developer covenants and agrees that: (a) In Use of Property. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, mental or physical disability, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Developer or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendors of the Property. (b) In Affordable Housing Restrictions. The foregoing covenant shall: (a) be included in the Affordability Restrictions on Transfer of Property; (b) run with the land; and, (c) remain effective for the term of the Agreement. (c) In Employment. In construction of the Property, Developer shall not discriminate against any employee or applicant because of race, color, creed, religion, sex, marital status, mental or physical disability, national origin, or ancestr y. Developer shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, religion, sex, marital status, national origin, or ancestry. (d) In all Contracts. Developer shall cause the foregoing covenants to be inserted in all contracts for any work covered by this Agreement so that such provisions will be binding upon each contractor and subcontractor for the benefit of City, provided that the foregoing covenant shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. Section 14. ENVIRONMENTAL MATTERS 14.1. Representation and Warranty. Except as disclosed in writing to the City including the Environmental Reports prepared on behalf of Developer and delivered to the City, and except for the Existing Hazardous Materials (as such term is defined in the Ground Lease) Developer has no knowledge: (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials in violation of applicable law, or of the transportation to or from the Property of any Hazardous Materials; (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the Property; or, (c) that there are any underground storage tanks located in, on or under the Property. 14.2. Compliance with Environmental Laws. Developer shall: (a) comply with all environmental laws and environmental permits applicable to the Construction of the Property; (b) immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance; (c) keep the Property free and clear of any environmental claims or liens imposed pursuant to any environmental law; and, (d) obtain and renew all environmental permits required for ownership or use of the Property. EXHIBIT 6 35 The Crossroads at Washington City NSP Loan Agreement 14.3. Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property, or transport or permit the transportation of Hazardous Materials to or from the Property except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine construction, operation and maintenance of the Property. 14.4. Notice of Environmental Matters. Developer shall immediately advise City in writing of any of the following: (a) any pending or threatened environmental claim against Developer or the Property; (b) any condition or occurrence that: (i) results in noncompliance with any applicable environmental law; (ii) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law; or, (iii) could reasonably be anticipated to form the basis of an environmental claim against the Property or Developer. 14.5. Environmental Indemnification by the Developer. Developer agrees to defend, indemnify and hold harmless the City and their respective officers, directors, employees and agents (collectively the "Indemnitees") from and against any and all obligations (including removal and remediation), losses, claims (including third party claims), suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including consultants, and attorneys' fees) of whatever kind or nature whatsoever that may at any time be incurred by, imposed on , or asserted against the Indemnitees directly or indirectly based on, or arising or resulting from the actual or alleged presence of Hazardous Materials on the Property other than arising from the gross negligence, willful misconduct and/or illegal actions of any Indemnitee and the Existing Hazardous Materials (as such term is defined in the Ground Lease). Section 15. OTHER AFFIRMATIVE COVENANTS While any obligation of Developer under the City/NSP Loan Note or Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that the Executive Director otherwise consents in writing: 15.1. Existence. Developer’s Managing General Partner shall maintain its existence in good standing under the laws of the State of California, and Developer shall provide documentation of such status annually to the City. 15.2. Protection of Lien. Developer shall maintain the lien of the City Deed of Trust as a valid second priority deed of trust on the Property and take all actions, and execute and deliver to City all documents, reasonably required by City from time to time in connection therewith. 15.3. Notice of Certain Matters. Developer shall give notice to City, within ten (10) days of Developer's learning thereof, of each of the following: (a) any filed litigation or claim affecting or relating to the Property and involving an amount in excess of $25,000; and any litigation or claim that might subject Developer or any general partner of Developer to liability in excess of $50,000, whether EXHIBIT 6 36 The Crossroads at Washington City NSP Loan Agreement covered by insurance or not; (b) any material dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which would reasonably be expected to have a material adverse effect on the Property; (c) any change in Developer's principal place of business; (d) any aspect of the Improvements that is not in substantial conformity with the plans or code; (e) any Event of Default or event which, with the giving of notice or the passage of time or both, would constitute an Event of Default; (f) any material default by Developer or any other party under any Senior Loan document, or the receipt by Developer of any notice of default under any Senior Loan document; (g) the creation or imposition of any mechanics’ or materialmans’ lien or other lien against the Property which might materially affect the Property; and/or (h) any material adverse change in the financial condition of Developer. 15.4. Further Assurances. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under the Loan Documents; to protect and further the validity, priority and enforceability of the City Deed of Trust; to subject to the Deed of Trust any property intended by the terms of any Loan Document(s) to be covered by the City Deed of Trust or otherwise to carry out the purposes of the Loan Documents and the transactions contemplated thereunder. Notwithstanding anything to the contrary set forth herein, the Developer shall have no obligation to execute any document, or take any action, which would: (i) change a material term of any Loan Document; (ii) change or impair any material right of Developer; and/or, (iii) increase the liability of Developer or any partner thereof. 15.5. Annual Financial Statements. Developer shall deliver to City, within one hundred twenty (120) days after the end of each Calendar Year following issuance of a Certificate of Completion: (a) a certified public accountant reviewed balance sheet for Developer as of the end of such Calendar Year and a certified public accountant reviewed statement of profit and loss for Developer and for Developer's operations in connection with the Property for such Calendar Year, together with all supporting schedules; (b) a certificate of such certified public accountant that such documents were reviewed by such certified public accountant in accordance with generally accepted accounting principles and otherwise comply with generally accepted accounting principles review requirements; and, (c) a certificate of Developer's Managing General Partner that such documents: (i) were prepared in accordance with generally accepted accounting principles applied on a EXHIBIT 6 37 The Crossroads at Washington City NSP Loan Agreement consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City; (ii) fairly present Developer's financial condition; (iii) show all material liabilities, direct and contingent; and, (iv) fairly present the results of Developer's operations. Developer shall also provide the City with any other annual audit reports issued by other monitoring agencies upon written request. 15.6. Audits and Access to Records. Developer agrees that City, the U.S. Department of Housing and Urban Development, the Comptroller General of the United States or any of their authorized representatives shall have the right of access, upon reasonable notice, to any books, documents, papers, or other records of Developer that are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all books and records pertaining to this Agreement for a period of not less than five (5) years after all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state laws, regulations or policies, and when a period of affordability or recapture applies to Developer's activities, for a period of not less than five (5) years after t he Affordability Period ends. Section 16. OTHER NEGATIVE COVENANTS While any obligation of Developer under the City/NSP Loan Note or City/NSP Loan Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that the Executive Director otherwise consents in writing: 16.1. Default on Senior Loan. Developer shall not default on any of the Senior Loan Documents, provided however, that Developer shall have such period as is provided in the Senior Loan Documents during which to effectuate a cure. 16.2. Sale or Lease of Property. Unless and until Developer has received a Certificate of Completion for the construction from City, except for a Permitted Transfer, Developer shall not sell, lease, sublease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of the Executive Director, which consent may be withheld in the Executive Director's sole and absolute discretion. In connection with the foregoing consent requirements, Developer acknowledges that City relied upon Developer's particular expertise in entering into this Agreement and continues to rely on such expertise to ensure the satisfactory completion of the construction. Notwithstanding anything to the contrary contained herein, a "transfer” shall not include: (i) a transfer of any general partner’s interest in Developer when made in connection with the exercise by the Developer’s Limited Partner of its rights upon a default by a general partner under the Developer’s Partnership Agreement or upon a general partner’s withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the managing general partner of EXHIBIT 6 38 The Crossroads at Washington City NSP Loan Agreement Developer pursuant to the right of first refusal or to the general partners of Developer pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner’s interest in accordance with the Partnership Agreement; and, (iv) any sale, transfer or other disposition of an interest in a limited partner of the Developer. Section 17. CERTIFICATE OF COMPLETION Upon satisfactory completion of the construction and upon the request of Developer, or at its own election, the City shall issue a certificate of completion (“Certificate of Completion”). Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction. If City declines to furnish a Certificate of Completion after written request from Developer, the Executive Director shall, within thirty (30) days after receipt of the request, provide Developer with a written statement of the reasons therefore. The statement shall contain a description of the action(s) Developer must take to obtain a Certificate of Completion. If the reason therefore is that the Developer has not completed a minor portion of the Construction, City may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with City of a bond or other form of security acceptable to the Executive Director in the amount of the fair value of the uncompleted work. A Certificate of Completion is not evidence of compliance with or satisfaction of the Loan Documents or any obligation of Developer to any other party whatsoever, including any holder of a mortgage or deed of trust. A Certificate of Completion is not "notice of completion” referred to in Section 3093 of the California Civil Code. A Certificate of Occupancy issued by the City will also meet the same purpose and requirement as the Certificate of Completion. Section 18. INDEMNIFICATION 18.1. Nonliability of City. Developer acknowledges and agrees that: (a) The relationship between Developer and City is and shall remain solely that of borrower and lender, City neither undertakes nor assumes any responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in connection with the construction, including matters relating to: (i) the performance of the construction work, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, or (iii) the progress of the construction; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledges that any review, inspection, supervision, approval or information supplied to Developer by City in connection with such matters is solely for the protection of City and that neither Developer nor any third party is entitled to rely on it; (b) Notwithstanding any other provision of any Loan Document: (i) the EXHIBIT 6 39 The Crossroads at Washington City NSP Loan Agreement City is not a partner, joint venture, alter-ego, manager, controlling person or other business associate or participant of any kind of Developer and City does not intend to ever assume any such status; (ii) City’s activities in connection with the City/NSP Loan shall not be “outside the scope of the activities of a lender of money” within the meaning of California Civil Code Section 3434, as modified or recodified from time to time, and City does not intend to ever assume any responsibility to any person for the quality or safety of the Property; and, (iii) City shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construction on, or occupancy or use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer’s agents, employees, independent contractors, licensees or invitees; or, (iii) any accident on the Property or any fire or other casualty or hazard thereon; and (d) By accepting or approving anything required to be performed or given to City under the Loan Documents, including any certificate, financial statement, survey, appraisal or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone. 18.2. Indemnity. Developer shall defend (by counsel reasonably satisfactory to City), indemnify and save and hold harmless the Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys' fees and court costs) arising from or relating to: (i) a breach of this Agreement by Developer; (ii) the making of the City/NSP Loan; (iii) a claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Property; or, (vi) the ownership, occupancy or use of the Property. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of illegal conduct, gross negligence or willful misconduct of City. Developer's obligations under this Sect ion shall survive the cancellation of the City/NSP Loan Note, release and reconveyance of the City Deed of Trust, issuance of the Certificate of Completion, and termination of this Agreement. (a) Notwithstanding the foregoing, neither Developer, nor any of its partners, shall be personally liable for any indemnification obligation hereunder which would result as the repayment of principal and/or interest under the City/NSP Loan. (b) To the fullest extent permitted by law, the Developer agrees to indemnify, hold harmless and defend the City and its elected officials, officers, governing members, employees, attorneys and agents (collectively, the "Indemnified Parties"), from and against any and all losses, damages, claims, actions, liabilities, reasonable costs and expenses of any and every conceivable nature, kind or character (including, without EXHIBIT 6 40 The Crossroads at Washington City NSP Loan Agreement limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject to under any statutory law (including federal or state securities laws) or at common law or otherwise, arising out of or based upon or in any way relating to: (i) the Loan Documents or the execution or amendment thereof or in connection with the transactions contemplated thereby; (ii) Developer’s ownership or operation of the Project or any act or omission of the Developer or any of its agents, contractors, servants, employees or licensees in connection with the City/NSP Loan or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation, operation or rehabilitation of, the Project or any part thereof; (iii) any lien or charge upon payments by the Developer to the City, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the City in respect of any portion of the Project; (iv) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from the Project or any part thereof; (v) any untrue or misleading statement of a material fact by the Developer contained in any Loan Document or any of the documents or instruments relating to said Loan Documents that the City relied upon in making the City/NSP Loan, except to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Developer, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment and payment for counsel selected by the Indemnified Party, and shall assume the payment of all reasonable expenses related thereto, with full power to litigate, compromise or settle the same; provided that the Indemnified Party shall have the right to review and approve or disapprove in its reasonable discretion any such compromise or settlement; and, (vi) Notwithstanding anything in this Section 18.2 to the contrary, if judgment is entered against Developer and City by a court of competent jurisdiction because of the concurrent active negligence of City or Indemnified Parties, Developer and City agree that liability will be apportioned as determine d by the court. Neither Party shall request a jury apportionment. 18.3. Reimbursement of City. Developer shall reimburse City immediately upon written demand for all costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Loan Documents and all related matters including all claims, demands, EXHIBIT 6 41 The Crossroads at Washington City NSP Loan Agreement causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Loan Documents. Such reimbursement obligations shall bear interest from the date occurring twenty (20) days after City gives written demand to Developer at the rate of Interest defined in the Note and shall be secured by the City Deed of Trust. Such reimbursement obligations shall survive the cancellation of the City/NSP Loan Note, release and reconveyance of the City/NSP Loan Deed of Trust, issuance of a Certificate of Completion, and termination of this Agreement Subsequent to the making and disbursement of this Loan, the Developer shall pay for any subsequent revisions, transfers, extensions, renewals, modifications, refinancing or "workouts," and providing estoppels or subordinations of the City/NSP Loan (collectively, “Changes”), and in the exercise of any of City's rights or remedies under this Agreement. The City will receive from Developer in connection with any request by Developer for a Change, a nonrefundable fee in the amount of Five Hundred Dollars ($500) and Developer shall reimburse City for all of the City’s reasonable out -of-pocket expenses (including reasonable attorney’s fees) incurred in the administration and review of such Changes, to the extent such expenses exceed Five Hundred Dollars ($500). Section 19. INSURANCE, CASUALTY AND CONDEMNATION 19.1. Prior to undertaking performance of work under this Agreement, Developer shall maintain and shall require its subcontractors, if any, to obtain and maintain insurance as described below: a. Minimum Scope and Limit of Insurance – Coverage shall be at least as broad as: 1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. 2. Automobile Liability: Insurance Services Office Form Number CA 00 01 covering any auto (Code 1), or if Developer has no owned autos, hired (Code 8), and non-owned autos (Code 9), with a limit no less than $1,000,000 per accident for bodily injury and property damage. 3. Workers’ Compensation: Insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. 4. Professional Liability (Errors & Omissions): Insurance appropriate EXHIBIT 6 42 The Crossroads at Washington City NSP Loan Agreement to the Developer’s profession, with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. 5. Broader Coverage: If Developer maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by Developer. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. b. Other Insurance Provisions – The insurance policies are to contain, or be endorsed to contain, the following provisions: 1. Additional Insured Status: The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Developer including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to Developer’s insurance (at least as broad as ISO Form CG 20 10 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used). 2. Primary Coverage: For any claims related to this Agreement, Developer’s insurance coverage shall be primary coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of Developer’s insurance and shall not contribute with it. 3. Notice of Cancellation: Each insurance policy required above shall state that coverage shall not be canceled, except with notice to the City. 4. Waiver of Subrogation: Developer hereby grants to City a waiver of any right to subrogation which any insurer of said Developer may acquire against the City by virtue of the payment of any loss under such insurance. Developer agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. 5. Self-Insured Retentions: Self-insured retentions must be declared to and approved by the City. The City may require Developer to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed EXHIBIT 6 43 The Crossroads at Washington City NSP Loan Agreement to provide, that the self-insured retention may be satisfied by either the named insured or City. 6. Acceptability of Insurers: Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City. 7. Claims Made Policies: If any of the required policies provide coverage on a claims-made basis: i. The Retroactive Date must be shown and must be before the date of the Agreement or the beginning of work. ii. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the work. iii. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Developer must purchase “extended reporting” coverage for a minimum of five (5) years after completion of work. 8. Verification of Coverage: Developer shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive Developer’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. 9. Subcontractors: Developer shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Developer shall ensure that City is an additional insured on insurance required from subcontractors. 10. Special Risks or Circumstances: City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances. 19.2. Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi-public use of any portion of the Property (collectively, "Condemnation"), and shall provide City with copies of all documents which pertain to any EXHIBIT 6 44 The Crossroads at Washington City NSP Loan Agreement such casualty or Condemnation. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and/or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed. 19.3. Delivery of Proceeds to City. If the proceeds from any casualty insurance is in excess of $500,000, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt. 19.4. Application of Casualty Insurance Proceeds. Subject to the rights of the Senior Lender, any proceeds collected (the "Proceeds") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions") within ninety (90) days (unless extended by mutual agreement of Developer and City) following the occurrence of the damage for which the Proceeds are collected: (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within two years (or such longer time period reasonably determined by City), to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of: (i) plans and specifications reasonably satisfactory to City; and, (ii) a construction contract in form and content, and with a contractor, reasonably satisfactory to City. (b) To the extent that the Proceeds are insufficient to accomplish the restoration required above, Developer shall deliver to City (the "Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to City as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. (c) Developer shall execute such documents as City reasonably requires to evidence and secure Developer's obligation to use all amounts disbursed for the diligent restoration of the Property. (d) No Event of Default shall remain uncured. 19.5. Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance with then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer up to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall either be paid to Developer or applied by City against any obligations to City that are secured by a lien on the Property, as they elect in their sole and absolute discretion. 19.6. Failure to Satisfy Conditions. In the event that Developer fails to fulfill EXHIBIT 6 45 The Crossroads at Washington City NSP Loan Agreement the Restoration Conditions within ninety (90) days, unless extended, following the date on which the damage occurs, the Proceeds shall be applied by City against any obligations to City that are secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in their sole and absolute discretion, subject to the rights of the Senior Lender. 19.7. Condemnation; Treatment of Compensation. Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation"). Subject to any superior rights of Senior Lender, Developer shall deliver such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City’s reasonable judgment Developer’s security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to reduce the unpaid obligations secured in such order as City may determine, and without any adjustment in the amount or due dates of payments due under the City/NSP Loan Note. If so applied, any award in excess of the unpaid balance of the City/NSP Loan Note and other sums due to City shall be paid to Developer or Developer’s assignee. City shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. (a) Notwithstanding the foregoing, as long as the Developer is not in default under the Loan Documents, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. Section 20. DEFAULTS AND REMEDIES 20.1. Events of Default. The occurrence of any of the following, whatever the reason therefore, shall constitute an Event of Default by Developer: (a) Developer fails to make any payment of principal or interest under the City/NSP Loan Note when due, and such failure is not cured within thirty (30) Business Days after Developer's receipt of written notice that such payment was not received when due; (b) Developer fails to perform any other obligation for the payment of money under any Loan Document, and such failure is not cured within thirty (30) Business Days after Developer's receipt of written notice that such obligation was not performed when due; (c) Developer fails to perform any obligation (other than the obligations described in subparagraphs (a) and (b) above) under any Loan Document, and such failure is not cured within thirty (30) days after Developer's receipt of written notice that such obligation was not performed; provided that, if cure cannot reasonably be effected within such thirty (30)-day period, such failure shall not be an Event of Default so long as Developer (in any event, within ten (10) days after receipt of such notice) commences to EXHIBIT 6 46 The Crossroads at Washington City NSP Loan Agreement cure, and thereafter diligently (in any event within one hundred and twenty (120) days after receipt of such notice) prosecutes such cure to completion; (d) Any representation or warranty in any Loan Document proves to have been incorrect in any material respect when made; (e) Reserved; (f) Work on the construction ceases for ninety (90) consecutive days for any reason (other than governmental orders, decrees or regulations, acts of God or any other deity, quarantine restrictions, epidemics, supply shortages, strikes or other causes beyond Developer's reasonable control), provided that the same do not, in the aggregate and in the City’s reasonable judgment, threaten to delay the completion of the construction beyond the required completion date set forth in this Agreement; (g) Developer is enjoined or otherwise prohibited by any Governmental Authority from constructing and/or occupying the improvements and such injunction or prohibition continues unstayed for ninety (90) days or more for any reason; (h) Developer is dissolved, liquidated or terminated, or all or substantially all of the assets of Developer are sold or otherwise transferred without the Executive Director's prior written consent; (i) Developer is the subject of an order for relief by a bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Developer applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver, trustee, custodi an, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of Developer and the appointment continues undischarged or unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part of its property; or any similar proceeding is instituted without the consent of Developer and continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of attachment or execution, or similar process is issued or levied against any property of Developer and is not released, vacated or fully bonded within ninety (90) days after its issue or levy; (j) Any of the Senior Loan documents is amended, supplemented or otherwise modified without City's prior written consent, to the extent the City’s consent is required pursuant to any subordination agreement between the City and the Senior Lender; (k) Senior Loan Document Breach. Any default or breach of Developer that continues uncured after the expiration of any applicable cure period under any other loan document including, but not limited to, the Senior Loan Documents (including but not limited to the Senior Loan Deed of Trust); (l) Voluntary Suspension. The voluntary suspension of Developer's EXHIBIT 6 47 The Crossroads at Washington City NSP Loan Agreement business or the dissolution or termination of the Partnership (if any) constituting Developer; (m) Unauthorized Transfer. Developer’s sale or other transfer of the Property or the Project in violation of such terms herein; (n) Fraud or Material Misstatement or Omissions. Any fraudulent act or intentional material omission of Developer's, or intentional material misrepresentation of Developer's, pertaining to or made in connection with the City/NSP Loan, Loan Documents or the Project; or, (o) Project Monies. Developer’s intentional misapplication or embezzlement of Project monies. 20.2. Remedies Upon Default. Upon the occurrence and during the continuance of any Event of Default, City may, at its option and in its absolute discretion, do any or all of the following: (a) By written notice to Developer, declare the principal of all amounts owing under the Loan Documents, together with all accrued interest and other amounts owing in connection therewith, to be immediately due and payable, regardless of any other specified due date; provided that any Event of Default described in Section 20.1 shall automatically, without notice or other action on City's part, cause all such amounts to be immediately due and payable; (b) In its own right or by a court-appointed receiver, take possession of the Property, enter into contracts for and otherwise proceed with the completion of the construction by expenditure of its own funds; (c) Exercise any of its rights under the Loan Documents and any rights provided by law, including, without limitation, the right to seek specific performance and the right to foreclose on any security and exercise any other rights with respect to any security, all in such order and manner as City elects in its sole and absolute discretion; (d) Suspend or terminate the award of NSP funds if Developer fails to comply with any term of that award; and, (e) Right to Cure at Developer's Expense. The City shall have the right to cure any monetary Event of Default by Developer under a loan other than the City/NSP Loan. The Developer agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Developer upon demand therefore, together with interest thereon at the rate of twelve percent (12%) per annum (which rate shall in no event exceed the maximum rate permitted by law and if it does, said rate shall be reduced to the maximum rate then permitted by law), from the date of expenditure until the date of reimbursement. 20.3. Cumulative Remedies: No Waiver. City's rights and remedies under the Loan Documents are cumulative and in addition to all rights and remedies provided by law. EXHIBIT 6 48 The Crossroads at Washington City NSP Loan Agreement The exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the City in the exercise of any other right or remedy. No waiver of any default shall be implied from any omission by City to take action on account of such default if such default persists or is repeated. No waiver of any default shall affect any default other than the default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent breach of the same provision. City's consent to or approval of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary City's consent to or approval of any subsequent act. The City's acceptance of the late performance of any obligation shall not constitute a waiver by City of the right to require prompt performance of all further obligations; City's acceptance of any performance following the sending or filing of any notice of default shall not constitute a waiver of either party's right to proceed with the exercise of its remedies for any unfulfilled obligations; and City's acceptance of any partial performance shall not constitute a waiver by City of any rights. 20.4. Nonrecourse Liability. Neither Developer, nor any other party, including any partner of Developer, shall have any personal liability under this Agreement, or the attached City/NSP Loan Note and City/NSP Loan Deed of Trust, and any judgment, decree or order for the payment of money obtained in any action to enforce the obligation of Developer to repay the City/NSP Loan or any other amount evidenced or secured by such documents shall be enforceable against Developer only to the extent of Developer’s interest in the Property. 20.5. Limited Partner Cure. The City shall provide the Developer’s Limited Partner with an opportunity to cure any default. Any cure made or tendered by Limited Partner shall be accepted as if made by Developer. Section 21. MISCELLANEOUS 21.1. Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any other claim by developer against City, in connection with the City/NSP Loan or otherwise, Developer hereby waives any right it might otherwise have: (a) to offset any such obligation, liability or claim against Developer's obligations under the Loan Documents; or, (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under the Loan Documents. 21.2. Notices. All notices, demands, approvals and other communications provided for in the Loan Documents shall be in writing and be delivered to the appropriate party by personal service or U.S. mail at its address as follows: If to Developer: Washington Santa Ana Housing Partners, L.P. c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 EXHIBIT 6 49 The Crossroads at Washington City NSP Loan Agreement Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo President and Chief Executive Officer With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. With a copy to: U.S. Bancorp Community Development Corporation 1307 Washington Ave., Suite 300 St. Louis, MO 63103 USB Project No: 28339 Attn: Director of LIHTC Asset Management If to City: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 With a copy to: City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 Addresses for notice may be changed as required by written notice to all other parties. All notices personally served shall be effective when actually received. All notices mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing notwithstanding, the non-receipt of any notice as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such notice. 21.3. Survival of Representations and Warranties. All representations and warranties in the Loan Documents shall survive the making of the City/NSP Loan described herein and have been or will be relied on by City notwithstanding any investigation made by either party. 21.4. No Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Developer and the City, and no other person shall EXHIBIT 6 50 The Crossroads at Washington City NSP Loan Agreement have any rights hereunder or by reason hereof. 21.5. Reserved. 21.6. Prior Agreements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement between the City and Developer with respect to the City/NSP Loan and the Property, and all prior negotiations, understandings and agreements are superseded by this Agreement and such other Loan Documents. No modification of any Loan Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. 21.7. Governing Law. All of the Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California and Federal law, whichever is more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of Cali fornia for the County of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Agreement or the Loan Documents. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue. 21.8. Severability of Provisions. No provision of any Loan Document that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of the Loan Documents are hereby declared to be severable. 21.9. Headings. Article and section headings are included in the Loan Documents for convenience of reference only and shall not be used in construing the Loan Documents. 21.10. Conflicts. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, this Agreement, unless otherwise expressly provided, shall prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed. 21.11. Time of the Essence. Time is of the essence under this Agreement and in the performance of every term, covenant, and obligation contained herein. 21.12. Conflict of Interest. No member, official or employee of the City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement that is prohibited by law. 21.13. Warranty Against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement. EXHIBIT 6 51 The Crossroads at Washington City NSP Loan Agreement 21.14. Reserved. 21.15. Plans and Data. As additional collateral for the City/NSP Loan, Developer hereby grants to the City a security interest in all plans and data concerning the Property, subject to the rights of any Senior Lender. Such right of City shall be subject to any right of the preparer of the plans to their use. 21.16. Authority to Enter Agreement. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and attorney’s fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. {signatures on following page} EXHIBIT 6 EXHIBIT 6 52 The Crossroads at Washington City NSP Loan Agreement IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date set forth at the beginning of this Agreement. DEVELOPER Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer ATTEST: CITY OF SANTA ANA EXHIBIT 6 53 The Crossroads at Washington City NSP Loan Agreement ___________________________ _______________________ Daisy Gomez Kristine Ridge Clerk of the Council City Manager Dated: Dated: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: ________________________ Ryan O. Hodge Assistant City Attorney Dated: RECOMMENDED FOR APPROVAL: _______________________________ Steven A. Mendoza Executive Director Community Development Agency June 13, 2022 EXHIBIT 6 54 The Crossroads at Washington City NSP Loan Agreement EXHIBITS A. Legal Description B. Scope of Work C. Project Budget D. City/NSP Loan Deed of Trust E. City/NSP Loan Note F. Affordability Restrictions on Transfer of Property EXHIBIT 6 Exhibit A: Legal Description EXHIBIT 6 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 6 Exhibit B: Scope of Work EXHIBIT 6 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 1 Project Description Narrative Overview/Current Use of Property The proposed project, The Crossroads at Washington, (the “Project”) will be located at 1136 & 1146 E. Washington Avenue, Santa Ana, CA 92701 (the “Property”). The 2.29 acre site includes two (2) parcels that will be merged into one (1) parcel prior to the completion of construction. The current APNs associated with the Project are APN 398-092-014 (“North Parcel”) and APN 398-092-013 (“South Parcel”). The Property is currently vacant and underutilized. The immediate perimeter of the site is bounded by the Santa Ana Freeway to the north and east, light industrial use buildings to the west, and Santa Ana Boulevard to the south. Along with environmental remediation activities to prepare the site for its intended use, there is an asphalt pad on the site that will be removed in order to begin construction. Ownership and Conveyance of Land The North Parcel is currently owned by the Housing Authority of the City of Santa Ana (“Agency”), while the South Parcel is owned by the County of Orange (“County”). The parcels will be merged into one parcel and co-owned by both the Housing Authority of the City of Santa Ana and the County of Orange as Tenants-in-Common. Washington Santa Ana Housing Partners, L.P. (the “Partnership”) entered into an Option Agreement with the Housing Authority of the City of Santa Ana and County of Orange on February 25, 2020. Upon satisfactorily meeting conditions to the Option Agreement, the site will be leased to the Partnership for a period of sixty-two (62) years from the date of the Certificate of Occupancy, not to exceed sixty-five (65) years from the date of execution of the Ground Lease. Design Description and Project Characteristics The Project is an eighty-six (86) unit, affordable housing project with forty-three (43) units dedicated for permanent supportive housing and one (1) unit dedicated as Manager’s unit. Of the forty-three (43) permanent supportive housing units, twenty (20) will be set aside for Mental Health Services Act (“MHSA”) tenants. The breakdown of the bedroom types are sixteen (16) studio units, twenty-six (26) one-bedroom units, twenty-two (22) two-bedroom units, seventeen (17) three-bedroom units, and five (5) four-bedroom units. Its purpose is to provide housing to families with incomes at thirty percent (30%) of the Area Median Income (“AMI”), and to special needs populations with incomes at or below thirty percent (30%) of AMI. Tucked away in Santa Ana’s historic “Logan neighborhood,” the Project is designed in accordance with the architectural legacy of Santa Ana and the City’s Transit Zoning Code (SD 84 Specific Plan) and will incorporate a Mission Revival architectural design style. The Project is designed as Type VA construction with two (2) buildings. Building 1 (1136 E. EXHIBIT 6 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 2 Washington Avenue) is four (4) stories with an elevator. Building 2 (1146 E. Washington Avenue) ranges from two (2) to three (3) stories and has two (2) elevators. Building 1 has a total of thirty-five (35) units and Building 2 has a total of fifty-one (51) units. Each building is comprised of stacked flats. The Project will include approximately 5,811 square feet of Community Area with leasing and management offices, as well as 1,060 square feet of retail for a community serving use. The proposed design of the Project will feature an inward-facing orientation that creates buffered courtyards in order to accommodate for the adjacent Santa Ana Freeway to the east of the project and the industrial building backdrop to the west. The Project is designed to keep in mind its urban context as well as the needs of its future families and special needs residents. The Project includes multiple on-site amenities for its residents, including a pool, tot lot, courtyards, laundries, leasing/management offices, BBQ pavilion, and a dog run. The Project was fully entitled on February 24, 2020. Parking The Project will provide one hundred and twenty (120) parking spaces in an on-grade parking lot, which includes accessible parking and Electric Vehicle (“EV”) parking. Thirty-eight (38) of the one hundred and twenty (120) spaces utilize tandem parking. Landscaping The landscaping concept consists of a drought-tolerant and native plant palette where feasible that complements the Project architecture and is consistent with the overall landscape in the adjacent neighborhood. Floor Plans and Unit Amenities The design of the space considers layouts to ensure livability for residents. Units meet or exceed established minimum requirements for area and amenities. The breakdown of unit type by square footage is summarized below: Sixteen (16) studio/one bath units at 400 ft2. Twenty-six (26) one-bedroom/one bath units at 600 ft2. Twenty-two (22) two-bedroom/one bath units at 815 ft2. Seventeen (17) three-bedroom/two bath units at 1,100 ft2. Five (5) four-bedroom/two bath units at 1,300 ft2. Unit amenities include: Bathroom fixtures and finishes. Kitchen fixtures, finishes, and cabinets. Energy Star rated appliances including stove/oven and refrigerators. Energy efficient lighting. EXHIBIT 6 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 3 Energy efficient windows. Floor and window coverings. Central heating/air conditioning. Storage closets. Coat closets. Ceiling Fans. Dishwashers. Accessible features include: The Project will comply with accessibility requirements. The Project will provide ten percent (10%) of all units as accessible to people with mobility impairments, and an additional four percent (4%) of all units as accessible to people with vision and hearing impairments. Recreational Amenities and On-Site Services The design for the recreational amenities and on-site services will reflect the interests and needs of the resident population. Various amenities are provided in the design, including a computer room, community room/lounge and kitchen, fitness room, pool, and outdoor courtyards with seating areas and barbeque areas. The design encourages interaction amongst all residents through easy access and visual links to common spaces. Because there are two (2) target populations (families and special needs populations), a mix of the units has been spread across the residential buildings as to ensure integration and prevent isolation of a group within the Project. The tot lot, however, is strategically situated next to the residential building that has a higher share of larger family bedroom units. While the Project has a high density of dwelling units, a large portion of the ground floor is dedicated to services, common areas and on-site amenities. Demolition & Remediation Costs The site is currently vacant. The site will be remediated in accordance with the Removal Action Workplan (“RAW”) as approved by the Department of Toxic Substances Control (“DTSC”). The RAW is a proposed cleanup plan to address areas of soil contaminated with arsenic, lead, chromium, and petroleum hydrocarbons, and an area of soil vapor contaminated with tetrachloroethylene (“PCE”), prior to residential development. Services The Project will engage the social service provider A Community of Friends (“ACOF”) to provide a range of services available to residents. Adult Educational, Health, Wellness, and Skill Building Classes – examples of classes may include, but are not limited to, the following areas: financial literacy, computer training, resume building, nutrition, health information/awareness, and cooking. Service Coordinator – responsibilities include, but are not limited to, providing individual case management referrals and supportive services for tenants. EXHIBIT 6 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 4 Case Manager – responsibilities include, but are not limited to, providing individual case management referrals and supportive services for tenants; process housing applications using the Coordinated Entry System (“CES”), Family Solutions Center (“FSC”), and interview potential tenants for permanent supportive housing; and developing Individual Service Plans in collaboration with tenants. Please note that because the project contains less than seventy-five percent (75%) Special Needs units, and is fifty percent (50%) Special Needs and fifty-percent (50%) Large Family, services are provided proportionally for each population type. In addition to the services provided by ACOF, the Orange County Health Care Agency (“OCHCA”) will provide individualized services for the twenty (20) Mental Health Services Act tenants. Project Population Type As described above, the Project consists of eighty-six (86) units. Of the eighty (86) units, forty- three (43) units are dedicated for permanent supportive housing and one (1) unit dedicated as Manager’s unit. Of the forty-three (43) permanent supportive housing units, twenty (20) will be set aside for Mental Health Services Act (“MHSA”) tenants. Development & Management Teams The Project is controlled by the Partnership. The “for profit” administrative general partner is Related/Washington Santa Ana Development Co., LLC, an affiliate of Related. The “not for profit” managing general partner will be Supportive Housing LLC, whose member is A Community of Friends. The John Stewart Company (“JSCo”) will manage the Project. Related/Washington Santa Ana Development Co., LLC, will own a .0075% interest and Supportive Housing LLC will own a .0025% interest and act as the Managing General Partner. Income Catergory Total Units General Affordable MHSA Units General PSH Units Total PSH Units Type (PSH vs Family) Studio 30% TC 16 0 - 16 16 PSH 1 Bedroom 30% TC 26 0 20 6 26 PSH 2 Bedrooms 30% TC 21 20 - 1 1 PSH 2 Bedrooms Manager 1 1 - 3 Bedrooms 30% TC 17 17 - - 0 Family 4 Bedrooms 30% TC 5 5 - - 0 Family Total 86 43 20 23 43 EXHIBIT 6 The Crossroads at Washington Prepared March 11, 2022 Washington Santa Ana Housing Partners, L.P. 5 EXHIBIT 6 DRAFT 6/9/22 Refernce Number Description Value 01-7123 Site Controls / Field Engineering 55,775$ 02-0002 General Overtime Hour Allowance 200,000$ 03-3000 Cast-In-Place Concrete 1,352,273$ 03-3116 Lightweight Concrete 172,500$ 04-2000 Masonry 207,202$ 05-1200 Structural Steel Framing 559,545$ 05-7000 Misc. & Ornamental Metals 204,801$ 06-1000 Rough Carpentry 5,416,400$ 06-2000 Finish Carpentry 112,826$ 06-2200 Countertops 223,792$ 06-4100 Cabinets 412,672$ 07-1000 Waterproofing 184,821$ 07-2100 Building Insulation 221,087$ 07-4600 Cladding/Siding 190,085$ 07-4000 Roofing 383,260$ 07-6000 Flashing / Sheetmetal 193,012$ 07-9000 Caulking, Sealant & Fire Stopping 43,866$ 07-9500 Expansion Controls 24,829$ 08-1000 Doors and Trim 843,400$ 08-3100 Access Doors 16,059$ 08-5200 Wood & Plastic Windows 720,447$ 08-8000 Glass & Glazing 81,078$ 09-2200 Drywall & Metal Stud 2,275,000$ 09-2400 Cement Plastering 1,546,500$ 09-3000 Ceramic Tile 33,533$ 09-6200 Special Flooring 15,549$ 09-6500 Resilient Flooring & Carpet 627,142$ 09-7710 Fiber Reinforced Panel 5,000$ 09-9000 Painting & Wall Covering 720,698$ 10-1400 Signs 43,866$ 10-2100 Toilet Compartments & Accessories 51,900$ 10-2600 Wall & Corner Guards 7,500$ 10-4400 Fire Extinguisher 6,141$ 10-5500 Mail Chutes/Boxes 25,800$ 10-7313 Canopies/Awnings 22,814$ 11-4000 Appliances 231,000$ The Crossroads at Washington Schedule of Values Exhibit B - Scope of Work EXHIBIT 6 12-2000 Window Treatment 45,150$ 13-1100 Swimming Pool & Spa 165,000$ 14-2000 Elevators 250,000$ 14-9000 Chutes 70,300$ 21-1000 Fire Sprinkler Systems 514,000$ 22-0000 Plumbing 2,261,098$ 23-0000 HVAC 1,112,000$ 26-0000 Electrical 1,752,800$ 26-0001 Light Fixture Allowance 400,000$ 26-0002 Dry Utility Allowance 100,000$ 27-1000 Low Voltage Systems Allowance 298,560$ 27-1001 Electronic Hardware Allowance 42,000$ 28-4600 Fire Alarm Systems 210,559$ 31-0001 Earthwork 302,247$ 31-2500 Erosion Control 36,999$ 32-1216 Asphaltic Concrete Paving 95,564$ 32-1313 Site Concrete 322,023$ 32-1700 Pavement Marking 13,650$ 32-1800 Playfield Equipment 149,840$ 32-3300 Site/Street Furnishings 62,205$ 32-8000 Irrigation/Landscaping 415,097$ 33-0001 Site Utilities (Storm Drain/Sewer/Water) Allowance 1,023,250$ Trade Subtotal 27,074,515$ General Conditions & General Requirements 2,376,385$ Contractor Fee 1,178,036$ Insurance 434,931$ Mark Up Subtotal 3,989,352$ Contract Value Total 31,063,867$ EXHIBIT 6 Exhibit C: Project Budget EXHIBIT 6 Project Data Basis Calculations Project Type Special Needs Total Eligible Basis $42,311,860 County Orange Adjusted Threshold Basis Limit $49,190,316 Site Control Type Ground Lease Total Eligible Basis as a % of Threshold Basis Limit 86.02% Total Units 86 Parking Spaces 120 Permanent Sources Interest Rate Term (Years)Amount Debt Service Land Area 2.29 Acres Tax Credit Equity 24,696,393 n/a Net Residential Area 65,130 SF Permanent Loan Note A 6.02%15 Yr / 40 Yr Amort 490,000 32,435 Recreation Building 6,141 SF Permanent Loan Note B (SAHA PBV Tranche B Loan)6.02%15 Yr / 40 Yr Amort 4,894,000 323,949 Retail Building/Space 1,443 SF Permanent Loan Note B (OCHA PBV Tranche B Loan)6.02%15 Yr / 40 Yr Amort 6,442,000 426,415 Construction Months 16 Months City Residual Receipts Loan (Land Value)3.00%62 4,108,136 n/a City Residual Receipts Loan 3.00%55 4,644,909 n/a Orange County Residual Receipts Loan (Land Value)3.00%62 2,341,864 n/a Operating Economic Assumptions Orange County PSH Loan 3.00%55 2,650,701 n/a Residential Vacancy Rate (General Affordable Units)5.00%OCHFT MHSA Loan (2021 PSH NOFA)3.00%55 2,500,000 n/a Residential Vacancy Rate (PSH Units)10.00%Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)300,000 n/a Unit Weighted Vacancy 7.53%GP Equity 100 n/a Retail Vacancy Rate 0.0%Total 53,068,103 782,799 Income Inflator 3.0% Expense Inflator 3.0%Sources and Uses Property Tax Inflator 2.0%Total Permanent Sources 53,068,103 Replacement Reserve Inflator (every 5 Years)10.0%Total Development Cost 53,068,103 CPI 3.0%Over/(Under)- Stabilized Cash Flow Year 1 Cost Efficiency / Credit Reduction / Public Funds Gross Scheduled Rent 833,928 Cost Efficiency 13% Project Based Voucher Overhang (OCHA)939,708 Credit Reduction 0% Laundry Income 6,192 Public Funds Development Ratio 25% Vacancy & Collection (134,704)38% Effective Gross Income 1,645,124 Operating Expenses (744,794) Net Operating Income 900,330 Debt Service (combined)(782,799)Cash Flow 117,532 DCR 1.15 Related Companies of California PROJECT SUMMARY The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 6 Total Number Income Rent Gross Utility Net Net Rent Monthly Annual Square Of Units Category Restriction SF Rent Allowance Rent Per SqFt Rent Rent Unit %Footage Studio 16 30% AMI TCAC 400 $711 $36 $675 $1.69 $10,800 $129,600 19%6,400 16 1 Bedroom 26 30% AMI TCAC 600 $762 $45 $717 $1.20 $18,642 $223,704 30%15,600 26 2 Bedrooms 21 30% AMI TCAC 815 $915 $60 $855 $1.05 $17,955 $215,460 24%17,115 1 Manager 815 $0 $0 0 n/a $0 $0 1%815 22 3 Bedrooms 17 30% AMI TCAC 1,100 $1,057 $76 $981 $0.89 $16,677 $200,124 20%18,700 17 4 Bedrooms 5 30% AMI TCAC 1,300 $1,179 $95 $1,084 $0.83 $5,420 $65,040 6%6,500 5 Unit Distribution Summary Summary Income Units Total %Unit Size Units Total % Total SF 65,130 30% AMI 85 100%Studio 16 19% Avg. Unit SF 757 35% AMI 0 0%1 Bedroom 26 30% Monthly Rent $69,494 40% AMI 0 0%2 Bedrooms 22 26% Annual Rent $833,928 45% AMI 0 0%3 Bedrooms 17 20% Avg. Rent (excl. manager's)$818 50% AMI 0 0%4 Bedrooms 5 6% Avg. Rent PSF (excl. manager's)$1.08 60% AMI 0 0%Total 86 100% Bedrooms 157 Market 0 0% Subtotal 85 100% Manager 1 Total 86 Related Companies of California UNIT DISTRIBUTION The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 6 The Crossroads at Washington - Updated Closing Proforma (v04r) PBV Overhang Calculation - Separated by AHAP SEPARATED OCHA 2021 Income Catergory PBS8 Units Payment Standard TCAC Gross Rents Per Unit Overhang Monthly Overhang Annual Overhang Studio 30% TC 16 1,682 711 971 15,536 186,432 1 Bedroom 30% TC 26 1,867 762 1,105 28,730 344,760 2 Bedrooms 30% TC 1 2,278 915 1,363 1,363 16,356 Total 43 Gross Overhang 45,629 547,548 Less Vacancy 10.00%(4,563) (54,755) Less Monitoring Fee (197) (2,365) Less Management Fee - - Net Overhang 40,869 490,428 DCR 1.15 Interest Rate 6.02% Term (months)480 Maximum Loan Amount 6,442,663 Actual Loan Amount (Rounded Down)6,442,000 Annual Payment 426,415 SAHA 2021 Income Catergory PBS8 Units Payment Standard TCAC Gross Rents Per Unit Overhang Monthly Overhang Annual Overhang 3 Bedrooms 30% TC 10 3,114 1,057 2,057 20,570 246,840 4 Bedrooms . 30% TC 5 3,601 1,179 2,422 12,110 145,320 Total 15 32,680 392,160 Less Vacancy 5.00%(1,634) (19,608) Net Overhang 31,046 372,552 DCR 1.15 Interest Rate 6.02% Term (months)480 Maximum Loan Amount 4,894,146 Actual Loan Amount (Rounded Down)4,894,000 Annual Payment 323,949 EXHIBIT 6 Related Companies of California Operating Expense Budget (86 units) RENTING Advertising 672 Misc. Renting 699 TOTAL RENTING 1,371 ADMINISTRATION Office 5,913 Legal 3,010 Audit 12,000 Telephone/Computer 16,931 Tenant Relations 2,956 Misc. Administrative 11,234 TOTAL ADMINISTRATION 52,044 MANAGEMENT FEE Contract Management 54,696 TOTAL MANAGEMENT 54,696 OPERATING Electricity 10,000 Water 24,725 Gas 10,402 Sewer 18,505 Exterminating 4,300 Rubbish Removal 23,220 Misc. Operating 1,075 TOTAL OPERATING 92,227 MAINTENANCE Security 29,348 Grounds 26,875 Pool 6,000 Repairs 26,875 Elevator 19,350 Unit Turns 5,375 Misc. Maintenance 9,138 TOTAL MAINTENANCE 122,960 SALARIES AND BENEFITS Office Salaries 67,080 Maintenance Salaries 62,608 Payroll Taxes and Benefits 51,875 TOTAL SALARIES AND BENEFITS 181,563 TAXES AND INSURANCE Real Estate Taxes 4,500 Business Taxes and Licenses 369 Insurance 51,600 TOTAL TAXES AND INSURANCE 56,469 RESERVES AND OTHER EXPENSES Replacement Reserves 25,800 Replacement Reserves (Add'l MHSA Units)4,000 PSH Monitoring Fee (OCHA/OCCS: $55/unit/yr x 43 units)2,365 PSH Monitoring Fee (OCHFT: $65/unit/yr x 20 units)1,300 Annual Environmental Monitoring Fees 10,000 Social Programs 140,000 TOTAL RESERVES AND OTHER COSTS 183,465 TOTAL OPERATING EXPENSES 744,794 ANNUAL OPERATING EXPENSE BUDGET The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 6 PROJECT BUDGET 86 units Commercial/TCAC Budget Residential Retail Eligible Basis ACQUISITION COSTS 6,450,000 6,450,000 0 0 PROFESSIONAL FEES 2,672,000 2,672,000 0 2,669,431 FEES AND PERMITS 2,630,000 2,630,000 0 2,630,000 CONSTRUCTION COSTS Offsite Improvements/Site Improvements/Landscaping 3,687,814 3,687,814 0 3,687,814 Residential Structures/Non-Residential Structures/Community Building 23,212,137 22,751,496 460,642 22,751,496 General Conditions / Contractor Profit 3,674,454 3,611,532 62,922 3,611,532 Contractor Insurance 311,124 305,796 5,328 305,796 Contractor / Construction Contingency 2,109,175 2,073,057 36,118 2,073,057 Remediation 850,000 850,000 0 0 TOTAL CONSTRUCTION COSTS 33,844,705 33,279,695 565,010 32,429,695 GAP/CONSTRUCTION/PERMANENT LOAN FEES 557,000 557,000 0 57,234 CONSTRUCTION LOAN INTEREST/POST-CONSTRUCTION INTEREST 2,382,000 2,382,000 0 960,000 OTHER SOFT COSTS 1,643,500 1,643,500 0 1,058,500 RESERVES 381,898 381,898 0 0 DEVELOPER FEE 2,507,000 2,507,000 0 2,507,000 TOTAL DEVELOPMENT COSTS 53,068,103 52,503,093 565,010 42,311,860 / TOTAL ELIGIBLE BASIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California EXHIBIT 6 Total Project Cost $53,068,103 Total Permanent Sources (28,371,710) Funding Shortfall $24,696,393 Total Qualified Basis $29,829,544 Annual Federal Credits - Calculated $2,684,659 Annual Federal Credits - Awarded $2,684,659 Total Federal Credits (10 Years)$26,846,590 Federal Tax Credit Price $0.920 Federal Tax Credit Investor Equity $24,696,393 Total Tax Credit Investor Equity (Federal + State+ Acquisition)$24,696,393 Threshold Basis Limits (Year 2022)9% Limits Units Limit Total Efficiency 16 308,882 4,942,112 1 Bedroom 26 356,138 9,259,588 2 Bedrooms 22 429,600 9,451,200 3 Bedrooms 17 549,888 9,348,096 4 Bedrooms 5 612,610 3,063,050 86 36,064,046 Special Features Threshold Basis Limit Increases 10% Increase: 95% of the project's upper floor units are serviced by an elevator 3,606,405 20% Increase: State or Federal Prevailing Wage Requirement 7,212,809 Total Percentage Increase to Unadjusted Eligible Basis (Combined not to exceed 39%)10,819,214 Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis max.)850,000 Development Impact Fees 1,457,057 Adjusted Threshold Basis Limit $49,190,316 Total Eligible Basis $42,311,860 Over /(Under) Basis Limit ($6,878,456) Related Companies of California TAX CREDIT CALCULATION The Crossroads at Washington - Updated Closing Proforma (v04r) EXHIBIT 6 Construction Sources and Uses Construction Sources Construction Loan 35,033,056 City Residual Receipts Loan (Land Value)4,108,136 Tax Credit Equity 2,469,639 City Residual Receipts Loan 4,644,909 Orange County Residual Receipts Loan (Land Value)2,341,864 OCHFT MHSA Loan (2021 PSH NOFA)2,500,000 Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)300,000 GP Equity 100 1,253,500 Operating Deficit Reserve 381,898 Deferred TCAC Monitoring Fee 35,000 Total Construction Sources 53,068,103 Construction Uses Total Development Cost 53,068,103 Amount Over/(Under)- Permanent Sources and Uses Sources Tax Credit Equity 24,696,393 Permanent Loan Note A 490,000 Permanent Loan Note B (SAHA PBV Tranche B Loan)4,894,000 Permanent Loan Note B (OCHA PBV Tranche B Loan)6,442,000 City Residual Receipts Loan (Land Value)4,108,136 City Residual Receipts Loan 4,644,909 Orange County Residual Receipts Loan (Land Value)2,341,864 Orange County PSH Loan 2,650,701 OCHFT MHSA Loan (2021 PSH NOFA)2,500,000 Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)300,000 GP Equity 100 Total Permanent Sources 53,068,103 Uses Total Development Cost 53,068,103 Amount Over/(Under)- Deferred Developer Fee (50% of $2,507,000) SOURCES AND USES OF FUNDS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California EXHIBIT 6 3%/3% Cash Flow Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 INCOME Gross Rental Income 833,928 858,946 884,714 911,256 938,593 966,751 995,754 1,025,626 1,056,395 1,088,087 1,120,729 1,154,351 1,188,982 1,224,651 1,261,391 Project Based Voucher Overhang (SAHA)392,160 403,925 416,043 428,524 441,380 454,621 468,260 482,307 496,777 511,680 527,030 542,841 559,126 575,900 593,177 Project Based Voucher Overhang (OCHA)547,548 563,974 580,894 598,320 616,270 634,758 653,801 673,415 693,617 714,426 735,859 757,934 780,673 804,093 828,215 Vacancy @ 7.57%(134,237)(138,265)(142,412)(146,685)(151,085)(155,618)(160,286)(165,095)(170,048)(175,149)(180,404)(185,816)(191,390)(197,132)(203,046) Laundry Income 6,192 6,378 6,569 6,766 6,969 7,178 7,394 7,615 7,844 8,079 8,322 8,571 8,828 9,093 9,366 Unit Weighted Vacancy @ 7.53%(466)(480)(495)(509)(525)(540)(557)(573)(591)(608)(627)(645)(665)(685)(705) EFFECTIVE GROSS INCOME 1,645,124 1,694,478 1,745,312 1,797,672 1,851,602 1,907,150 1,964,365 2,023,295 2,083,994 2,146,514 2,210,910 2,277,237 2,345,554 2,415,921 2,488,398 EXPENSES Administrative (52,044)(53,605)(55,213)(56,870)(58,576)(60,333)(62,143)(64,007)(65,927)(67,905)(69,942)(72,041)(74,202)(76,428)(78,721) Management Fee (54,696)(56,337)(58,027)(59,768)(61,561)(63,408)(65,310)(67,269)(69,287)(71,366)(73,507)(75,712)(77,983)(80,323)(82,733) Operating (92,227)(94,994)(97,843)(100,779)(103,802)(106,916)(110,124)(113,427)(116,830)(120,335)(123,945)(127,663)(131,493)(135,438)(139,501) Maintenance (122,960)(126,649)(130,448)(134,362)(138,393)(142,544)(146,821)(151,225)(155,762)(160,435)(165,248)(170,205)(175,312)(180,571)(185,988) Salaries (181,563)(187,010)(192,620)(198,399)(204,351)(210,482)(216,796)(223,300)(229,999)(236,899)(244,006)(251,326)(258,866)(266,632)(274,631) Taxes (escalated at 2.00%)(4,869)(4,966)(5,065)(5,167)(5,270)(5,375)(5,483)(5,593)(5,704)(5,819)(5,935)(6,054)(6,175)(6,298)(6,424) Insurance (51,600)(53,148)(54,742)(56,385)(58,076)(59,819)(61,613)(63,461)(65,365)(67,326)(69,346)(71,426)(73,569)(75,776)(78,050) Renting (1,371)(1,412)(1,454)(1,498)(1,543)(1,589)(1,637)(1,686)(1,736)(1,788)(1,842)(1,897)(1,954)(2,013)(2,073) Social Programs (140,000)(144,200)(148,526)(152,982)(157,571)(162,298)(167,167)(172,182)(177,348)(182,668)(188,148)(193,793)(199,607)(205,595)(211,763) Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%)(1,300)(1,326)(1,353)(1,380)(1,407)(1,435)(1,464)(1,493)(1,523)(1,554)(1,585)(1,616)(1,649)(1,682)(1,715) Other Expenses: Annual Environmental Monitoring Fees (10,000)(10,300)(10,609)(10,927)(11,255)(11,593)(11,941)(12,299)(12,668)(13,048)(13,439)(13,842)(14,258)(14,685)(15,126) Replacement Reserves (escalated at 10% every 5 years)(29,800)(29,800)(29,800)(29,800)(29,800)(32,780)(32,780)(32,780)(32,780)(32,780)(36,058)(36,058)(36,058)(36,058)(36,058) TOTAL OPERATING EXPENSES Op Exp / Income: 45% (744,794)(766,111)(788,067)(810,680)(833,970)(860,937)(885,643)(911,088)(937,295)(964,288)(995,366)(1,023,999)(1,053,490)(1,083,864)(1,115,147) NET OPERATING INCOME 900,330 928,367 957,246 986,992 1,017,632 1,046,213 1,078,722 1,112,207 1,146,699 1,182,226 1,215,543 1,253,238 1,292,064 1,332,057 1,373,251 DEBT SERVICE Permanent Loan Note A (32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435) Permanent Loan Note B (SAHA PBV Tranche B Loan)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949) Permanent Loan Note B (OCHA PBV Tranche B Loan)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415) Conventional Refinance Loan 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash Flow After Debt Service 117,532 145,568 174,447 204,194 234,834 263,415 295,923 329,409 363,900 399,428 432,745 470,439 509,265 549,258 590,452 SLP Fee (5,000)(5,150)(5,305)(5,464)(5,628)(5,796)(5,970)(6,149)(6,334)(6,524)(6,720)(6,921)(7,129)(7,343)(7,563) Partnership Administration Fee (20,000)(20,600)(21,218)(21,855)(22,510)(23,185)(23,881)(24,597)(25,335)(26,095)(26,878)(27,685)(28,515)(29,371)(30,252) Cash Flow After Fees 92,532 119,818 147,925 176,875 206,696 234,433 266,072 298,662 332,231 366,809 399,147 435,833 473,621 512,545 552,638 12,520 16,211 20,014 23,931 27,966 31,719 36,000 40,409 44,951 49,629 54,005 58,968 64,081 69,348 74,772 Only after County Cash Loan is paid off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 21,938 28,408 35,072 41,936 49,006 55,582 63,083 70,810 78,769 86,967 94,634 103,332 112,292 121,520 131,026 Only after City Cash Loan is paid off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11,808 15,290 18,876 22,571 26,376 29,916 33,953 38,112 42,395 46,808 50,934 55,616 60,438 65,405 70,521 Total Residual Receipts Payments 46,266 59,909 73,962 88,438 103,348 117,216 133,036 149,331 166,116 183,404 199,573 217,917 236,811 256,272 276,319 Orange County PSH Loan Beginning Loan Balance 2,650,701 2,717,702 2,781,012 2,840,519 2,896,108 2,947,663 2,995,466 3,038,987 3,078,099 3,112,669 3,142,561 3,168,077 3,188,629 3,204,069 3,214,243 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 Cash Flow Payment (12,520)(16,211)(20,014)(23,931)(27,966)(31,719)(36,000)(40,409)(44,951)(49,629)(54,005)(58,968)(64,081)(69,348)(74,772) Ending Loan Balance 2,717,702 2,781,012 2,840,519 2,896,108 2,947,663 2,995,466 3,038,987 3,078,099 3,112,669 3,142,561 3,168,077 3,188,629 3,204,069 3,214,243 3,218,992 Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance 2,341,864 2,412,120 2,482,376 2,552,632 2,622,888 2,693,144 2,763,400 2,833,655 2,903,911 2,974,167 3,044,423 3,114,679 3,184,935 3,255,191 3,325,447 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 Cash Flow Payment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ending Loan Balance 2,412,120 2,482,376 2,552,632 2,622,888 2,693,144 2,763,400 2,833,655 2,903,911 2,974,167 3,044,423 3,114,679 3,184,935 3,255,191 3,325,447 3,395,703 City Residual Receipts Loan Beginning Loan Balance 4,644,909 4,762,318 4,873,257 4,977,533 5,074,944 5,165,286 5,249,051 5,325,315 5,393,852 5,454,430 5,506,810 5,551,523 5,587,538 5,614,594 5,632,421 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 Cash Flow Payment (21,938)(28,408)(35,072)(41,936)(49,006)(55,582)(63,083)(70,810)(78,769)(86,967)(94,634)(103,332)(112,292)(121,520)(131,026) Ending Loan Balance 4,762,318 4,873,257 4,977,533 5,074,944 5,165,286 5,249,051 5,325,315 5,393,852 5,454,430 5,506,810 5,551,523 5,587,538 5,614,594 5,632,421 5,640,743 City Residual Receipts Loan (Land Value) Beginning Loan Balance 4,108,136 4,231,380 4,354,624 4,477,868 4,601,112 4,724,356 4,847,600 4,970,845 5,094,089 5,217,333 5,340,577 5,463,821 5,587,065 5,710,309 5,833,553 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 Cash Flow Payment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ending Loan Balance 4,231,380 4,354,624 4,477,868 4,601,112 4,724,356 4,847,600 4,970,845 5,094,089 5,217,333 5,340,577 5,463,821 5,587,065 5,710,309 5,833,553 5,956,797 OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance 2,500,000 2,563,192 2,622,902 2,679,026 2,731,455 2,780,079 2,825,164 2,866,211 2,903,099 2,935,704 2,963,896 2,987,961 3,007,345 3,021,908 3,031,503 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 Cash Flow Payment (11,808)(15,290)(18,876)(22,571)(26,376)(29,916)(33,953)(38,112)(42,395)(46,808)(50,934)(55,616)(60,438)(65,405)(70,521) Ending Loan Balance 2,563,192 2,622,902 2,679,026 2,731,455 2,780,079 2,825,164 2,866,211 2,903,099 2,935,704 2,963,896 2,987,961 3,007,345 3,021,908 3,031,503 3,035,982 DCR 1.15 1.19 1.22 1.26 1.30 1.34 1.38 1.42 1.46 1.51 1.55 1.60 1.65 1.70 1.75 Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California EXHIBIT 6 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1,299,233 1,338,210 1,378,356 1,419,707 1,462,298 1,506,167 1,551,352 1,597,892 1,645,829 1,695,204 1,746,060 1,798,442 1,852,395 1,907,967 1,965,206 610,973 629,302 648,181 667,626 687,655 708,285 729,533 751,419 773,962 797,181 821,096 845,729 871,101 897,234 924,151 853,062 878,654 905,013 932,164 960,129 988,933 1,018,601 1,049,159 1,080,633 1,113,052 1,146,444 1,180,837 1,216,262 1,252,750 1,290,333 (209,137)(215,412)(221,874)(228,530)(235,386)(242,448)(249,721)(257,213)(264,929)(272,877)(281,063)(289,495)(298,180)(307,125)(316,339) 9,647 9,936 10,234 10,541 10,858 11,183 11,519 11,865 12,220 12,587 12,965 13,354 13,754 14,167 14,592 (726)(748)(771)(794)(818)(842)(867)(893)(920)(948)(976)(1,005)(1,036)(1,067)(1,099) 2,563,050 2,639,942 2,719,140 2,800,714 2,884,736 2,971,278 3,060,416 3,152,228 3,246,795 3,344,199 3,444,525 3,547,861 3,654,297 3,763,926 3,876,843 (81,082)(83,515)(86,020)(88,601)(91,259)(93,997)(96,817)(99,721)(102,713)(105,794)(108,968)(112,237)(115,604)(119,072)(122,645) (85,215)(87,771)(90,404)(93,116)(95,910)(98,787)(101,751)(104,803)(107,947)(111,186)(114,521)(117,957)(121,496)(125,140)(128,895) (143,686)(147,997)(152,437)(157,010)(161,720)(166,572)(171,569)(176,716)(182,017)(187,478)(193,102)(198,895)(204,862)(211,008)(217,338) (191,568)(197,315)(203,234)(209,331)(215,611)(222,079)(228,742)(235,604)(242,672)(249,952)(257,451)(265,174)(273,130)(281,324)(289,763) (282,870)(291,356)(300,096)(309,099)(318,372)(327,923)(337,761)(347,894)(358,331)(369,081)(380,153)(391,558)(403,304)(415,403)(427,866) (6,553)(6,684)(6,817)(6,954)(7,093)(7,235)(7,379)(7,527)(7,677)(7,831)(7,988)(8,147)(8,310)(8,477)(8,646) (80,391)(82,803)(85,287)(87,846)(90,481)(93,195)(95,991)(98,871)(101,837)(104,892)(108,039)(111,280)(114,619)(118,057)(121,599) (2,135)(2,199)(2,265)(2,333)(2,403)(2,476)(2,550)(2,626)(2,705)(2,786)(2,870)(2,956)(3,045)(3,136)(3,230) (218,115)(224,659)(231,399)(238,341)(245,491)(252,856)(260,441)(268,254)(276,302)(284,591)(293,129)(301,923)(310,980)(320,310)(329,919) (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) (1,750)(1,785)(1,820)(1,857)(1,894)(1,932)(1,970)(2,010)(2,050)(2,091)(2,133)(2,175)(2,219)(2,263)(2,309) (15,580)(16,047)(16,528)(17,024)(17,535)(18,061)(18,603)(19,161)(19,736)(20,328)(20,938)(21,566)(22,213)(22,879)(23,566) (39,664)(39,664)(39,664)(39,664)(39,664)(43,630)(43,630)(43,630)(43,630)(43,630)(47,993)(47,993)(47,993)(47,993)(47,993) (1,150,973)(1,184,159)(1,218,338)(1,253,541)(1,289,798)(1,331,108)(1,369,569)(1,409,183)(1,449,983)(1,492,006)(1,539,650)(1,584,227)(1,630,140)(1,677,428)(1,726,133) 1,412,077 1,455,783 1,500,802 1,547,173 1,594,938 1,640,170 1,690,847 1,743,045 1,796,812 1,852,194 1,904,875 1,963,634 2,024,157 2,086,497 2,150,710 (32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435) (323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949) (426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 629,278 672,984 718,004 764,375 812,139 857,371 908,048 960,247 1,014,013 1,069,395 1,122,077 1,180,835 1,241,358 1,303,699 1,367,912 (7,790)(8,024)(8,264)(8,512)(8,768)(9,031)(9,301)(9,581)(9,868)(10,164)(10,469)(10,783)(11,106)(11,440)(11,783) (31,159)(32,094)(33,057)(34,049)(35,070)(36,122)(37,206)(38,322)(39,472)(40,656)(41,876)(43,132)(44,426)(45,759)(47,131) 590,329 632,867 676,682 721,814 768,301 812,219 861,541 912,344 964,674 1,018,575 1,069,732 1,126,920 1,185,826 1,246,501 1,308,998 79,872 85,627 91,555 97,662 103,952 109,894 116,567 123,441 130,521 137,814 144,735 152,473 160,443 168,652 177,108 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 139,962 150,047 160,436 171,136 182,158 192,570 204,264 216,309 228,716 241,495 253,624 267,183 281,149 295,535 310,352 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 75,331 80,759 86,350 92,109 98,042 103,646 109,940 116,423 123,100 129,979 136,507 143,804 151,321 159,064 167,039 295,165 316,433 338,341 360,907 384,151 406,109 430,770 456,172 482,337 509,288 534,866 563,460 592,913 623,250 654,499 3,218,992 3,218,641 3,212,535 3,200,500 3,182,360 3,157,929 3,127,557 3,090,511 3,046,591 2,995,591 2,937,299 2,872,085 2,799,133 2,718,211 2,629,080 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 79,521 78,872 (79,872)(85,627)(91,555)(97,662)(103,952)(109,894)(116,567)(123,441)(130,521)(137,814)(144,735)(152,473)(160,443)(168,652)(177,108) 3,218,641 3,212,535 3,200,500 3,182,360 3,157,929 3,127,557 3,090,511 3,046,591 2,995,591 2,937,299 2,872,085 2,799,133 2,718,211 2,629,080 2,530,844 3,395,703 3,465,959 3,536,215 3,606,471 3,676,726 3,746,982 3,817,238 3,887,494 3,957,750 4,028,006 4,098,262 4,168,518 4,238,774 4,309,030 4,379,286 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,465,959 3,536,215 3,606,471 3,676,726 3,746,982 3,817,238 3,887,494 3,957,750 4,028,006 4,098,262 4,168,518 4,238,774 4,309,030 4,379,286 4,449,542 5,640,743 5,640,128 5,629,428 5,608,340 5,576,552 5,533,741 5,480,518 5,415,602 5,338,640 5,249,272 5,147,124 5,032,847 4,905,011 4,763,209 4,607,022 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 139,347 138,211 (139,962)(150,047)(160,436)(171,136)(182,158)(192,570)(204,264)(216,309)(228,716)(241,495)(253,624)(267,183)(281,149)(295,535)(310,352) 5,640,128 5,629,428 5,608,340 5,576,552 5,533,741 5,480,518 5,415,602 5,338,640 5,249,272 5,147,124 5,032,847 4,905,011 4,763,209 4,607,022 4,434,880 5,956,797 6,080,041 6,203,285 6,326,529 6,449,774 6,573,018 6,696,262 6,819,506 6,942,750 7,065,994 7,189,238 7,312,482 7,435,726 7,558,970 7,682,214 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6,080,041 6,203,285 6,326,529 6,449,774 6,573,018 6,696,262 6,819,506 6,942,750 7,065,994 7,189,238 7,312,482 7,435,726 7,558,970 7,682,214 7,805,458 3,035,982 3,035,651 3,029,892 3,018,541 3,001,432 2,978,391 2,949,745 2,914,805 2,873,383 2,825,282 2,770,304 2,708,797 2,639,993 2,563,672 2,479,608 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 74,388 (75,331)(80,759)(86,350)(92,109)(98,042)(103,646)(109,940)(116,423)(123,100)(129,979)(136,507)(143,804)(151,321)(159,064)(167,039) 3,035,651 3,029,892 3,018,541 3,001,432 2,978,391 2,949,745 2,914,805 2,873,383 2,825,282 2,770,304 2,708,797 2,639,993 2,563,672 2,479,608 2,386,958 1.80 1.86 1.92 1.98 2.04 2.10 2.16 2.23 2.30 2.37 2.43 2.51 2.59 2.67 2.75 EXHIBIT 6 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 2,024,162 2,084,887 2,147,434 2,211,857 2,278,212 2,346,559 2,416,955 2,489,464 2,564,148 2,641,072 2,720,305 2,801,914 2,885,971 2,972,550 3,061,727 951,875 980,432 1,009,844 1,040,140 1,071,344 1,103,484 1,136,589 1,170,686 1,205,807 1,241,981 1,279,241 1,317,618 1,357,147 1,397,861 1,439,797 1,329,043 1,368,914 1,409,981 1,452,281 1,495,849 1,540,725 1,586,947 1,634,555 1,683,592 1,734,099 1,786,122 1,839,706 1,894,897 1,951,744 2,010,296 (325,829)(335,604)(345,672)(356,043)(366,724)(377,726)(389,057)(400,729)(412,751)(425,133)(437,887)(451,024)(464,555)(478,491)(492,846) 15,030 15,480 15,945 16,423 16,916 17,423 17,946 18,485 19,039 19,610 20,199 20,804 21,429 22,071 22,734 (1,132)(1,166)(1,201)(1,237)(1,274)(1,312)(1,351)(1,392)(1,434)(1,477)(1,521)(1,566)(1,613)(1,662)(1,712) 3,993,149 4,112,943 4,236,331 4,363,421 4,494,324 4,629,154 4,768,028 4,911,069 5,058,401 5,210,153 5,366,458 5,527,452 5,693,275 5,864,073 6,039,996 (126,324)(130,114)(134,017)(138,037)(142,179)(146,444)(150,837)(155,362)(160,023)(164,824)(169,769)(174,862)(180,108)(185,511)(191,076) (132,762)(136,744)(140,847)(145,072)(149,424)(153,907)(158,524)(163,280)(168,178)(173,224)(178,420)(183,773)(189,286)(194,965)(200,814) (223,859)(230,574)(237,492)(244,616)(251,955)(259,513)(267,299)(275,318)(283,577)(292,085)(300,847)(309,873)(319,169)(328,744)(338,606) (298,456)(307,410)(316,632)(326,131)(335,915)(345,993)(356,372)(367,063)(378,075)(389,418)(401,100)(413,133)(425,527)(438,293)(451,442) (440,702)(453,923)(467,540)(481,566)(496,013)(510,894)(526,221)(542,007)(558,268)(575,016)(592,266)(610,034)(628,335)(647,185)(666,601) (8,819)(8,995)(9,175)(9,359)(9,546)(9,737)(9,932)(10,130)(10,333)(10,540)(10,750)(10,965)(11,185)(11,408)(11,637) (125,247)(129,004)(132,874)(136,860)(140,966)(145,195)(149,551)(154,038)(158,659)(163,419)(168,321)(173,371)(178,572)(183,929)(189,447) (3,327)(3,427)(3,529)(3,635)(3,744)(3,857)(3,972)(4,092)(4,214)(4,341)(4,471)(4,605)(4,743)(4,886)(5,032) (339,817)(350,011)(360,512)(371,327)(382,467)(393,941)(405,759)(417,932)(430,470)(443,384)(456,685)(470,386)(484,497)(499,032)(514,003) (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) (2,355)(2,402)(2,450)(2,499)(2,549)(2,600)(2,652)(2,705)(2,759)(2,814)(2,870)(2,928)(2,986)(3,046)(3,107) (24,273)(25,001)(25,751)(26,523)(27,319)(28,139)(28,983)(29,852)(30,748)(31,670)(32,620)(33,599)(34,607)(35,645)(36,715) (52,793)(52,793)(52,793)(52,793)(52,793)(58,072)(58,072)(58,072)(58,072)(58,072)(63,879)(63,879)(63,879)(63,879)(63,879) (1,781,096)(1,832,762)(1,885,977)(1,940,785)(1,997,235)(2,060,656)(2,120,539)(2,182,216)(2,245,741)(2,311,169)(2,384,365)(2,453,772)(2,525,259)(2,598,888)(2,674,723) 2,212,053 2,280,181 2,350,355 2,422,636 2,497,089 2,568,498 2,647,489 2,728,853 2,812,660 2,898,984 2,982,093 3,073,679 3,168,016 3,265,185 3,365,273 (32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)(32,435)0 0 0 0 0 (323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)(323,949)0 0 0 0 0 (426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)(426,415)0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,429,254 1,497,382 1,567,556 1,639,838 1,714,290 1,785,699 1,864,691 1,946,054 2,029,861 2,116,185 2,982,093 3,073,679 3,168,016 3,265,185 3,365,273 (12,136)(12,500)(12,875)(13,262)(13,660)(14,069)(14,491)(14,926)(15,374)(15,835)(16,310)(16,799)(17,303)(17,823)(18,357) (48,545)(50,002)(51,502)(53,047)(54,638)(56,277)(57,966)(59,705)(61,496)(63,341)(65,241)(67,198)(69,214)(71,290)(73,429) 1,368,573 1,434,880 1,503,179 1,573,530 1,645,993 1,715,353 1,792,234 1,871,424 1,952,992 2,037,010 2,900,542 2,989,682 3,081,498 3,176,072 3,273,486 185,168 194,140 203,381 212,899 222,704 232,088 242,490 253,204 264,241 275,608 392,445 404,505 416,928 0 0 0 0 0 0 0 0 0 0 0 0 0 0 366,338 429,724 442,904 324,477 340,198 356,391 373,070 390,251 406,695 424,923 443,698 463,037 482,957 687,693 708,828 730,597 0 0 0 0 0 0 0 0 0 0 0 0 0 0 641,946 753,019 776,115 174,641 183,102 191,818 200,795 210,042 218,893 228,704 238,809 249,218 259,939 370,133 381,508 393,224 0 0 684,286 717,440 751,590 786,765 822,996 857,676 896,117 935,712 976,496 1,018,505 1,450,271 1,494,841 2,549,034 1,182,743 1,219,020 2,530,844 2,421,601 2,300,109 2,165,732 2,017,804 1,855,635 1,679,216 1,487,103 1,278,511 1,052,626 808,596 440,409 49,116 0 0 75,925 72,648 69,003 64,972 60,534 55,669 50,376 44,613 38,355 31,579 24,258 13,212 1,473 0 0 (185,168)(194,140)(203,381)(212,899)(222,704)(232,088)(242,490)(253,204)(264,241)(275,608)(392,445)(404,505)(50,590)0 0 2,421,601 2,300,109 2,165,732 2,017,804 1,855,635 1,679,216 1,487,103 1,278,511 1,052,626 808,596 440,409 49,116 0 0 0 4,449,542 4,519,798 4,590,053 4,660,309 4,730,565 4,800,821 4,871,077 4,941,333 5,011,589 5,081,845 5,152,101 5,222,357 5,292,613 4,996,530 4,637,062 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 70,256 0 0 0 0 0 0 0 0 0 0 0 0 (366,338)(429,724)(442,904) 4,519,798 4,590,053 4,660,309 4,730,565 4,800,821 4,871,077 4,941,333 5,011,589 5,081,845 5,152,101 5,222,357 5,292,613 4,996,530 4,637,062 4,264,414 4,434,880 4,243,450 4,030,556 3,795,082 3,535,864 3,251,689 2,942,545 2,605,898 2,240,376 1,844,550 1,416,929 771,744 86,068 0 0 133,046 127,304 120,917 113,852 106,076 97,551 88,276 78,177 67,211 55,337 42,508 23,152 2,582 0 0 (324,477)(340,198)(356,391)(373,070)(390,251)(406,695)(424,923)(443,698)(463,037)(482,957)(687,693)(708,828)(88,650)0 0 4,243,450 4,030,556 3,795,082 3,535,864 3,251,689 2,942,545 2,605,898 2,240,376 1,844,550 1,416,929 771,744 86,068 0 0 0 7,805,458 7,928,702 8,051,947 8,175,191 8,298,435 8,421,679 8,544,923 8,668,167 8,791,411 8,914,655 9,037,899 9,161,143 9,284,387 8,765,685 8,135,910 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 123,244 0 0 0 0 0 0 0 0 0 0 0 0 (641,946)(753,019)(776,115) 7,928,702 8,051,947 8,175,191 8,298,435 8,421,679 8,544,923 8,668,167 8,791,411 8,914,655 9,037,899 9,161,143 9,284,387 8,765,685 8,135,910 7,483,039 2,386,958 2,283,925 2,169,341 2,042,603 1,903,086 1,750,136 1,583,747 1,402,556 1,205,824 992,781 762,625 415,371 46,324 0 0 71,609 68,518 65,080 61,278 57,093 52,504 47,512 42,077 36,175 29,783 22,879 12,461 1,390 0 0 (174,641)(183,102)(191,818)(200,795)(210,042)(218,893)(228,704)(238,809)(249,218)(259,939)(370,133)(381,508)(47,714)0 0 2,283,925 2,169,341 2,042,603 1,903,086 1,750,136 1,583,747 1,402,556 1,205,824 992,781 762,625 415,371 46,324 0 0 0 2.83 2.91 3.00 3.09 3.19 3.28 3.38 3.49 3.59 3.70 0.00 0.00 0.00 0.00 0.00 EXHIBIT 6 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 46 47 48 49 50 51 52 53 54 55 3,153,579 3,248,186 3,345,632 3,446,001 3,549,381 3,655,862 3,765,538 3,878,504 3,994,859 4,114,705 1,482,991 1,527,480 1,573,305 1,620,504 1,669,119 1,719,193 1,770,768 1,823,891 1,878,608 1,934,966 2,070,605 2,132,723 2,196,705 2,262,606 2,330,484 2,400,399 2,472,411 2,546,583 2,622,981 2,701,670 (507,632)(522,861)(538,546)(554,703)(571,344)(588,484)(606,139)(624,323)(643,053)(662,344) 23,416 24,118 24,842 25,587 26,355 27,145 27,960 28,798 29,662 30,552 (1,763)(1,816)(1,870)(1,927)(1,984)(2,044)(2,105)(2,168)(2,233)(2,300) 6,221,196 6,407,831 6,600,066 6,798,068 7,002,010 7,212,071 7,428,433 7,651,286 7,880,824 8,117,249 (196,808)(202,713)(208,794)(215,058)(221,510)(228,155)(235,000)(242,050)(249,311)(256,790)Refi Loan (206,838)(213,043)(219,435)(226,018)(232,798)(239,782)(246,976)(254,385)(262,016)(269,877)Year 55 NOI 4,533,855 (348,764)(359,227)(370,004)(381,104)(392,537)(404,313)(416,443)(428,936)(441,804)(455,058)Year of Refinancing 55 (464,985)(478,935)(493,303)(508,102)(523,345)(539,045)(555,216)(571,873)(589,029)(606,700)Interest Rate 6.50% (686,599)(707,197)(728,412)(750,265)(772,773)(795,956)(819,835)(844,430)(869,763)(895,855)Term (years)5 years (11,869)(12,107)(12,349)(12,596)(12,848)(13,105)(13,367)(13,634)(13,907)(14,185)DCR 1.2 (195,130)(200,984)(207,014)(213,224)(219,621)(226,210)(232,996)(239,986)(247,185)(254,601)Max Refi Loan 16,091,620 (5,183)(5,339)(5,499)(5,664)(5,834)(6,009)(6,189)(6,375)(6,566)(6,763) (529,423)(545,306)(561,665)(578,515)(595,871)(613,747)(632,159)(651,124)(670,658)(690,777)Loan Balances (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365)Orange County PSH Loan 0 (3,169)(3,233)(3,297)(3,363)(3,430)(3,499)(3,569)(3,640)(3,713)(3,787)Orange County Residual Receipts Loan (Land Value)0 (37,816)(38,950)(40,119)(41,323)(42,562)(43,839)(45,154)(46,509)(47,904)(49,341) (70,267)(70,267)(70,267)(70,267)(70,267)(77,294)(77,294)(77,294)(77,294)(77,294)City Residual Receipts Loan (Land Value)0 (2,759,218)(2,839,665)(2,922,523)(3,007,863)(3,095,760)(3,193,318)(3,286,562)(3,382,599)(3,481,515)(3,583,394)City Residual Receipts Loan 0 OCHFT MHSA Loan (2021 PSH NOFA)0 3,461,978 3,568,166 3,677,544 3,790,206 3,906,250 4,018,753 4,141,871 4,268,686 4,399,309 4,533,855 Total Loan Balances (Actual Refi Loan Amount)0 Balance after Payoff (Can't be below 0)16,091,620 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 3,461,978 3,568,166 3,677,544 3,790,206 3,906,250 4,018,753 4,141,871 4,268,686 4,399,309 4,533,855 (18,908)(19,475)(20,059)(20,661)(21,281)(21,920)(22,577)(23,254)(23,952)(24,671) (75,632)(77,901)(80,238)(82,645)(85,124)(87,678)(90,308)(93,018)(95,808)(98,682) 3,367,438 3,470,790 3,577,246 3,686,899 3,799,845 3,909,155 4,028,986 4,152,414 4,279,549 4,410,502 0 0 0 0 0 0 0 0 0 0 455,616 469,600 484,003 498,839 514,121 528,910 545,124 561,824 579,025 596,743 0 0 0 0 0 0 0 0 0 0 798,390 822,894 848,134 874,132 900,910 926,827 955,238 984,502 1,014,644 1,045,692 0 0 0 0 0 0 0 0 0 0 1,254,006 1,292,494 1,332,137 1,372,971 1,415,031 1,455,737 1,500,361 1,546,325 1,593,669 1,642,435 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 4,264,414 3,879,054 3,479,710 3,065,963 2,637,380 2,193,515 1,730,410 1,237,199 712,491 154,841 70,256 70,256 70,256 70,256 70,256 65,805 51,912 37,116 21,375 4,645 (455,616)(469,600)(484,003)(498,839)(514,121)(528,910)(545,124)(561,824)(579,025)(159,486) 3,879,054 3,479,710 3,065,963 2,637,380 2,193,515 1,730,410 1,237,199 712,491 154,841 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 7,483,039 6,807,892 6,108,242 5,383,352 4,632,464 3,854,798 3,043,615 2,179,685 1,260,574 283,748 123,244 123,244 123,244 123,244 123,244 115,644 91,308 65,391 37,817 8,512 (798,390)(822,894)(848,134)(874,132)(900,910)(926,827)(955,238)(984,502)(1,014,644)(292,260) 6,807,892 6,108,242 5,383,352 4,632,464 3,854,798 3,043,615 2,179,685 1,260,574 283,748 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 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 EXHIBIT 6 Year INCOME Gross Rental Income Project Based Voucher Overhang (SAHA) Project Based Voucher Overhang (OCHA) Vacancy @ 7.57% Laundry Income Unit Weighted Vacancy @ 7.53% EFFECTIVE GROSS INCOME EXPENSES Administrative Management Fee Operating Maintenance Salaries Taxes (escalated at 2.00%) Insurance Renting Social Programs Other Expenses: PSH Monitoring Fees (OCHA/OCCS) (no escalation) Other Expenses: PSH Monitoring Fees (OCHFT) (escalated at 2%) Other Expenses: Annual Environmental Monitoring Fees Replacement Reserves (escalated at 10% every 5 years) TOTAL OPERATING EXPENSES Op Exp / Income: 45% NET OPERATING INCOME DEBT SERVICE Permanent Loan Note A Permanent Loan Note B (SAHA PBV Tranche B Loan) Permanent Loan Note B (OCHA PBV Tranche B Loan) Conventional Refinance Loan Cash Flow After Debt Service SLP Fee Partnership Administration Fee Cash Flow After Fees Only after County Cash Loan is paid off Only after City Cash Loan is paid off Total Residual Receipts Payments Orange County PSH Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance Orange County Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan Beginning Loan Balance Cash Flow Payment Ending Loan Balance City Residual Receipts Loan (Land Value) Beginning Loan Balance Cash Flow Payment Ending Loan Balance OCHFT MHSA Loan (2021 PSH NOFA) Beginning Loan Balance Cash Flow Payment Ending Loan Balance DCR Cash Flow to Subsidy Provider - County (PSH Loan) (13.5%) Cash Flow to Subsidy Provider - County (Land Loan) (13.5%) Cash Flow to Subsidy Provider - City (Cash Loan) (23.7%) Cash Flow to Subsidy Provider - City (Land Loan) (23.7%) Cash Flow to Subsidy Provider - OCHFT (PSH Loan) (12.8%) Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% Accrued Interest at 3.00% STABILIZED CASH FLOW ANALYSIS The Crossroads at Washington - Updated Closing Proforma (v04r) Related Companies of California 3%/3% Cash Flow 56 57 58 59 60 61 62 4,238,146 4,365,290 4,496,249 4,631,137 4,770,071 4,913,173 5,060,568 1,993,015 2,052,806 2,114,390 2,177,822 2,243,156 2,310,451 2,379,765 2,782,720 2,866,202 2,952,188 3,040,754 3,131,976 3,225,935 3,322,714 (682,214)(702,681)(723,761)(745,474)(767,838)(790,873)(814,600) 31,469 32,413 33,385 34,387 35,418 36,481 37,575 (2,369)(2,440)(2,514)(2,589)(2,667)(2,747)(2,829) 8,360,767 8,611,590 8,869,937 9,136,035 9,410,116 9,692,420 9,983,192 (264,494)(272,429)(280,602)(289,020)(297,690)(306,621)(315,820) (277,973)(286,312)(294,902)(303,749)(312,861)(322,247)(331,915) (468,710)(482,771)(497,254)(512,172)(527,537)(543,363)(559,664) (624,901)(643,648)(662,957)(682,846)(703,332)(724,432)(746,164) (922,731)(950,413)(978,925)(1,008,293)(1,038,542)(1,069,698)(1,101,789) (14,469)(14,758)(15,053)(15,354)(15,661)(15,974)(16,294) (262,239)(270,106)(278,209)(286,555)(295,152)(304,007)(313,127) (6,966)(7,175)(7,390)(7,612)(7,840)(8,075)(8,317) (711,501)(732,846)(754,831)(777,476)(800,800)(824,824)(849,569) (2,365)(2,365)(2,365)(2,365)(2,365)(2,365)(2,365) (3,863)(3,941)(4,019)(4,100)(4,182)(4,265)(4,351) (50,821)(52,346)(53,917)(55,534)(57,200)(58,916)(60,684) (85,023)(85,023)(85,023)(85,023)(85,023)(93,525)(93,525) (3,696,056)(3,804,133)(3,915,448)(4,030,099)(4,148,186)(4,278,314)(4,403,584) 4,664,711 4,807,457 4,954,489 5,105,936 5,261,930 5,414,106 5,579,608 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (3,778,212)(3,778,212)(3,778,212)(3,778,212)(3,778,212)0 0 886,498 1,029,244 1,176,277 1,327,724 1,483,718 5,414,106 5,579,608 (25,411)(26,173)(26,958)(27,767)(28,600)(29,458)(30,342) (101,643)(104,692)(107,833)(111,068)(114,400)(117,832)(121,367) 759,445 898,379 1,041,486 1,188,889 1,340,718 5,266,816 5,427,900 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 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 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 0 0 0 0 0 0 0 0 1.23 1.27 1.31 1.35 1.39 0.00 0.00 EXHIBIT 6 Exhibit D: City/NSP Loan Deed of Trust EXHIBIT 6 1 The Crossroads at Washington City NSP Deed of Trust FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council _________________________________________________________________ CITY NEIGBHORHOOD STABILIZATION PROGRAM DEED OF TRUSTAND ASSIGNMENT OF RENTS (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) THIS DEED OF TRUST AND ASSIGNMENT OF RENTS (“Deed of Trust”) is made as of this 21st day of June, 2022, by Washington Santa Ana Housing Partners, L.P., a California limited partnership, (“Trustor”), to [ ______ ], as trustee (“Trustee”), for the benefit of the City of Santa Ana, a charter city and municipal corporation , as beneficiary (“Beneficiary”). FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trust or hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trust or’s leasehold interest in the property located in the City of Santa Ana, State of California, that is described in Exhibit A, attached hereto and incorporated herein by this reference (the “Property”), on which Trustor intended to construct and operate an apartment complex commonly known as Crossroads at Washington. 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, hereditament and appurtenances thereof and thereto; TOGETHER WITH any and all buildings, improvements and landscaping 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 (sometimes collectively referred to as the “Improvements”); EXHIBIT 6 2 The Crossroads at Washington City NSP Deed of Trust 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, strips and gores of land adjacent to or used in connection with the Property and/or Improvements; 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 oil, gas and mineral rights (including royalty and leasehold rights relating thereto), all water and water rights and shares of stock relating thereto, all leases of all or any portion of the Property or Improvements entered into by Trustor as lessor or lessee, all options to purchase or lease all or any portion of the Property and/or Improvements, all deposits made with or other security given by Trustor to third parties including, 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 and proceeding or purchase in lieu thereof of the whole or any part of such property; and TOGETHER WITH all articles of personal property or fixtures now or hereafter attached to, located on, installed in or used in and about the Property and/or Improvements, including without limitation, all partitions, generators, screens, boilers, furnaces, pipes, plumbing, elevators, cleaning and sprinkler systems, fire extinguishing machinery and equipment, water tanks, heating, ventilating, air conditioning and air cooling machinery and, equipment, gas and electric machinery and equipment and other appliances, machinery and equipment and other fixtures of every nature, all of which shall remain real property, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the Property in any manner. TOGETHER WITH all present and future accounts, general intangibles, chattel paper, deposit accounts, investment property, instruments and documents as those terms are defined in the California Commercial Code, now or hereafter relating or arising with respect to the Property and/or Improvements and/or the use thereof or any improvements thereto, including without limitation: (i) all rights to the payment of money, including escrow proceeds arising out of the sale or other disposition of all or any portion of the Property and/or Improvements; (ii) all deposit accounts and other accounts and funds created under or pursuant to the Loan Agreement (as defined below), and the other Loan Documents, all amounts now or hereafter on deposit herein, and all interest and other earnings thereon with the exception of the operating reserve created pursuant to Borrower’s Partnership Agreement (as defined in the Loan Agreement); (iii) all use permits, occupancy permits, construction and building permits, and all other permits and approvals required by any governmental or quasi-governmental authority in connection with the development, construction, use, occupancy or operation of the Property and/or Improvements; (iv) any and all agreements relating to the occupancy and/or operation of the Property and/or Improvements, including without limitation service, property management, landscaping, gardening, consulting and other contracts of every nature (to the extent the same are assignable); (v) all lease or rental agreements; (vi) all names under which the Property and/or Improvements EXHIBIT 6 3 The Crossroads at Washington City NSP Deed of Trust are now or hereafter known and all rights to carry on business under any such names or any variant thereof; (vii) all trademarks relating to the Property and/or Improvements and/or the use, occupancy or operation thereof; (viii) all goodwill relating to the Property and/or Improvements and/or the use, occupancy or operation thereof; (ix) all insurance proceeds and condemnation awards arising out of or incidental to the ownership, use, occupancy or operation of the Property and/or Improvements; (x) all reserves, deferred payments, deposits, refunds, cost savings, bonds, insurance policies and payments of any kind relating to the Property and/or Improvements; (xi) all water stock, if any, relating to any Property and/or Improvements; (xii) all supplements, modifications and amendments to the foregoing and all present and future accessions, additions, attachments, replacements and substitutions of or to any or all of the foregoing; and (xiii) all cash and noncash proceeds and products of any or all of the foregoing, including without limitation all monies, deposit accounts, insurance proceeds and other tangible or intangible property received upon a sale or other disposition of any of the foregoing, whether voluntary or involuntary; and TOGETHER WITH all present and future goods, equipment and inventory, as those terms are defined in the California Commercial Code, and all other present and future personal property of any kind or nature whatsoever, now or hereafter located at, upon or about the Property and/or Improvements, or used or to be used in connection with or relating or arising with respect to the Property and/or Improvements, the use thereof or any improvements thereto. 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. FOR THE PURPOSE OF SECURING: (a) Payment of and performance of all indebtedness of Trustor to Beneficiary as set forth in the Loan Agreement (defined in Section 1.5 below) and the Note (defined in Section 1.6 below) in the original principal amount of $1,637,420 until paid or canceled. Said principal and other payments shall be due and payable as provided in the Loan Agreement and the Note. The Loan Agreement and the Note and all their terms are incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced; (b) Payment and performance of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust with interest thereon as provided herein; (c) Payment and performance of every other obligation, covenant or agreement of Trustor contained in this Deed of Trust and in the other “Loan Documents” (as such term is defined in the Loan Agreement); (d) Payment and performance of all renewals, extensions, supplements, amendments and other modifications of any of the foregoing, including without limitation modifications that are evidenced by new or additional documents or that change the rate of interest on any obligation. All of the foregoing obligations are referred to collectively herein as the “Obligations”. EXHIBIT 6 4 The Crossroads at Washington City NSP Deed of Trust AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: Section 1. DEFINITIONS 1.1 Defined Terms. In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall have the following meanings in this Deed of Trust: “Debt Instrument” means any debt, loan, mortgage, deed of trust, regulatory agreement or security instrument relating to the Property or the Security, including, but not limited to, the Loan Documents. “Environmental Reports” [list to be provided under separate cover] “Hazardous Substance” means: (a) any oil, flammable substance, explosive, radioactive material, hazardous waste or substance, toxic waste or substance or any other waste, material, or pollutant that (i) poses a hazard to the Property or to persons on the Property or (ii) causes the Property to be in violation of any Hazardous Substance Law; (b) asbestos in any form; (c) urea formaldehyde foam insulation; (d) transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls; (e) radon gas; (f) any chemical, material, or substance defined as or included in the definition of “hazardous substance,” “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous waste,” or “toxic substances” or words of similar import under any applicable local, state, or federal law or under the regulations adopted or publications promulgated pursuant to those laws, including, but not limited to, any Hazardous Substance Law, Code of Civil Procedure § 564, as amended from time to time, Code of Civil Procedure § 726.5, as amended from time to time, Code of Civil Procedure §736, as amended from time to time, and Civil Code § 2929.5, as amended from time to time; (g) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any governmental authority with authority over the Property or which may pose a hazard to the health and safety of the occupants of the Property or the owners or occupants of property adjacent to or surrounding the Property, or any other person coming on the Property or any adjacent property; and EXHIBIT 6 5 The Crossroads at Washington City NSP Deed of Trust (h) any other chemical, material, or substance that may pose a hazard to the environment. The term Hazardous Substance shall not include materials or substances commonly used in the construction and operation of an apartment complex in accordance with applicable Hazardous Substance Law. “Hazardous Substance Claim” means any enforcement, cleanup, removal, remedial, or other governmental, regulatory, or private actions, agreements, or orders threatened, instituted, or completed pursuant to any Hazardous Substance Law together with all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost-recovery compensation, loss, or injury resulting from the presence, release or discharge of any Hazardous Substance. “Hazardous Substance Law” means any federal, state, or local law, ordinance, regulation, or policy relating to the environment, health, and safety, any Hazardous Substance (including, without limitation, the use, handling, transportation, productio n, disposal, discharge, or storage of the substance), industrial hygiene, soil, groundwater, and indoor and ambient air conditions or the environmental conditions on the Property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 [42 USCS §§ 9601 et seq.], as amended from time to time; the Hazardous Substances Transportation Act [49 USCS §§ 1801 et seq.], as amended from time to time; the Resource Conservation and Recovery Act [42 USCS §§ 6901 et seq.], as amended from time to time; the Federal Water Pollution Control Act [33 USCS §§ 1251 et seq.], as amended from time to time; the Hazardous Substance Account Act [Health and Safety Code §§ 25300 et seq.], as amended from time to time; the Hazardous Waste Control Law [Health and Safety Code §§ 25100 et seq.], as amended from time to time; the Medical Waste Management Act [Health and Safety Code §§ 25015 et seq.], as amended from time to time; and the Porter-Cologne Water Quality Control Act [Water Code §§ 13000 et seq.], as amended from time to time. “Loan Agreement” means that certain Loan Agreement, which terms and provision are incorporated into this Deed of Trust by reference, of even date herewith between Trustor and Beneficiary. “Note” means that certain promissory note of even date herewith executed by the Trustor, the payment of which is secured by this deed of Trust. “Principal” means the aggregate of all principal and interest due under the Note. “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment, including continuing migration, of Hazardous Substances that goes into the soil, surface water, or groundwater of the Property, whether or not caused by, contributed to, permitted by, acquiesced to, or known to Trustor. Section 2. GENERAL COVENANTS OF TRUSTOR REGARDING THE PROPERTY, IMPROVEMENTS AND SECURITY EXHIBIT 6 6 The Crossroads at Washington City NSP Deed of Trust 2.1. Payment of Secured Obligations. Trustor shall duly and punctually pay and perform all Obligations, including but not limited to all terms, covenants, conditions and agreements set forth in the Debt Instruments, the Loan Agreement, the Note and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof. 2.2. Maintenance, Repair and Modification. (a) The Trustor agrees that at all times prior to full payment of the sum owed under the 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 and repair and in a prudent and businesslike manner. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals to the Security, which are necessary or appropriate. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security. (b) Trustor shall not remove, demolish or substantially alter any of the Improvements, other than to make repairs in the ordinary course of business of a non-structural nature which serve to preserve or increase the value of the Security without Beneficiary’s prior written consent, which consent shall not be unreasonably withheld so long as Trustor provides reasonable evidence to Beneficiary that, following such demolition and restoration and/or alteration, the Improvements shall have a fair market value at least equal to their fair market value prior to such demolition and restoration and/or alteration; Trustor shall complete promptly and in a good and workmanlike manner any Improvement which may now or hereafter be constructed and promptly restore in like manner any Improvement which may be damaged or destroyed thereon from any cause whatsoever, and pa y when due all claims for labor performed and materials furnished therefor; Trustor shall comply with all laws, ordinances, rules, regulations, covenants, conditions, restrictions and orders of any governmental authority now or hereafter affecting the conduct or operation of Trustor’s business or the security or any part thereof or requiring any alteration or improvement to be made thereon; Trustor shall not commit, suffer or permit any act to be done in, upon or to the Security or any part thereof in viola tion of any such laws, ordinances, rules, regulations or orders, or any covenant, condition or restriction now or hereafter affecting the Security; Trustor shall not commit or permit any waste or deterioration of the Security, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Trustor will not take (or fail to take) any action, which if taken (or not so taken) would increase in any way the risk of fire or other hazard occurring to or affecting the Security or otherwise would impair the security of Beneficiary in the Security; Trustor shall comply with the provisions of all leases, if any, constituting a portion of the Security; Trustor shall not abandon the Security or any portion thereof or leave the Security unprotected, unguarded, vacant or deserted; Trustor shall not initiate, join in or consent to any change in any zoning ordinance, general plan, specific plan, private restrictive covenant or other public or private restriction limiting the uses which may be made of the Security by Trustor or by the owner thereof; Trustor shall secure and maintain in full force all permits necessary for the use, occupancy and operation of the Security; except as otherwise prohibited or restricted by the Loan Agreement and the other instruments and documents executed in connection with the transaction to which the Loan Agreement pertains or EXHIBIT 6 7 The Crossroads at Washington City NSP Deed of Trust any of them, Trustor shall do any and all other acts which may be reasonably necessary to protect or preserve the value of the Security and the rights of Trustee and Beneficiary with respect thereto. 2.3. 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 and telegraph, or those required by law. 2.4. Agreement to Pay Attorneys’ Fees and Expenses. In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or incur 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 paid by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such expenses are paid at the Agreed Rate (as defined in Section 3.1(d) below). 2.5. Payment of the Principal. The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and by the times set out therein. 2.6. Fixture Filing and Security Agreement. (a) To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixture filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement under the California Commercial Code and Trustor hereby grants to Beneficiary a security interest in all of Trustor’s right, title and interest, whether now existing or hereaft er arising, in and to any portion of the Property which constitutes personal property (the “Personal Property”). (b) Trustor hereby represents and warrants to Beneficiary that: (1) Trustor is the owner of the Personal Property and no other person has any right, title, claim or interest (by way of security interest or other lien or charge or otherwise) in, against or to the Personal Property other than any senior lender or lien holder approved in writing by Beneficiary; (2) the Personal Property is free from all liens, security interests, encumbrances and adverse interests, except Permitted Encumbrances (hereinafter defined); (3) no financing statement or similar filing covering any of the Personal Property, and naming any secured party other than Beneficiary and the holders of Permitted Encumbrances, is on file in any public office; (4) each account, general intangible, chattel paper, deposit account, instrument, document, agreement, contract or right to the payment of money constituting Personal Property (collectively, the "Rights to Payment"), if EXHIBIT 6 8 The Crossroads at Washington City NSP Deed of Trust any, is genuine and enforceable in accordance with its terms against the party obligated to pay the same and (5) the Personal Property is not used nor was the Personal Property purchased for personal or family use by Trustor. (c) Trustor hereby agrees: (1) to pay, prior to delinquency, all taxes, assessments, charges, encumbrances and liens now or hereafter imposed upon or affecting all or any part of the Personal Property; (2) not to amend, modify, supplement, terminate or cancel any of the Personal Property; (3) without the prior written consent of Beneficiary, not to remove all or any part of the tangible Personal Property from the Property; (4) to give Beneficiary thirty (30) days' prior written notice of any change in Trustor's residence, principal place of business, chief executive office or trade names or styles; (5) to appear in and defend any action or proceeding which may affect the Personal Property (including, without limitation, actions, proceedings and claims which may affect Trustor's title to the Personal Property or the validity or priority of Beneficiary's security interest in the Personal Property); (6) to indemnify Beneficiary against all claims, demands and liabilities of every kind caused by the Personal Property; and (7) upon not less than 72 hours’ prior written notice and during regular business hours, to permit Beneficiary to enter Trustor's premises to inspect the Personal Property; provided, that Trustor shall have the right to require that a representative of Trustor be present during any such entry made while any construction and/or rehabilitation work is occurring. Trustor further agrees (8) to fully and timely perform all of its obligations under and with respect to all Rights of Payment and to diligently enforce all of the obligations of each obligor thereunder; (9) not to amend, modify, supplement, cancel or terminate any of the Rights to Payment in any material respect without the prior written consent of Beneficiary; (10) to keep the Rights to Payment and all proceeds free and clear of all defaults, defenses, rights of offset and counterclaim; (11) to take or bring, in Beneficiary's name or in the name of Trustor, as Beneficiary may require, all actions, suits or proceedings reasonably deemed necessary by Beneficiary to effect collection or to realize upon Rights to Payment; and (12) not to commingle Rights to Payment or collections thereunder with other property. (d) As soon as practicable, and in any event within ten (10) days, Trustor shall notify Beneficiary of: (1) any attachment or other legal process levied against any of the Personal Property; (2) any information received by Trustor which may in any manner materially and adversely affect the value of the Personal Property or the rights and remedies of Beneficiary with respect thereto; and (3) the removal of any of the Personal Property to a new location other than in the ordinary course of business and the removal of any records of Trustor relating to the Personal Property to any location other than the Land and Improvements. (e) Trustor hereby irrevocably constitutes and appoints Beneficiary as its attorney-in- fact to, after the occurrence and during the occurrence of an Event of Default: (1) perform any obligation of Trustor hereunder in Trustor's name or otherwise; (2) give notice of Beneficiary's rights in the Rights to Payment, to enforce the same, and make extension agreements with respect thereto; (3) release persons liable on the Rights to Payment and to give receipts and acquittances and compromise disputes in connection therewith; (4) release security for the Rights to Payment; (5) resort to security for the Rights to Payment in any order; (5) prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, financing statements, continuation statements, termination statements, and other documents to perfect preserve or release Beneficiary's interest in the Rights to Payment; and (6) do all acts and things EXHIBIT 6 9 The Crossroads at Washington City NSP Deed of Trust and execute all documents in the name of Trustor or otherwise, deemed by Beneficiary as necessary, proper and convenient in connection with the preservation, perfection or enforcement of its rights hereunder. The power of attorney granted hereunder is coupled with an interest and is irrevocable. 2.7. 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 that 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 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. 2.8. Operation of the Security. The Trustor agrees and covenants to operate the Security in full compliance with the Loan Agreement and the Debt Instruments. 2.9. Inspection of the Security. The Trustor covenants and agrees that at any and all reasonable times during regular business hours and upon not less than 72 hours’ prior written notice, the Beneficiary and its duly authorized agents, attorney’s experts, engineers, accountants and representatives, shall have the right, without payment of charges or fees, to inspect all or any portion of the Security, including, but not limited to, the right to inspect and copy all reports and records pertaining thereto provided, that Trustor shall have the right to require that a representative of Trustor be present during any entry onto the Property made while any construction and/or rehabilitation work is occurring. 2.10. Nondiscrimination. The Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, age, marital status, national origin, ancestry or disability in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants shall run with the land. 2.11. Subrogation and Waiver of Offset. (a) Trustor waives any and all right to claim or recover against Beneficiary, its officers, employees, agents and representatives, for loss of or damage to Trustor, the Security, EXHIBIT 6 10 The Crossroads at Washington City NSP Deed of Trust Trustor’s property or the property of others under Trustor’s control from any cause insured against or required to be insured against by the provisions of this Deed of Trust; provided, however, that this waiver of subrogation shall not be effective with respect to any policy of insurance permitted or required by this Deed of Trust if (i) such policy prohibits, or if coverage thereunder would be reduced as a result of, such waiver of subrogation and (ii) Trustor is unable to obtain from a carrier issuing such insurance a policy that, by special endorsement or otherwise, permits such a waiver of subrogation. (b) Except as otherwise specifically provided herein, all amounts payable by Trustor pursuant to this Deed of Trust shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Trustor hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of or any condemnation or similar taking of the Security or any part thereof; (ii) any restriction or prevention of or interference by any third party with any use of the Security or any part thereof; (iii) any title defect or encumbrance or any eviction from the Security or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Beneficiary, or any action taken with respect to this Deed of Trust by any trustee or receiver of Beneficiary, or by any court, in any such proceeding; (v) any claim which Trustor has or might have against Beneficiary; (vi) any default or failure on the part of Beneficiary to perform or comply with any of the terms hereof or of any other agreement with Trustor; or (vii) an y other occurrence whatsoever, whether similar or dissimilar to the foregoing. Except as expressly provided herein, Trustor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Trustor. 2.12. Utilities. Trustor shall pay or cause to be paid when due all utility charges which are incurred for the benefit of the Security or which may become a charge or lien against the Security for gas, electricity, water, sewer services or other fees and charges for utilities furnished to the Security and all other assessments or charges of a similar nature, whether public or private, affecting or related to the Security or any portion thereof, whether or not such taxes, assessments or charges are or may become liens thereon. 2.13. Actions by Beneficiary to Preserve Property. If Trustor fails to make any payment or to do any act as and in the manner provided in this Deed of Trust, Beneficiary and Trustee, and each of them, each in its own discretion, without obligation to do so, without releasing Trustor from any Obligation, and subject only to the notice and cure provisions of the Loan Agreement, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. In connection therewith (without limiting their general and other powers, whether conferred herein, in another Loan Document or by law), Beneficiary and Trustee shall each and are hereby given the right, but not the obligation: (i) to enter upon and take possession of the Security; (ii) to make additions, alterations, repairs and improvements to the Security which either of them consider necessary or EXHIBIT 6 11 The Crossroads at Washington City NSP Deed of Trust proper to keep the Security in good condition an d repair; (iii) to appear and participate in any action or proceeding which may affect the security hereof or the rights or powers of Beneficiary or Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in the judgment of either may affect the security of this Deed of Trust or be prior or superior hereto; and (v) in exercising such powers to pay necessary expenses, including employment of counsel or other necessary or desirable consultants. Trustor shall reimburse Beneficiary on demand for all costs incurred by Beneficiary in connection with actions which Beneficiary reasonably deems advisable to protect its interest under the Loan Agreement and all such amounts shall bear interest at the Agreed Rate following demand and be secured hereby. 2.14. Transfer of Property by Trustor. Prior to repayment of the Note, Trustor agrees that Trustor shall not sell or transfer the Security or any interest therein or sell or transfer all or substantially all of the assets of Trustor or any of them except as may be provided in the Loan Agreement. 2.15. Additional Security. No other security now existing, or hereafter taken, to secure the Obligations secured hereby or the liability of any maker, surety guarantor or endorser w ith respect to such Obligations, or any of them, shall be impaired or affected by the execution of this Deed of Trust; and all additional security shall be taken, considered and held as cumulative. The taking of additional security, execution of partial releases of the Security, or any extension of the time of payment of the indebtedness shall not diminish the force, effect or lien of this Deed of Trust and shall not affect or impair the liability of any maker, surety, guarantor or endorser for the payment of said indebtedness. In the event Beneficiary at any time holds additional security for any of the Obligations secured hereby, it may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently, or after a sale is made hereunder. 2.16. Liens. Trustor shall not cause, incur suffer or permit to exist or become effective any lien, encumbrance or charge upon all or any part of the Property, the Improvements or any interest therein other than (a) easements, rights of way, covenants, conditions, restrictions, liens, and other title limitations approved in writing by Beneficiary prior to the execution of this Deed of Trust, (b) immaterial easements and rights of way which are required by governmental authorities as a condition to the use and operation of the Improvements which are approved in writing by Beneficiary after the execution of this Deed of Trust, (c) easements, rights of way, covenants, conditions, restrictions, liens and other title limitations allowed pursuant to Section 2.3 hereof and (d) deeds of trust, regulatory agreements and covenants contained in that certain lenders’ title policy issued to the Beneficiary in connection with the Loan on or about the date hereof (the “Permitted Encumbrances”). Trustor shall pay and promptly discharge, at Trustor’s cost and expense, all liens, encumbrances and charges upon the Security, or any part thereof or interest therein other than the Permitted Encumbrances; provided, that the existence of any mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s lien or right thereto shall not constitute a violation of this Section if payment is not yet due under the contract which is the foundation thereof. Trustor shall have the right to contest in good faith the validity of any such EXHIBIT 6 12 The Crossroads at Washington City NSP Deed of Trust lien, encumbrance or charge, provided Trustor shall first deposit with the Beneficiary a bond or other security reasonably satisfactory to Beneficiary in such amounts as Beneficiary shall reasonably require, but not more than one hundred fifty percent (150%) of the amount of the claim or shall post a bond authorized by statute in lieu thereof, and provided further that Trustor shall thereafter diligently proceed to cause such lien, encumbrance or charge to be removed and discharged. If Trustor shall fail to remove and discharge any such lien, encumbrance, or charge, then, in addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be obligated to, discharge the same, without inquiring into the validity of such lien, encumbrance or charge nor into the existence of any defense or offset thereto, either by paying the amount claimed to be due, or by procuring the discharge of such lien, encumbrance or charge by depositing in court a bond or the amount claimed, or otherwise giving security for such claim, in such manner as is or may be prescribed by law. Trustor shall, promptly upon demand therefor by Beneficiary, pay to Beneficiary an amount equal to all costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing right to discharge any such lien, encumbrance or charge, together with interest thereon from the date of such expenditure at the Agreed Rate and, until paid, such sums shall be secured hereby. 2.17. Beneficiary’s Powers. Without affecting the liability of any other person liable for the payment of any Obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Security not then or theretofore released as securit y for the full amount of all unpaid Obligations, Beneficiary may, from time to time and without notice: (a) release any person so liable, (b) extend the maturity or alter any of the terms of any such Obligation (to the extent that Beneficiary is so allowed under the Loan Agreement), (c) grant other indulgences, (d) release or reconvey, or cause to be released or reconveyed at any time at Beneficiary's option any parcel, portion or all of the Security, (e) take or release any other or additional security for any Obligation herein mentioned, or (f) make compositions or other arrangements with debtors in relation thereto. By accepting payment or performance of any Obligation secured by this Deed of Trust after the payment or performance thereof is due or after the filing of notice of default and election to sell (other than satisfaction in full of the Obligations), Beneficiary shall not have thereby waived its right to require prompt payment or performance, when due, of all other Obligations secured hereby, or to declare a default for failure so to pay or perform, or to proceed with the sale under any notice of default and election to sell theretofore given by Beneficiary, or with respect to any unpaid balance of the indebtedness secured hereby. The acceptance by Beneficiary of any sum in an amount less than the sum then due shall not constitute a waiver of the obligation of Trustor to pay the entire sum then due. Trustor’s failure to pay the entire sum then due shall continue to be a default, notwithstanding the acceptance of partial payment, and, until the entire sum then due shall have been paid, Beneficiary or Trustee shall at all times be entitled to declare a default and to exercise all the remedies herein conferred, and the right to proceed with a sale under any notice of default and election to sell shall in no way be impaired, whether or not such amounts are received prior or subsequent to such notice. No delay or omission of Trustee or Beneficiary in the exercise of any other right or power hereunder s hall impair such right or power or any other right or power nor shall the same be construed to be a waiver of any default or any acquiescence therein. 2.18. Suits to Protect Property. EXHIBIT 6 13 The Crossroads at Washington City NSP Deed of Trust Trustor agrees to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or any additional or other security for the obligations secured, the interest of Beneficiary of the rights, powers and duties of Trustee, and to pay all costs and expenses, including without limitation, cost of evidence of title and reasonable attorneys’ fees, in any action or proceeding in which Beneficiary or Trustee may appear to be made a party, including, but not limited to, foreclosure or other proceeding commenced by those claiming a right to any part of the Property under subordinate liens, in any action to partition or condemn all or part of the Property, whether pursued to final judgment, and in any exercise of the power of sale in this Deed of Trust, whether the sale is actually consummated. Section 3. TAXES AND INSURANCE; ADVANCES 3.1. Taxes, Other Governmental Charges and Utility Charges. (a) Trustor shall pay, prior to delinquency, all real property taxes and assessments, general and special, and all other charges of any kind, including without limi tation non- governmental levies or assessments such as maintenance charges, levies or other charges resulting from covenants, conditions and restrictions affecting the Security, which are assessed or imposed upon the Security or upon Trustor as owner or operator of the Security, or become due and payable, and which create or may create a lien upon the Security, or any part thereof, or upon any personal property, equipment or other facility used in the operation or maintenance thereof (all the above collectively hereinafter referred to as “Impositions”); provided, however, that if, by law, any Imposition is payable, or may at the option of the taxpayer be paid, in installments, Trustor may pay the same in installments (together with any interest charged) as th e same become due and before any fine, penalty or cost may be added thereto for the nonpayment of any such installment. Notwithstanding the foregoing, Trustor shall have the right to diligently contest, in good faith and by appropriate proceedings, the validity of any Imposition, so long as Trustor demonstrates to Beneficiary that Trustor is maintaining sufficient reserves for the payment of all contested liabilities and so long as the security and value of Beneficiary’s interest under this Deed of Trust are not impaired as a result of such contest. (b) If at any time after the date hereof there shall be assessed or imposed (1) a tax or assessment on the Security in lieu of or in addition to the Impositions payable by Trustor pursuant to this Section 3.1 hereof, or (2) a license fee, tax or assessment imposed on Beneficiary and measured by or based in whole or in part upon the amount of the outstanding Obligations secured hereby, then all such taxes, assessments or fees shall be deemed to be included within the term “Impositions” as defined in this Section and Trustor shall pay and discharge the same as herein provided with respect to the payment of Impositions. If Trustor fails to pay such Impositions prior to delinquency or if Trustor is prohibited by law from paying such Impositions, Beneficiary may at its option declare all Obligations secured hereby, together with all accrued interest thereon, immediately due and payable. Anything to the contrary herein notwithstanding, Trustor shall have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax levied on Beneficiary or on the Obligations secured hereby. (c) Trustor shall deliver to Beneficiary within thirty (30) days after the date upon which any such Imposition is due and payable by Trustor official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Beneficiary, evidencing the payment EXHIBIT 6 14 The Crossroads at Washington City NSP Deed of Trust thereof. Trustor shall not suffer, permit or initiate the joint assessment of any real and personal property which may constitute all or a portion of the Security and the personal property or suffer, permit or initiate any other procedure whereby the lien of real property taxes and the lien of personal property taxes shall be assessed, levied or charged to the Security as a single Lien. Trustor shall cause to be furnished to Beneficiary a tax reporting service, covering the Property, of a type and duration, and with a company, reasonably satisfactory to Beneficiary. (d) In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within fifteen (15) 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 lesser of twelve percent (12%) per annum or the maximum rate permitted by law (hereinafter the “Agreed Rate”), shall become an additional Obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts. 3.2. Insurance. (a) Trustor agrees to provide insurance conforming in all respects to that required under the Loan Agreement at all times until all amounts secured by this Deed of Trust have been paid and all other Obligations secured hereunder fulfilled, and this Deed of Trust reconveyed. All such insurance policies and coverages shall be maintained at Trustor’s sole cost and expense. (b) All said insurance shall have attached thereto a lender’s loss payable endorsement for the benefit of Beneficiary in form reasonably satisfactory to the Beneficiary and/or shall name Beneficiary as an additional insured, as Beneficiary may require, and shall contain an endorsement or agreement by the insurer that any loss shall be payable in accordance with the terms of such policies notwithstanding any act or negligence of Trustor or any party holdin g under Trustor which might otherwise result in forfeiture of said insurance and the further agreement of the insurer waiving all rights of setoff, counterclaim and deduction against Trustor. At Beneficiary’s option, Trustor shall furnish Beneficiary with an original of all required policies of insurance and/or a certificate of insurance with all required endorsements for each required policy setting forth the coverage, the limits of liability, the deductible, if any, the name of the carrier, the policy number, and the period of coverage, which certificates and endorsements shall be executed by authorized officials of the companies issuing such insurance, or any agents or attorneys-in-fact authorized to issue said certificates and endorsements (in which event each such certificate and endorsements shall be accompanied by a notarized affidavit, agency agreement or power of attorney evidencing the authority of the signatory to issue such certificate on behalf of the insurer named therein), accompanied by a certificate from Trustor that the insurance satisfies the requirements of the Loan Agreement, and that Beneficiary may conclusively rely on such certificates. If Beneficiary consents (which consent shall not be unreasonably withheld or delayed), Trustor may provide any of the required insurance through blanket policies carried by Trustor and covering more than one location; provided, however, all such policies shall be in form and substance and issued by companies reasonably satisfactory to Beneficiary. (c) At least thirty (30) days prior to the expiration of each required policy, Trustor shall deliver to Beneficiary evidence reasonably satisfactory to Beneficiary of the payment of EXHIBIT 6 15 The Crossroads at Washington City NSP Deed of Trust premium and the renewal or replacement of such policy continuing insurance in form as required by this Deed of Trust or the Loan Agreement. All such policies shall contain a provision that, notwithstanding any contrary agreement between Trustor and the insurance company, such policies will not be canceled, allowed to lapse without renewal, surrendered or materially amended (which term shall include any reduction in the scope, or limits of coverage), other than for nonpayment, without at least thirty (30) days prior written notice to Beneficiary. (d) In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Trustor in and to all policies of insurance required by Section 3.2 hereof and any unearned premiums paid thereon shall, without further act, be assigned to and shall inure to the benefit of and pass to the successor in interest to Trustor or the purchaser or grantee of the Property, and Trustor hereby appoints Beneficiary its lawful attorney-in-fact to execute an assignment thereof and any other document necessary to effect such transfer. 3.3. Advances. In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust or shall fail to keep the Security in accordance with the Loan Agreement, the Beneficiary, after at least twenty (20) days prior written notice to Trustor, may (but shall be under no Obligation to) take out the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Beneficiary shall become an additional Obligation of the Trustor to the Beneficiary (together with any applicable interest) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the Agreed Rate. Section 4. DAMAGE, DESTRUCTION OR CONDEMNATION 4.1. Casualties. Trustor shall give prompt written notice to Beneficiary upon the occurrence of casualty to or in connection with the Security or any part thereof, whether or not covered by insurance. In the event of such casualty Trustor hereby absolutely and unconditionally assigns to Beneficiary all insurance proceeds which it may be entitled to receive and such proceeds shall be delivered to and held by Beneficiary to be applied to Beneficiary’s expenses in settling, prosecuting or defending any insurance claim, and then to the restoration of any portion of the Security that has been damaged or destroyed to the same condition, character and value as existed prior to such damage or destruction so long as the following conditions are satisfied: (i) Trustor is not in default hereunder (other than any default resulting from such casualty), (ii) Beneficiary’s security is not materially impaired, (iii) all income (from the Security or otherwise) required to pay all debt service and operating expenses of the Security during such restoration and thereafter will be equal to or greater than the income which was required to pay such debt service and operating expenses prior to the casualty, (iv) Trustor evidences to the reasonable satisfaction of Beneficiary that the insurance required to be maintained hereunder will be available to the Trustor during restoration and thereafter, (v) Beneficiary shall have approved the plans and specifications for such restoration, which approval shall not be unreasonably withheld or EXHIBIT 6 16 The Crossroads at Washington City NSP Deed of Trust delayed, and (vi) in the event that in Beneficiary’s reasonable judgment the insurance proceeds and any amounts deposited with a senior lender are not sufficient to accomplish restoration, Trustor deposits with the Beneficiary or senior lender, if and to the extent required by that senior lender pursuant to the terms of the senior debt instrument, within five days of demand by Beneficiary, the additional amounts necessary to accomplish restoration. Proceeds disbursed for restoration will be released to Trustor in accordance with Beneficiary’s then current customary disbursement procedures. In the event any of the conditions set forth above are not satisfied or if the insurance proceeds shall not be applied to the restoration of the Security within thirty days after receipt of such proceeds by Beneficiary, Beneficiary may release such proceeds to Trustor without such release being deemed a payment of any indebtedness secured hereby, rather than apply such proceeds to the restoration of the Security. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If the Security is restored at a cost less than the available insurance proceeds, then such excess proceeds shall, if Trustor is not then in default hereunder, be paid over to Trustor. Beneficiary may commence, appear in, defend or prosecute any assigned claim or action, and may adjust, compromise, settle and collect all claims, proceeds and awards assigned to Beneficiary, but shall not be responsible for any failure to collect any claim, proceeds or award, regardless of the cause of the failure. 4.2. Condemnation. Promptly upon its obtaining knowledge of the institution or the threatened institution of any proceeding for the condemnation or other taking for public or quasi-public use of the Security or any part thereof, or if the same be taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner, or should Trustor receive any notice or other information regarding such proceedings, action, taking or damage, Trustor shall promptly notify Trustee and Beneficiary of such fact. Trustor shall then, if requested by Beneficiary, file or defend its right thereunder and prosecute the same with due diligence to its final disposition and shall cause any award or settlement to be paid to Beneficiary in accordance with the provisions of the Loan Agreement. At Beneficiary’s option, Beneficiary or Trustor may be the nominal party in such proceeding but in any event Beneficiary shall be entitled, without regard to the adequacy of its security, to participate in, appear in, prosecute and settle, jointly with Trustor to control the same and to be represented therein by counsel of its choice, and Trustor will deliver, or cause to be delivered, to Beneficiary such instruments as may be requested by it from time to time to permit such participation. Trustor and Beneficiary agree to act in good faith with respect to any consent, settlement, or award arising out of said prosecution. If the Security or any part thereof is taken or diminished in value, or if a consent settlement is entered, by or under threat of such proceedings, all compensation, awards, damages, rights of action proceeds and settlements payable to Trustor b y virtue of its interest in the security shall be and hereby are assigned, transferred and set over into Beneficiary to be held by it, in trust, subject to the lien and security interest of this Deed of Trust. All such proceeds shall be first applied to reimburse Trustee and Beneficiary, for all costs and expenses, including reasonable attorneys’ fees, incurred in connection with the collection of such award or settlement , and then to the restoration of any portion of the Security that has been taken to the similar condition, character and value as existed prior to such taking so long as the following conditions are satisfied: (i) Trustor is not in default hereunder, (ii) Beneficiary’s security is not materially impaired, (iii) all income (from the Security or otherwise) required to pay all debt service and EXHIBIT 6 17 The Crossroads at Washington City NSP Deed of Trust operating expenses of the Security during such restoration and thereafter will be equal to or greater than the income which was required to pay such debt service and operating expenses prior to the casualty, (iv) Trustor evidences to the reasonable satisfaction of Beneficiary that the insurance required to be maintained hereunder will be available to the Trustor during restoration and thereafter, (v) Beneficiary shall have approved the plans and specifications for such restoration, and (vi) in the event that in Beneficiary’s reasonable judgment the insurance proceeds and any amounts deposited with a senior lender are not sufficient to accomplish restoration, Trustor deposits with the Beneficiary or senior lender, if and to the extent required by that senior lender pursuant to the terms of the senior Debt Instrument, within five days of demand by Beneficiary, the additional amounts necessary to accomplish restoration. Application or release of proceeds as provided herein shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Section 5. ENVIRONMENTAL COVENANTS OF TRUSTOR 5.1. Disclosures By Trustor. Except as disclosed in writing to, and acknowledged and accepted in writing by Beneficiary, Trustor represents and warrants that: (a) during the period of Trustor’s ownership of the Property (1) there has been no use, generation, manufacture, storage, treatment, disposal, discharge, Release, or threatened Release of any Hazardous Substance by any person on or around the Property except in such small quantities as are customary and usual in the ordinary course of constructing, using and operating a residential housing business on the Property and in strict compliance with all Hazardous Substances Laws, and (2) there have been no Hazardous Substances transported over or through the Property; (b) Trustor has no knowledge of, or reason to believe that, there has been: (1) any use, generation, manufacture, storage, treatment, disposal, Release, or threatened Release of any hazardous waste or substance by any prior owners or prior occupants of the Property or by any third parties onto the Property, or (2) any actual or threatened litigation or claims of any kind by any person relating to these matters; (c) to Trustor’s knowledge, no Hazardous Substances in excess of permitted levels or reportable quantities under applicable Hazardous Substance Laws are present in or about the Property or any nearby real property that could migrate to the Property; (d) to Trustor’s knowledge, no Release or threatened Release exists or has occurred; EXHIBIT 6 18 The Crossroads at Washington City NSP Deed of Trust (e) to Trustor’s knowledge, no underground storage tanks of any kind are or ever have been located in or about the Property; (f) the Property and all of Trustor’s contemplated operations and activities at, and Trustor’s contemplated use and occupancy of, the Property comply with all applicable Hazardous Substance Laws; (g) Trustor is now in strict compliance with, every permit, license, and approval required by all applicable Hazardous Substance Laws for all activities and operations at, and the use and occupancy of, the Property; (h) to Trustor’s knowledge, there are no Hazardous Substance Claims pending or threatened with regard to Property or against Trustor; (i) to Trustor’s knowledge the Property has not been nor is it within 2,000 feet of any other property designated as “hazardous waste property” or “border zone property” pursuant to Health and Safety Code §§ 25220 et seq., and no proceedings for a determination of this designation are pending or threatened; (j) to Trustor’s knowledge, there exists no occurrence or condition on any real property adjoining or within 2,000 feet of the Property that would cause the Property or any part of it to be designated as “hazardous waste property” or “border zone property” under the provisions of Health and Safety Code §§ 25220 et seq., and any regulation adopted in accordance with that section; (k) that the Trustor’s use of the Property shall be residential housing; (l) to Trustor’s knowledge, any written disclosure submitted by or on behalf of Trustor to Beneficiary concerning any Release or threatened Release, past or present compliance by Trustor or other person of any Hazardous Substance Laws applicable to the Property, the past and present use and occupancy of the Property, and any environmental concerns relating to the Property, was true and complete when submitted and continues to be true and complete as of the date of this Deed of Trust. As used in this Section 5.1, phrases such as “to Trustor’s knowledge,” shall refer to the actual knowledge of the Trustor, and its agents, directors and other associates, without duty of inquiry or investigation other than the ordering of a Phase I Environmental Assessment as required pursuant to the Loan Agreement. 5.2. Covenants of Trustor. Trustor agrees, except in the ordinary course of business and in strict compliance with all applicable Hazardous Substance Laws, as follows: (a) not to cause or permit the property to be used as a site for the use, generation, manufacture, storage, treatment, Release, discharge, disposal, transportation, or presence of any Hazardous Substance, other than Existing Hazardous Materials (as such term is defined in the Ground Lease); EXHIBIT 6 19 The Crossroads at Washington City NSP Deed of Trust (b) not to cause, contribute to, permit, or acquiesce in any Release or threatened Release; (c) not to change or modify the use of the Property without the prior written consent of Beneficiary; (d) to comply with and to use reasonable commercial efforts to cause the Property and every invitee or occupant of the Property to comply with all Hazardous Substance Laws; (e) to promptly upon Trustor’s discovery thereof (other than Hazardous Substances that were known prior to Loan closing as disclosed in the Environmental Reports), notify Beneficiary in writing of and to provide Beneficiary with a reasonably detailed description of: (1) any noncompliance of the Property with any Hazardous Substance Laws; (2) any Hazardous Substance Claim; (3) any Release or Threatened Release; (4) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that would cause the Property or any part of it to be designated as “hazardous waste property” or “border zone property” under the provisions of Health and Safety Code §§ 25220 et seq., and any regulation adopted in accordance with that section; (f) if Trustor discovers a Release or the presence of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law, to: (1) notify Beneficiary of that discovery together with a reasonably detailed description; (2) engage promptly after a request by Beneficiary, a qualified environmental engineer reasonably satisfactory to Beneficiary to investigate these matters and prepare and submit to Beneficiary a written report containing the findings and conclusions resulting from that investigation, all at the sole expense of Trustor, and (3) Except as otherwise provided in the Ground Lease, if the Release of Hazardous Substances results in (i) injury to any person, (ii) injury to or contamination of the Property (or a portion thereof), or (iii) injury to or contamination of any real or personal property wherever situated take, at Trustor’s sole expense, all necessary actions to remedy, repair, clean up, or detoxify any Release of Hazardous Substance, including, but not limited to, any remedial action required by any Hazardous Substance Laws or any judgment, consent, decree, settlement, or compromise in respect of any Hazardous Substance Claims, these actions to be performed: A. in accordance with Hazardous Substance Laws, EXHIBIT 6 20 The Crossroads at Washington City NSP Deed of Trust B. in a good and proper manner, C. under the supervision of a qualified environmental engineer approved in writing by Beneficiary (such approval not to be unreasonably withheld or delayed), D. in accordance with plans and specifications for these actions approved in writing by Beneficiary (such approval not to be unreasonably withheld or delayed), and E. using licensed and insured qualified contractors approved in writing by Beneficiary; (g) promptly furnish to Beneficiary copies of all written communications received by Trustor from any governmental authority or other person or given by Trustor to any person and any other information Beneficiary may reasonably request concerning any Release, threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law; and (h) keep Beneficiary generally informed regarding any Release, threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about the Property in violation of any Hazardous Substance Law. 5.3. Rights of Beneficiary. Upon Beneficiary’s reasonable belief of the existence of a past or present Release or threatened Release not previously disclosed by Trustor in connection with the making of the Loan, Environmental Reportsor the execution of this Deed of Trust or upon Beneficiary’s reasonable belief that Trustor has failed to comply with any environmental provision of this Deed of Trust or any other Loan Document and upon not less than 72 hours’ prior written notice (except in the case of an emergency) to Trustor, Beneficiary or its representatives, employees, and agents, may from time to time and at all reasonable times during regular business hours (or at any time in the case of an emergency) enter and inspect the Property and every part of it (including all samples of building materials, soil, and groundwater and all books, records, and files of Trustor relating to the Property) and perform those acts and things that Beneficiary reasonably deems necessary to inspect, investigate, assess, and protect the Security of this Deed of Trust, for the purpose of determining: (a) the existence, location, nature, and magnitude of any past or present Release or threatened Release, (b) the presence of any Hazardous Substances on or about the Property in violation of any Hazardous Substance Law, and (c) the compliance by Trustor of every environmental provision of this Deed of Trust and every other Loan Document. In furtherance of the purposes above, without limitation of any of its other rights, Beneficiary may: EXHIBIT 6 21 The Crossroads at Washington City NSP Deed of Trust (1) obtain a court order to enforce Beneficiary’s right to enter and inspect the Property under Civil Code § 2929.5; and (2) have a receiver appointed under Code of Civil Procedure § 564 to enforce Beneficiary’s right to enter and inspect the Property for the purpose set forth above. All reasonable costs and expenses incurred by Beneficiary with respect to the audits, tests, inspections, and examinations that Beneficiary or its agents, representatives, or employees may conduct, including the reasonable fees of the engineers, laboratories, contractors, consultants, and attorneys, will be paid by Trustor. All reasonable costs or expenses incurred by Trustee and Beneficiary pursuant to this Section (including without limit ation court costs, consultant’s fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest at the Agreed Rate from the date they are incurred until those sums have been paid in full. Except as provided by law, any inspections or tests made by Beneficiary or its representatives, employees, and agents will be for Beneficiary’s purposes only and will not be construed to create any responsibility or liability on the part of Beneficiary to Trustor or to any other person. Beneficiary will have the right, but not the obligation, to communicate with any governmental authority regarding any fact or reasonable belief of Beneficiary that constitutes or could constitute a breach of any of Trustor’s obligations under any environmental provision contained in this Deed of Trust or any Loan Document. 5.4. Waiver and Indemnity. Except as otherwise provided in the Ground Lease, Trustor: (a) releases and waives any future claims against Beneficiary for indemnity or contribution in the event Trustor becomes liable for cleanup or other costs under any Hazardous Substance Laws or under any Hazardous Substance Claim except to the extent such liability arises out of the gross negligence or willful misconduct or Beneficiary; (b) agrees to reimburse Beneficiary, on demand, for all costs and expenses incurred by Beneficiary in connection with any review, approval, consent, or inspection relating to the environmental provisions in this Deed of Trust together with interest, after demand, at the Agreed Rate; and (c) agrees to indemnify, defend, and hold Beneficiary and Trustee harmless from all losses, costs, claims, damages, penalties, liabilities, causes of action, judgments, court costs, reasonable attorney fees and other legal expenses, costs of evidence of title, cost of evidence of value, and other expenses (collectively, “Expenses”), including, but not limited to, any Expenses incurred or accruing after the foreclosure of the lien of this Deed of Trust, which either may suffer or incur and which directly or indirectly arises out of or is in any way connected with the breach of any environmental provision either in this Deed of Trust or in any Loan Document or as a consequence of any Release or threatened Release or the presence, use, generation, manufacture, storage, disposal, transportation, Release, or threatened Release of any Hazardous Substance on or about the Property, (but excluding any Existing Hazardous Materials), including the soils and groundwater, caused or permitted by Trustor, including, without limitation, to the extent required by an environmental agency with jurisdiction over the EXHIBIT 6 22 The Crossroads at Washington City NSP Deed of Trust Property, the cost of any required or necessary repair, cleanup, remedy, or detoxification of any hazardous Substance and the preparation of any closure, remedial action, or other required plans. Trustor’s obligations will survive the satisfaction, release, or cancellation of the indebtedness, the release and reconveyance or partial release and reconveyance of this Deed of Trust, and the foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust , for any liability accruing or arising prior to such satisfaction, release, or cancellation of the indebtedness, the release and reconveyance or partial release and reconveyance of th is Deed of Trust, and the foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust. 5.5. Additional Covenants of Trustor. (a) Trustor and Beneficiary agree that: (1) this Section is intended as Beneficiary’s written request for information and Trustor’s written response concerning the environmental condition of the Property as provided by Code of Civil Procedure § 726.5; and (2) each representation, warranty, covenant, or indemnity made by Trustor in this Section or in any other provision of this Deed of Trust or any Loan Document that relates to the environmental condition of the Property is intended by Trustor and Beneficiary to be an “environmental provision” for purposes of Code of Civil Procedure § 736 and will survive the payment of the indebtedness and the termination or expiration of this Deed of Trust and will not be affected by Lender’s acquisition of any interest in the Property, whether by full credit bid at foreclosure, deed in lieu of that, or otherwise. If there is any transfer of any portion of Trustor’s interest in the Property, any successor-in-interest to Trustor agrees by its succession to that interest that the written request made pursuant to this Section will be deemed remade to the successor-in-interest without any further or additional action on the part of Beneficiary and that by assuming the debt secured by this Deed of Trust or by accepting the interest of Trustor subject to the lien of this Deed of Trust, the successor remakes each of the representations and warranties in this Deed of Trust and agrees to be bound by each covenant in this Deed of Trust, including, but not limited to, any indemnity provision. (b) Even though Trustor may have provided Beneficiary with an environmental site assessment or other environmental report together with other relevant information regarding the environmental condition of the Property, Trustor acknowledges and agrees that Beneficiary is not accepting the Property as security for the Loan based on that assessment, report, or information. Rather, Beneficiary has relied on the representations and warranties of Trustor in this Deed of Trust, and Beneficiary is not waiving any of its rights and remedies in the environmental provisions of this Deed of Trust or any other Loan Document. (c) Beneficiary or its agents, representatives, and employees may seek a judgment that Trustor has breached its covenants, representations, or warranties in Section 2 of this Deed of Trust or any other covenants, representations, or warranties that are deemed to be “environmental provisions” pursuant to Code of Civil Procedure § 736 (each an “Environmental Provision”), by commencing and maintaining an action or actions in any court of competent jurisdiction pursuant to Code of Civil Procedure § 736, whether commenced prior to or after foreclosure of the lien of this Deed of Trust. Beneficiary or its agents, representatives, EXHIBIT 6 23 The Crossroads at Washington City NSP Deed of Trust and employees may also seek an injunction to cause Trustor to abate any action in violation of any Environmental Provision and may seek the recovery of all costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses actually incurred by Beneficiary (collectively, “Environmental Costs”) incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action required by any Hazardous Substances Law or any Hazardous Substance Claim. It will be conclusively presumed between Beneficiary and Trustor that all Environmental Costs incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action of or to the Property were made by Beneficiary in good faith. All reasonable Environmental Costs incurred by Beneficiary under this Section (including without limitation court costs, consultant fees, and attorney fees, whether incurred in litigation and whether before or after judgment) will bear interest at the Agreed Rate from the date of expenditure until those sums have been paid in full. Beneficiary will be entitled to bid, at any trustee’s or foreclosure sale of the Property, the amount of the costs, expenses, and interest in addition to the amount of other indebtedness. (d) Beneficiary or its agents, representatives, and employees may waive its lien against the Property or any portion of it, including but not limited to the Improvements, to the extent that the Property or any portion of the Security is found to be environmentally impaired in accordance with Code of Civil Procedure § 726.5, and to exercise all rights and remedies of an unsecured creditor against Trustor and all of Trustor’s assets and property for the recovery of any deficiency and Environmental Costs, including, but not limited to, seeking an attachment order under Code of Civil Procedure § 483.010. As between Beneficiary and Trustor, for purposes of Code of Civil Procedure § 726.5, Trustor will have the burden of proving that Trustor or any related party (or any affiliate or agent of Trustor or any related party) was not in any way negligent in permitting the Release or threatened Release of the Hazardous Substances. Section 6. ASSIGNMENTS OF RENTS, ISSUES AND PROFITS 6.1. Assignment. Trustor hereby absolutely, irrevocably and unconditionally assigns to Beneficiary, as security for the Obligations, all rents, profits, deposits, royalties, income and other issues and similar benefits derived from the Security (collectively, the “Rents”), and hereby confers upon Beneficiary the right, power and authority to collect such Rents. Trustor irrevocably appoints Beneficiary its true and lawful attorney-in-fact, at the option of Beneficiary, at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in its name or in the name of Trustor, for all Rents, and apply the same to the Obligations secured hereby; provided, however, that Trustor shall have the right, as between Trustor and Beneficiary, to collect the Rents but not more than one (1) month in advance of the date due unless the written approval of Beneficiary has first been obtained, with the exception of security deposits and “first and last months’ rent” collected from tenants in connection with Trustor’s ordinary leasing of residential apartments within the Property), and to retain and enjoy the same, so long as an Event of Default shall not have occurred hereunder and be continuing. 6.2. Collection Upon Default. EXHIBIT 6 24 The Crossroads at Washington City NSP Deed of Trust While any Event of Default remains uncured, Beneficiary may, at any time without notice, either in person, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the Obligations hereby secured, enter upon and take possession of the Security, or any part thereof, and, with or without taking possession of the Security or any part thereof, in its own name sue for or otherwise collect such Rents (including those past due and unpaid, and all prepaid Rents and all other monies which may have been or may hereafter be deposited with Trustor by any tenant to secure the payment of any Rent or for any services thereafter to be rendered by Trustor for any other obligation of any tenant to Trustor arising under any lease, and Trustor agrees that, upon the occurrence of any Event or Default hereunder, Trustor shall promptly deliver all Rents and other moneys to Beneficiary), and Beneficiary may apply the same, less costs and expenses of operation and collection, including, without limitation, reasonable attorneys fees, whether or not suit is brought or prosecuted to judgment, against any indebtedness or Obligation of Trustor secured hereby, and in such order as Beneficiary may determine notwithstanding that said indebtedness or the performance of said Obligation may not then be due. The collection of Rents, or the entering upon and taking possession of the Security, or the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default or be deemed or construed to make Beneficiary a mortgagee- in-possession of the Security or any portion thereof. 6.3. Further Assignments. Upon demand of Beneficiary, Trustor shall, from time to time hereafter, execute, and deliver to Beneficiary recordable assignments of Trustor’s interest in any or al l leases, subleases, contracts, rights, licenses and permits now or hereafter affecting the Security or any portion thereof. Such assignments shall be made by instruments in form and substance reasonably satisfactory to Beneficiary; provided, however, that no such assignment shall be construed as imposing upon Beneficiary any obligation with respect thereto. Beneficiary may, at its option, exercise its rights hereunder or under any such specific assignment and such exercise shall not constitute a waiver of any right hereunder or under any such specific assignment. Section 7. EVENTS OF DEFAULT 7.1. Events of Default. Each of the following shall constitute Events of Default: (1) the occurrence of an “Event of Default” as defined in the Loan Agreement or as defined in any Debt Instrument; or (2) the failure to make any payment or perform any of Trustor’s other Obligations now or hereafter secured by this Deed of Trust (subject to written notice and expiration of any applicable cure period) and if no cure period is provided, a cure period equal to those granted to the limited partner under Section 7.12. 7.2. Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default, the unpaid Principal of the Note and any other indebtedness and other Obligations secured hereby shall immediately EXHIBIT 6 25 The Crossroads at Washington City NSP Deed of Trust become due and payable without presentment, protest notice or demand, all of which are hereby expressly waived, upon written notice by the Beneficiary to the Trustor and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right. 7.3. The Beneficiary’s Right to Enter and Take Possession. If an Event of Default shall have occurred and be 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 Security 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 which it reasonably deems necessary to preserve the value or marketability of the Security, or p art thereof or interest therein, increase the income therefrom or protect the security thereof and, with or without taking possession of the Security, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection including without limitation reasonable attorneys fees, against any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Security the collection of such Rents and the application thereof as aforesaid shall not cure or waive any Event of Default or notice of default hereunder or invalidate any act done in response to such Event of Default or pursuant to such notice of default, and, notwithstanding the continuance in possession of the Security, Beneficiary shall 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; (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, which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of Orange County; 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 all or any portion of the Obligations secured hereby, or provided by law. 7.4. Foreclosure by Power of Sale. Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust, the Loan Agreement and the Note which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid Principal amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. EXHIBIT 6 26 The Crossroads at Washington City NSP Deed of Trust (a) Upon receipt of such notice from the Beneficiary (“Notice of Default”), Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and election to sell 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 Default and after notice of sale having been given as required by law (“Notice of Sale”), 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 shall deem expedient and in such order as it may determine unless specified otherwise to 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 shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale. (b) 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 Note; (2) all other sums then secured hereby; and (3) the remainder, if any, to Trustor. (c) Trustee may postpone sale of all or any portion of the Security 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. 7.5. Receiver If an Event of Default shall have occurred and be 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, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall 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 shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated. 7.6. Application of Funds After Default. Except as otherwise herein provided, upon the occurrence of an Event of Default hereunder, and while such Event of Default remains uncured, Beneficiary may, at any time without notice, apply any or all sums or amounts received and held by Beneficiary to pay insurance premiums, Impositions, or either of them, or as Rents or income of the Security, or as insurance or condemnation proceeds, and all other sums or amounts received by Beneficiary from or on account of Trustor or the Security, or otherwise, against any indebtedness or Obligation of the Trustor secured hereby, in such manner and order as Beneficiary may elect. The receipt, use or application of any such sum or amount shall not be construed to affect the EXHIBIT 6 27 The Crossroads at Washington City NSP Deed of Trust maturity of any indebtedness secured by this Deed of Trust, or any o f the rights or powers of Beneficiary under the terms of the Loan Agreement, this Deed of Trust or the Note, or any of the Obligations of Trustor or any guarantor under any other instruments or documents now or hereafter delivered in connection with the Loan Agreement or to cure or waive any default or notice of default under the Loan Agreement or any such instruments or documents; or to invalidate any act of Trustee or Beneficiary. 7.7. Costs of Enforcement. If any Event of Default occurs, Beneficiary and Trustee, and each of them, may employ an attorney or attorneys to protect their rights hereunder. Trustor promises to pay to Beneficiary, on demand, the reasonable fees and expenses of such attorneys and all other reasonable costs of enforcing the Obligations secured hereby, including, without limitation, recording fees, the expense of a trustee, sale guarantee, Trustee’s fees and expenses, receivers fees and expenses, and all other reasonable expenses, of whatever kind or nature, incurred by Beneficiary and Trustee, and each of them, in connection with the enforcement of the Obligations secured hereby, whether or not such enforcement includes the filing of a lawsuit. Until paid, such sums shall be secured hereby and shall bear interest at the Agreed Rate. 7.8. 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 shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. 7.9. No Waiver. (a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall 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. No consent or waiver, expressed or implied, by the Beneficiary to or any breach by the Trustor in the performance of the Obligations hereunder shall be deemed or construed to be a consent to or waiver of 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, shall 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 of any sums secured hereby, (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 Loan Agreement, (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 Loan Agreement, (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 shall not release, discharge, EXHIBIT 6 28 The Crossroads at Washington City NSP Deed of Trust 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 shall 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 shall the lien of this Deed of Trust be altered thereby. 7.10. Suits to Protect the Security. The Beneficiary shall have power to: (1) institute and maintain such suits and proceedings as it may in its reasonable discretion 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, (2) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (3) restrain the enforcement of or compliance with any legislation or other 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. 7.11. 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 Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date. 7.12. Limited Partner Cure Rights. Notwithstanding anything to the contrary in this Deed of Trust, Beneficiary shall give the investor limited partner of Trustor the following notice at the address provided in Section 8.3(b) and cure rights: (a) Beneficiary will give the limited partner a copy of any notice (at the limited partner's address provided in a notice by Trustor to Beneficiary) that Beneficiary gives to Trustor under this Deed of Trust, provided that Trustor has provided the address and contact information for the investor limited partner in writing to Beneficiary; (b) Beneficiary will give the limited partner thirty (30) days after the limited partner's receipt of such notice to cure a non-payment of any sum due under this Deed of Trust; (c) Beneficiary will give the limited partner sixty (60) days after the limited partner's receipt of such notice to cure any other default under this Deed of Trust; (d) If a non-monetary default is incapable of being cured within sixty (60) days, Beneficiary will give the limited partner such additional time as is reasonably necessary to cure EXHIBIT 6 29 The Crossroads at Washington City NSP Deed of Trust such default provided the limited partner has commenced to cure such default and is diligently proceeding to cure such default through the end of such period; and (e) If the limited partner makes any such payment or otherwise cures such default, the Beneficiary will accept such action as curing such default as if such payment or cure were made by Trustor. Section 8. MISCELLANEOUS 8.1. Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor. 8.2. Reconveyance by Trustee. Upon written request of Beneficiary stating that all sums secured hereby have been paid, 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 reconvey, without warranty, the Security to Trustor, or to the person or persons legally entitled thereto. 8.3. Notices. (a) If at any time after the execution of this Deed of Trust it shall become 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 shall be in writing and shall be served personally or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and: (1) if intended for Beneficiary shall be addressed to: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 (2) if intended for Trustors shall be addressed to: Trustor: Washington Santa Ana Housing Partners, L.P. With a copy to: Any notice, demand or communication shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herei n specified, on the delivery date or date delivery is refused by the addressee, as shown on the EXHIBIT 6 30 The Crossroads at Washington City NSP Deed of Trust return receipt. 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. 8.4. Successors and Joint Trustors. All Obligations of Trustor secured by this Deed of Trust, shall also apply to and bind any permitted 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 shall be deemed to be a joint and several Obligation of the Trustor and such transferee. Where Trustor is more than one entity or person, all Obligations of Trustor shall be deemed to be a joint and several Obligation of each and every entity and person comprising Trustor. 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. 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 shall not affect the balance of the terms and provisions hereof, which terms and provisions shall 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, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. 8.7. Governing Law and Venue. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. In the event of any legal action to enforce or interpret this Deed of Trust, the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California, and the parties hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. 8.8. Gender and Number. In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires. 8.9. Deed of Trust, Mortgage. Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to a mortgage. EXHIBIT 6 31 The Crossroads at Washington City NSP Deed of Trust 8.10. Actions. Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security. 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 shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall 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 City or counties in which the Security is situated, shall be conclusive proof of proper appointment of the successor trustee. 8.12. 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 pending sale under this Deed of Trust or of any action of proceedings in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 8.13. Conflicts. If any term or provision of this Deed of Trust conflicts with any term of provision of the Loan Agreement, the term or provision of the Loan Agreement shall control to the extent of such conflict. 8.14. Statements by Trustor. Trustor shall, at its cost, within ten (10) days after notice thereof from Beneficiary, deliver to Beneficiary a written statement setting forth to the best of its knowledge and information, the amounts then unpaid and secured by this Deed of Trust and stating whether Trustor is aware of any offset or defense against such amounts. 8.15. Beneficiary Statements. For any statement or accounting requested by Trustor or any other entitled person pursuant to Section 2943 or Section 2954 of the California Civil Code or pursuant to any other provision of applicable law, or for any other document or instrument furnished to Trustor by Beneficiary, Beneficiary may charge the maximum amount permitted by law at the time of the request therefor, or if there be no such maximum, then in accordance with Beneficiary’s customary charges therefor or the actual cost to Beneficiary therefor, whichever is greater. 8.16. Statute of Limitations. EXHIBIT 6 32 The Crossroads at Washington City NSP Deed of Trust Except insofar as now or hereafter prohibited by law, the right to plead, use or assert any statute of limitations as a plea or defense or bar of any kind, or for any purpose, to any debt, demand or obligation secured or to be secured hereby, or to any complaint or other pleading or proceeding filed, instituted or maintained for the purpose of enforcing this Deed of Trust or any rights hereunder, is hereby waived by Trustor. 8.17. Trust Irrevocable; No Offset. The Trust created hereby is irrevocable by Trustor. No offset or claim that Trustor now has or may in the future have against Beneficiary shall relieve Trustor from paying the indebtedness or performing any other Obligation contained herein or secured hereby. 8.18. Corrections. Trustor shall, upon request of Beneficiary, promptly correct any defect, error or omission which may be discovered in the contents hereof or in the execution or acknowledgment hereof, and will execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or as may be reasonably requested by Beneficiary to carry out more effectively the purposes thereof, to subject to, the lien and security interest hereby created any of Trustor’s properties, rights or interests covered or intended to be covered hereby, or to perfect and maintain such lien and security interest. 8.19. Further Assurance. Trustor, Beneficiary and Trustee agree to do or cause to be done such further acts and things and to execute and deliver or to cause to be executed and delivered such additional assignments, agreements, powers and instruments, as any of them may reasonably require to keep valid and effective the charges and liens hereof, to carry into effect the purposes of this Deed of Trust or to better assure and confirm unto any of them their rights, powers and remedies hereunder; and, upon request by Beneficiary, shall supply evidence of fulfillment of each of the covenants herein contained concerning which a request for such evidence has been made. 8.20. Waiver of Jury Trial. Unless prohibited by Federal, State or local laws, each party acknowledges that it is aware of and has had the advice of counsel of its choice with respect to its rights to trial by jury, and each party, for itself and its successors and assigns, does hereby expressly and knowingly waive and release all such rights to trial by jury in any action, proceeding or counterclaim brought by any party hereto against the other (and/or against its officers, directors, employees, agents, or subsidiary or affiliated entities) on or with regard to any matters whatsoever arising out of or in any way connected with this Deed of Trust and/or any claim of injury or damage to the fullest extent permitted by applicable law. 8.21. Tax Credits. Beneficiary agrees that the lien of this Deed of Trust shall be subordinate to any extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the “Extended Use Agreement”) recorded against the Security; provided that EXHIBIT 6 33 The Crossroads at Washington City NSP Deed of Trust such Extended Use Agreement, by its terms, must terminate upon foreclosure under this Instrument or upon a transfer of the Security by instrument in lieu of foreclosure, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code. Section 9. WAIVERS 9.1. Waivers and Related Matters. (a) To the fullest extent allowed by law, Trustor hereby waives: (i) presentment, demand, protest, notice of dishonor, notice of protest and all other notices and demands of every kind, and all suretyship defenses of every kind that would otherwise be available in connection with this Deed of Trust, and (ii) all rights of redemption, valuation, appraisement, stay of executive, notice of election to mature or declare due the whole of the Obligation and marshaling in the event of foreclosure of the liens hereby created. (b) Trustor hereby authorizes Beneficiary, at any time and from time to time without notice and without affecting this Deed of Trust in any way, to: (i) accept new or additional instruments, documents, agreements, security or guaranties in connection with all or any part of the Obligations; (ii) accept partial payments on the Obligations; and (iii) waive, release, reconvey, terminate, abandon, subordinate, exchange, substitute, transfer, compound, compromise, liquidate and enforce all or any part of the Obligations and any security or guaranties therefor, and apply any such security and direct the order or manner of sale thereof and bid and purchase at any such sale. (c) Trustor hereby waives any right to require Beneficiary to (i) proceed against any person; (ii) proceed or exhaust any collateral held from any person; or (iii) pursue any other remedy in Beneficiary’s power. Upon the occurrence of any Event of Default, Beneficiary is hereby expressly given the right, at its option, to proceed in the enforcement of this Deed of Trust, independently of any other remedy or security Beneficiary may at any time hold in connection with the Obligations, and Beneficiary shall not in any way be obligated or otherwise required to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce this Deed of Trust. (d) Trustor hereby waives any defense arising by reason of: (i) any disability or other defense of Trustor or any other person; (ii) the cessation from any cause whatsoever, other than full payment and performance of the Obligations, of the Obligations of Trustor or any other person; or (iii) any act or omission by Beneficiary which directly or indirectly results in or aids in the discharge or release of Trustor, or any other person, any Obligation, or any collateral by operation of law or otherwise. The waivers set forth in this Section 9 shall also apply, to the fullest extent permitted by law to all other real and/or personal property of Trustor now or hereafter assigned to Beneficiary as security for the Obligations. Trustor warrants and agrees that each, of the waivers set forth above are made with Trustor’s full knowledge of their significance and consequences, with the understanding that events giving rise to any defense waived may diminish, destroy or otherwise adversely affect rights which Trustor otherwise may have against Beneficiary or others, or against collateral, and that under the circumstances, the waivers are reasonable and not contrary EXHIBIT 6 34 The Crossroads at Washington City NSP Deed of Trust to public policy or law. If any of the waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective to the maximum extent permitted by law. {signatures on following page} EXHIBIT 6 The Crossroads at Washington Exhibit A City HOME Deed of Trust IN WITNESS WHEREOF, Trustor has executed this City Deed of Trust as of the date first written above. TRUSTOR: Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 6 The Crossroads at Washington Exhibit A City HOME Deed of Trust EXHIBIT A LEGAL DESCRIPTION EXHIBIT 6 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 6 Exhibit E: City/NSP Loan Note EXHIBIT 6 1 The Crossroads at Washington City NSP Loan Note CITY NEIGHBORHOOD STABILIZATION PROGRAM LOAN NOTE SECURED BY SUBORDINATED DEED OF TRUST TO THE CITY OF SANTA ANA, CALIFORNIA (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) $1,637,420 June 21, 2022 Santa Ana, California 1. PRINCIPAL AMOUNT OF LOAN. For value received, WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership (“Borrower”) promises to pay to the order of THE CITY OF SANTA ANA (“City"), at 20 Civic Center Plaza, 6th Floor, Santa Ana, California 92701, or at such other place as the City may from time to time designate in writing, or to the assignee of the City, the principal sum of ONE MILLION, SIX HUNDRED THIRTY SEVEN THOUSAND, FOUR HUNDRED AND TWENTY DOLLARS AND NO CENTS ($1,637,420.00) or so much thereof as shall be disbursed hereunder, with three percent (3%) simple interest per annum and commencing from the date of issuance of the Certificate of Completion. City and Borrower have heretofore entered into that certain Neighborhood Stabilization Program (NSP) Loan Agreement dated concurrently herewith (the "Loan Agreement"), pertaining to the construction of certain real property described in the Loan Agreement as the "Property," commonly known as 1126, 1136 and 1146 East Washington Avenue, Santa Ana, California, and the operation of the Property as affordable housing for Extremely-Low Income households. This City NSP Loan Note (the “Note”) is made pursuant to, entitled to the benefits of and referred to as the City/NSP Loan Note in the Loan Agreement; that certain “Affordability Restrictions on Transfer of Property” between Borrower and City, dated on or about the date hereof; and that certain Subordinated City/NSP Deed of Trust and Assignment of Rents by Borrower for the benefit of City, dated on or about the date hereof (the "City Deed of Trust"). This Note, the Loan Agreement, the City Deed of Trust and the Affordability Restrictions on Transfer of Property are sometimes collectively referred to herein as the "Loan Documents." The Loan Documents and the rights and responsibilities thereto inure to the benefit of the City. Any capitalized term that is not otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreement. 2. DEFINITIONS. For the purpose of calculating the payments to be made by Borrower to City pursuant to this Note, the following terms shall have the following respective meanings: "City Loan" shall mean the loan evidenced by this Note. EXHIBIT 6 2 The Crossroads at Washington City NSP Loan Note "City’s Percentage" with reference to the Residual Receipts, shall mean 23.71% of the total Residual Receipts from the Property, as further described in Section 5 hereof. “Calendar Year” means each consecutive twelve (12) month period from January 1 to December 31. "Closing Costs" shall mean: (i) In the case of a Sale, reasonable brokerage commissions payable to a broker as a result of the Sale, which shall not in any event exceed the customary amount charged-for similar transactions in the immediate marketplace, costs of title insurance premiums, documentary stamp taxes, escrow fees, recording charges, loan repayment charges and other costs reasonably incurred with respect to the Property, in each case actually paid by Borrower as a condition of the Sale. (ii) In the case of a Refinancing, the reasonable and necessary costs of consummating such Refinancing, including, without limitation, loan fees, loan repayment charges, costs of title insurance premiums, escrow fees, recording fees, attorneys' fees and costs of Lender required repairs or reserves. “CPI” means United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index of Urban Wage Earners and Clerical Workers, Subgroup “All Items,” for the Los Angeles-Riverside-Orange County area, 1982-84 = 100, or successor or equivalent index in case such index is no longer published. "Gross Revenues" shall mean all revenues and receipts of every kind actually received by Borrower from operating the Property, and all parts thereof, including, but not limited to, income from both cash and credit transactions, rental payments from leased and/or subleased spaces, governmental assistance housing payments or other operating subsidies, and parking fees and charges (but not including security deposits and other tenant deposits, except to the extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues does not include any insurance proceeds other than any rental interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at the time cash proceeds (principal, interest and/or other) are received. Borrower shall establish and maintain accounts for the Gross Revenues (the '"Project Accounts") that are segregated from revenues and income received by Borrower from all other projects. Gross Revenues shall also include all interest earned on the Project Accounts to the extent interest is released from the Project Accounts. Gross Revenues do not include the proceeds of any loans or capital contributions made to Borrower, Refinancing Proceeds or Sale Proceeds. “Ground Lease” shall mean the lease between the Housing Authority of the City of Santa Ana (“Agency’) and the County of Orange (“County") as tenants-in-common, and Washington Santa Ana Housing Partners, LP. “Ground Lessor” shall mean collectively the Housing Authority of the City of Santa Ana and the County of Orange. EXHIBIT 6 3 The Crossroads at Washington City NSP Loan Note “Interest” shall mean that the NOTE shall bear simple interest at the rate of Three percent (3%) per annum, from the date of issuance of the Certificate of Completion. “Operating Expenses” shall mean the sum of the following: (a) payments of principal and interest and all other charges payable on or with respect to the Senior Loan(s); (b) a property management fee no greater than fifty-five dollars ($55)/per unit/per year, increased annually by the lesser of: (i) three percent (3%); or (ii) prior Year CPI, beginning the year following the issuance of the first certificate of occupancy for the Project; (c) Partnership related fees that are actually incurred and are reasonable and customary to the partners of Borrower for similar projects in Southern California, and which may include: (i) the partnership management fee payable to the Administrative General Partner and/or Managing General Partner not to exceed twenty thousand dollars ($20,000) per operating year and escalating at three percent (3%) per operating year; and (ii) a limited partner asset management fee of five thousand dollars ($5,000) per year, escalating at (A) three percent (3%) per operating year; (d) Deposits into required reserves required by any lender or Borrower’s Partnership Agreement; (e) all other actual, reasonable cash operating costs and expenses, calculated on an annual basis, that are directly attributable to managing and operating the Property and the Borrower, including, without limiting the generality of the foregoing, the following: costs and expenses for real and personal property taxes, special assessments or similar charges; water, fuel, electricity and other utilities; heating, ventilation and air conditioning expenses; labor; supplies; tools; equipment; insurance; advertising and marketing; accounting and legal fees; brokerage commissions and other leasing expenses; reasonable reserves for all anticipated expenses as approved by the City; and other such items constituting operation, maintenance and repair costs actually paid by the Borrower, subject to the following conditions: (i) Depreciation, amortization, and accrued principal and interest expenses on deferred payment debt and capital improvement expenditures shall not be considered Operating Expenses, except as otherwise provided herein. (f) Any expenses, compensation or fees paid to any affiliate of Borrower shall only be included as Operating Expenses to the extent they are not in excess of the reasonable expenses, compensation or fees which would be paya ble to unrelated third parties in arms-length transactions for similar services in the Santa Ana, California area; (g) Any other expenses necessary to meet senior lender requirements and requirements of Borrower’s limited partner, or its assignee, as set forth in Borrower’s Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), EXHIBIT 6 4 The Crossroads at Washington City NSP Loan Note including, without limitation, repayment of any loans to the Borrower by a partner or tax credit recapture or deficiency payments; (h) Deferred developer fees; and (i) A social services administrative fee; Director reserves the right to at any time review and approve each or any annual budget during the Term hereof, and any changes to any said annual budget reasonably requested by Director shall be promptly implemented by Borrower. Notwithstanding the foregoing, in no event shall Operating Expenses include any costs, fees, fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and accounting fees and expenses) that are due to or arising out of the Borrower’s: (a) breach or default of this Loan, any Loan Document or any Senior Loan Document; (b) fraudulent acts or willful misconduct; or (c) breach or default under any other contract, lease or agreement pertaining to the Project. "Project" shall mean the acquisition and construction of the Property by Borrower pursuant to the Loan Agreement. "Property" shall mean the real property located at 1126, 1136 and 1146 East Washington Avenue , Santa Ana, California described in the City Deed of Trust. "Refinancing" shall mean changing the then existing financing on the Property by, without limitation, modifying final maturity date of the existing Senior Loan, increasing the stated maximum principal amount of the existing Senior Loan, paying off the existing Senior Loan in full and obtaining new Senior Loan. "Refinancing Proceeds" shall be as set forth in Section 7 hereof. "Residual Receipts" shall mean the Gross Revenues from the Property, for each year, less deductions for Operating Expenses from the Property, applicable to each such year to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, conveyance or lease (other than to a tenant for occupancy or a transaction set forth in Section 11.3 hereof and Permitted Transfers as such term is defined in the Loan Agreement) of the Borrower’s leasehold interest in the Property or any portion thereof, or any interest therein by the Borrower, and includes any transfer, assignment or sale of any partnership interest in the Borrower by an individual or entity which is a general partner in the Borrower, or any interest by a ny individual or entity which holds an interest in any such general partner in the Borrower, which brings the cumulative total of all such direct and indirect transfers, assignments and sales by a general partner during the term of this Note to more than forty-nine percent (49%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a direct or indirect general partnership interest thereafter. Sale includes a sale in condemnation or under threat thereof. Sale does not include dedications and grants of easements to public and private utility companies of the kind customary in real estate EXHIBIT 6 5 The Crossroads at Washington City NSP Loan Note development, nor transfers of Limited Partnership interests or transfers of General Partner interests caused by the removal of the General Partner pursuant to the terms of the Partnership Agreement. "Sale Proceeds" shall be as set forth in Section 8 hereof. "Senior Loan" shall mean the senior loan being made by U.S. Bank National Association, concurrent to the City Loan for payment of a portion of costs of the acquisition of the leasehold interest in the Property and the Construction Costs, and shall include the Senior Loan following the purchase thereof by California Community Reinvestment Corporation (or its assignee) any subsequent loan that refinances the Senior Loan, and shall include any other loan recorded senior in priority to this City Loan "Term" the term for repayment of this Note shall mean sixty-two (62) years from the Certificate of Completion. 3. LOAN REPAYMENT. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 7 (Refinancing Proceeds), 8 (Sale Proceeds) and 10 (Accelerated Loan Repayment). 4. OPERATING CAPITAL IMPROVEMENT LOAN. If the replacement reserve account (“reserves”) is depleted due to unforeseen repairs and the General Partner(s) makes a loan to the Borrower, the reserves must be fully funded to the balance of the reserve prior to disbursement for such unforeseen repairs prior to repayment of said loan. Such loan shall be repaid with net cash flow prior to the Residual Receipt split. The outstanding loan balance will be reflected in the annual report. 5. ANNUAL LOAN REPAYMENT. 5.1. After any deferred developer fee has been paid, as set forth hereinabove, the Borrower shall thereafter make a loan payment to the City annually, in the amount of the lesser of the outstanding balance due under this Note, plus any accrued interest thereon, or the City’s Percentage of the Residual Receipts, as provided in this Section 5. 5.2. Within one hundred twenty (120) days after the year in which the construction of the Project is completed, and on or before the 120th day of each Calendar Year thereafter, the Borrower shall submit to the City a detailed statement of Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar Year with which to make a City Loan payment then due. 5.3. Except as otherwise provided in Section 4, the Borrower shall pay to the City the City’s Percentage of the Residual Receipts as payment of principal and interest under this Note. The Borrower shall pay 13.53% of the Residual Receipts to the County, EXHIBIT 6 6 The Crossroads at Washington City NSP Loan Note and 12.76% of the Residual Receipts to the Orange County Housing Finance Trust. The remaining amount of the Residual Receipts shall remain with the Borrower to be used by Borrower in accordance with the terms of the Partnership Agreement, including, without limitation, for distribution to the partners of the Borrower. 5.4. The Residual Receipts payment shall be made not later than one hundred fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to the payment of all expenses, charges, costs and fees incurred by or payable to City by Borrower pursuant to the terms of the Loan Documents; second to any accrued but unpaid interest, if any; and third, to reduce the principal balance of the City Loan. Notwithstanding anything to the contrary contained herein, after the occurrence and during the continuation of an Event of Default (as such term is defined in the Loan Agreement), all amounts received by City from any party shall be applied in such order as City, in its sole discretion, may elect. 6. RESERVED. 7. LOAN REPAYMENT FROM NET REFINANCING PROCEEDS/NET SYNDICATION PROCEEDS. The Borrower shall make a payment to the City or Agency from every approved Refinancing or Syndication that occurs during the term of this Note and the term of the Ground Lease, not to exceed (i) the outstanding balance of principal and interest on this Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease, to the extent of the City’s Percentage (23.71%) of the Net Refinancing Proceeds / Net Syndication Proceeds (if any). The “Net Refinancing Proceeds” shall be defined as the proceeds from the refinancing of any loan approved by the Ground Lessor as stipulated in the Ground Lease, net of all of the following: the amount of the financing which is satisfied out of such proceeds, closing costs, costs to rehabilitate the Project, including the costs necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), payment of outstanding deferred developer fee, the soft costs related to the rehabilitation of the Project (such as architecture, engineering and other consultant costs, and all required relocation costs), and all hard costs of the rehabilitation, all of which have been reviewed and reasonably approved by the Ground Lessor. The “Net Syndication Proceeds” shall be defined as the syndication proceeds net of final Project hard and soft construction costs, including developer fee, based on a cost certification completed at the end of construction, and syndication costs all of wh ich has been reviewed and reasonably approved by the Ground Lessor. Such payment shall be due within 30 days of the date of such Refinancing or Syndication, and shall be applied at the City’s sole discretion to either: (i) first to any accrued but unpaid interest, then to reduce the principal balance of the City Loan; or (ii) to the unpaid amount of Agency Base Rent as outlined in the Ground Lease. The City shall EXHIBIT 6 7 The Crossroads at Washington City NSP Loan Note not be required to reconvey the lien of the City Deed of Trust if Net Refinancing/Net Syndication Proceeds are insufficient to repay the City Loan in full. 8. LOAN REPAYMENT FROM SALE PROCEEDS. The Borrower shall make a payment, not to exceed (i) the outstanding balance of principal and interest on this Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease, to the City/Agency from any approved Sale of the leasehold interest that occurs during the term of the City Loan or the Ground Lease, to the extent of the City’s Percentage (23.71%) of the Sale Proceeds, as follows. The Sale Proceeds shall be calculated as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full all amounts owing on the Senior Loan; next the Borrower shall pay to the City the City’s Percentage of the then remaining unapplied Sale Proceeds, not to exceed (i) the outstanding balance of principal and interest on this Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease. Such payment shall be due on the date of such Sale, and shall be applied at the City’s sole discretion to either: (i) first to any accrued but unpaid interest, then to reduce the principal balance of the City Loan; or (ii) to the unpaid amount of Agency Base Rent as outlined in the Ground Lease. The City shall not be required to reconvey the lien of the City Deed of Trust if Sale Proceeds are insufficient to repay the City Loan in full. 9. BUY OUT OPTION. Prior to the initial disbursement under this Note, the Borrower shall grant to the City a right of first refusal (subject to any purchase option and/or right for first refusal granted to one or more of the General Partner(s) of the Borrower and any rights of the investor limited partner of Borrower under the Partnership Agreement) (the “City Right of First Refusal”) to acquire the leasehold interest in the Property if Borrower desires to transfer the Property to an entity that is not affiliated with one or more of Borrower’s general partners. The City Right of First Refusal shall be in form and substance acceptable to the City, shall comply with all applicable Tax Credit requirements and shall, at minimum, include that the purchase price will not be less than the amount of any bona fide third party offer received by Borrower. The City Right of First Refusal is hereby subordinated to the Senior Loan Deed of Trust and the other Senior Loan Documents, and in any event, the City Right of First Refusal shall automatically terminate, without any further action by Borrower, the City or any other party upon the initial disbursement under this Note. Senior Lender is hereby made a third party beneficiary of the immediately preceding sentence, and such sentence shall not be amended or deleted without Senior Lender’s prior written consent. 10. ACCELERATED LOAN PAYMENT. The full principal amount outstanding plus accrued but unpaid interest thereon, shall be due and payable on the earlier to occur of the following: (a) Sale or Refinancing of the Property as provided further in Section 15 hereof; unless: (i) in the case of a Sale in which the City’s Percentage of the Sale EXHIBIT 6 8 The Crossroads at Washington City NSP Loan Note Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the purchaser assumes the balance of the City Loan in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the City’s Percentage of the Refinancing Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terms of this Note; (b) if an Event of Default occurs pursuant to Section 16 hereof; or (c) The date that is sixty-two (62) years after the date of execution of the Certificate of Completion. 11. PREPAYMENT. Borrower may prepay the outstanding principal balance under this Note, in whole or in part, together with any accrued but unpaid interest, if any, and other sums owed to the City under this Note, if any, at any time without penalty. In the event of prepayment by Borrower, the Loan Agreement (only with respect to any continuing obligations of Borrower that survive repayment in full of the loan) and the Affordability Restrictions on Transfer of Property shall remain intact, and shall be unaffected by the prepayment of this Note by the Borrower. 12. LAWFUL MONEY. Principal and interest are payable in lawful money of the United States of America. 13. APPLICATION OF PAYMENTS; LATE CHARGES. (a) Any payments received by the City pursuant to the terms hereof shall be applied first to sums, other than principal and interest, due the City pursuant to this Note, next to the payment of all interest accrued to the date of such payment, and the balance, if any, to the payment of principal. (b) If any payment is not received by the City within thirty (30) days following the due date thereof, then in addition to the remedies conferred upon the City pursuant to this Note and the other Loan Documents: (i) a late charge of four percent (4%) of the amount due and unpaid will be added to the delinquent amount to compensate the City for the expense of handling the delinquency; and (ii) the amount due and unpaid, excluding the late charge, shall bear interest at twelve percent (12%) per annum, or the maximum amount allowed by law, whichever is less, computed from the date on which the amount was due and payable until paid. Without prejudice to the rights of the City hereunder or under any of the other Loan Documents, Borrower shall indemnify the City against, and shall pay the City on demand, any expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when due any installment of interest and/or principal, fees, or other amounts payable to the City under this Note or any other Loan Document, to the extent that any such expense or loss is not recovered pursuant to such foregoing provisions. A certificate of the City setting forth the basis for the determination of the amounts necessary to indemnify the City in respect of such expenses EXHIBIT 6 9 The Crossroads at Washington City NSP Loan Note or direct loss, submitted to Borrower by the City, shall be conclusive and binding for all purposes except as corrected by Borrower notice to City within ten (10) days of receipt of such certificate from City. 14. SECURITY. This Note is secured by the City Deed of Trust. 15. ACCELERATION BY REASON OF TRANSFER OR FINANCING. 15.1. In order to induce City to make the City Loan evidenced hereby, Borrower agrees that in the event of any transfer of the leasehold interest in the Property without the prior written consent of City (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Senior Loan Deed of Trust), City shall have the absolute right at its option, upon at least 30 days’ prior written notice to Borrower, to declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. City may grant or deny such consent in its sole and absolute discretion and, if consent should be given, any such transfer shall be subject to this Section 15, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall release Borrower from all liability thereunder from and after the date of such assumption. 15.2. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of the leasehold interest in the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property, or the lease of all or substantially all of the Property. 'Tr ansfer' shall not include the leasing of individual residential units on the Property, so long as Borrower complies with the provisions of the Loan Agreement and the Affordable Housing Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which a general partner of Borrower or an affiliate of a general partner of Borrower is a general partner, or to a corporation that is wholly owned by the Borrower or a general partner of Borrower and that is formed for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior Loan, without the prior written consent of City (which consent City may grant or deny in its sole discretion), then the entire outstanding balance of the City Loan together with all accrued and unpaid interest, shall be repaid to the City at the time of each Refinancing or partial Refinancing. 15.3. For the avoidance of doubt, a "transfer” shall not include (i) a transfer of any general partner’s interest in Borrower when made in connection with the exercise by the Borrower’s limited partner (the "Limited Partner") of its rights upon a default by a general partner under the Borrower’s Partnership Agreement or upon a general partner’s withdrawal in violation of the Partnership Agreement, so long as the removal and substitution of the defaulting general partner is made within thirty (30) days of such default EXHIBIT 6 10 The Crossroads at Washington City NSP Loan Note or, if such removal and substitution cannot reasonably be completed within thirty (30) days, so long as the Limited Partner commences to take action to remove and substitute the general partner with a reasonable period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of the Property to the managing general partner of Borrower pursuant to the right of first refusal or to the general partners of Borrower pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner’s interest in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of an interest in a limited partner of the Borrower. 16. EVENT OF DEFAULT. Subject to the provisions hereof, the occurrence of any of the following shall be deemed to be an event of default ("Event of Default'') hereunder: (a) failure by Borrower to make any payments provided for herein, and if such default is not made good within the earlier of fifteen (15) days of written notice to Borrower of such default or thirty (30) days after such payment was due; or (b) failure by Borrower to perform any covenant or agreement in the City Deed of Trust, the Loan Agreement, or the Affordability Restrictions on Transfer of Property within thirty (30) days after written demand therefor by City (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Borrower fail to promptly commence such cure, and diligently and continuously prosecute same to completion). 17. CURE BY LIMITED PARTNER. The City acknowledges that the Limited Partner of Borrower shall have the right, but not the obligation to cure any default hereunder. Any cure made or tendered by such Limited Partner shall be accepted as if made by Borrower. 18. REMEDIES. Upon the occurrence and during the continuance of an Event of Default, after any applicable notice has been provided and the expiration of any applicable cure period therefore, City may declare all sums evidenced hereby immediately due and payable by delivery to the Trustee named in the City Deed of Trust securing this Note, and to Borrower, written declaration of default and demand for sale, and written notice of default and of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record and City may foreclose on the City Deed of Trust. City shall also deposit with Trustee the City Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. No delay or omission on the part of the City in exercising any right under this Note or under any of the other Loan Documents shall operate as a waiver of such right. 19. ATTORNEYS' FEES. If this City Loan Note is not paid when due or if any Event of Default occurs, Borrower promises to pay all costs of enforcement and collection, including but not limited EXHIBIT 6 11 The Crossroads at Washington City NSP Loan Note to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 20. SEVERABILITY. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 21. CALCULATION OF INTEREST. Interest hereunder shall be calculated on the basis of a three hundred sixty (360) day year consisting of twelve (12) months of thirty (30) days each, except that interest due and payable for a period less than a full month shall be calculated by dividing (a) the product of (i) the actual number of days elapsed in such period, (ii) the outstanding principal balance hereunder during that period and (iii) the Note interest rate in effect hereunder during that period by (b) 360. 22. NUMBER AND GENDER. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires. 23. NON-RECOURSE. The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor any other party, including Borrower’s partners, shall have any personal liability for repayment of the City Loan or for any other amounts under any of the documentation evidencing, securing or describing the City Loan. The sole recourse of City under this Note and the City Deed of Trust for repayment of the City Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 24. SUBORDINATION. Any agreement by the City to subordinate the City Deed of Trust and/or Regulatory Agreements to an encumbrance securing and/or evidencing Approved Financing (each such Approved Financing, a "Senior Loan"), will be subject to the satisfaction of each of the following conditions: 1. All of the proceeds of the proposed Senior Loan, less any transaction costs, are used to provide acquisition, construction and/or permanent financing for the Project, or any combination thereof; EXHIBIT 6 12 The Crossroads at Washington City NSP Loan Note 2. The proposed lender of a Senior Loan (each a "Senior Lender") must be a state or federally chartered financial institution, a nonprofit corporation or a public entity that is not affiliated with Borrower; 3. Borrower demonstrates to the City's satisfaction that subordination of the City Deed of Trust and/or Affordability Restrictions on Transfer of Property is necessary to secure adequate acquisition, construction and/or permanent financing to ensure the viability of the Project, including the operation of the Project as affordable housing, as required by the Loan Documents. To satisfy this requirement, Borrower must provide to the City, in addition to any other information reasonably required by the City, evidence demonstrating that the proposed amount of the Senior Loan is necessary to provide adequate construction and/or permanent financing to ensure the viability of the Project, and adequate financing for the Project would not be available without the proposed subordination; 4. The subordination agreement(s) is structured to minimize the risk that the City Deed of Trust and/or Affordability Restrictions on Transfer of Property will be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Loan. To satisfy this requirement, the subordination agreement must provide the City with adequate rights to cure any defaults by Borrower, including: (i) providing the City or its successor with copies of any notices of default at the same time and in the same manner as provided to Borrower; and (ii) providing the City with a cure period of at least sixty (60) days to cure any default; 5. The subordination(s) of the City Loan is effective only during the original term of the Senior Loan and any extension of its term that is approved in writing by the City; 6. No subordination may limit the effect of the City Deed of Trust and/or the Affordability Restrictions on Transfer of Property before a foreclosure, nor require the consent of the Senior Lender prior to the City exercising any remedies available to the City under the Loan Documents; and 7. Upon a determination by the City Executive Director that the conditions in this Section have been satisfied, the Executive Director or his/her designee, will be authorized to execute the approved subordination agreement without the necessity of any further action or approval by the City Council. Execution of any subordination agreement will evidence and constitute the determination of the City that all requirements of this Section have been satisfied or waived. Notwithstanding anything to the contrary contained in the Loan Documents, with prior 30-days written notice to City, Borrower may refinance the Senior Loan with a non - profit, commercial, governmental or institutional lender without the prior consent of the City (“Refinanced Senior Indebtedness”), and the City hereby agrees to subordinate the lien of its Deed of Trust (but not the Affordability Restrictions on Transfer of Property) to the Refinanced Senior Indebtedness and the lien of any deed of trust or mortgage securing the Refinanced Senior Indebtedness, provided that the principal balance of the Refinanced EXHIBIT 6 13 The Crossroads at Washington City NSP Loan Note Senior Indebtedness does not exceed the then outstanding principal balance of the Senior Loan plus the costs incurred in securing the Refinanced Senior Indebtedness. 25. RESERVED. 26. RESERVED. 27. FORCE MAJEURE. Notwithstanding specific provisions of this Note, performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City or any other public or governmental City or entity (except that any act or failure to act of City shall not excuse performance by City); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time the party claiming such extension gives notice to the other party, provided notice by the party claiming such extension is given within thirty (30) days after the commencement of the cause. Times of performance under this Note may also be extended in writing by the City and the Borrower. 28. ASSIGNMENTS. The City, and the assignee of the City, shall have the right to assign this Note and the City Deed of Trust securing this Note, without any further act of Borrower. The assignee shall give notice to Borrower as soon as practicable after such assignment. {signatures on following page} EXHIBIT 6 14 The Crossroads at Washington City NSP Loan Note This Note is hereby agreed to and executed on the date first set forth above. “BORROWER” Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 6 Exhibit F: Affordability Restrictions on Transfer of Property EXHIBIT 6 1 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] NEIGHBORHOOD STABILIZATION PROGRAM AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (1126, 1136 & 1146 East Washington Avenue, Santa Ana, California) THESE NEIGHBORHOOD STABILIZATION PROGRAM (NSP) AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the “Restrictions”) are entered into as of June 21, 2022, by and between and Washington Santa Ana Housing Partners, L.P., a California limited partnership (“Developer”), and the City of Santa Ana, a charter city and municipal corporation (“City”). RECITALS: A. The Housing Authority of the City of Santa Ana (“Housing Authority”) owns one parcel located at 1136 East Washington Avenue (APN 398-092-14) totaling approximately 1.43 acres of land area (“Housing Authority Parcel”). The County of Orange (“County”) owns an adjacent parcel (APN 398-092-13) totaling approximately 0.85 acres of land area (“County Parcel”). The two parcels will be merged into one parcel (“Property”) and co- owned by the Housing Authority and the County as Tenants-In-Common. The Property is located in the City of Santa Ana, more particularly described in Exhibit A, which is attached hereto and incorporated herein by this reference. B. The Housing Authority and the County will ground lease the Property to the Developer for sixty-two (62) years from the Certificate of Completion, but no more than sixty- five (65) years from the date of execution of the Ground Lease. C. The Developer and the City have entered into that certain NSP Loan Agreement, dated on or about the date hereof (“Loan Agreement”), for the purpose of providing eighty- six (86) units of housing that will be affordable to Extremely Low Income households (“Restricted Units”), with one un-restricted unit reserved for an on-site manager, to which these Restrictions are attached as Exhibit F (any capitalized term that is not otherwise EXHIBIT 6 2 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property defined in these Restrictions shall have the meaning ascribed to such term in the Loan Agreement). D. The Loan Agreement provides, among other things, for the use of the Property for affordable housing with all Restricted Units being restricted to Extremely Low Income households, at Affordable Rent(s). E. The Loan Agreement contains certain provisions relating to the use of the Property. NOW, THEREFORE, CITY AND DEVELOPER COVENANT AND AGREE AS FOLLOWS: 1. Developer covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property or any part thereof) that Developer, such successors, and such assigns shall use the Property exclusively to provide affordable housing of Extremely Low Income households, as provided in these Restrictions and in the Loan Agreement. 2. Developer, for itself and its successors and assigns, hereby covenants and agrees that all of the apartments in the Property (less one manager’s unit) (the “Units”) shall be rented exclusively, at Affordable Rent, to Extremely Low Income households to the extent provided for herein. Area median income levels and Affordable Rents are subject to adjustment from time to time as provided in Section 3 below. 3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 3.1. Use Covenants and Restrictions. (a) The Project shall consist of eighty-six (86) units, including one (1) on-site manager’s unit. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assigns and every successor in interest to the Property that Developer will make all Restricted Units on the Property available to Extremely Low Income households at rents affordable to such households for sixty-two (62) years from the issuance of the Certificate of Completion. The City permits the Developer to limit the eligibility and/or give preference to a particular segment of the population in accordance with applicable state and federal laws. (b) At initial lease up, households in the Restricted Units cannot earn more than the Extremely Low Income limits (30% of AMI) as published by HUD for the Orange County, California PMSA, adjusted for household size. Rental increases shall be in conformance with federal and state law. (c) Initial rents for the Restricted Units must not exceed the applicable rents for the 30% Income Level for Extremely Low Income units as published by the California Tax Credit Allocation Committee (TCAC). EXHIBIT 6 3 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property (d) Forty-three (43) Extremely Low Income Units, consisting of sixteen (16) studio units, twenty-six (26) one-bedroom units, and one (1) two-bedroom unit shall be designated as permanent supportive housing (PSH) units for persons experiencing homelessness. (e) Maximum Occupancy will be two (2) people per room plus one (1). Example for a two-bedroom unit, five (5) people would be maximum occupancy. (f) Developer must have a written lease between tenant and owner for a period of at least one year, unless a shorter period is mutually agreed upon. Leases must be consistent with Section 7. 3.2. Affordability Levels/Unit Mix: The affordability levels/unit mix for the Restricted Units in the Project are as follows: Unit Size 30% TCAC AMI No. Units Current Rent Studio 16 $711 1 Bedroom 26 $762 2 Bedroom 21 $915 3 Bedroom 17 $1,057 4 Bedroom 5 $1,179 Total 85 The remaining unit will be an un-restricted 2-bedroom unit reserved for the onsite manager. (1) Annually with the financial statements, the Developer shall provide an annual report of rents and occupancy of all Restricted Units to verify compliance with affordability requirements. The affordable rents charged at the Project for the Restricted Units must comply with the standards set forth by the California Tax Credit Allocation Committee (TCAC), and during the HOME Compliance Period, the HOME requirements for the HOME assisted units. A utility allowance must be deducted from the maximum affordable rent charged at the Project for each Restricted Unit. Initial rents may be recalculated to allowable rental amounts at the time of initial lease-up following completion of construction in accordance with any changes in allowable rent and income tables as published by HUD and TCAC. 3.3. Rent Increases. EXHIBIT 6 4 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property On an annual basis, the City shall provide Developer with the maximum allowable schedule of rents for the Property in accordance with changes in allowable rent and income tables published by HUD and TCAC. In no event can Developer charge any tenant more than such amount. All rent increases on the Restricted Units are subject to City approval pursuant to the terms of this Section. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in Section 3.2 above. (a) Termination of Tenancy. Developer may not terminate the tenancy or refuse to renew the lease of tenant except for serious or repeated violation of the terms and conditions of the Lease; for violation of applicable federal, state, or local law; for completion of the transitional housing tenancy period (if the housing is transitional); or for other good cause. Any termination or refusal to renew must be preceded by not less than thirty (30) days by the Developer’s service upon the tenant of a written notice specifying the grounds for the action. (b) Non-Qualifying Adjusted Income. Subject to the applicable requirements and provisions of, and changes to, Section 42 and 142(d) of the Internal Revenue Code of 1986, as amended (the “Code”), if, upon recertification of the income of a tenant of a Restricted Unit, the Developer determines that a tenant has an adjusted income exceeding 30% of the applicable Median Income for the Area in each case, adjusted for household size as provided in Section 3.2 above, such tenant may be permitted to continue to occupy the Restricted Unit at the rental rate as provided for in Section 3.2 above, until the tenant chooses to vacate the Restricted Unit. After the Restricted Unit is vacated, the Restricted Unit shall be re-rented to a tenant pursuant to the terms, covenants and conditions of these Restrictions. 3.4. Loss of Project-Based Voucher Subsidy. It is anticipated that during the Term of Agreement the Project will maintain not less than fifteen (15) Project-Based Voucher (“PBV”) Restricted Units (“PBV Restricted Units”) provided by the Housing Authority and forty three (43) Project-Based Vouchers provided by Orange County (the “County PBV Restricted Units”), supported by Project- Based Section 8 rental subsidy payments ("Rental Subsidy"). If, during the Term of Agreement, there is a reduction, termination or nonrenewal of the Housing Authority’s or County’s Rental Subsidy through no fault of Developer, such that the Rental Subsidy shown on the Project Budget is no longer available (or available in a lesser amount), Developer may request approval of the City (a) to allow households with adjusted incomes that do not exceed sixty percent (60%) of AMI, adjusted for actual household size, to occupy the extremely-low income units (i.e., a unit previously restricted to households with adjusted incomes that do not exceed 30% of AMI), and (b) to increase the rent on one or more of the Restricted Units, to rents that are affordable to households with an adjusted income that does not exceed sixty percent (60%) of AMI, adjusted for household size appropriate for the Restricted Unit. EXHIBIT 6 5 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property The rent increase is subject to the following requirements: (a) concurrently with the request, Developer shall provide the City with evidence of the anticipated reduction, termination, or nonrenewal of the Rental Subsidy; (b) a Management Plan (as defined in Section 6.1(d) of the Loan Agreement) for the Project for the City’s approval pursuant to Sections 6.1(d) and Exhibit G of the Loan Agreement, showing the impact of the loss or reduction of the Rental Subsidy; (c) a proposed operating budget reflecting the rent increases (the “Operating Budget”); and (d) a description of efforts to obtain alternate sources of rent. The number of the PBV Restricted Units subject to the rent increase and the amount of the proposed increase may not be greater than the number or amount required to ensure that the Project generates sufficient income to cover its operating costs, required deposits to replacement reserves, and debt service on approved financing as shown on the Operating Budget, and as is necessary to maintain the financial stability of the Project. In addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described above, Developer hereby agrees to the following: (a) Developer shall use good faith commercially reasonable efforts to obtain alternative sources of rental subsidies and shall provide the City with annual progress reports on efforts to obtain alternative sources of rental subsidies that would allow the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall reduce the rents back to the original restrictions to the extent that the alternative rental subsidies provide sufficient income to cover the operating costs, required replacement reserves and debt service of the Project as shown on the Operating Budget. (b) Developer shall provide tenants in the Restricted Units with notice of any rent increase pursuant to this Section 3.4, and shall notify the tenant that if they have received a tenant-based voucher from the Housing Authority of the City of Santa Ana they may use the tenant-based voucher for their PBV Restricted Unit. (c) All rent increases for the Restricted Units are subject to City approval pursuant to the terms of this Section 3.4. No later than sixty (60) days prior to the proposed implementation of any rent increase, Developer shall submit to the City a schedule of any proposed increase in the rent. The City will disapprove a rent increase if it does not comply with the restrictions set forth in this Section 3.4. Notwithstanding the foregoing, rent increases for the PBV Restricted Units shall be subject to review and approval of the City. Developer shall give tenants of all Restricted Units written notice at least sixty (60) days prior to any rent increase. 3.5. Reserved. EXHIBIT 6 6 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property 4. Developer, its successors and assigns shall not charge rents for the Restricted Units in excess of the amounts set forth herein, as adjusted on the basis of the revised schedules of area median incomes issued from time-to-time by HUD. The City shall notify Developer in writing of the adjusted allowable maximum incomes and rents. 5. Developer shall adopt and include as part of its Management Plan (described in Section 11 below), written tenant selection policies and criteria for the Restricted Units that meet the following requirements: 5.1. Are consistent with the purpose of providing housing for Extremely Low Income households; 5.2. Are reasonably related to program eligibility and the applicants’ ability to perform the obligations of the lease; 5.3. Give reasonable consideration to the housing needs of households that would have a preference under 42 CFR §906.211 (Federal selection preferences for admission to Public Housing); 5.4. Provide for: (a) The selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (b) The prompt written notification to any rejected applicant of the grounds for any rejection; 5.5. Except with regard to persons experiencing homelessness referred off of the County of Orange coordinated entry system due to the layer of forty-three (43) PBVs provided by the Orange County Housing Authority, and subject to compliance with the HOME Regulations, the requirements of Section 142(d) of the Code, Section 42 of the Code, the County of Orange coordinated entry system and applicable California and federal fair housing laws, local preference for Santa Ana residents and workers in tenant selection shall be a requirement of the Project. Subject to applicable laws and regulations governing nondiscrimination and preferences in housing occupancy required by Section 142(d) of the Code, Section 42 of the Code, HUD or the State of California, as well as the City of Santa Ana Affordable Housing Funds Policies and Procedures, the Developer shall give preference in leasing units in the following order of priority: (a) First priority shall be given to persons who have been permanently displaced or face permanent displacement from housing in Santa Ana as a result of any of the following: (i) A redevelopment project undertaken pursuant to California’s Community Redevelopment Law (Health & Safety Code Sections 33000, et seq.) – applicable only to projects funded by the Low and Moderate Income Housing Asset Fund; EXHIBIT 6 7 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property (ii) Ellis Act, owner-occupancy, or removal permit eviction; (iii) Earthquake, fire, flood, or other natural disaster; (iv) Cancellation of a Housing Choice Voucher HAP Contract by property owner; or (v) Governmental Action, such as Code Enforcement. (b) Second priority shall be given to persons who are either: (i) Residents of Santa Ana; and/or (ii) Working in Santa Ana at least 32 hours per week for at least the last 6 months. The Restricted Units will still be available to the general public, as required under Section 142(d) of the Code and Section 42 of the Code, and these preferences do not restrict the availability of the units to the general public. 5.6. Carry out the Affirmative Marketing procedures of the City of Santa Ana, which are designed to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups in the housing market area to the units. 6. Developer, its successors and assigns, shall not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 982 (Housing Choice Voucher Program) or to a holder of a comparable document evidencing participation in a federally funded tenant-based assistance program because of the status of the prospective tenant as a holder of such certificate of family participation, rental voucher, or comparable tenant-based assistance document Total rents charged to the tenant for the tenant’s share of rent shall not exceed the allowable rents as described above. 7. Any lease of any of the units must be for not less than one year, unless by mutual agreement between the tenant and the Developer. Should the tenant and Developer agree to a term of less than one year, said agreement shall be expressed in some type of written form, signed by the tenant, and maintained in the tenant’s rental file held by the Developer. The lease may not contain any of the following provisions (in which references to “owner” shall mean the Developer, its successors or assigns): 7.1. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; 7.2. Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing Unit after the tenant has moved out of the Unit. The owner may dispose of this personal property in accordance with state law; 7.3. Agreement by the tenant not to hold the owner or the owner’s agent legally responsible for any action or failure to act, whether intentional or negligent; EXHIBIT 6 8 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property 7.4. Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant; 7.5. Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; 7.6. Agreement by the tenant to waive any right to a trial by jury; 7.7. Agreement by the tenant to waive the tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and 7.8. Agreement by the tenant to pay attorney’s fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. EXHIBIT 6 9 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property 8. Developer, its successors or assigns, must adhere to state law requirements with regard to termination of tenancy. 9. Developer shall maintain the improvements on the Property in compliance with all applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local code requirements (California Health and Safety Code section 33418), and shall keep the Property free from any unreasonable accumulation of debris or waste materials. Developer shall also maintain in a healthy condition any landscaping planted on the Property. 10. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, mental or physical disability, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property, as required by the Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations. 11. Not later than fifteen (15) business days prior to the Close of Escrow, Developer shall submit to the Executive Director a Management Plan in a form that is acceptable to the Executive Director, including, but not limited to, the components listed below. Approval of the Management Plan must be obtained from the Executive Director not later than the time for the Close of Escrow. Developer shall manage the Restricted Units in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the Executive Director, for the term of the income and rent restrictions contained in these Restrictions. The components of the Management Plan shall include: 11.1. Management Agent. Developer shall submit the name and qualifications of the proposed Management Agent. The Executive Director shall approve or disapprove the proposed Management Agent in writing based on the experience and qualifications of the Management Agent. 11.2. Management Agreement. Developer shall submit a copy of the proposed management agreement specifying the amount of the management fee, and the relationship and division of responsibilities between Developer and Management Agent. 11.3. Annual Budget and Projected Cash Flows. Prior to the Closing, and annually thereafter not less than sixty (60) days prior to the close of each calendar year thereafter until the Loan is repaid in full, Developer shall submit a projected operating budget and cash flow to the Executive Director for the following calendar year. The budget and cash flow shall be in a form that is acceptable to the Executive Director. 11.4. Tenant Selection Policies. Developer shall include in the Management EXHIBIT 6 10 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property Plan the tenant selection policies in accordance with Section 5, above. 12. If at any time the City determines that the units are not being managed or maintained in accordance with the approved Management Plan, the City shall send the Developer a detailed description of the management deficiencies (a “Deficiency Notice”). If the deficiencies set forth in the Deficiency Notice are not cured within sixty (60) days (or such longer period as may be reasonably required to cure the deficiency), the Executive Director may require Developer to change management practices or to terminate the management contract and designate and retain a different management agent. The management agreement shall provide that it is subject to termination by Developer without penalty, upon thirty (30) days prior written notice, at the direction of the Executive Director upon failure to cure a Deficiency Notice within the time period specified above. Within thirty (30) days following a direction of the Executive Director to replace the management agent in accordance with the terms hereof, the Developer shall select another management agent or make other arrangements satisfactory to the Executive Director or designee for continuing management of the units. 12.1. Marketing Plan. The marketing plan will apply to all of the units in the Project, except the one manager’s unit. The Developer shall submit a marketing plan for review and approval by the Executive Director which approval will not be unreasonably withheld, conditioned or delayed. The marketing plan must contain procedures that ensure marketing of the Restricted Units to Extremely Low Income households throughout the City. Such procedures shall be applicable for initial rent-up and ongoing marketing of the units throughout the term of these Restrictions. Developer shall advertise vacancies of the Restricted Units in general distribution newspapers that circulate throughout the City. Where the Developer utilizes other forms of advertising, such advertising shall also be distributed throughout the City. 13. The covenants established in these Restrictions and any amendments hereto approved by the City and Developer shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City and their respective successors and assigns. These Restrictions shall remain in effect for sixty-two (62) years from the issuance of the Certificate of Completion. In its discretion, the City may defer repayment of the NSP Loan or the City may agree to such reasonable modifications to the requirements of these Restrictions, as they may determine are necessary for the continued maintenance and operation of the Restricted Units. The covenants against discrimination shall remain in effect for the period of these Restrictions. 14. Developer shall not request disbursement of NSP funds until the funds are needed to pay eligible costs. The City shall have the right to disapprove any request if the City determines the request is for an ineligible item or is otherwise not in compliance with or inconsistent with the Loan Agreement and these Restrictions [24 CFR 92.504 (c)(10)]. EXHIBIT 6 11 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property 15. Maintenance; Compliance with Law. During the term of these Restrictions, Developer agrees to maintain all interior and exterior improvements, including landscaping, on the Project in good condition, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with any Management Plan approved by the City under these Restrictions (including without limitation any landscaping and signage), as the same may be amended from time to time, and all other 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. Developer acknowledges the great emphasis the City places on quality maintenance to protect its investment and to provide quality low income housing for its constituents and to ensure that all City subsidized affordable housing projects within the City are not allowed to deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free from all graffiti and any accumulation of debris or waste material. Developer shall promptly make all repairs and replacements necessary to keep the Project in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that Developer breaches any of the covenants contained in this Section 15 and such default continues for a period of five (5) days after written notice from the City (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from the City (with respect to landscaping and building improvements), then the City, in addition to whatever other right or remedy it may have under the Loan Agreement, the other Loan Documents, these Restrictions or at law or in equity, shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permitted (but is not required) to enter upon the Project and perform all acts and work necessary to protect, maintain and preserve the improvements and landscaped areas on the Project. Developer shall promptly pay to the City, as applicable, the amount of the expenditure arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, including a fifteen percent (15%) administrative charge. 16. Developer shall prepare, maintain and submit to the City, as appropriate, the following records and reports in compliance with 24 CFR 92.504 (c)(12):] 16.1. Annual Reports. Developer shall file with the City an Annual Report (herein referred to as the “Annual Report”) by June 15th of each calendar year, commencing with the end of the calendar year (or portion thereof) in which the Real Estate Closing occurs. The Annual Report shall contain a certification by Developer as to such information as the City Executive Director may then require, including, but not limited to, the following: (a) The fiscal condition of the Project, including the Annual Budget and Project Cash Flow report required by Section 11.3 which shall include a financial statement for the previous calendar year that includes a balance sheet and a profit and loss statement EXHIBIT 6 12 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property indicating any surplus or deficit in operating accounts; a detailed itemized listing of income and expenses; and the amounts of any fiscal reserves. Such Annual Budget and financial statement shall be prepared in accordance with generally accepted accounting practices. The City Executive Director may require that the financial statement be audited at Developer’s expense by an independent certified public accountant acceptable to the Executive Director. (b) Any substantial physical defects in the Project, including a description of any major repair or maintenance work undertaken or needed in the previous and current years. Such statement shall describe what steps Developer has taken in order to maintain the Project in a safe and sanitary condition in accordance with applicable housing and building codes and the property standards set forth in 24 CFR 92.251. (c) The occupancy of the units indicating the income of each current resident and the current rents charged each resident and whether those rents include utilities, including records that demonstrate that the Project meets the requirements of 24 CFR 92.253 for tenant and participant protection and this Agreement. (d) General management performance, including tenant relations and other relevant information. (e) Records that demonstrate that the units meet the affordability requirements of 24 CFR 92.252, for the required period of affordability. (f) Evidence of a currently paid hazard insurance policy in accordance with the requirements of Section 3 of the City/NSP Deed of Trust, with a loss payable endorsement naming the City as a loss payee(s) together with other approved lenders (as their interests may appear), with a “Replacement Cost Endorsement” in amount sufficient to prevent Developer or City from becoming a co-insurer under the terms of the policy, but in any event in an amount not less than 100% of the then full replacement cost, to be determined at least once annually and subject to reasonable approval by the Executive Director. (g) Evidence of a currently paid liability insurance policy, naming the City as additional insured and in a form approved by the City Attorney with coverage as described in the Loan Agreement. (h) Termite reports pertaining to the Property every fifth (5th) year. (i) Such other information as may be reasonably required by the Executive Director or his/her designee. 16.2. Records and Audits. Developer shall maintain the following general program records, and make them available for inspection by the City, the State or HUD: (a) records which demonstrate that the project meets the property standard specified in 24 CFR 92.251; EXHIBIT 6 13 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property (b) records which demonstrates that the project meets the requirements of 24 CFR 92.252; (c) records which demonstrate compliance with the tenant and participant protections, as specified in 24 Section 29.253; (d) records which demonstrate compliance with the Equal Opportunity and Fair Housing requirements outlined in these Restrictions (i) Intentionally Omitted; (ii) documentation of actions undertaken to meet the equal opportunity requirements of 24 CFR 92.350, which implements Section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u); (iii) documentation and data on the steps taken to implement Developer’s outreach programs to minority-owned and women-owned businesses to meet the minority outreach requirements of 24 CFR 92.350; (e) documentation of the steps taken to carry out an affirmative marketing program in accordance with 24 CFR 92.351, if applicable; (f) if applicable, records which demonstrate compliance with the requirements relating to relocation of displaced persons, as described in 24 CFR 92.353. At a minimum, these shall include project occupancy lists identifying the name and address of all persons occupying the project property up until the date of the Real Estate Closing (i.e., the date on which Developer obtained site control); (g) if applicable, records concerning lead-based paint in accordance with 24 CFR 92.355; (h) if applicable, records which support any requests for waivers of the conflict of interest prohibition as stated in 24 CFR 92.356; (i) records of certifications of contractor qualifications as they relate to the debarment and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part 24; and (j) any other reports issued by other monitoring agencies. 16.3. All records pertaining to each calendar year of NSP funds must be retained for the most recent five year period, except that records of individual tenant income verifications, project rents and project inspections must be retained for the most recent five year period, until five years after the affordability period terminates (24 CFR 92.508). Developer shall cooperate with the City to retain all books and records relevant to the Loan Agreement for a minimum of five years after the expiration of the Loan Agreement and any and all amendments hereto, or for five years after the conclusion or resolution of any and all audits or litigation relevant to the Loan Agreement, whichever is later. The C ity, EXHIBIT 6 14 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property the State, the Office of the Auditor General of HUD, and/or their representatives shall have unrestricted reasonable access to all locations, books, and records for the purpose of monitoring, auditing, or otherwise examining said locations, books, and records with or without prior notice. 16.4. If so directed by the City, the State or HUD upon termination of the Loan Agreement, Developer shall cause all records, accounts, documentation and all other materials relevant to the work to be delivered to the City, the State or HUD, as depository. 16.5. All records, accounts, documentation and other materials relevant to the Project shall be accessible at any time to the authorized representatives of the City, the State or HUD, on reasonable prior notice, for the purpose of examination or audit. 16.6. Pursuant to 24 CFR Part 44, the City shall perform an annual audit at the close of each calendar year in which these Restrictions are in effect. Developer shall reasonably cooperate with City in performing such audit. 17. If an event of default occurs under the terms of these Restrictions, prior to exercising any remedies hereunder, City shall give Developer written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Developer shall have such period to effect a cure prior to exercise of remedies by the City under these Restrictions. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Developer: (i) initiates corrective action within said period; and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Developer shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by City. Any cure made or tendered by such limited partner shall be accepted as if made by Developer. The City is a beneficiary of the terms and provisions of these Restrictions and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit these Restrictions and the covenants running with the land have been provided. Upon the occurrence of an event of default and the expiration of the notice and cure period specified above, the City shall have the right to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of these Restrictions and covenants are entitled. 18. Default. Each of the following shall constitute an "Event of Default" by Developer under these Restrictions: 18.1. Failure to Make Payments. Developer fails to make any payment due the City under these Restrictions within thirty (30) days after receiving written notice for said payment from the City; EXHIBIT 6 15 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property 18.2. Non-Monetary Failure to Perform. Developer fails to timely perform, comply with or observe any of the terms, covenants, or conditions of these Restrictions (other than those provisions elsewhere referred to in this Section 18) and such failure continues uncured or without Developer commencing to diligently cure for thirty (30) days after notice thereof in writing is given by the City to Developer, provided that if Developer has commenced cure but cannot complete such cure reasonably within thirty (30) days, Developer shall have ninety (90) days from the date of notice to cure such failure without such failure constituting an event of default; 18.3. Senior Loan Document Breach. Any default or breach of Developer which continues uncured after the expiration of any applicable cure period under the Loan Agreement (including, but not limited to, the obligations of the Developer under Section 6 of the Loan Agreement), any Loan Document or any other loan document including, but not limited to, the Senior Loan Documents, as defined and set forth in the Loan Agreement; 18.4. Voluntary Suspension. The voluntary suspension of Developer's business or the dissolution or termination of the partnership (if any) constituting Developer; 18.5. Unauthorized Transfer. Developer’s sale or other transfer of the Project in violation of this Agreement; 18.6. Fraud or Material Misstatement or Omissions. Any fraudulent act or intentional material omission of Developer pertaining to or made in connection with the Loan, Loan Documents or the Project that is not cured within thirty (30) days after written notice to Developer, unless such act or omission is not capable of cure; 18.7. Insolvency. A court having jurisdiction shall have made or entered any decree or order: (i) adjudging Developer to be bankrupt or insolvent; (ii) approving as properly filed a petition seeking reorganization of Developer or seeking any arrangement for Developer under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction; (iii) appointing a receiver, trustee, liquidator, or assignee of Developer in bankruptcy or insolvency or for any of their properties; or (iv) directing the winding up or liquidation of Developer, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days, unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period will apply under this section as well; or Developer shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note; or 18.8. Project Monies. Developer’s intentional misapplication or embezzlement of Project monies. 19. Reserved. EXHIBIT 6 16 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property 20. Remedies. The occurrence of any Event of Default shall, either at the option of the City or automatically where so specified, relieve the City of any obligation to make or continue the Loan and shall give the City the right to proceed with any and all remedies set forth in these Restrictions or otherwise available at law or in equity or by statute (and all of t he City's rights and remedies shall be cumulative), including but not limited to the following: 20.1. Acceleration of Note. The City shall have the right to cause all indebtedness of the Developer to the City under the Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest, or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party under the law, including the Uniform Commercial Code, including foreclosure under the Deed of Trust. The Developer shall be liable to pay the City on demand all expenses, costs and fees (including, without limitation, reasonable attorneys' fees and expenses) paid or incurred by the City in connection with the enforcement of this provision, provided that such expenses, costs and fees shall be subordinate to the Senior Loan made to Developer and the Senior Loan Documents. 20.2. Specific Performance. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Developer to perform its obligations and covenants under these Restrictions or to enjoin acts on things, which may be unlawful, or in violation of the provisions of these Restrictions. The Developer shall be liable to pay the City on demand all expenses, costs and fees (including, without limitation, reasonable attorneys’ fees and expenses) paid or incurred by the City in connection with the enforcement of these Restrictions. 20.3. Right to Cure at Developer's Expense. The City shall have the right to cure any monetary Event of Default by Developer under these Restrictions. The Developer agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Developer upon demand therefore, together with interest thereon at the rate of twelve percent (12%) per annum or the maximum rate permitted by law, whichever rate is lesser, from the date of expenditure until the date of reimbursement. 20.4. Remedies Cumulative. No right, power, or remedy given to the City by the terms of these Restrictions is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, or by any statute or otherwise against Developer and any other person. Neither the failure nor any delay on the part of the City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. 20.5. Waiver of Terms and Conditions. No waiver of any default or breach by Developer hereunder shall be implied from any omission by the City to take action on EXHIBIT 6 17 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the City to or of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under these Restrictions or the Loan Documents, nor shall it invalidate any act done pursuant to notice of default, or prejudice the City in the exercise of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of Developer to City are paid and discharged in full. 21. The covenants and agreements contained herein shall run with the land and not be personal obligations of Developer. Upon the sale, conveyance or other transfer of the leasehold interest in the Property (a “Transfer”) and the assumption of the obligations hereunder by a transferee, Developer’s liability for performance shall be terminated as to any obligation to be performed hereunder after the date of such Transfer. 22. The Loan Agreement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Property, the City/NSP Loan Note and the City/NSP Deed of Trust provide a means of enforcement by the City if Developer is in breach of i ts obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c) (13)]. 23. Additional Terms. 23.1. Indemnity. To the fullest extent permitted by law, the Developer agrees to indemnify, hold harmless and defend the City and its elected officials, officers, governing members, employees, attorneys and agents (collectively, the "Indemnified Parties"), from and against any and all losses, damages, claims, actions, liabil ities, costs and expenses of any and every conceivable nature, kind or character (including, without limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject to under any statutory law (including federal or state securities laws) or at common law or otherwise, arising out of or based upon or in any way relating to: (a) these Restrictions or the execution or amendment thereof in connection with the transactions contemplated thereby; (b) Developer’s ownership or operation of the Property and the Project or any act or omission of the Developer or any of its agents, contractors, servants, employees or licensees in connection with the Property and the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation, operation or rehabilitation of, the Project or any part thereof; EXHIBIT 6 18 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property (c) any lien or charge upon payments by the Developer to the City, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the City in respect of any portion of the Project; (d) any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Property or the Project or any part thereof; or (e) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact by the Developer contained in any Loan Document or any of the documents or instruments relating to said Loan Documents that the City relied upon in making the Loan; except to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Developer, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment and payment for of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. 23.2. Time. Time is of the essence in these Restrictions. 23.3. Construction. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender. 23.4. Waiver of Jury Trial. Unless prohibited by Federal, State or local laws, each party to these Restrictions hereby expressly waives any right to trial by jury of any claim, demand, action or cause of action arising under any Loan Document or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to any Loan Document, or the transactions related thereto, in each case whether now existing or hereafter arising, and whether sounding in contract or tort or otherwise; and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to these Restrictions may file an original counterpart or a copy of this section with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury. 23.5. Nonliability. By accepting or approving anything required to be performed or given to City under these Restrictions, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone. 23.6. Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any claim by Developer against City, in connection with these Restrictions or otherwise, Developer hereby waives EXHIBIT 6 19 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property any right it might otherwise have: (a) to offset any such obligation, liability or claim against Developer’s obligations under these Restrictions; or (b) to claim that the existence of any such obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under these Restrictions. 24. Reserved. . 25. Notices. All notices, demands, approvals and other communications provided for in the Loan Documents shall be in writing and be delivered to the appropriate party by personal service or U.S. mail at its address as follows: If to Developer: Washington Santa Ana Housing Partners, L.P., a California limited partnership With a copy to: If to City: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 With a copy to: City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 Addresses for notice may be changed as required by written notice to all other parties. All notices personally served shall be effective when actually received. All notices mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing notwithstanding, the non-receipt of any notice as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such notice. {signatures on following page} EXHIBIT 6 20 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions on Transfer of Property to be executed on the date set forth hereinabove. ATTEST: CITY OF SANTA ANA ___________________________ _______________________ Daisy Gomez Kristine Ridge Clerk of the Council City Manager Dated: Dated: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: ________________________ Ryan O. Hodge Assistant City Attorney Dated: RECOMMENDED FOR APPROVAL: _______________________________ Steven A. Mendoza Executive Director Community Development Agency June 13, 2022 EXHIBIT 6 21 The Crossroads at Washington City NSP Affordability Restrictions on Transfer of Property DEVELOPER Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 6 Subordination Agreement (City of Santa Ana) Form 6456 Page 1 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: U.S. Bank National Association 4747 Executive Dr 3rd Floor San Diego, CA 92121 Mail Code: LM-CA-ED3D Attention: Rebecca O’Toole SPACE ABOVE THIS LINE FOR RECORDER’S USE SUBORDINATION AGREEMENT (City of Santa Ana) This SUBORDINATION AGREEMENT (this “Agreement”) dated as of July __, 2022, is executed by and among (i) U.S. BANK NATIONAL ASSOCIATION, a national banking association (in such capacity, and together with its successors and assigns, “Senior Lender”), (ii)CITY OF SANTA ANA, a charter city and municipal corporation (“Subordinate Lender”), and (iii) WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership (“Borrower”). RECITALS: A.Senior Lender has determined to make a mortgage loan to the Borrower in the maximum aggregate principal amount of $__________ (the “Senior Loan”) to provide for the financing of an 86-unit rental housing development project (the “Project”) on the “Land” (“Land”) described in the “Senior Secured Instrument” (as defined below). The Senior Loan will be made pursuant to that certain Construction and Permanent Loan Agreement (as amended from time to time, the “Senior Loan Agreement”) dated as of June 1, 2022, between Senior Lender, as lender, and Borrower, as borrower. The Senior Loan is evidenced by, among other things, that certain promissory note dated as of _______________, made by Borrower to the order of Senior Lender in the face principal amount of the Senior Loan (the “Senior Note”). B.To secure Borrower’s obligations under the Senior Loan Agreement and the Senior Note, the Borrower is executing and delivering a deed of trust for the benefit of Senior Lender (as amended from time to time, the “Senior Security Instrument”) dated as of even date herewith, encumbering, among other things, Borrower’s leasehold interest in the Land and fee interest in the Improvements located thereon certain personal property described in the Mortgage (collectively, the “Mortgaged Property”) and being recorded in the Official Records of the County of Orange, State of California (the “Official Records”), substantially concurrently herewith. The Senior Loan Agreement, Senior Note, Senior Security Instrument and all the other “Loan Documents” as defined in the Senior Loan Agreement are referred to herein collectively as the “Senior Loan Documents”. All capitalized terms used herein and without definition herein shall have the meanings set forth for such terms in the Senior Loan Agreement. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 2 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 C. Borrower has requested Senior Lender to permit Subordinate Lender to loan to Borrower (1) a subordinate loan in the amount of $3,007,489 (the “HOME Loan”), and (2) a subordinate loan in the amount of $1,637,420 (the “NSP Loan”; and together with the HOME Loan, the “Subordinate Loans”), and to allow the Subordinate Loans to be secured by mortgage liens against the Mortgaged Property. D. Upon satisfaction of all “Conditions to Conversion” described in that certain Loan Purchase Agreement dated as of even date herewith, by and among Borrower, Senior Lender and California Community Reinvestment Corporation, a California nonprofit public benefit corporation (“Permanent Lender”), the Senior Loan will convert from a construction loan to a permanent term loan. On the Conversion Date, Permanent Lender shall purchase the Senior Loan, take an assignment from Senior Lender of its rights under the Senior Loan Documents, and become the “Senior Lender” hereunder. E. Senior Lender has agreed to permit the Subordinate Loans and to allow the subordinate mortgage liens against the Mortgaged Property subject to all of the conditions contained in this Agreement. AGREEMENTS: NOW, THEREFORE, in order to induce the Senior Lender to permit the Subordinate Lender to make the Subordinate Loans to Borrower and to place a subordinate mortgage lien against the Mortgaged Property, and in consideration thereof, Senior Lender, Subordinate Lender and Borrower agree as follows: 1. Recitals. The recitals set forth above are incorporated herein by reference. 2. Definitions. In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement the following terms have the respective meanings set forth below: “Affiliate” means, when used with respect to a Person, any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual Controlled by, under common Control with, or which Controls such Person, and in all cases any other Person that holds fifty percent (50%) or more of the ownership interests in such Person. “Borrower” means the Person named as such in the first paragraph on page 1 of this Agreement, any successor or assign of Borrower, including without limitation, a receiver, trustee or debtor-in- possession and any other Person (other than Senior Lender) who acquires title to the Mortgaged Property after the date of this Agreement. “Business Day” means any day other than (a) a Saturday, (b) a Sunday, (c) a day on which Senior Lender or Subordinate Lender is not open for business, or (d) a day on which the Federal Reserve Bank of New York is not open for business. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 3 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 “Condemnation Action” means any action or proceeding, however characterized or named, relating to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect. “Control” (including with correlative meanings, the terms “Controlling,” “Controlled by” and “under common Control with”), as applied to any entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or operations of such entity, whether through the ownership of voting securities, ownership interests or by contract or otherwise. “Default Notice” means: (a) a copy of any written notice from Senior Lender to Borrower and Subordinate Lender stating that a Senior Loan Default has occurred under the Senior Loan Documents; or (b) a copy of any written notice from Subordinate Lender to Borrower and Senior Lender stating that a Subordinate Loan Default or a default under any Unsubordinated City Regulatory Agreement has occurred, as applicable. Each Default Notice shall specify the default upon which such Default Notice is based. “Official Records” means the Official Records of Orange County, California. “Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private). “Senior Lender” means the Person named as such in the first paragraph on page 1 of this Agreement. When any other Person becomes the legal holder of the Senior Note, such other Person shall automatically become the Senior Lender. “Senior Loan” has the meaning set forth in Recital A, above. “Senior Loan Agreement” has the meaning set forth in Recital A, above. “Senior Loan Default” means the occurrence of an “Event of Default” as that term is defined in the Senior Loan Documents. “Senior Loan Documents” has the meaning set forth in Recital B, above. “Senior Note” has the meaning set forth in Recital A, above. “Senior Security Instrument” has the meaning set forth in Recital B, above. “Subordinate Lender” means the Person named as such in the first paragraph on page 1 of this Agreement, any successor or assign of Subordinate Lender, or any other Person who becomes the legal holder of any Subordinate Note after the date of this Agreement. “Subordinate Loan Agreements” means, collectively, (a) that certain HOME Loan Agreement dated as of ______________, 2022, and (b) that certain Neighborhood Stabilization Program Loan Agreement dated as of _______________, 2022. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 4 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 “Subordinate Loan Default” means a default by Borrower in performing or observing any of the terms, covenants or conditions in the Subordinate Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the Subordinate Loan Documents for curing the default. “Subordinate Loan Documents” means the Subordinate Loan Agreements, Subordinate Notes, the Subordinate Mortgages, any UCC-1 financing statement filed showing Borrower, as debtor, and Subordinate Lender, as secured party, filed in connection with the Subordinate Loans, and all other documents evidencing, securing or otherwise executed and delivered in connection with the Subordinate Loans. “Subordinate Loans” has the meaning set forth in Recital D, above. “Subordinate Mortgages” means, collectively, (a) that certain City HOME Deed of Trust and Assignment of Rents dated as of _______________, 2022, and (b) that certain City Neighborhood Stabilization Program Deed of Trust and Assignment of Rents dated as of _______________, 2022, each executed by Borrower in favor of Subordinate Lender, and each recorded in the Official Records substantially concurrently herewith, encumbering the Mortgaged Property as security for the applicable Subordinate Loan. “Subordinate Notes” means, collectively, (a) that certain City HOME Loan Note Secured By Subordinated Deed of Trust to the City of Santa Ana, California dated as of _______________, 2022, executed by Borrower to the order of Subordinate Lender, in the face principal amount of $3,007,489, evidencing the HOME Loan, and (b) that certain City Neighborhood Stabilization Program Loan Note Secured By Subordinated Deed of Trust to the City of Santa Ana, California dated as of _______________, 2022, executed by Borrower to the order of Subordinate Lender, in the face principal amount of $____________, evidencing the NSP Loan. “Unsubordinated City Regulatory Agreements” means, collectively, (a) that certain Affordability Restrictions on Transfer of Property dated _______________, 2022 (the “HOME Regulatory Agreement”), and (b) that certain Neighborhood Stabilization Program Affordability Restrictions on Transfer of Property dated _______________, 2022 (the “NSP Regulatory Agreement”), each executed by and between Borrower and Subordinate Lender, and each recorded in the Official Records substantially concurrently herewith. 3. Permission to Place Mortgage Lien Against Mortgaged Property. Senior Lender agrees, notwithstanding the prohibition against inferior liens on the Mortgaged Property contained in the Senior Loan Documents and subject to the provisions of this Agreement, to permit Subordinate Lender to record the Subordinate Mortgages, the Unsubordinated City Regulatory Agreements, and other recordable Subordinate Loan Documents against the Mortgaged Property to secure Borrower’s obligation to repay the Subordinate Notes and all other obligations, indebtedness and liabilities of Borrower to Subordinate Lender under and in connection with the Subordinate Loans. Such permission is subject to the condition that each of the representations and warranties made by the Borrower and the Subordinate Lender in Section 4 is true and correct on the date of this Agreement and on the date on which the proceeds of the EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 5 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 Subordinate Loans are disbursed to the Borrower. If any of the representations and warranties made by the Borrower and the Subordinate Lender in Section 4 is not true and correct on both of those dates, the provisions of the Senior Loan Documents applicable to unpermitted liens on the Mortgaged Property shall apply. 4. Borrower’s and Subordinate Lender’s Representations and Warranties. Borrower and Subordinate Lender each makes the following representations and warranties to Senior Lender: (a) Subordinate Loan Documents. The Subordinate Loans are evidenced by the Subordinate Notes and is secured by the Subordinate Mortgages, the Subordinate Loan Agreements and the other Subordinate Loan Documents. (b) Relationship of Borrower to Subordinate Lender and Senior Lender. The Subordinate Lender is not an Affiliate of the Borrower and is not in possession of any facts which would lead it to believe that the Senior Lender is an Affiliate of the Borrower. (c) Term. The terms of the Subordinate Notes do not end before the stated term of the Senior Note. (d) Subordinate Loan Documents and Unsubordinated City Regulatory Agreement. The executed Subordinate Loan Documents and the Unsubordinated City Regulatory Agreements are substantially in the same forms as those submitted to, and approved by, Senior Lender prior to the date of this Agreement. Upon execution and delivery of the Subordinate Loan Documents and the Unsubordinated City Regulatory Agreements, Borrower shall deliver to Senior Lender an executed copy of each of the Subordinate Loan Documents and the Unsubordinated City Regulatory Agreements, certified to be true, correct and complete. 5. Deliveries. Upon execution and delivery of the Senior Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of the Senior Loan Documents, certified to be true, correct and complete. 6. Terms of Subordination. (a) Agreement to Subordinate. Senior Lender and Subordinate Lender agree that (1) the Unsubordinated City Regulatory Agreements shall remain senior to the lien of the Senior Instrument and all other Senior Loan EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 6 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 Documents, (2) subject to the terms of paragraph (c) below in this Section 6, the indebtedness evidenced by the Subordinate Loan Documents is and shall be subordinated in right of payment, to the extent and in the manner provided in this Agreement, to the prior payment in full of the Indebtedness evidenced by the Senior Loan Documents, and (3) the liens, terms, covenants and conditions of the Subordinate Mortgages and the other Subordinate Loan Documents are and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Senior Security Instrument and the other Senior Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the Senior Security Instrument and the other Senior Loan Documents (including but not limited to, all sums advanced for the purposes of (A) protecting or further securing the lien of the Senior Security Instrument, curing defaults by Borrower under the Senior Loan Documents or for any other purpose expressly permitted by the Senior Loan Documents, or (B) constructing, renovating, repairing, furnishing, fixturing or equipping the Mortgaged Property). (b) Subordination of Subrogation Rights. Subordinate Lender agrees that if, by reason of its payment of real estate taxes or other monetary obligations of Borrower, or by reason of its exercise of any other right or remedy under the Subordinate Loan Documents or the Unsubordinated City Regulatory Agreements, it acquires by right of subrogation or otherwise a lien on the Mortgaged Property which (but for this subsection) would be senior to the lien of the Senior Security Instrument, then, in that event, such lien shall be subject and subordinate to the lien of the Senior Security Instrument. (c) Payments Before Senior Loan Default. Notwithstanding anything to the contrary in this Agreement, until Subordinate Lender receives a Default Notice (or otherwise acquires actual knowledge) of a Senior Loan Default, Subordinate Lender shall be entitled to retain for its own account all payments made under or pursuant to the Subordinate Loan Documents. (d) Payments After Senior Loan Default. Borrower agrees that, after it receives a Default Notice (or otherwise acquires knowledge) of a Senior Loan Default, it will not make any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorneys’ fees, or any other sums secured by the Subordinate Loan Documents) without Senior Lender’s prior written consent. Subordinate Lender agrees that, after it receives a Default Notice from Senior Lender with written instructions directing Subordinate Lender not to accept payments from Borrower on account of the Subordinate Loans, it will not accept any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorneys’ fees, or any other sums secured by the Subordinate Loan Documents) without Senior Lender’s prior written consent or until the Senior Loan has been repaid in full. If Subordinate Lender receives written notice from Senior Lender that the Senior Loan Default which gave rise to Subordinate Lender’s obligation not to accept payments has been cured, waived, or otherwise suspended by Senior Lender, the restrictions on payment to Subordinate Lender in this Section 6 EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 7 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 shall terminate, and Senior Lender shall have no right to any subsequent payments made to Subordinate Lender by Borrower prior to Subordinate Lender’s receipt of a new Default Notice from Senior Lender in accordance with the provisions of this Section 6(d). (e) Remitting Subordinate Loan Payments to Senior Lender. If, after Subordinate Lender receives a Default Notice from Senior Lender in accordance with Section 6(d), Subordinate Lender receives any payments under the Subordinate Loan Documents, Subordinate Lender agrees that such payment or other distribution will be received and held in trust for Senior Lender and unless Senior Lender otherwise notifies Subordinate Lender in writing, will be promptly remitted, in kind to Senior Lender, properly endorsed to Senior Lender, to be applied to the principal of, interest on and other amounts due under the Senior Loan Documents in accordance with the provisions of the Senior Loan Documents. By executing this Agreement, Borrower specifically authorizes Subordinate Lender to endorse and remit any such payments to Senior Lender, and specifically waives any and all rights to have such payments returned to Borrower or credited against the Subordinate Loans. Borrower and Senior Lender acknowledge and agree that payments received by Subordinate Lender, and remitted to Senior Lender under this Section 6, shall not be applied or otherwise credited against the Subordinate Loans, nor shall the tender of such payment to Senior Lender waive any Subordinate Loan Default which may arise from the inability of Subordinate Lender to retain such payment or ap ply such payment to the Subordinate Loans. (f) Notice of Payment from Other Persons. Subordinate Lender agrees to notify (telephonically or via email, followed by written notice) Senior Lender of Subordinate Lender’s receipt from any Person other than Borrower of a payment with respect to Borrower’s obligations under the Subordinate Loan Documents, promptly after Subordinate Lender obtains knowledge of such payment. (g) Agreement Not to Commence Bankruptcy Proceeding. Subordinate Lender agrees that during the term of this Agreement it will not commence, or join with any other creditor in commencing any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings against or with respect to Borrower, without Senior Lender’s prior written consent. 7. Default Under Subordinate Loan Documents or Unsubordinated City Regulatory Agreements. (a) Notice of Subordinate Loan Default and Cure Rights. During the term of this Agreement, Subordinate Lender shall deliver to Senior Lender a Default Notice within five (5) Business Days in each case where Subordinate Lender has given a Default Notice to Borrower. Failure of Subordinate Lender to send a Default Notice to Senior Lender shall not prevent the exercise of Subordinate Lender’s rights and remedies under the Subordinate Loan Documents or the Unsubordinated City Regulatory Agreements, as appliable, EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 8 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 subject to the provisions of this Agreement. Senior Lender shall have the right, but not the obligation, to cure any Subordinate Loan Default or any default under any Unsubordinated City Regulatory Agreement within sixty (60) days following the date of such notice; provided, however that Subordinate Lender shall be entitled, during such sixty (60) day period, to continue to pursue its rights and remedies under the Subordinate Loan Documents or the Unsubordinated City Regulatory Agreements, as applicable, to the extent permitted under Section 7(b). All amounts paid by Senior Lender in accordance with the Senior Loan Documents to cure a Subordinate Loan Default or a default under any Unsubordinated City Regulatory Agreement shall be deemed to have been advanced by Senior Lender pursuant to, and shall be secured by, the Senior Loan Agreement and the Senior Security Instrument. (b) Subordinate Lender’s Agreement to Standstill. If a Subordinate Loan Default or a default under any Unsubordinated City Regulatory Agreement occurs and is continuing, the Subordinate Lender agrees that, without the Senior Lender’s prior written consent, it will not accelerate the Subordinate Loans, commence foreclosure proceedings with respect to the Mortgaged Property, collect rents, appoint (or seek the appointment of) a receiver or institute any other collection or enforcement action. (c) Cross Default. Borrower and Subordinate Lender agree that a Subordinate Loan Default and/or a default under the any Unsubordinated City Regulatory Agreement shall constitute a Senior Loan Default under the Senior Loan Documents and Senior Lender shall have the right to exercise all rights or remedies under the Senior Loan Documents in the same manner as in the case of any other Senior Loan Default. If Subordinate Lender notifies Senior Lender in writing that any Subordinate Loan Default or of any default under any Unsubordinated City Regulatory Agreement of which Senior Lender has received a Default Notice has been cured or waived, as determined by Subordinate Lender in its sole discretion, then provided that Senior Lender has not conducted a sale of the Mortgaged Property pursuant to its rights under the Senior Loan Documents, any Senior Loan Default under the Senior Loan Documents arising solely from such Subordinate Loan Default or default under any Unsubordinated City Regulatory Agreement shall be deemed cured, and the Senior Loan shall be reinstated, provided, however, that Senior Lender shall not be required to return or otherwise credit for the benefit of Borrower any default rate interest or other default related charges or payments received by Senior Lender during such Senior Loan Default. 8. Default Under Senior Loan Documents. (a) Notice of Senior Loan Default and Cure Rights. Senior Lender shall deliver to Subordinate Lender a Default Notice within five (5) Business Days in each case where Senior Lender has given a Default Notice to Borrower. Failure of Senior Lender to send a Default Notice to Subordinate Lender shall not prevent the exercise of Senior Lender’s rights and remedies under the Senior Loan Documents, subject to the provisions of this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure any such Senior Loan Default as provided below. Subordinate Lender shall have up to thirty (30) days from EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 9 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 the date of the Default Notice to cure any monetary default under the Senior Loan Documents; provided, however, that the Senior Lender shall be entitled during such 30-day period to continue to pursue its remedies with respect to the Mortgaged Property. Subordinate Lender shall have up to sixty (60) days from the date of the Default Notice to cure a non-monetary default if during such 60- day period Subordinate Lender keeps current all payments required by the Senior Loan Documents. In the event that such a non-monetary default creates an unacceptable level of risk relative to the Mortgaged Property, or Senior Lender’s secured position relative to the Mortgaged Property, as determined by Senior Lender in its sole discretion, then Senior Lender may exercise during such 60- day period all available rights and remedies to protect and preserve the Mortgaged Property and the rents, revenues and other proceeds from the Mortgaged Property. All amounts paid by the Subordinate Lender to the Senior Lender to cure a Senior Loan Default shall be deemed to have been advanced by the Subordinate Lender pursuant to, and shall be secured by the lien of, the Subordinate Mortgages. (b) Cross Default. Subordinate Lender agrees that, notwithstanding any contrary provision contained in the Subordinate Loan Documents, a Senior Loan Default shall not constitute a default under the Subordinate Loan Documents (if no other default has occurred under the Subordinate Loan Documents) until either (1) Senior Lender has accelerated the maturity of the Senior Loan, or (2) Senior Lender has taken affirmative action to exercise its rights under the Senior Loan Documents to collect rent, to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of sale contained in) the Senior Loan Documents. At any time after a Senior Loan Default is determined to constitute a default under the Subordinate Loan Documents, Subordinate Lender shall be permitted to pursue its remedies for default under the Subordinate Loan Documents, subject to the restrictions and limitations of this Agreement. If at any time Borrower cures any Senior Loan Default to the satisfaction of Senior Lender, as evidenced by written notice from Senior Lender to Subordinate Lender, any default under the Subordinate Loan Documents arising from such Senior Loan Default shall be deemed cured and the Subordinate Loans shall be retroactively reinstated as if such Senior Loan Default had never occurred. 9. Conflict. Borrower, Senior Lender and Subordinate Lender each agrees that, in the event of any conflict or inconsistency between the terms of the Senior Loan Documents, the Subordinate Loan Documents, the Unsubordinated City Regulatory Agreements and the terms of this Agreement, the terms of this Agreement shall govern and control solely as to the following: (a) the relative priority of the security interests of Senior Lender and Subordinate Lender in the Mortgaged Property; (b) the timing of the exercise of remedies by Senior Lender and Subordinate Lender under the Senior Loan Documents and the Subordinate Loan Documents and/or the Unsubordinated City Regulatory Agreements, respectively; and (c) solely as between Senior Lender and Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which Senior Lender and Subordinate Lender have agreed to as expressly provided in this Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and shall not be deemed to: extend Borrower’s time to cure any Senior Loan Default or Subordinate Loan Default and/or default under any Unsubordinated City Regulatory Agreement, as the case may be; give Borrower EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 10 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 the right to notice of any Senior Loan Default or Subordinate Loan Default and/or default under any Unsubordinated City Regulatory Agreement, as the case may be other than that, if any, provided, respectively under the Senior Loan Documents or the Subordinate Loan Documents and/or any Unsubordinated City Regulatory Agreement; or create any other right or benefit for Borrower as against Senior Lender or Subordinate Lender. 10. Rights and Obligations of Subordinate Lender Under the Subordinate Loan Documents and of Senior Lender under the Senior Loan Documents. Subject to each of the other terms of this Agreement, all of the following provisions shall supersede any provisions of the Subordinate Loan Documents covering the same subject matter: (a) Protection of Security Interest. Subordinate Lender shall not, without the prior written consent of Senior Lender in each instance, take any action which has the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate Loan Documents, except that Subordinate Lender shall have the right to advance funds to cure Senior Loan Defaults pursuant to Section 8(a) and advance funds pursuant to the Subordinate Loan Documents for the purpose of paying real estate taxes and insurance premiums, making necessary repairs to the Mortgaged Property and curing other defaults by Borrower under the Subordinate Loan Documents. (b) Condemnation or Casualty. Following the occurrence of (1) a Condemnation Action, or (2) a fire or other casualty resulting in damage to all or a portion of the Mortgaged Property (collectively, a “Casualty”), at any time or times when the Senior Security Instrument remains a lien on the Mortgaged Property the following provisions shall apply: (A) Subordinate Lender hereby agrees that its rights (under the Subordinate Loan Documents or otherwise) to participate in any proceeding or action relating to a Condemnation Action or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Condemnation Action or a Casualty shall be and remain subject and subordinate in all respects to Senior Lender’s rights under the Senior Loan Documents with respect thereto, and Subordinate Lender shall be bound by any settlement or adjustment of a claim resulting from a Condemnation Action or a Casualty made by Senior Lender; provided, however, this subsection or anything contained in this Agreement shall not limit the rights of Subordinate Lender to file any pleadings, documents, claims or notices with the appropriate court with jurisdiction over the proposed Condemnation Action or Casualty; and (B) all proceeds received or to be received on account of a Condemnation Action or a Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and restoration or to payment of the Senior Loan) in the manner provided by the Senior Lender Loan Documents; provided, however, EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 11 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 that if Senior Lender is entitled to and elects to apply such proceeds to payment of the principal of, interest on and other amounts payable under the Senior Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and other amounts payable under the Senior Loan shall be paid to, and may be applied by, Subordinate Lender in accordance with the applicable provisions of the Subordinate Loan Documents, provided however, Senior Lender agrees to consult with Subordinate Lender in determining the application of Casualty proceeds, provided further however that in the event of any disagreement between Senior Lender and Subordinate Lender over the application of Casualty proceeds, the decision of Senior Lender, in accordance with the rights under its Senior Loan Documents, shall prevail. (c) Insurance. Subordinate Lender agrees that all original policies of insurance required pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding sentence shall not preclude Subordinate Lender from requiring that it be named as a loss payee, as its interest may appear, under all policies of property damage insurance maintained by Borrower with respect to the Mortgaged Property, provided such action does not affect the priority of payment of the proceeds of property damage insurance under the Senior Security Instrument, or that it be named as an additional insured under all policies of liability insurance maintained by Borrower with respect to the Mortgaged Property. (d) No Modification of Subordinate Loan Documents or Unsubordinated City Regulatory Agreements. Borrower and Subordinate Lender each agree that, until the principal of, interest on and all other amounts payable under the Senior Loan Documents have been paid in full, it will not, without the prior written consent of Senior Lender in each instance, increase the amount of any Subordinate Loan, increase the required payments due under any Subordinate Loan, decrease the term of any Subordinate Loan, increase the interest rate on any Subordinate Loan, or otherwise amend any Subordinate Loan terms or any Unsubordinated City Regulatory Agreement in a manner that creates an adverse effect upon Senior Lender under the Senior Loan Documents. Any unauthorized amendment of the Subordinate Loan Documents or any Unsubordinated City Regulatory Agreement or assignment of Subordinate Lender’s interest in any Subordinate Loan without Senior Lender’s consent shall be void ab initio and of no effect whatsoever and Subordinate Lender agrees that it shall not transfer or assign any Subordinate Loan or any Subordinate Loan Document without the prior written consent of the Senior Lender. 11. Conversion, Modification or Refinancing of Senior Loan. Subordinate Lender consents to any agreement or arrangement in which Senior Lender waives, postpones, extends, reduces or modifies any provisions of the Senior Loan Documents , including any provision requiring the payment of money. Subordinate Lender further agrees that its agreement to subordinate hereunder shall extend to the Senior Loan following the Conversion Date and the purchase by Permanent Lender of the Senior Loan and any amendments or additional EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 12 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 documents executed in connection with the Conversion Date and the Conversion of the Senior Loan to a term loan, as well as any new mortgage debt which is for the purpose of refinancing all or any part of the Senior Loan (including reasonable and necessary costs associated with the closing and/or the refinancing) and, in the event of new mortgage debt, Subordinate Lender shall execute and deliver to Senior Lender a new subordination agreement on the same terms and conditions as this Subordination Agreement; and that all the terms and covenants of this Agreement shall inure to the benefit of any holder of any such refinanced debt; and that all references to the Senior Loan, the Senior Note, the Senior Loan Agreement, the Senior Security Instrument, the Senior Loan Documents and Senior Lender shall mean, respectively, the refinance loan, the refinance note loan agreement, the mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining to the refinance note and the holder of the refinance note. Following the Conversion Date, all terms and covenants of this Agreement shall inure to the benefit of any holder of the Senior Loan. 12. Default by Subordinate Lender or Senior Lender. If Subordinate Lender or Senior Lender defaults in performing or observing any of the terms, covenants or conditions to be performed or observed by it under this Agreement, the other, non-defaulting lender shall have the right to all available legal and equitable relief. 13. Special Provisions Regarding Unsubordinated City Regulatory Agreements (a) Transfers. Notwithstanding anything set forth in the Unsubordinated City Regulatory Agreements to the contrary, nothing in the Unsubordinated City Regulatory Agreements shall be deemed to restrict or limit, or require the consent of Subordinate Lender to, the following: (i) any foreclosure or deed in lieu of foreclosure of the Senior Security Instrument by Senior Lender or its successor, assigns, or nominee (a “Foreclosure Action”), or (ii) the first subsequent transfer by Senior Lender or its successors, assigns or nominee following a Foreclosure Action. Neither the successor owner initially acquiring title to the Mortgaged Property as a result of a Foreclosure Action, nor its immediate successor in interest, shall be subject to any of the limitations upon creation of indebtedness nor creation of any lien securing indebtedness set forth in the Unsubordinated City Regulatory Agreements; provided that any subsequent mortgagee or lienholder with respect to such indebtedness shall agree that in the event of foreclosure or deed in lieu of foreclosure, the transferee under such foreclosure agrees that it will take subject to the Unsubordinated City Regulatory Agreement; and provided further that all other subsequent encumbrances shall be subject to Subordinate Lender’s approval under the Unsubordinated City Regulatory Agreement. Any sale, assignment or transfer of the Mortgaged Property following a transfer pursuant to a Foreclosure Action (other than the first transfer thereafter) shall be subject to Subordinate Lender’s rights under the Unsubordinated City Regulatory Agreement to approve such transfer, except that Subordinate Lender agrees that its decision to approve any such sale, assignment or other transfer will be based solely upon whether the proposed transferee is qualified to manage and operate affordable housing projects similar to the Mortgaged Property, and the EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 13 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 Subordinate Lender will not unreasonably withhold, delay or condition its consent to any such proposed transfer. (b) Compliance with Subordinate Loan Documents. Notwithstanding anything to the contrary set forth in the Unsubordinated City Regulatory Agreements, from and after any foreclosure or deed in lieu of foreclosure, neither Senior Lender nor any successor in interest to the Property following any foreclosure or deed in lieu of foreclosure of the Senior Deed of Trust (collectively, the “Successor Owner”), shall be obligated to comply with the terms of any Subordinate Loan Document, and neither Senior Lender nor any Successor Owner shall have any obligation to repay the Subordinate Loans. (c) Indemnification Provisions in Unsubordinated City Regulatory Agreements. Notwithstanding anything to the contrary set forth in the Unsubordinated City Regulatory Agreements, in no event shall Senior Lender or any Successor Owner be liable to Subordinate Lender for amounts due to the Subordinate Lender under the Unsubordinated City Regulatory Agreements as the result of an act or a failure to act occurring prior to the date on which Senior Lender or its successor, assigns, or nominee acquires title to the Mortgaged Property by foreclosure or deed in lieu of foreclosure. (d) Default Under Unsubordinated City Regulatory Agreements. No Successor Owner shall be required to cure any default under the Unsubordinated City Regulatory Agreements first occurring prior to the date upon which such Successor Owner acquired title to the Mortgaged Property, except that each Successor Owner shall be required to cure continuing defaults under the Unsubordinated City Regulatory Agreement related to the Mortgaged Property; provided further, however, that each such Successor Owner shall have 120 days after the date upon which it acquires title to the Mortgaged Property to cure such continuing defaults, or, if any such continuing default is not reasonably susceptible to a cure by such Successor Owner within such period, to commence curing such default (and in such latter case, such Successor Owner shall thereafter continuously and diligently pursue the cure of such default to completion). 14. Reinstatement. To the extent that Borrower makes a payment to Senior Lender or Senior Lender receives any payment or proceeds of the collateral securing the Senior Loan for Borrower’s benefit, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable doctrine, then to the extent of such payment or proceeds received and not retained by Senior Lender, this Agreement shall be reinstated and continue in full force and effect until full and final payment shall have been made to Senior Lender. Subordinate Lender agrees to hold in trust for Senior Lender and promptly remit to Senior Lender any payments received by Subordinate Lender after such invalidated, rescinded or returned payment was originally made. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 14 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 15. Notices. Each notice, request, demand, consent, approval or other communication (hereinafter in this Section referred to collectively as “notices” and referred to singly as a “notice”) which the Senior Lender or the Subordinate Lender is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if: (a) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered); or (b) sent by Federal Express (or other similar national overnight courier) designating early morning delivery (any notice so delivered shall be deemed to have been received on the next Business Day following receipt by the courier); or (c) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed to have been received two days after mailing in the United States), addressed to the respective parties as follows: SENIOR LENDER (prior to the Conversion Date): U.S. Bank National Association 1307 Washington Avenue Suite 300 St. Louis, Missouri 63103 Attention: Director of LIHTC Asset Management With a copy to: California Community Reinvestment Corporation 100 W. Broadway Suite 1000 Glendale, California 91210 Attention: President SENIOR LENDER (from and after the Conversion Date): California Community Reinvestment Corporation 100 W. Broadway Suite 1000 Glendale, California 91210 Attention: President SUBORDINATE LENDER: City of Santa Ana City Manager 20 Civic Center Plaza P.O. Box 1988 Santa Ana, California 92702 EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 15 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 With a copy to: City of Santa Ana City Attorney 20 Civic Center Plaza 7th Floor (M-29) Santa Ana, California 92702 Either party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses for its notices, but notice of a change of address shall only be effective upon receipt. 16. General. (a) Assignment/Successors. This Agreement shall be binding upon Borrower, Senior Lender and Subordinate Lender and shall inure to the benefit of the respective legal successors, transferees and assigns of Borrower, Senior Lender and Subordinate Lender. Borrower shall not assign any of its rights and obligations under this Agreement without the prior written consent of Senior Lender and Subordinate Lender. (b) No Partnership or Joint Venture. Senior Lender’s permission for the placement of the Subordinate Loan does not constitute Senior Lender as a joint venturer or partner of Subordinate Lender. Neither party hereto shall hold itself out as a partner, agent or Affiliate of the other party hereto. (c) Senior Lender’s and Subordinate Lender’s Consent. Wherever Senior Lender’s consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by Senior Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. Wherever Subordinate Lender’s consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by Subordinate Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. (d) Further Assurances. Subordinate Lender, Senior Lender and Borrower each agrees, at Borrower’s expense, to execute and deliver all additional instruments and/or documents reasonably required by any other party to this Agreement in order to evidence that the Subordinate Mortgages are subordinate to the lien, covenants and conditions of the Senior Loan Documents, or to further evidence the intent of this Agreement. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page 16 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 (e) Amendment. This Agreement shall not be amended except by written instrument signed by all parties hereto. (f) Governing Law. This Agreement shall be governed by the laws of the jurisdiction in which the Mortgaged Property is located without giving effect to any choice of law provisions thereof that would result in the application of the laws of another jurisdiction. Senior Lender, Subordinate Lender and Borrower agree that any controversy arising under or in relation to this Security Instrument shall be litigated exclusively in the jurisdiction in which the Mortgaged Property is located. The state and federal courts and authorities with jurisdiction in such locale shall have exclusive jurisdiction over all controversies that arise under or in relation to this Agreement. The parties hereto irrevocably consent to service, jurisdiction, and venue of such courts for any such litigation and waive any other venue to which any might be entitled by virtue of domicile, habitual residence or otherwise. (g) Severable Provisions. If any provision of this Agreement shall be invalid or unenforceable to any extent, then the other provisions of this Agreement, shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (h) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one (1) and the same instrument. (i) Sale of Senior Loan. Nothing in this Agreement shall limit Senior Lender’s (including any assignee or transferee of Senior Lender) right to sell or transfer the Senior Loan, or any interest in the Senior Loan. The Senior Loan or a partial interest in the Senior Loan (together with this Agreement and the ot her Loan Documents) may be sold one or more times without prior notice to Borrower. [Remainder of Page Intentionally Blank] EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page S-1 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 IN WITNESS WHEREOF, Borrower, Senior Lender and Subordinate Lender have signed and delivered this Agreement under seal (where applicable) or have caused this Agreement to be signed and delivered under seal (where applicable) by a duly authorized representativ e. Where applicable law so provides, Borrower, Senior Lender, and Subordinate Lender intend that this Agreement shall be deemed to be signed and delivered as a sealed instrument. SENIOR LENDER: U.S. BANK NATIONAL ASSOCIATION, a national banking association By: ________________________________ Jennifer L. Stolen Vice President EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page S-2 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 BORROWER: WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ____________________________________ Frank Cardone President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ____________________________________ Dora Leong Gallo President and Chief Executive Officer Address: Washington Santa Ana Housing Partners, L.P. c/o The Related Companies of California LLC 18201 Von Karman Avenue Suite 900 Irvine, California 92612 Attention: Frank Cardone EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page S-3 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 SUBORDINATE LENDER: CITY OF SANTA ANA, a charter city and municipal corporation By: _____________________________________ Kristine Ridge City Manager ATTEST: By: __________________________________ Daisy Gomez Clerk of the Council Dated: _________________________________ APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: __________________________________ Ryan O. Hodge Assistant City Attorney Dated: _________________________________ RECOMMENDED FOR APPROVAL: By: __________________________________ Steven A. Mendoza Executive Director Community Development Agency Dated: _________________________________ June 9, 2022 EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Page A-1 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 EXHIBIT A Legal Description EXHIBIT 7 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 7 Subordination Agreement (County of Orange) Form 6456 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ) ) ss County of _______________________ ) On ________________________, 2022 before me, ____________________________________, a 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. Signature (Seal) 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. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ) ) ss County of _______________________ ) On ________________________, 2022 before me, ____________________________________, a 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. Signature (Seal) 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. EXHIBIT 7 Subordination Agreement (City of Santa Ana) Form 6456 Fannie Mae 08-13 © 2013 Fannie Mae [Crossroads at Washington] 4870-7010-6914v.2 0017787-000542 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ) ) ss County of _______________________ ) On ________________________, 2022 before me, ____________________________________, a 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. Signature (Seal) 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. EXHIBIT 7 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: County of Orange OC Community Resources/ Housing & Community Development 1501 E. St. Andrew Place, 1st Floor, Santa Ana, CA 92705 Attn: Director _______________________________________________________________________________ SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into as of June ___, 2022 by and among (i) COUNTY OF ORANGE, a political subdivision of the state of California, (the "County") (ii) CITY OF SANTA ANA, a charter city and municipal corporation (the "Subordinate Lender"), and (iii) WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership (the "Borrower"). Recitals A. The County has made or is making a loan (the "Senior Mortgage Loan") to the Borrower in the original principal amount of $2,280,701. The Senior Mortgage Loan is or will be secured by a senior mortgage lien (the "Senior Mortgage") on a multifamily housing project known as Crossroads at Washington, located in the City of Santa Ana, CA (the "Property”) and as more fully described in Exhibit “A” attached hereto. The Borrower's obligation to repay the Senior Mortgage Loan is evidenced by a Promissory Note of even date herewith (the "Senior Mortgage Note"). B. The Borrower has obtained two (2) loans from Subordinate Lender totaling $4,644,909 as follows: a loan of HOME Investment Partnerships Program (HOME) funds totaling $3,007,489; and a loan from the City of Santa Ana Neighborhood Stabilization Program totaling $1,637,420 (collectively, the "Subordinate Loans") which Subordinate Loans will be secured by, among other things, two mortgage liens against the Property. D. The County has agreed to permit the Subordinate Loans to remain as subordinate mortgage liens against the Property subject to all of the conditions contained in this Agreement. EXHIBIT 8 E. The Subordinate Lender has agreed to subordinate its mortgage liens to the lien of the Senior Mortgage. NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference and made a part of this Agreement, the County, the Subordinate Lender and the Borrower agree as follows: 1. Definitions. In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement the following terms have the respective meanings set forth below: "Affiliate" means, when used with respect to a Person, any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual controlled by, under common control with, or which controls such Person (the term "control" for these purposes shall mean the ability, whether by the ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to make management decisions on behalf of, or independently to select the managing partner of, a partnership, or otherwise to have the power independently to remove and then select a majority of those individuals exercising managerial authority over an entity, and control shall be conclusively presumed in the case of the ownership of 50% or more of the equity interests). "Borrower" means Washington Santa Ana Housing Partners, L.P and any other Person (other than the County) who acquires title to the Property after the date of this Agreement. "Business Day" means any day other than Saturday, Sunday or a day on which the County or Subordinate Lender is not open for business. "County" means the County of Orange a political subdivision of the state of California. "Default Notice" means: (a) a copy of the written notice from the County to the Borrower stating that a Senior Mortgage Loan Default has occurred under the Senior Mortgage Loan; or (b) a copy of the written notice from the Subordinate Lender to the Borrower stating that a Subordinate Loan Default has occurred under one or both of the Subordinates Loan, or that a Regulatory Agreement Default has occurred under the County Regulatory Agreement. Each Default Notice shall specify the default upon which such Default Notice is based. "Person" means an individual, estate, trust, partnership, corporation, limited liability company, limited liability partnership, governmental department or agency or any other entity EXHIBIT 8 which has the legal capacity to own property. "Regulatory Agreement Default" means a default by the Borrower in performing or observing any of the terms, covenants or conditions in the County Regulatory Agreement to be performed or observed by it, which continues beyond any applicable period provided in the County Regulatory Agreement for curing the default "Senior Mortgage Loan Default" means the occurrence of either a default by the Borrower in performing or observing any of the terms, covenants or conditions in the Senior Mortgage Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the Senior Mortgage Loan Documents for curing the default, or an "Event of Default" as that term is defined in the Senior Mortgage Loan Documents. "Senior Mortgage Loan Documents" means the Senior Mortgage Note and all other documents evidencing, securing or otherwise executed and delivered in connection with the Senior Mortgage Loan. "Subordinate Lender" means the City of Santa Ana, a charter city and municipal corporation, and any other Person who becomes the legal holder of the Subordinate Notes after the date of this Agreement. "Subordinate Loan Default" means a default by the Borrower in performing or observing any of the terms, covenants or conditions in the Subordinate Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the Subordinate Loan Documents for curing the default. "Subordinate Loan Documents" means the Subordinate Notes, the Subordinate Mortgages, and all other documents evidencing, securing or otherwise executed and delivered in connection with the Subordinate Loans. "Subordinate Mortgages" means the mortgages or deeds of trust encumbering the Property as security for the Subordinate Loans, which were previously recorded in the applicable land records. "Subordinate Notes" means the promissory notes issued by the Borrower to the Subordinate Lender, or order, to evidence the Subordinate Loans. 2. Permission to Place Mortgage Lien Against Property. The County has agreed and hereby consents to, notwithstanding the prohibition against inferior liens on the Property contained in the Senior Mortgage Loan Documents and subject to the provisions of this Agreement, the Subordinate Mortgages and other recordable Subordinate Loan EXHIBIT 8 Documents against the Property (which are subordinate in all respects to the lien of the Senior Mortgage) which secure the Borrower's obligation to repay the Subordinate Notes and all other obligations, indebtedness and liabilities of the Borrower to the Subordinate Lender under and in connection with the Subordinate Loans. Such consent is subject to the condition that each of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 are true and correct as of the date of this Agreement. If any of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is not true and correct as of the date of this Agreement, the provisions of the Senior Mortgage Loan Documents applicable to unpermitted liens on the Property shall apply. 3. Borrower's and Subordinate Lender's Representations and Warranties. A. The Borrower and the Subordinate Lender each makes the following representations and warranties to the County: (a) Relationship of Borrower to Subordinate Lender and Borrower. The Subordinate Lender is not an Affiliate of the Borrower and is not in possession of any facts that would lead it to believe that the Subordinate Lender is an Affiliate of the Borrower. B. The Borrower makes the following representations and warranties to the County and the Subordinate Lender: (a) Subordinate Loan Documents. The executed Subordinate Loan Documents are substantially in the same forms as those submitted to, and approved by, County prior to the date of this Agreement. Borrower shall deliver to County an executed copy of each of the Subordinate Loan Documents, certified to be true, correct and complete. (b) Senior Loan Documents. The executed Senior Loan Documents are substantially in the same forms as, when applicable, those submitted to Subordinate Lender prior to the date of this Agreement. Upon execution and delivery of the Senior Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of the Senior Loan Documents, certified to be true, correct and complete. 4. Terms of Subordination. (a) Subordinate Lender Agreement to Subordinate. The County and the Subordinate Lender agree that: (i) the indebtedness evidenced by the Subordinate Loan Documents is and shall be subordinated in right of payment, to the extent and in the manner provided in this Agreement to the prior payment in full of the indebtedness evidenced by the Senior Mortgage Loan Documents, and (ii) the Subordinate Mortgages and the other Subordinate Loan Documents are and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Senior Mortgage and the other Senior Mortgage EXHIBIT 8 Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the Senior Mortgage and the other Senior Mortgage Loan Documents (including but not limited to, all sums advanced for the purposes of (1) protecting or further securing the lien of the Senior Mortgage, curing defaults by the Borrower under the Senior Mortgage Loan Documents or for any other purpose expressly permitted by the Senior Mortgage, or (2) constructing, renovating, repairing, furnishing, fixturing or equipping the Property). (b) Subordinate Lender Subordination of Subrogation Rights. The Subordinate Lender agrees that if, by reason of its payment of real estate taxes or other monetary obligations of the Borrower, or by reason of its exercise of any other right or remedy under the Subordinate Loan Documents, it acquires by right of subrogation or otherwise a lien on the Property which (but for this subsection) would be senior to the lien of the Senior Mortgage, then, in that event, such lien shall be subject and subordinate to the lien of the Senior Mortgage. (c) Payments Before Senior Mortgage Loan Default. Until the Subordinate Lender receives a Default Notice of a Senior Mortgage Loan Default from the County, the Subordinate Lender shall be entitled to retain for its own account all payments made under or pursuant to the Subordinate Loan Documents. (d) Payments After Senior Mortgage Loan Default. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of a Senior Mortgage Loan Default, it will not make any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Mortgage) without the County's prior written consent. The Subordinate Lender agrees that, after it receives a Default Notice from the County with written instructions directing the Subordinate Lender not to accept payments from the Borrower on account of the Subordinate Loans, it will not accept any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Mortgages) without the County's prior written consent. If the Subordinate Lender receives written notice from the County that the Senior Mortgage Loan Default which gave rise to the Subordinate Lender's obligation not to accept payments has been cured, waived, or otherwise suspended by the County, the restrictions on payment to the Subordinate Lender in this Section 4 shall terminate, and the County shall have no right to any subsequent payments made to the Subordinate Lender by the Borrower prior to the Subordinate Lender's receipt of a new Default Notice from the County in accordance with the provisions of this Section 4(d). (e) Remitting Subordinate Loan Payments to County. If, after the Subordinate Lender receives a Default Notice from the County in accordance with subsection (d) above, the Subordinate Lender receives any payments under the Subordinate Loan Documents, the EXHIBIT 8 Subordinate Lender agrees that such payment or other distribution will be received and held in trust for the County and unless the County otherwise notifies the Subordinate Lender in writing, will be promptly remitted, in kind to the County, properly endorsed to the County, to be applied to the principal of, interest on and other amounts due under the Senior Mortgage Loan Documents in accordance with the provisions of the Senior Mortgage Loan Documents. By executing this Agreement, the Borrower specifically authorizes the Subordinate Lender to endorse and remit any such payments to the County, and specifically waives any and all rights to have such payments returned to the Borrower or credited against the Subordinate Loans. Borrower and County acknowledge and agree that payments received by the Subordinate Lender, and remitted to the County under this Section 4, shall not be applied or otherwise credited against the Subordinate Loans, nor shall the tender of such payment to the County waive any Subordinate Loan Default which may arise from the inability of the Subordinate Lender to retain such payment or apply such payment to the Subordinate Loans. (f) Subordinate Lender Agreement Not to Commence Bankruptcy Proceeding. The Subordinate Lender agrees that during the term of this Agreement it will not commence, or join with any other creditor in commencing any bankruptcy reorganization, arrangement, insolvency or liquidation proceedings with respect to the Borrower, without the County's prior written consent. 5. Default Under Subordinate Loan Documents. (a) Notice of Default and Cure Rights. The Subordinate Lender shall deliver to the County a Default Notice within five (5) Business Days in each case where the Subordinate Lender has given a Default Notice to the Borrower. Failure of the Subordinate Lender to send a Default Notice to the County shall not prevent the exercise of the Subordinate Lender's rights and remedies under the Subordinate Loan Documents, subject to the provisions of this Agreement. The County shall have the right, but not the obligation, to cure any Subordinate Loan Default or Regulatory Agreement Default (as applicable) within sixty (60) days following the date of such notice; provided, however that the Subordinate Lender shall be entitled, during such sixty (60) day period, to continue to pursue its rights and remedies under the Subordinate Loan Documents. All amounts paid by the County in accordance with the Senior Mortgage Loan Documents to cure a Subordinate Loan Default or Regulatory Agreement Default (as applicable) shall be deemed to have been advanced by the County pursuant to, and shall be secured by the lien of, the Senior Mortgage. (b) Subordinate Lender's Exercise of Remedies After Notice to County. If a Subordinate Loan Default or Regulatory Agreement Default occurs and is continuing, the Subordinate Lender agrees that, without the County's prior written consent, it will not commence foreclosure proceedings with respect to the Property under the Subordinate Loan EXHIBIT 8 Documents or exercise any other rights or remedies it may have under the Subordinate Loan Documents, including, but not limited to accelerating one or both of the Subordinate Loans, collecting rents, appointing (or seeking the appointment of) a receiver or exercising any other rights or remedies thereunder unless and until it has given the County at least sixty (60) days' prior written notice; during such sixty (60) day period, however, the Subordinate Lender shall be entitled to exercise and enforce all other rights and remedies available to the Subordinate Lender under the Subordinate Loan Documents and/or under applicable laws. (c) Cross Default. The Borrower and the Subordinate Lender agree that any of a Subordinate Loan Default, or Regulatory Agreement Default shall constitute a Senior Mortgage Loan Default under the Senior Mortgage Loan Documents and the County shall have the right to exercise all rights or remedies under the Senior Mortgage Loan Documents in the same manner as in the case of any other Senior Mortgage Loan Default. If the Subordinate Lender notifies the County in writing that any Subordinate Loan Default or Regulatory Agreement Default of which the County has received a Default Notice has been cured or waived, as determined by the Subordinate Lender in its sole discretion, then provided that County has not conducted a sale of the Property pursuant to its rights under the Senior Mortgage Loan Documents, any Senior Mortgage Loan Default under the Senior Mortgage Loan Documents arising solely from such Subordinate Loan Default or Regulatory Agreement Default shall be deemed cured, and the Senior Mortgage Loan shall be reinstated, provided, however, that the County shall not be required to return or otherwise credit for the benefit of the Borrower any default rate interest or other default related charges or payments received by the County during such Senior Mortgage Loan Default. 6. Default Under Senior Mortgage Loan Documents. (a) Notice of Default and Cure Rights. The County shall deliver to the Subordinate Lender a Default Notice within five (5) Business Days in each case where the County has given a Default Notice to the Borrower. Failure of the County to send a Default Notice to the Subordinate Lender shall not prevent the exercise of the County's rights and remedies under the Senior Loan Documents, subject to the provisions of this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure any such Senior Mortgage Loan Default within sixty (60) days following the date of such notice; provided, however, that the County shall be entitled during such sixty (60) day period to continue to pursue its remedies under the Senior Mortgage Loan Documents. Subordinate Lender may have up to ninety (90) days from the date of the Default Notice to cure a non-monetary default if during such ninety (90) day period Subordinate Lender keeps current all payments required by the Senior Mortgage Loan Documents. In the event that such a non-monetary default creates an unacceptable level of risk relative to the Property, or County's secured position relative to the Property, as determined by County in its sole discretion, then County may exercise during such ninety (90) day period all available rights and remedies to protect and preserve the Property and the rents, revenues and other proceeds from the Property. All EXHIBIT 8 amounts paid by the Subordinate Lender to the County to cure a Senior Mortgage Loan Default shall be deemed to have been advanced by the Subordinate Lender pursuant to, and shall be secured by the lien of, the Subordinate Mortgages. (b) Cross Default. The Subordinate Lender agrees that, notwithstanding any contrary provision contained in the Subordinate Loan Documents, a Senior Mortgage Loan Default shall not constitute a default under the Subordinate Loan Documents if no other default occurred under the Subordinate Loan Documents until either (i) the County has accelerated the maturity of the Senior Mortgage Loan, or (ii) the County has taken affirmative action to exercise its rights under the Senior Mortgage to collect rent, to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of sale contained in) the Senior Mortgage. At any time after a Senior Mortgage Loan Default is determined to constitute a default under the Subordinate Loan Documents, the Subordinate Lender shall be permitted to pursue its remedies for default under the Subordinate Loan Documents, subject to the restrictions and limitations of this Agreement. If at any time the Borrower cures any Senior Mortgage Loan Default to the satisfaction of the County, as evidenced by written notice from the County to the Subordinate Lender, any default under the Subordinate Loan Documents arising from such Senior Mortgage Loan Default shall be deemed cured and the Subordinate Loans shall be retroactively reinstated as if such Senior Mortgage Loan Default had never occurred. 7. Conflict. The Borrower, the County and the Subordinate Lender each agrees that, in the event of any conflict or inconsistency between the terms of the Senior Mortgage Loan Documents, the Subordinate Loan Documents, and the terms of this Agreement, the terms of this Agreement shall govern and control solely as to the following: (a) the relative priority of the security interests of the County and the Subordinate Lender in the Property; (b) the timing of the exercise of remedies by the County and the Subordinate Lender under the Senior Mortgage and the the Subordinate Mortgages, respectively; and (c) solely as between the County and the Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which the County and the Subordinate Lender have agreed to as expressly provided in this Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and shall not be deemed to: extend Borrower's time to cure any Senior Mortgage Loan Default or Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any Senior Mortgage Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided, respectively under the Senior Mortgage Loan Documents, the Subordinate Loan Documents; or create any other right or benefit for Borrower as against County or Subordinate Lender. 8. Rights and Obligations of the Subordinate Lender Under the Subordinate Loan Documents and of the County under the Senior Mortgage Loan Documents. EXHIBIT 8 Subject to each of the other terms of this Agreement, all of the following provisions shall supersede any provisions of the Subordinate Loan Documents covering the same subject matter: (a) Protection of Security Interest. The Subordinate Lender shall not, without the prior written consent of the County in each instance, take any action which has the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate Loan Documents, except that the Subordinate Lender shall have the right to advance funds to cure Senior Mortgage Loan Defaults pursuant to Section 6(a) above and advance funds pursuant to the Subordinate Mortgages for the purpose of paying real estate taxes and insurance premiums, making necessary repairs to the Property and curing other defaults by the Borrower under the Subordinate Loan Documents. (b) Condemnation or Casualty. In the event of: a taking or threatened taking by condemnation or other exercise of eminent domain of all or a portion of the Property (collectively, a "Taking"); or the occurrence of a fire or other casualty resulting in damage to all or a portion of the Property (collectively, a "Casualty"), at any time or times when the Senior Mortgage remains a lien on the Property the following provisions shall apply: (1) The Subordinate Lender hereby agrees that its rights (under the Subordinate Loan Documents or otherwise) to participate in any proceeding or action relating to a Taking and/or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Taking or a Casualty shall be and remain subordinate in all respects to the County's rights under the Senior Mortgage Loan Documents with respect thereto, and the Subordinate Lender shall be bound by any settlement or adjustment of a claim resulting from a Taking or a Casualty made by the County; provided, however, this subsection and/or anything contained in this Agreement shall not limit the rights of the Subordinate Lender to file any pleadings, documents, claims or notices with the appropriate court with jurisdiction over the proposed Taking and/or Casualty; and (2) All proceeds received or to be received on account of a Taking or a Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and restoration or to payment of the Senior Mortgage Loan) in the manner determined by the County in its sole discretion; provided, however, that if the County elects to apply such proceeds to payment of the principal of, interest on and other amounts payable under the Senior Mortgage Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and other amounts payable under the Senior Mortgage Loan shall be paid to, and may be applied by, the Subordinate Lender in accordance with the applicable provisions of the Subordinate Loan Documents, provided however, the County agrees to consult with the Subordinate Lender in determining the application of Casualty proceeds, provided further however that in the event of any disagreement between the County and the Subordinate Lender over EXHIBIT 8 the application of Casualty proceeds, the decision of the County, in its sole discretion, shall prevail. (c) No Modification of Subordinate Loan Documents. The Borrower and the Subordinate Lender each agrees that, until the principal of, interest on and all other amounts payable under the Senior Mortgage Loan Documents have been paid in full, it will not, without the prior written consent of the County in each instance, increase the amount of the Subordinate Loans, increase the required payments due under the Subordinate Loans, decrease the term of the Subordinate Loans, increase the interest rate on the Subordinate Loans, or otherwise amend the terms of the Subordinate Loans in a manner that creates an adverse effect upon the County under the Senior Mortgage Loan Documents. Any unauthorized amendment of the Subordinate Loan Documents or assignment of the Subordinate Lender's interest in the Subordinate Loans without the County's consent shall be void ab initio and of no effect whatsoever. 9. Modification or Refinancing of Senior Mortgage Loan. Subject to the final sentence hereof, the Subordinate Lender consents to any agreement or arrangement in which the County waives, postpones, extends, reduces or modifies any provisions of the Senior Mortgage Loan Documents, including any provision requiring the payment of money. Subordinate Lender further agrees that its agreement to subordinate hereunder shall extend to any new mortgage debt which is for the purpose of refinancing all or any part of the Senior Mortgage Loan (including reasonable and necessary costs associated with the closing and/or the refinancing); and that all the terms and covenants of this Agreement shall inure to the benefit of any holder of any such refinanced debt; and that all references to the Senior Mortgage Loan, the Senior Mortgage Note, the Senior Mortgage, the Senior Mortgage Loan Documents and County shall mean, respectively, the refinance loan, the refinance note, the mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining to the refinance note and the holder of the refinance note. Notwithstanding anything to the contrary in this Section 9, the County shall not, without the prior written consent of the Subordinate Lender in each instance, which will not be unreasonably withheld, take any action which has the effect of increasing the indebtedness outstanding under, or secured by, the Senior Mortgage Loan Documents, increasing the required payments due under the Senior Mortgage Loan, decreasing the term of the Senior Mortgage Loan, or increasing the interest rate on the Senior Mortgage Loan (other than on account of regular fluctuations in the variable interest rate on the Senior Mortgage Loan or in connection with charging default rate of interest following a Senior Mortgage Loan Default), except that the Senior Lender shall have the right to advance funds to cure Subordinate Loan Defaults pursuant to Section 5(a), above, and advance funds pursuant to the Senior Mortgage Loan Documents for the purpose of paying real estate taxes and insurance premiums, making necessary repairs to the Property, curing other defaults by Borrower under the Senior Mortgage Loan Documents, or protecting the Senior Lender’s security interest in the Property. EXHIBIT 8 10. Default by the Subordinate Lender or County. If the Subordinate Lender or County defaults in performing or observing any of the terms, covenants or conditions to be performed or observed by it under this Agreement, the other, non- defaulting lender shall have the right to all available legal and equitable relief. 11. Notices. Each notice, request, demand, consent, approval or other communication (hereinafter in this Section referred to collectively as "notices" and referred to singly as a "notice") which the County or the Subordinate Lender is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if: (a) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered); or (b) sent by Federal Express (or other similar national overnight courier) designating next Business Day delivery (any notice so delivered shall be deemed to have been received on the next Business Day following receipt by the courier); or (c) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed to have been received two (2) days after mailing in the United States), addressed to the respective parties as follows: COUNTY: County of Orange OC Community Resources/ Housing & Community Development 1501 E. St. Andrew Place, 1st Floor, Santa Ana, CA 92705 Attn: Director SUBORDINATE LENDER: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P .0. Box 1988 Santa Ana, California 92702 BORROWER: Washing Santa Ana Housing Partners, L.P. c/o The Related Companies of California, LLC EXHIBIT 8 18201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo, President and Chief Executive Officer With copy to: Bocarsly Emden Cowan Esmail & Arndt, LLP 633 West Fifth Street, 64th Floor Los Angeles, California 90071 Attention: Nicole Deddens, Esq. Either party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses for its notices, but notice of a change of address shall only be effective upon receipt. 12. General. (a) Assignment/Successors. This Agreement shall be binding upon the Borrower, the County and the Subordinate Lender and shall inure to the benefit of the respective legal successors and assigns of the County and the Subordinate Lender. (b) No Partnership or Joint Venture. The County's permission for the placement of the Subordinate Loan Documents does not constitute the County as a joint venturer or partner of the Subordinate Lender. Neither party hereto shall hold itself out as a partner, agent or Affiliate of the other party hereto. (c) County's and Subordinate Lender's Consent. Wherever the County's consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by the County in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. Wherever the Subordinate Lender's consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by the Subordinate Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. (d) Further Assurances. The Subordinate Lender, the County and the Borrower each agree, at the Borrower's expense, to execute and deliver all additional instruments and/or documents reasonably required by any other party to this Agreement in order to (i) evidence that the Subordinate Mortgages are subordinate to the lien, covenants and conditions of the EXHIBIT 8 Senior Mortgage or (ii) further evidence the intent of this Agreement. (e) Amendment. This Agreement shall not be amended except by written instrument signed by all parties hereto. (f) Governing Law. This Agreement shall be governed by the laws of the State of California. (g) Severable Provisions. If any provision of this Agreement shall be invalid or unenforceable to any extent, then the other provisions of this Agreement, shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (h) Term. The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the Senior Mortgage Loan Documents; (ii) the payment of all of the principal of, interest on and other amounts payable under the Subordinate Loan Documents, other than by reason of payments which the Subordinate Lender is obligated to remit to the County pursuant to Section 4 hereof; (iii) the acquisition by the County of title to the Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the Senior Mortgage; or (iv) the acquisition by the Subordinate Lender of title to the Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, one of the Subordinate Mortgages, but only if such acquisition of title does not violate any of the terms of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. - SIGNATURE PAGES FOLLOW - EXHIBIT 8 COUNTY: COUNTY OF ORANGE, a political subdivision of the state of California By:____________________________________ Julia Bidwell, OC Community Resources, Housing and Community Development APPROVED AS TO FORM COUNTY COUNSEL ORANGE COUNTY, CALIFORNIA By Deputy EXHIBIT 8 BORROWER: WASHINGTON SANTA ANA HOUSING, L.P., a California limited partnership, By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: _____ Dora Leong Gallo President and CEO EXHIBIT 8 SUBORDINATE LENDER ATTEST: CITY OF SANTA ANA ___________________________ _______________________ Daisy Gomez Kristine Ridge Clerk of the Council City Manager Dated: Dated: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: ________________________ Ryan O. Hodge Assistant City Attorney Dated: RECOMMENDED FOR APPROVAL: _______________________________ Steven A. Mendoza Executive Director Community Development Agency June 9, 2022 EXHIBIT 8 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 8 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT between THE CITY OF SANTA ANA a charter city and municipal corporation of the State of California and Washington Santa Ana Housing Partners, L.P. a California limited partnership [Dated as of June 21, 2022] EXHIBIT 9 DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT 1. PARTIES AND EFFECTIVE DATE. This Development Impact Fee Deferral Agreement (“Agreement”) is entered into on this 21st day of June, 2022, by and between the City of Santa Ana, a charter city and municipal corporation of the State of California (“City”), and Washington Santa Ana Housing Partners, L.P., a California limited partnership (“Owner”). City and Owner are sometimes individually referred to herein as “Party” and collectively as “Parties.” 2. RECITALS. 2.1 Owner is the owner of a leasehold interest in that certain real property in the City of Santa Ana, California, that includes land owned by both the Housing Authority of the City of Santa Ana, a public body, corporate and politic, and the County of Orange, and more particularly described in Exhibit “A” attached hereto and incorporated herein by this reference and as evidenced by that certain Memoranda of Lease between _____, which was recorded in the Official Records of Orange County, California on _____, as Document No. ____ (“Property”). The Housing Authority and the County of Orange have executed a Joint Powers Agreement to provide a combined site for the project that includes both the Housing Authority property and the County of Orange property, which will be combined and owned as tenants in common. Owner is the developer of the affordable rental residential community at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) consisting of 85 new affordable units and 1 manager’s unit, with 42 two, three- and four-bedroom units for large families, and 43 studio, one- and two-bedroom affordable units for persons experiencing homelessness. 100% of the units will be for extremely low-income households at 30% Area Median Income. Owner has received City approval and is in the process of obtaining the building permits; 2.2 Prior to issuance of any building permits, the City currently requires the payment of various development impact fees for all residential projects to help address the impacts of new development; 2.3 On May 11, 2022, Owner submitted a written request formally requesting the deferral of specific development impact fees for the Property pursuant to California Government Code section 66007; and, 2.4 City and Owner desire to execute this Agreement to defer certain development impact fees applicable to the Property and place a lien on the Property to secure payment of these fees, pursuant to the terms and conditions set forth herein. 3. TERMS. 3.1 Deferral of Development Impact Fees. EXHIBIT 9 3.1.1 Deferral of Development Impact Fees. City and Owner agree that the development impact fees (“Subject Fee(s)”) and amount as shown on Exhibit “B,” for the Property ordinarily due before issuance of a building permit for any new affordable residential units on the Property (including manager’s units) will be deferred until immediately prior to the final inspection or issuance of a certificate of occupancy for any new residential units on the Property, whichever occurs first (“Deferral Period”). City and Owner acknowledge and agree that the City Council may, in its sole and absolute discretion and during a regular, regular adjourned, or special meeting of the City Council, extend the deadline for payment of the Subject Fees without obtaining the approval of Owner or an amendment or modification of this Agreement. Any extension granted by the City Council pursuant to this Section 3.1.1 shall automatically be deemed to be part of the Deferral Period for purposes of this Agreement. 3.1.2 Payment of Subject Fees. Owner, or its successor in interest to the Property or any portion thereof, shall be liable for the payment of the Subject Fees pursuant to this Agreement. The Subject Fees for a residential building constructed on the Property shall be due and payable at the termination of the Deferral Period. No certificate of occupancy shall be issued for the building, any portion, or any residential units thereof on the Property unless and until all Subject Fees ordinarily required to have been paid absent this Agreement have been paid in full. 3.1.3 Subject Fee Amount. Except as may otherwise be provided for by a statutory development agreement for the Property, as approved by the City, the amount of the Subject Fee for each residential unit to be developed on the Property shall be determined according to the rate of the Subject Fee adopted by the City and in effect on the date when the building permit for the residential building is issued by the City. Upon issuance of each building permit, the City shall complete and attach the form set forth in Exhibit “B” to this Agreement to reflect the amount of the Subject Fee applicable at the time of issuance of that building permit and attach a copy of the building permit, which shall collectively thereafter be incorporated as part of this Agreement. 3.1.4 Obligation for Payment of Subject Fee. Owner hereby acknowledges and agrees that Owner’s obligation to pay the Subject Fees shall continue and remain an obligation of Owner, or any successors in interest of Owner, including, without limitation, any successor in interest to the Property or any portion of the Property. Without limiting the nature of the foregoing, any Subject Fees that remain unpaid following the time that they are required to be paid may be collected by the City as a personal obligation of the Owner, or any successor of Owner, as a special assessment against the property (collected at the same time and in the same manner as ad valorem property taxes), or by any combination of the foregoing. 3.2 Covenant of Owner. Owner covenants that he, she or it is eligible to enter into this Agreement and has fulfilled the requirements for approval of deferral of the Subject Fees. Should Owner and/or the Property be deemed at any time prior or subsequent to execution of this Agreement to be ineligible for a deferral of Subject Fees regardless of whether Owner intentionally or unintentionally misrepresented to the City that Owner was eligible for a deferral of Subject Fees, City may terminate this Agreement and require all Subject Fees ordinarily required to have been paid absent this Agreement to be immediately paid in full. EXHIBIT 9 3.3 Recordation of Agreement. Upon the execution of this Agreement, the City shall cause this Agreement to be recorded in the Official Records of the County of Orange, California. All costs assessed by the County of Orange for recordation of this Agreement shall be paid by the Owner. 3.4 Lien against Property. From and after its execution, this Agreement shall contractually bind Owner to pay all Subject Fees as provided in this Agreement, and shall constitute a lien against the Property in an amount equal to the total Subject Fees, pursuant to Government Code section 66007(c)(2). Upon payment to City of the total amount of the Subject Fees for the Property, City shall, at the request of the Owner, execute and record in the Official Records of the County of Orange, California, a release of the lien from the Property in substantially the form of Exhibit “C” which is attached hereto and incorporated herein by this reference. At the request of the Owner, the City shall deliver a copy of the executed and recorded release of the lien to Owner. No partner of Owner shall have any personal liability for the payment of any Subject Fees. 3.5 Breach Won't Defeat Lien. The breach of any of the provisions of this Agreement, or any lien (or a foreclosure thereof) pursuant to this Agreement, shall not defeat or render invalid the lien of any duly recorded mortgage or deed of trust encumbering the Property or any portion thereof which is/are made in good faith and for value, provided that all provisions of this Agreement shall be binding and effective against any owner operating the Property who acquires the Property by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 3.6 Covenants Run With Land. Notwithstanding Section 3.6, each and all of the promises, covenants and conditions of this Agreement and all liens against the Property subject to this Agreement shall, as provided in Government Code section 66007, run with the Property and shall be binding upon a party upon having or acquiring any right, title or interest in or to the Property or any portion thereof. 3.7 Sale of Property. Pursuant to Government Code section 66007(c)(3), Owner shall notify City in writing within three (3) business days of the sale or transfer of all or any portion of the Property by Owner. 3.8 Invalidity of Lien. The invalidity or unenforceability of any lien provided for under this Agreement shall not affect the contractual obligation of Owner to pay any and all Subject Fees for the Property, nor shall the sale, lease or any encumbrance of the Property release the Owner of this contractual obligation. 3.9 Rights Not Granted Under Agreement. This Agreement is not, and shall not be construed to be, an approval or a granting of any right or entitlement (vested or otherwise) by City concerning any development on the Property, or any other project, development or other construction by Owner within the City. This Agreement does not, and shall not be construed to, exempt Owner from paying any fees for any entitlements, permits, licenses or other approvals that may be required by the City or other public entity with jurisdiction over the Property at the time required by the City or other public entity with jurisdiction over the Property, or any other project development or other construction by Owner. This Agreement does not, and shall not be construed to, exempt Owner from any requirement to obtain permits or other discretionary or EXHIBIT 9 non-discretionary approvals as may be necessary for the development, maintenance or operation of the development on the Property or any other project, development or other construction by Owner within the City. This Agreement does not, and shall not be construed to, exempt Owner or the Property from the application or exercise of the City’s or any of its related agencies’ power of eminent domain or its police powers, including, but not limited to, the regulation of land uses, and the taking of any actions necessary to protect the health, safety and welfare. 3.10 Cumulative Remedies. The rights or remedies of the City, as provided in this Agreement, or pursuant to any applicable laws, rules or regulations, may be pursued singly, successively, together or otherwise against the Property, Owner or its transferees, at the sole discretion of the City. The City’s failure to exercise any such right or remedy shall in no event be construed as a waiver or release of such rights or remedies, or of the right to exercise them at any later time. 3.11 Indemnification. Owner agrees to indemnify, defend and hold harmless the City, its elected officials, officers, agents and employees from and against all claims, demands, costs, damages, liabilities and obligations of any kind or nature arising out of the deferral provided by the City to Owner, this Agreement, or both, including without limitation, all costs of collection, including actual attorneys’ and expert witness fees. 3.12 Successors and Assigns. Owner may not assign this Agreement, in whole or in part, without the prior written consent of the City, which may be given, withheld or conditioned in the City’s sole and absolute discretion. Any attempt to assign this Agreement without the City’s prior written consent shall be null and avoid. This Agreement shall be binding on any and all permitted successors and assigns of Owner. 3.13 Governing Laws. This Agreement shall be governed by the laws of the State of California, without regard to the conflict of laws principles. The Superior Courts of the State of California in the County of Orange, California, shall have exclusive jurisdiction of any litigation between the City and Owner arising out of this Agreement. Owner hereby expressly waives the provisions of any federal or state law providing for a change of venue to any other state court or to federal district court, due to any reason whatsoever, including, without implied limitation, the fact that the City is a party to this Agreement, due to any diversity of citizenship between the City and Owner, or due to the fact that a federal question may be involved. Without limiting the generality of the foregoing, Owner expressly waives, to the maximum legal extent, the benefit of California Code of Civil Procedure Section 394 and all other state and federal statutes and judicial decisions of similar effect. 3.14 Notices. All notices required to be delivered under this Agreement or applicable law shall be delivered by personal delivery, express mail or by United States mail, certified, postage prepaid. Notices personally delivered or delivered by express mail shall be deemed received upon receipt. Notices delivered by certified mail shall be deemed received the earlier of three (3) days following deposit of such notice with the United States Postal Service or actual receipt. Notices shall be sent as follows: To City: City of Santa Ana Community Development Agency EXHIBIT 9 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, CA 92702-1988 Attention: Housing. Manager With copy to: Office of City Attorney City of Santa Ana 20 Civic Center Plaza (M-29) P.O. Box 1988 Santa Ana, California 92702 To Owner: Washington Santa Ana Housing Partners, L.P. c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo President and Chief Executive Officer With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. 3.15 Attorneys’ Fees and Costs. Should the City or Owner bring any action or proceeding against the other, and if such action or proceeding is related to the interpretation or enforcement of this Agreement or in any way relates to or arises due to the existence of this Agreement, then the prevailing party in that action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled, its actual litigation costs and attorneys’ and expert witness fees. The “prevailing party” shall be as determined by the court in accordance with the provisions of California Code of Civil Procedure Section 1032. Recoverable litigation costs and attorneys’ fees include those incurred by the prevailing party in the enforcement of any judgment or other judicial order, and during, the defense of any appeal taken from such underlying judgment or other judicial order. 3.16 Entire Agreement. This Agreement constitutes the entire agreement of City and Owner as to the deferral of impact fees and supersedes all previous agreements, oral or written, on the subject matter of this Agreement. 3.17 Modification. This Agreement may be amended or modified only by an agreement in writing signed by each of the parties hereto. EXHIBIT 9 3.18 Headings. Section headings contained in this Agreement are for convenience only, and shall not impact the construction or interpretation of any provision. 3.19 Severability. If any provision or clause of this Agreement or any application of it to any person, firm, organization, partnership or corporation is held invalid, such invalidity shall not affect any other provision of this Agreement, and the Agreement shall be construed as if such provisions or clauses did not exist. 3.20 Time is of the Essence. Time is of the essence in this Agreement. 3.21 No Third Party Beneficiaries. This Agreement and the performance of the City’s and Owner’s obligations hereunder are for the sole and exclusive benefit of the City and Owner. No person or entity who or which is not a signatory to this Agreement shall be deemed to be benefited or intended to be benefited by any provision hereof, and no such person or entity shall acquire any rights or causes of action against either the City or Owner hereunder as a result of the City’s or Owner’s performance or nonperformance of their respective obligations under this Agreement. 3.21 Counterparts. This Agreement may be signed by the Parties in different counterparts and the signature pages combined shall create a single document binding on all parties. [Signatures on Following Page] EXHIBIT 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first above written. OWNER Washington Santa Ana Housing Partners, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ________________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company, its Managing General Partner By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ________________________________ Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 9 EXHIBIT 9 ATTEST: CITY OF SANTA ANA ___________________________ _______________________ Daisy Gomez Kristine Ridge Clerk of the Council City Manager Dated: Dated: PROPERTY OWNER: HOUSING AUTHORITY OF THE CITY OF SANTA ANA _______________________________ Steven A. Mendoza Executive Director APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: ________________________ Ryan O. Hodge Assistant City Attorney Dated: [SIGNATURES CONTINUE ON FOLLOWING PAGE] June 9, 2022 EXHIBIT 9 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On , , before me, (here insert name and title of the officer) 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. Signature (Seal) EXHIBIT 9 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On , , before me, (here insert name and title of the officer) 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. Signature (Seal) EXHIBIT 9 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On , , before me, (here insert name and title of the officer) 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. Signature (Seal) EXHIBIT 9 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On , , before me, (here insert name and title of the officer) 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. Signature (Seal) EXHIBIT 9 EXHIBIT “A” TO DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT Legal Description of Property EXHIBIT 9 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 9 EXHIBIT “B” TO DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT Subject Fees for Building Permit No. ____ The following development impact fees imposed upon the Property or portion thereof by the city of Santa Ana upon issuance of City of Santa Ana Building Permit No. ___ shall be deferred pursuant to the terms and conditions of this Agreement: Fee Description Factor Factor Total Transit Zoning Code Traffic Impact Mitigation Fair Share $1,333.54 per unit 86 Units $114,685 Drainage Area Assessment Fee $7,748.21 per acre 2.286 Acres $17,712 Sewer Connection Fee $49.00 per F.U. 562 F.U. (est.) $25,774 Park Acquisition and Development Fee $400,448 Fire Facilities $0.94psf 100,104 SF $94,098 TOTAL $652,717 Calculations of the final fee amounts to be determined at the time of issuance of certificate of occupancy. EXHIBIT 9 Exhibit “C” TO DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT Form Release of Lien [Attached behind this cover page] EXHIBIT 9 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Clerk of the Council 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] RELEASE OF LIEN FOR PAYMENT OF DEVELOPMENT IMPACT FEES The City of Santa Ana, a charter city and municipal corporation of the State of California, does hereby release that leasehold interest in certain real property, as further described in Exhibit 1 attached to this Release, from the lien for payment of certain development impact fees as created by the Development Impact Fee Deferral Agreement entered into on __________, by and between the City of Santa Ana and Washington Santa Ana Housing Partners, L.P., a California limited partnership, which was recorded on ____________________, as Document Serial No. ________ in the Official Records of the County of Orange, California (“Agreement”). This release pertains only to the property described above and does not extend to any other property(ies). This release of lien is executed and recorded pursuant to the provisions of California Government Code section 66007. Dated: ____________________ CITY OF SANTA ANA By: _____________________ City Manager Attest: __________________________ City Clerk EXHIBIT 9 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On , , before me, (here insert name and title of the officer) 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. Signature (Seal) EXHIBIT 9 Page | 1 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 DWT Comments 5/13/22 ATT Comments 5/16/22 GROUND LEASE THIS GROUND LEASE (“Lease”) is made and effective as of the ___ day of __________, 2022 (“Effective Date”) by and between the COUNTY OF ORANGE, a political subdivision of the State of California, the HOUSING AUTHORITY OF THE CITY OF SANTA ANA, a public body, corporate and politic, as tenants-in-common (respectively, the “County” and the “Agency”, and collectively “Lessor”) and WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership (hereinafter called “Tenant”) (also referred to hereinafter each as “Party” or collectively as the “Parties”). RECITALS A.County and Agency are tenants-in-common of a certain property that encompasses the Premises (as hereinafter defined). B.County and Agency have executed a Joint Powers Agreement (“Joint Powers Agreement”), pursuant to which the County and Agency agreed to lease the Premises to the Tenant to develop, entitle and construct an 86-unit multifamily affordable housing project, as more fully described herein, upon the fulfillment of certain conditions precedent as set forth therein. C.The Parties have executed an Option Agreement, dated _________________February 25, 2020 (“Option Agreement”), pursuant to which the Lessor had agreed to lease the Premises to the Tenant upon the fulfillment of certain conditions precedent. D.The County and Agency acknowledge that the conditions precedent required by the Joint Powers Agreement and Option Agreement have been fulfilled and therefore the Parties desire that Tenant shall ground lease the Premises from Lessor on the terms set forth herein. E.Lessor and Tenant have jointly agreed to enter into this Lease as of the date set forth above. F. On July 2, 2019, the Agency authorized the Executive Director of the Agency and the Recording Secretary to execute a pre-commitment letter with the Tenant to enter into negotiations for a sixty-five (65) year ground-lease of 1126 E. Washington Ave for the development of the Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14). G. On July 2, 2019, the City of Santa Ana authorized the City Manager and the Clerk of the Council to execute a pre-commitment letter with the Tenant for $3,971,440 in affordable housing funds consisting of $963,951 in Neighborhood Stabilization Program funds and $3,007,489 in HOME Investment Partnerships Program funds, for the development of the Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14). EXHIBIT 11 Page | 2 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 NOW, THEREFORE, in consideration of the above recitals, which are hereby incorporated into this Lease by reference, and mutual covenants and agreements hereinafter contained, County, Agency and Tenant mutually agree to the following: ARTICLE I DEFINITIONS 1.1 Definitions: The following defined terms used in this Lease shall have the meanings set forth below. Other terms are defined in other provisions of this Lease, and shall have the definitions given to such terms in such other provisions. 1.1.1. “Affiliate” shall mean, with respect to any person (which as used herein includes an individual, trust or entity), any other person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such person. 1.1.2. “Agency” shall mean the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under the California Redevelopment Law. The principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702. “Agency” shall also refer to the City of Santa Ana where the context dictates, to the effect that the City of Santa Ana shall have all rights granted to the Agency hereunder. 1.1.3. “Aggregate Transfer” shall refer to the total “Ownership Interest(s)” in Tenant transferred or assigned in one transaction or a series of related transactions (other than an Excluded Transfer) occurring since the latest of (a) the Effective Date, (b) the execution by Tenant of this Lease, or (c) the most recent Tenant Ownership Change; provided, however, that there shall be no double counting of successive transfers of the same interest in the case of a transaction or series of related transactions involving successive transfers of the same interest. Isolated and unrelated transfers shall not be treated as a series of related transactions for purposes of the definition of “Aggregate Transfer.” 1.1.4. “Annual Operating Expenses” means all regular and customary annual expenses incurred in relation to the operation of the Premises, including the Improvements, as reflected on the annual budget that Tenant shall prepare and abide by each year during the Term of this Ground Lease, commencing on the Commencement Date, as approved in writing by the Lessor, in Lessor’s reasonable discretion. Said Annual Operating Expenses shall include a reasonable property management and administrative fee, fees related to the tax credit syndication of the Premises, utility charges, operating and maintenance expenses, Project property taxes and Project insurance premiums, and such other costs as approved by the Lessor, in his/her reasonable discretion. Tenant will deliver an annual budget for the following year no later than December 1 for each year following issuance of a permanent certificate of occupancy for the Improvements. Lessor shall deliver any comments, or its approval to such operating budget within thirty (30) days of receipt thereof. If an operating budget for the following year has not been approved by Lessor and Tenant prior to January 1 of such year, the annual operating budget from the previous year, increased by three percent (3%), with the actual cost of property tax and insurance premiums, shall apply until a new operating budget is approved. Notwithstanding the foregoing, in no event shall Annual Operating Expenses include any costs, fees, fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and accounting fees and expenses) which are due to or arisin g out Commented [ST1]: NOTE: This conforms to the Stanton Inn ground lease. The loans are subordinate and we need this provision to work even if there is a foreclosure and these loans go away. Commented [ST2]: Consistent with Placentia Veterans lease. EXHIBIT 11 Page | 3 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 of the Tenant’s (A) breach or default of any mortgage loan, (B) fraudulent acts or willful misconduct or (C) breach or default under any other contract, lease or agreement pertaining to the Project. Annual Operating Expenses shall also not include other expenses not related to the Project’s operations such as depreciation, amortization, accrued principal and interest expense on deferred payment debt and capital improvement expenditures. 1.1.5. “Annual Project Revenue” means all annual revenue generated by the Project from any source, including, but not limited to, rent payments, governmental assistance housing payments, laundry and other vending machine and pay telephone income. Notwithstanding the foregoing, Annual Project Revenue shall not include the following items: (a) security deposits from subtenants (except when applied by Tenant to rent or other amounts owing by subtenants); (b) capital contributions to Tenant by its members, partners or shareholders (including capital contributions required to pay deferred developer fee); (c) condemnation or insurance proceeds; (d) there shall be no line item, expense, or revenue shown allocable to vacant unit(s) at the Project; or (e) receipt by an Affiliate of management fees or other bona fide arms-length payments for reasonable and necessary Operating Expenses associated with the Project. 1.1.6. “Auditor-Controller" shall mean the Auditor-Controller, County of Orange, or designee, or upon written notice to Tenant, such other person as may be designated by the Board of Supervisors. 1.1.7. “Base Rent” shall mean a total of six million four hundred and fifty thousand dollars ($6,450,000) due and owing and payable in full on the Commencement Date, but if not paid in full on the Commencement Date, then the Base Rent amount paid in accordance with this Lease, including pursuant to Article III, below, with four million, one hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) being paid to the Agency pursuant to Section 3.1.2 and two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) being paid to the County pursuant to Section 3.1.1. Address APN Size (Acres) Size (SF) Land Percentage Value Allocation City Owned Site 398-092-14 1.456 63,423 63.69% $4,108,136 County Owned Site 398-092-13 0.83 36,155 36.31% $2,341,864 Total 2.286 99,578 100.00% $6,450,000 1.1.8. “Board of Supervisors” shall mean the Board of Supervisors of the County of Orange, a political subdivision of the State of California, the governing body of the County. 1.1.9. “Certificate of Occupancy” shall mean a temporary or final certificate of occupancy (or other equivalent entitlement, however designated) which entitles Tenant to commence normal operation and occupancy of the Improvements. 1.1.10. “Chief Real Estate Officer” shall mean the Chief Real Estate Officer, County Executive Office, County of Orange, or designee, or upon written notice to Tenant, such other person as may be designated by the County Board of Supervisors. EXHIBIT 11 Page | 4 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 1.1.11. “City” shall mean the City of Santa Ana, California, a charter city and municipal corporation. “City” shall also refer to the Agency where the context dictates, to the effect that the Agency shall have all the rights granted to the City hereunder. “City Council” shall mean the City Council of the City of Santa Ana. 1.1.12. “Claims” shall mean liens, claims, demands, suits, judgments, liabilities, damages, fines, losses, penalties, costs and expenses (including without limitation reasonable attorneys' fees and expert witness costs, and costs of suit), and sums reasonably paid in settlement of any of the foregoing. 1.1.13. “Commencement Date” shall mean the date on which a Certificate of Occupancy is issued for the Project, and on which the Term shall commence and Base Rent shall become due and payable. 1.1.14. “Contractor” shall mean Tenant’s general contractor for the construction of the Improvements. 1.1.15. “County” shall mean the County of Orange, a political subdivision of the State of California. 1.1.16. “Effective Date” is defined in the introductory paragraph to this Lease and is the date on which the Tenant is entitled to commence construction pursuant to Article V, below . 1.1.17. “Event of Default” is defined in Section 11.1. 1.1.18. “Excluded Transfer” shall mean any of the following: (a) A transfer by any direct or indirect partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or indirect owner in Tenant’s ownership structure) as of the Effective Date or the date on which a Tenant Ownership Change occurred as to the interest transferred, to any other direct or indirect partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or indirect owner in Tenant’s ownership structure) as of the Effective Date, including in each case to or from a trust for the benefit of the immediate family of any direct or indirect partner or member of Tenant who is an individual; (b) A transfer of an Ownership Interest in Tenant or in constituent entities of Tenant (i) to a member of the immediate family of the transferor (which for purposes of this Lease shall be limited to the transferor’s spouse, children, parents, siblings, and grandchildren); (ii) to a trust for the benefit of a member of the immediate family of the transferor; (iii) from such a trust or any trust that is an owner in a constituent entity of Tenant as of the Effective Date, to the settlor or beneficiaries of such trust or to one or more other trusts created by or for the benefit of any of the foregoing persons, whether any such transfer described in this subsection is the result of gift, devise, intestate succession, or operation of law; or (iv) in connection with a pledge by any partners or members of a constituent entity of Tenant to an affiliate of such partner or member; (c) A transfer of a direct or indirect interest resulting from public trading in the stock or securities of an entity, when such entity is a corporation or other entity whose stock Commented [ST3]: We need the ground lease in effect concurrent or before closing in order to close the loan. Must be a hard date on or before the closing date. Commented [ST4]: We Commented [ST5]: EXHIBIT 11 Page | 5 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 and/or securities is/are traded publicly on a national stock exchange or traded in the over -the-counter market and the price for which is regularly quoted in recognized national quotation services; (d) A mere change in the form, method, or status of ownership (including, without limitation, the creation of single-purpose entities) as long as the ultimate beneficial ownership remains the same as of the Effective Date, or is otherwise excluded in accordance with subsections (a) – (c) above; (e) A transfer to an Affiliated nonprofit public benefit corporation or for- profit corporation, or to a limited partnership whose general partner is a nonprofit corporation, for - profit corporation or limited liability company Affiliated with the Tenant or the Tenant’s general partner, subject to the County and Agency’s right to reasonably approve the agreement to effect such assignment or transfer; (f) The lease, assignment of lease or sublease of any individual residential unit in the Improvements; (g) A transfer of the Tenant’s interest in the Premises by foreclosure or deed in lieu of foreclosure (i) to any bona fide third-party lender holding a lien encumbering the Premises (or its nominee), and (ii) by a Lender Foreclosure Transferee to a third-party made in accordance with Section 17.6.5; (h) Transfers of any limited partnership or membership interest in the Tenant to an investor solely in connection with the tax credit syndication of the Premises in accordance with Section 42 of the Internal Revenue Code of 1986, as amended (the “Tax Credit Laws”), (including, without limitation, a subsequent transfer of the Limited Partner’s interest to an Affiliate of the Limited Partner), provided, such syndication shall not extend the Term of this Lease; (i) The grant or exercise of an option agreement or right of first refusal solely in connection with the tax credit syndication of the Premises in accordance with the Tax Credit Laws provided that the syndication shall not extend the Term of this Lease; (j) The removal and replacement of one or both of Tenant’s general partners pursuant to the terms of Tenant’s Partnership Agreement as of the Effective Date and replacement by the Limited Partner, or an Affiliate thereof; or (k) Any assignment of the Lease by Tenant to an Affiliate of Tenant or to a Mortgagee as security in which there is no change to the direct and indirect beneficial ownership of the leasehold interest. 1.1.19. “Force Majeure Event” is defined in Article XIV. 1.1.20. “Hazardous Material(s)” is defined in Section 4.5. 1.1.21. “HCD” shall mean the California Department of Housing and Community Development. EXHIBIT 11 Page | 6 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 1.1.22. “Improvement Costs” shall mean the final actual construction costs incurred by Tenant in connection with the construction of the Improvements and in accordance with the terms of this Lease, excluding ordinary repair and maintenance costs and any Permitted Capital Expenditures paid for out of the Capital Improvement Fund. 1.1.23. “Improvements” shall mean and includes all buildings (including above- ground and below ground portions thereof, and all foundations and supports), building systems and equipment (such as HVAC, electrical and plumbing equipment), physical structures, fixtures, hardscape, paving, curbs, gutters, sidewalks, fences, landscaping and all other improvements of any type or nature whatsoever now or hereafter made or constructed on the Premises. The term Improvements shall mean the Initial Improvements and any replacement improvements constructed in accordance with the terms of this Lease. During the entire Term, the Improvements will be restricted to the following uses: (a) multifamily affordable housing, (b) permanent supportive housing units and related services, and (c) related commercial and community-serving uses as needed for the siting of the affordable housing and supportive housing units, as approved by the Lessor. 1.1.24. “Includes” shall mean “includes but is not limited to” and “including” shall mean “including but is not limited to.” 1.1.25. “Initial Improvements” shall mean the improvements first constructed by Tenant on the Premises at its sole cost and expense as more particularly described in Exhibit B attached hereto and incorporated by reference herein. 1.1.26. “Interest Rate” shall mean the lower of: (a) the reference or prime rate of U.S. Bank National Association, in effect from time to time plus three percent (3%); or (b) the highest rate of interest permissible under the Laws not to exceed the rate of twelve percent (12%) per annum. 1.1.27. “Laws” shall mean all laws, codes, ordinances, statutes, orders and regulations now or hereafter made or issued by any federal, state, county, local or other governmental agency or entity that are binding on and applicable to the Premises and Improvements. 1.1.28. “Lease” shall mean this Ground Lease (including any and all addenda, amendments and exhibits hereto), as now or hereafter amended. 1.1.29. “Leasehold Estate” is defined in Section 17.1.1. 1.1.30. “Leasehold Foreclosure Transferee” is defined in Section 17.1.2. 1.1.31. “Leasehold Mortgage” is defined in Section 17.1.3. 1.1.32. “Leasehold Mortgagee” is defined in Section 17.1.4. 1.1.33. “Lender” shall mean: (a) a bank, savings bank, investment bank, savings and loan association, mortgage company, insurance company, trust company, commercial credit Commented [ST6]: Right now this defined term isn’t used any where. I added it in two spots where I think it may have been intended. EXHIBIT 11 Page | 7 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 corporation, real estate investment trust, pension trust or real estate mortgage investment conduit; or (b) some other type of lender engaged in the business of making commercial loans, provided that such other type of lender has total assets of at least $2,000,000 and capital/statutory surplus or shareholder’s equity of at least $500,000,000 (or a substantially similar financial capacity if the foregoing tests are not applicable to such type of lender); or (c) a local, state or federal governmental entity, including but not limited to HCD, which provides predevelopment, acquisition, construction and/or permanent financing for Tenant’s acquisition and development of the Property. 1.1.34. “Lessor’s Interest” shall mean all of County’s and Agency’s interests in the real property, the Premises, this Lease as tenants-in-common and their existing and reversionary interest in the real property, Premises, as well as the Improvements upon the expiration of the Term or earlier termination thereof. 1.1.35. “Lessor Parties” shall mean, collectively and individually, the County, the Agency and their respective Affiliates, governing boards, agents, employees, members, officers, directors and attorneys. 1.1.36. “Limited Partner” shall mean any limited partner or investor member (and its successors and/or assigns) of Tenant and shall include all references to “investor” in this Ground Lease. 1.1.37. “Net Refinancing Proceeds” is defined in Section 3.2. 1.1.38. “Net Syndication Proceeds” is defined in Section 3.2. 1.1.39. “New Lease” is defined in Section 17.7.1. 1.1.40. “Operating Costs” is defined in Section 3.4.13.6.5. 1.1.41. “Trust” shall mean Orange County Housing Finance Trust, a California public agency formed pursuant to California Government Code section 6500, et. seq. 1.1.42. “Ownership Interests” shall mean the share(s) of stock, partnership interests, membership interests, other equity interests or any other direct or indirect ownership interests in Tenant, regardless of the form of ownership and regardless of whether such interests are owned directly or through one or more layers of constituent partnerships, corporations, limited liability companies, or trusts. 1.1.421.1.43. “Partnership Related Fees” shall mean the following fees of Tenant (or partners thereof pursuant to Tenant’s Partnership Agreement) which are actually paid including: (i) a limited partner asset management fee payable to the Limited Partner in the annual amount of $5,000 (increased annually by 3%); and (ii) partnership management fee (administrative and/or managing general partner) payable to the general partners of Tenant in the aggregate annual amount of $20,00020,000 (increased annually by 3%). Commented [LP7]: Per LPA, this fee starts at $25,000 annually, increasing by 3% thereafter. Need to confirm initial amount. EXHIBIT 11 Page | 8 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 1.1.431.1.44. “Person” shall include firms, associations, partnerships, joint ventures, trusts, corporations and other legal entities, including public or governmental bodies, agencies or instrumentalities, as well as natural persons. 1.1.441.1.45. “Premises” shall mean that certain real property containing approximately 2.28 acres of undeveloped land in the City, together with all easements, rights and privileges appurtenant thereto, to be leased to Tenant pursuant to this Lease and on which Tenant intends to construct the Improvements. The legal description of the Premises is attached hereto as Exhibit A. A rendering showing the approximate boundaries of the Premises is attached hereto as Exhibit A-1. 1.1.451.1.46. “Project” shall mean the Improvements, and all related appurtenances, constructed by Tenant on the Premises. 1.1.461.1.47. “Rent” shall mean and includes the County Base Rent, the Agency Base Rent, and Additional Rent payable by Tenant under this Lease. 1.1.471.1.48. “Residual Receipts” means the Annual Project Revenue less (A) Annual Operating Expenses (hereinafter defined), (B) obligated debt service on Leasehold Mortgages for the funding of the Improvements approved in writing by the Lessor at the closing of the construction and permanent financing for the Improvements or as permitted hereunder or otherwise approved pursuant to Section 17.2, below, (C) payment obligations approved in writing by the Lessor at the closing of the construction financing for the Improvements, (D) Partnership Related Fees (including accrued by unpaid Partnership Related Fees from the prior year or years), (E) repayment of loans, if any, made by Limited Partner to Tenant for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (F) repayment of loans, if any, made by a general partner of Tenant solely for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (G) deferred developer fee, and (H) scheduled deposits to reserves approved in writing by the Lessor at the closing of the construction financing for the Improvements (or such higher reserve deposits as may be required under Leasehold Mortgagee’s loan documents executed at the construction loan closing or as reasonably required by any Leasehold Mortgagee). 1.1.481.1.49. “Risk Manager” shall mean the Manager of County Executive Office, Risk Management, County of Orange, or designee, or upon written notice to Tenant, such other person as may be designated by the Board of Supervisors and the Risk Manager for the City of Santa Ana, or designee, or upon written notice to Tenant, such other person as may be designated by the City Council. 1.1.491.1.50. “Taxes” is defined in Section 3.11.2. 1.1.51. “TCAC” is defined as the California Tax Credit Allocation Committee. 1.1.52. “Tenant Group” shall mean Tenant and Tenant’s Affiliates, agents, employees, members, officers, directors and attorneys. 1.1.53. “Tenant Ownership Change” shall mean (a) any transfer or assignment by Tenant of the Leasehold Estate or (b) any “Aggregate Transfer” of at least twenty five percent (25%) of the “Ownership Interest(s)” in Tenant, in each case that is not an “Excluded Transfer.” Commented [ST8]: We need to know that the CCRC reserve payments required under their documents (signed at construction loan closing) are approved if higher than what is under here. EXHIBIT 11 Page | 9 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 1.1.54. “Tenant’s Partnership Agreement” shall mean Tenants Amended and Restated Agreement of Limited Partnership dated as of _______________. 1.1.55. “Term” is defined in Section 2.2. 1.1.56. “Transfer” is defined in Section 10.1.1. 1.1.57. “Transfer Notice” is defined in Section 10.4. 1.1.58. “Treasurer-Tax Collector” shall mean the Treasurer-Tax Collector, County of Orange, or designee, or upon written notice to Tenant, such other person or entity as may be designated by the Board of Supervisors. 1.1.59. “Trust MHSA Loan” shall mean that certain loan in the amount of two million, five hundred thousand dollars ($2,500,000), representing a Trust Mental Health Service Act loan from the Orange County Housing Trust to the Tenant. 1.1.60. “Utility Costs” is defined in Section 3.4.13.6.6. 1.1.601.1.61. “Work” shall mean both Tenant’s construction activity with respect to the Improvements, including permitted future changes, alterations and renovations thereto and also including, without limiting the generality of the foregoing, site preparation , landscaping, installation of utilities, street construction or improvement and grading or filling in or on the Premises. ARTICLE II LEASE OF PROPERTY 2.1 Lease of Premises. 2.1.1. Lessor hereby leases the Premises to Tenant for the Term, and Tenant hereby leases the Premises from Lessor for the Term, subject to the terms, conditions, covenants, restrictions and reservations of this Lease. 2.1.2. Warranty of Peaceful Possession. Lessor covenants and warrants that, subject to the Tenant’s payment of Rent and performance and observation of all of the covenants, obligations and agreements herein contained and provided to Tenant, Tenant shall and may peaceably and quietly have, hold, occupy, use and enjoy the Premises during the Term and may exercise all of its rights hereunder. Except as otherwise set forth herein, the Lessor covenants and agrees that they shall not grant any mortgage or lien on or in respect of its fee interest in the Premises unless the same is expressly subject and subordinate to this Lease or any New Lease. 2.2 Term. The “Term” of this Lease shall commence on the Effective Date of this Lease, and shall expire at 12:00 midnight Pacific Standard Time on the 62nd anniversary of the Commencement Date, unless sooner terminated as a result of Tenant’s non-compliance with any EXHIBIT 11 Page | 10 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 terms, conditions, covenants, restrictions or reservations of this Lease. Notwithstanding the foregoing, the Term shall not exceed sixty five (65) years from the Effective Date . 2.3 Termination at End of Term. This Lease shall terminate without need of further actions of any Party at 12:00 midnight Pacific Standard Time on the last day of the Term. 2.4 Condition of the Premises. TENANT HEREBY ACCEPTS THE PREMISES “AS IS”, AND ACKNOWLEDGES THAT THE PREMISES IS IN SATISFACTORY CONDITION. COUNTY AND AGENCY MAKES NO WARRANTY, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR TENANT’S PROPOSED USES. COUNTY AND AGENCY MAKE NO COVENANTS OR WARRANTIES, IMPLIED OR OTHERWISE, RESPECTING THE CONDITION OF THE SOIL, SUBSOIL, OR ANY OTHER CONDITIONS OF THE PREMISES OR THE PRESENCE OF HAZARDOUS MATERIALS, NOR DOES COUNTY OR AGENCY COVENANT OR WARRANT, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR THE PROPOSED DEVELOPMENT, CONSTRUCTION OR USE BY TENANT. COUNTY AND AGENCY SHALL NOT BE RESPONSIBLE FOR ANY LAND SUBSIDENCE, SLIPPAGE, SOIL INSTABILITY OR DAMAGE RESULTING THEREFROM. COUNTY AND AGENCY SHALL NOT BE REQUIRED OR OBLIGATED TO MAKE ANY CHANGES, ALTERATIONS, ADDITIONS, IMPROVEMENTS OR REPAIRS TO THE PREMISES. TENANT SHALL RELY ON ITS OWN INSPECTION AS TO THE SUITABILITY OF THE PREMISES FOR THE INTENDED USE. TENANT INITIALS: ______ ______ 2.5 Limitations of the Leasehold. This Lease and the rights and privileges granted Tenant in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of record as of the date hereof or otherwise disclosed to Tenant prior to the date hereof. Nothing contained in this Lease or in any document related hereto shall be construed to imply the conveyance to Tenant of rights in the Premises which exceed those owned by Lessor, or any representation or warranty, either express or implied, relating to the nature or condition of the Premises or County’s or Agency’s interest therein. 2.6 Tenant’s Investigation. Tenant acknowledges that it is solely responsible for investigating the Premises to determine the suitability thereof for the uses contemplated by Tenant. Tenant further acknowledges by executing this Lease that it has completed its investigation and has made such determinations as Tenant believes may be required under the circumstances. ARTICLE III TOTAL RENT 3.1 Base Rent. Throughout the Term of this Lease, regardless of an earlier termination date Tenant shall pay to the County and the Agency the Base Rent as set forth herein. 3.1.1 County Base Rent. Until the satisfaction, expiration or termination of the Trust MHSA Loan, Tenant shall make annual payments to County of thirtythirteen and fifty-three and four-tenthsone hundredths of one percent (33.413.53%) of the then available Residual Receipts (defined above), but only to the extent said Residual Receipts are available, until the amount of two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) is EXHIBIT 11 Page | 11 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 fully paid (“County Base Rent”). After the satisfaction, expiration, or termination of the Trust MHSA Loan, County Base Rent shall automatically reset to thirty-three and four-tenths percent (33.4%) of the then available Residual Receipts. County Base Rent shall only become due after the Tenant has repaid that certain loan from the County awarded under the 2016 Permanent Supportive Housing Notice of Funding Availability, Addendum One, evidenced by a Loan Agreement, Promissory Note and Leasehold Deed of Trust, in the amount of $2,280,7012,650,701 (collectively, and together with the other loan documents evidencing, securing and relating to said loan from the County, the “County Loan Documents”), which is also being paid out of the same thirty-three and four-tenths percent (33.4%)applicable percentage of the Residual Receipts. On the last day of the Term the then outstanding amount of the County Base Rent shall be paid in full if not already paid by that time. County Base Rent will bear interest commencing on the Commencement Date at the simple rate of three percent (3%) per year until paid in full. Once the County Base Rent has been paid in full with interest, Tenant shall have no further obligation for County Base Rent under this Lease. 3.1.2 Agency Base Rent. Until the satisfaction, expiration or termination of the Trust MHSA Loan, Tenant shall also make annual payments to Agency of thirtytwenty-three and seventy one one-thirdhundredths of one percent (33.323.71%) of the then available Residual Receipts (defined above), but only to the extent said Residual Receipts are available, until the amount of four million, one hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) is fully paid (“Agency Base Rent”). After the satisfaction, expiration, or termination of the Trust MHSA Loan, Agency Base Rent shall automatically reset to thirty-three and three-tenths percent (33.3%) of the then available Residual Receipts. Agency Base Rent shall only become due after the Tenant has repaid those two certain loans from the City, each evidenced by a Loan Agreement, Promissory Note, Deed of Trust, and Affordability Restrictions on Transfer of Property dated _________________, 20__,for an Agency HOME loan in the amount of $3,007,489.00, and dated _________________, 20__,3,007,489.00, , for an Agency Neighborhood Stabilization Program loan in the amount of $963,951 1,637,420, for a total of $4,644,909(collectively, and together with the other loan documents evidencing, securing and relating to said loans from the Agency, the “Agency Loan Documents”), which is also being paid out of the same thirty-three and one-third percent (33.3%)applicable percentage of the Residual Receipts. On the last day of the Term the then outstanding amount of the Agency Base Rent shall be paid in full if not already paid by that time. Agency Base Rent will bear interest commencing on the Commencement Date at the simple rate of three percent (3%) per year until paid in full. Once the Agency Base Rent has been paid in full, Tenant shall have no further obligation for Agency Base Rent under this Lease. 3.1.3 Trust MHSA Loan. The Parties recognize that during the Term of the Trust MHSA Loan, Tenant will be making annual payments to the Trust of twelve and seventy six one- hundredths percent (12.76%) of the then available Residual Receipts, until the Trust MHSA Loan is fully paid. At such time as the Trust MHSA Loan has been paid in full, or has been otherwise satisfied or terminated, the County Base Rent and Agency Base Rent shall be 33.4% and 33.3%, respectively, of the then available Residual Receipts, based on the loan amounts set forth above, without further actions of the Parties. 3.2 Net Refinancing Proceeds/Net Syndication Proceeds. Any Net Refinancing Proceeds or Net Syndication Proceeds received by Tenant shall be used to pay any unpaid Base Rent. Additionally, the Tenant’s right and obligation to use such net proceeds to pay Base Rent is subject to the rights of Leasehold Mortgagees to control the use of such proceeds pursuant to the terms of Commented [LP9]: Note – will need to confirm number of RR loans and amounts; they differ from current loan schedule in our LPA. Are they each paid pari passu from share of RR? EXHIBIT 11 Page | 12 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 their respective loan documents, all of which have been reviewed and reasonably approved by the Lessor and is further subject to the consent of TCAC to the extent required under the applicable regulations or the extended use agreement. Without limiting application of those loan documents and TCAC regulations and requirements, in no case shall Tenant be permitted to retain Net Refinancing Proceeds or Net Syndication Proceeds without the prior written consent of the Lessor, until full satisfaction of the unpaid Base Rent. Notwithstanding the foregoing, this Section 3.2 shall not apply to (i) any Excluded Transfer or (ii) any financing described in Section 17.2. “Net Refinancing Proceeds” shall be defined as the proceeds from the refinancing of any loan approved by Lessor hereunder or otherwise permitted under this Lease, net of all of the following: the amount of the financing which is satisfied out of such proceeds, closing costs, costs to construct and/or rehabilitate the Project, including the costs necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), the Improvement Costs, the soft costs related to the construction and/or rehabilitation of the Project (such as architecture, en gineering and other consultant costs, and all required relocation costs), and all hard costs of the rehabilitation and/or construction, all of which have been reviewed and reasonably approved by the Lessor. “Net Syndication Proceeds” shall be defined as syndication proceeds net of final Project hard and soft construction costs, including all Improvement Costs and reasonable and customary syndication closing costs, including developer fee, based on a cost certification completed at the end of construction, and syndication costs all of which has been reviewed and reasonably approved by the Lessor. 3.3 Triple Net Rent. It is the intent of the Parties that all Rent shall be absolutely net to Lessor and that, except as otherwise provided herein, Tenant will pay all costs, charges, insurance premiums, taxes, utilities, expenses and assessments of every kind and nature incurred for, against or in connection with the Premises which arise or become due during the Term as a result of Tenant’s use and occupancy of the Premises. Under no circumstances or conditions, whether now existing or hereafter arising, or whether beyond the present contemplation of the Parties, shall County or Agency be obligated or required to make any payment of any kind whatsoever or be under any other obligation or liability under this Lease except as expressly provided herein. 3.4 Insufficient Funds. For purposes of this Section 3.4, Rent shall have the same meaning as stated in Section 1.1.421.1.47. If any payment of Rent or other fees made by check is returned due to insufficient funds or otherwise, County and Agency shall have the right to require Tenant to make all subsequent Rent payments by cashier’s check, certified check or automated clearing house debit system. All Rent or other fees shall be paid in lawful money of the United States of America, without offset or deduction or prior notice or demand. No payment by Tenant or receipt by County and Agency of a lesser amount than the Rent or other fees due shall be deemed to be other than on account of the Rent or other fees due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and County and Agency shall accept such check or payment without prejudice to County’s and Agency’s right to recover the balance of the Rent or other fees or pursue any other remedy available to the County or Agency in this Lease. 3.5 Reserved. 3.6 Additional Rent. EXHIBIT 11 Page | 13 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 3.6.1. Additional Rent. During the Term, the Base Rent shall be absolutely net to County and Agency so that all costs (including but not limited to Operating Costs and Utility Costs, as defined below), fees, taxes (including but not limit ed to Real Estate Taxes and Equipment Taxes, as defined below), charges, expenses, impositions, reimbursements, and obligations of every kind relating to the Premises shall be paid or discharged by Tenant as additional rent (“Additional Rent”). Additional Rent shall also include such amounts as described in Article XI. As more particularly set forth in Sections 3.6.3 and 3.6.6, below, Tenant has the right to pay under protest the foregoing Additional Rent, as applicable, and defend against the same. Any imposition rebates shall belong to Tenant. 3.6.2. Taxes. During the Term, Tenant shall pay directly to the taxing authorities all Taxes (as herein defined) at least ten (10) days prior to delinquency thereof. For purposes hereof, “Taxes” shall include any form of assessment, license fee, license tax, business license fee, commercial rental tax, levy, penalty, sewer use fee, real property tax, charge, possessory interest tax, tax or similar imposition (other than inheritance or estate taxes), imp osed by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, drainage, flood control, water pollution control, public transit or other special district thereof, as against any legal or equitable interest of County or Agency in the Premises or any payments in lieu of taxes required to be made by County or Agency, including, but not limited to, the following: (a) Any assessment, tax, fee, levy, improvement district tax, charge or similar imposition in substitution, partially or totally, of any assessment, tax, fee, levy, charge or similar imposition previously included within the definition of Taxes. It is the intention of Tenant and Lessor that all such new and increased assessments, taxes, fees, levies, charges and similar impositions be included within the definition of “Taxes” for the purpose of this Lease. (b) Any assessment, tax, fee, levy, charge or similar imposition allocable to or measured by the area of the Premises or the rent payable hereunder, including, without limitation, any gross income tax or excise tax levied by the city, county, state or federal government, or any political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; (c) Any assessment, tax, fee, levy, charge or similar imposition upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises, including any possessory interest tax levied on the Tenant’s interest under this Lease; (d) Any assessment, tax, fee, levy, charge or similar imposition by any governmental agency related to any transportation plan, fund or system instituted within the geographic area of which the Premises are a part. The definition of “Taxes,” including any additional tax the nature of which was previously included within the definition of “Taxes,” shall include any increases in such taxes, levies, charges or assessments occasioned by increases in tax rates or increases in assessed valuations, whether occurring as a result of a sale or otherwise. EXHIBIT 11 Page | 14 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 3.6.3. Contest of Taxes. Tenant shall have the right to contest, oppose or object to the amount or validity of any Taxes or other charge levied on or assessed against the Premises and/or Improvements or any part thereof; provided, however, that the contest, opposition or objection must be filed before such time the Taxes or other charge at which it is directed becomes delinquent. Furthermore, no such contest, opposition or objection shall be continued or maintained after the date the tax, assessment or other charge at which it is directed becomes delinqu ent unless Tenant has either: (i) paid such tax, assessment or other charge under protest prior to its becoming delinquent; or (ii) obtained and maintained a stay of all proceedings for enforcement and collection of the tax, assessment or other charge by posting such bond or other matter required by law for such a stay; or (iii) delivered to Lessor a good and sufficient undertaking in an amount specified by Lessor and issued by a bonding corporation authorized to issue undertakings in California conditioned on the payment by Tenant of the tax, assessments or charge, together with any fines, interest, penalties, costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final determination of Tenant’s contest, opposition or objection to such tax, assessment or other charge. 3.6.4. Payment by Lessor. Should Tenant fail to pay any Taxes required by this Article III to be paid by Tenant within the time specified herein, subject to Tenant’s right to contest such Taxes in accordance with Section 3.6.3, and if such amount is not paid by Tenant within fifteen (15) days after receipt of Lessor’s written notice advising Tenant of such nonpayment, County and/or Agency may, without further notice to or demand on Tenant, pay, discharge or adjust such tax, assessment or other charge for the benefit of Tenant. In such event Tenant shall promptly on written demand of County or Agency reimburse County and/or Agency for the full amount paid by County and/or Agency in paying, discharging or adjusting such tax, assessment or other charge, together with interest at the Interest Rate from the date advanced until the date repaid. 3.6.5. Operating Costs. Tenant shall pay all Operating Costs during the Term prior to delinquency. As used in this Lease, the term “Operating Costs” shall mean all charges, costs and expenses related to the Premises, including, but not limited to, management, operation, maintenance, overhaul, improvement, replacement or repair of the Improvements and/or the Premises. 3.6.6. Utility Costs. Tenant shall pay all Utility Costs during the Term prior to delinquency. As used in this Lease, the term “Utility Costs” shall include all charges, surcharges, taxes, connection fees, service fees and other costs of installing and using all utilities required for or utilized in connection with the Premises and/or the Improvements, including without limitation, costs of heating, ventilation and air conditioning for the Premises, costs of furnishing gas, electri city and other fuels or power sources to the Premises, and the costs of furnishing water and sewer services to the Premises. Tenant agrees to indemnify and hold harmless the County and Agency against any liability, claim, or demand for the late payment or non-payment of Utility Costs. ARTICLE IV USE OF PREMISES 4.1 Permitted Use of Premises. Tenant may use the Premises for the construction, development, entitlement, operation, maintenance, replacement and repair of the Project, including the Improvements, as follows: 4.1.1. Required Services and Uses. Lessor’s primary purpose for entering into this Lease is to promote the development of the Improvements consistent with this Lease. In furtherance EXHIBIT 11 Page | 15 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 of that purpose, Tenant shall construct and during the entire Term operate, maintain, replace and repair the Improvements in a manner consistent with the Laws and for the following uses: (a) multifamily affordable housing, and appurtenant improvements, including, without limitation, parking, (b) permanent supportive housing units and related services, and (c) related commercial and community-serving uses, as approved by the Lessor. 4.1.2. Ancillary Services and Uses. Subject to the prior written approval of Lessor, which approval may be granted or withheld in the sole discretion of the Lessor, Tenant may provide those additional services and uses which are ancillary to and compatible with the required services and uses set forth in Section 4.1.1., above. 4.1.3. Additional Concessions or Services. Tenant may establish, maintain, and operate such other additional facilities, concessions, and services as Tenant and Lessor may jointly from time to time reasonably determine to be reasonably necessary for the use of the Premises and which are otherwise permitted by Law for the sole purpose to provide affordable housing and/or emergency shelter. 4.1.4. Restricted Use. The services and uses listed in this Section 4.1, both required and optional, shall be the only services and uses permitted. Tenant agrees not to use the Premises for any other purpose or engage in or permit any other activity within or from the Premises unless approved in writing by the Lessor, which approval may be granted or withheld in the sole discretion of the Lessor. 4.1.5. Continuous Use. During the Term, Tenant shall continuously conduct Tenant’s business in the Premises in the manner provided under this Lease and shall not discontinue use of the Premises for any period of time except in the case of a Force Majeure Event or as permitted in advance and in writing by the Lessor. 4.1.6. Alcohol Restrictions. Tenant shall not permit the sale or service of alcoholic beverages on the Premises. 4.1.7. Permits and Licenses. Tenant shall be solely responsible to obtain, at its sole cost and expense, any and all permits, licenses or other approvals required for the uses permitted herein and shall maintain such permits, licenses or other approvals for the entire Term. 4.2 Nuisance; Waste. Tenant shall not maintain, commit, or permit the maintenance or commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable to the Premises and Improvements or any part thereof. Tenant shall not commit or allow to be committed any waste in or upon the Premises or Improvements and shall keep the Premises and the Improvements thereon in good condition, repair and appearance. 4.3 Compliance with Laws. Tenant shall not use or permit the Premises or the Improvements or any portion thereof to be used in any manner or for any purpose that violates any applicable Laws. Tenant shall have the right to contest, in good faith, any such Laws, and to delay EXHIBIT 11 Page | 16 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 compliance with such Laws during the pendency of such contest (so long as there is no material threat to life, health or safety that is not mitigated by Tenant to the satisfaction of the applicable authorities). Lessor may cooperate with Tenant in all reasonable respects in such contest, including joining with Tenant in any such contest if County and/or Agency’s joinder is required in order to maintain such contest; provide, however, that any such contest shall be without cost to Lessor, and Tenant shall indemnify, defend (with attorneys acceptable to Lessor), and hold harmless the Lessor from any and all claims, liabilities, losses, damages, or actions of any kind and nature, including reasonable attorneys’ fees, arising or related to Tenant’s failure to observe or comply with the contested Law during the pendency of the contest. 4.4 Hazardous Materials. 4.4.1. Definition of Hazardous Materials. For purposes of this Lease, the term “Hazardous Material” or “Hazardous Materials” shall mean any hazardous or toxic substance, material, product, byproduct, or waste, which is or shall become regulated by any governmental entity, including, without limitation, the County and/or Agency acting in their governmental capacity, the State of California or the United States government. 4.4.2. Use of Hazardous Materials. Except for those Hazardous Materials which are customarily used in connection with the construction, operation, maintenance and repair of the Improvements or used in connection with any permitted use of the Premises and Improvements under this Lease (which Hazardous Materials shall be used in compliance with all applicable Laws), Tenant or Tenant’s employees, agents, independent contractors or invitees (collectively “Tenant Parties”) shall not cause or permit any Hazardous Materials to be brought upon, stored, kept, used, generated, released into the environment or disposed of on, under, from or about the Premises (which for purposes of this Section shall include the subsurface soil and ground water). 4.4.3. Tenant Obligations. If the presence of any Hazardous Materials on, under or about the Premises caused or permitted by Tenant or Tenant Parties, and excluding Hazardous Materials existing on the Premises prior to the Effective Date (the “Existing Hazardous Materials”), results in (i) injury to any person, (ii) injury to or contamination of the Premises (or a portion thereof), or (iii) injury to or contamination or any real or personal property wherever situated, Tenant, at its sole cost and expense, shall promptly take all actions necessary or appropriate to return the Premises to the condition existing prior to the introduction of such Hazardous Materials to the Premises and to remedy or repair any such injury or contamination. Without limiting any other rights or remedies of County or Agency under this Lease, Tenant shall pay the cost of any cleanup or remedial work performed on, under, or about the Premises as required by this Lease or by applicable Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous Materials caused or permitted by Tenant or Tenant Parties, excluding the Existing Hazardous Materials. Notwithstanding the foregoing, Tenant shall not take any remedial action in respon se to the presence, discharge or release, of any Hazardous Materials on, under or about the Premises caused or permitted by Tenant or Tenant Parties, or enter into any settlement agreement, consent decree or other compromise with any governmental or quasi-governmental entity without first obtaining the prior written consent of the Lessor. All work performed or caused to be performed by Tenant as provided for above shall be done in good and workmanlike manner and in compliance with plans, specifications, permits and other requirements for such work approved by Lessor. EXHIBIT 11 Page | 17 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 4.4.4. Indemnification for Hazardous Materials. (a) To the fullest extent permitted by law, Tenant hereby agrees to indemnify, hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its elected officials, officers, employees, agents, independent contractors, and the Premises, from and against any and all liabilities, losses, damages (including, but not limited, damages for the loss or restriction on use of rentable or usable space or any amenity of the Premises or damages arising from any adverse impact on marketing and diminution in the value of the Premises), judgments, fines, demands, claims, recoveries, efficiencies, costs and expenses (including, but not limited to , reasonable attorneys' fees, disbursements and court costs and all other professional or consultant's expenses), whether foreseeable or unforeseeable (collectively, "Liabilities"), arising out of the presence, use, generation, storage, treatment, on or off-site disposal or transportation of Hazardous Materials on, into, from, under or about the Premises by Tenant or Tenant Parties, and excluding all Existing Hazardous Materials. Such indemnification shall not apply to any loss, claims, liability or costs arising out of Tenant’s discovery of Existing Hazardous Materials on the Premises or the existence of Existing Hazardous Materials on the Premises. (b) The foregoing indemnity shall also specifically include the cost of any required or necessary repair, restoration, clean-up or detoxification of the Premises and the preparation of any closure or other required plans. The forgoing indemnity obligation shall not include the cost of any repair, restoration, clean-up or detoxification of the Premises related to Existing Hazardous Materials. (c) The foregoing indemnity and defense obligations of this Lease shall survive its expiration or termination; provided, however, that the indemnity contained in this Section 4.4.4 shall not apply to any Liabilities arising or occurring (a) prior to the Effective Date of this Ground Lease, (b) after the expiration or earlier termination of the Term of this Ground Lease, or (c) as a result of the grossly negligent or wrongful acts or omissions of Lessor, or (d) related to Exis ting Hazardous Materials on the Premises. (a) To the fullest extent permitted by law, Tenant hereby agrees to indemnify, hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its elected officials, officers, employees, agents, independent contractors, and the Premises, from and against any and all liabilities, losses, damages (including, but not limited, damages for the loss or restriction on use of rentable or usable space or any amenity of the Premises or damages arising from any adverse impact on marketing and diminution in the value of the Premises), judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses (including, but not limited to, reasonable attorneys' fees, disbursements and court costs and all other professional or consultant's expenses), whether foreseeable or unforeseeable (collectively, "Liabilities"), arising out of the presence, use, generation, storage, treatment, on or off-site disposal or transportation of Hazardous Materials on, into, from, under or about the Premises by Tenant or Tenant Parties, and excluding all Existing Hazardous Materials. To clarify, the foregoing indemnification shall not apply to any Liabilities arising out of Tenant’s discovery of Existing Hazardous Materials on the Premises or attributable to the presence of Existing Hazardous Materials on the Premises. (b) The foregoing indemnity shall also specifically include the cost of any required or necessary repair, restoration, clean -up or detoxification of the Premises and the preparation of any closure or other required plans; provided, however, Tenant shall have no EXHIBIT 11 Page | 18 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 obligation or responsibility for the cost of any repair, remediation, restoration, clean -up or detoxification of the Premises related to Existing Hazardous Materials. (c) The foregoing indemnity and defense obligations (and exclusions therefrom) of this Lease shall survive its expiration or termination; provided, however, that the indemnity contained in this Section 4.4.4 shall not apply to any Liabilities arising or occurring (a) prior to the Effective Date of this Ground Lease, (b) after the expiration or earlier termination of the Term of this Ground Lease, (c) as a result of the grossly negligent or wrongful acts or omissions of Lessor, or (d) related to Existing Hazardous Materials on the Premises. 4.5 Access by Lessor. Lessor reserves the right for County, Agency and their authorized representatives to enter the Premises upon two (2) business days’ prior written notice to Tenant, during normal business hours, in order to determine whether Tenant is complying with Tenant’s obligations hereunder, or to enforce any rights given to County or Agency under this Lease. Lessor and its representatives shall report to the Tenant’s on-site office and must be accompanied by a representative of Tenant at all times while on the Property and obey Tenant’s rules and regulations. Tenant acknowledges Lessor have the authority to enter the Premises and perform work on the Premises at any time as needed to provide immediate or necessary protection for the general public. Lessor will take all necessary measures not to unreasonably interfere with Tenant’s business at the Premises in exercising its rights under this Section. Lessor shall indemnify and hold Tenant harmless from and against any loss, cost, damage or liability, including, without limitation, attorneys’ fees, which results from Lessor’s willful misconduct or gross negligence, or willful misconduct or gross negligence committed by any party acting under Lessor’s authority, of the rights granted by this Section 4.5. ARTICLE V CONSTRUCTION OF IMPROVEMENTS 5.1 Construction of Improvements. 5.1.1. Initial Improvements. Upon the fulfillment of the Preconditions set forth in Section 5.1.2, below, and payment for and issuance of all permits required under the Laws (whether from County or City in their governmental capacity, or otherwise), Tenant shall construct the Initial Improvements. 5.1.2. Preconditions. No work for development of the Initial Improvements shall be commenced, and no building or other materials shall be delivered to the Premises, until: (a (a) Lessor has provided approval in writing that all the conditions set forth in Section 5 of the Option Agreement have been satisfied; (b) Tenant has obtained a permit through the City, submitted Project design, conceptual development, plans and special provisions for the construction of Improvements in accordance with the Lessor’s criteria, standard and practices; Commented [ST10]: Estoppe from Landlord must confirm all preconditions satisfied at closing of USB loan. Commented [ST11]: Per the recitals, I understood all option conditions are satisfied prior to executing this Lease. Commented [ST12]: Commented [ST13]: EXHIBIT 11 Page | 19 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 (bc) Tenant has given Lessor written notice of the proposed commencement of construction of the Premises or the delivery of construction materials in order to allow Lessor to take all necessary actions under California Civil Code section 3094, including posting of a notice of non-responsibility at the Premises; and (cd) Tenant has provided to Lessor evidence that (i) Tenant has entered into a Construction Contract with a Contractor in accordance with Section 5.2 below, (ii) Tenant has secured the construction funding required under Section 5.1.4 below, and (iii) Tenant has provided Lessor with assurances sufficient to construct the Initial Improvements in accordance with Section 5.3 below. 5.1.3. Utilities. To the extent not already constructed, Tenant, at no cost to Lessor, shall construct or cause to be constructed all water, gas, heat, light, power, air conditioning, telephone, broadband internet, and other utilities and related services supplied to and/or used on the Premises at Tenant’s sole cost and expense for the purposes of conducting Tenant’s operations thereon. All such utilities shall be separately metered from any utilities which may be used by County and/or Agency in conducting its operations, if any, on or about the Premises. Nothing contained in this Section is to be construed or implied to give Tenant the right or permission to install or to permit any utility poles or communication towers to be constructed or installed on t he Premises. 5.1.4. Construction Funding. Prior to commencement of construction of the Initial Improvements, Tenant shall provide to Lessor evidence reasonably satisfactory to Lessor of funding available to Tenant that is sufficient to pay for Tenant’s estimated total cost of constructing the Initial Improvements, which evidence may consist of (i) a written commitment to Tenant from a Lender selected by Tenant to provide a construction loan to Tenant for the purpose of constructing the Initial Improvements (which may be secured by a Leasehold Mortgage encumbering Tenant’s leasehold interest under this Lease), (ii) actual equity funds then held by Tenant or irrevocably committed to be paid to Tenant for the purpose of constructing the Initial Improvements, or (iii) any combination of the foregoing. Tenant may from time to time change any of the foregoing funding sources and the allocation thereof, so long as the aggregate available funding continues to be sufficient to pay for Tenant’s estimated remaining cost of constructing the Initial Improvements, provided that Tenant shall promptly notify Lessor of any such change. 5.1.5. Compliance with Laws and Permits. Tenant shall cause all Improvements made by Tenant to be constructed in substantial compliance with all applicable Laws, including all applicable grading permits, building permits, and other permits and approvals issued by governmental agencies and bodies having jurisdiction over the construction thereof. No permit, approval, or consent given hereunder by County and/or Agency, in their governmental capacity, shall affect or limit Tenant’s obligations hereunder, nor shall any approvals or consents given by County and/or Agency, as a Party to this Lease, be deemed approval as to compliance or conformance with applicable governmental codes, laws, rules, or regulations. 5.1.6. Reports. Not less than monthly from the commencement of construction of the Initial Improvements, Tenant shall provide Lessor with written construction status reports in the form of AIA No. G702 (“Application and Certification for Payment”) or comparable form, augmented by oral reports if so requested by County or Agency. Commented [ST14]: We’ll confirm in the landlord estoppel that the financing conditions are satisfied. EXHIBIT 11 Page | 20 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 5.1.7. Certificate of Occupancy. Tenant shall provide Lessor with a copy of the Certificate of Occupancy promptly following issuance thereof. The date of issuance of the Certificate of Occupancy shall be the Commencement Date hereunder. 5.1.8. Insurance. Tenant (or the Contractor, as applicable) shall deliver to Lessor both (i) certificates of insurance evidencing coverage for “builder’s risk,” as specified in Section 8.1, and (ii) evidence of worker’s compensation insurance, which provide the requisite insurance levels in accordance with Article VIII, for all persons employed in connection with the construction of any Improvements upon the Premises and with respect to whom death or bodily injury claims could be asserted against County and/or Agency or the Premises. Tenant shall (or shall cause Contractor to) maintain, keep in force and pay all premiums required to maintain and keep in said insurance herein at all times during which construction Work is in progress. 5.1.9. Mechanic’s Liens. (a) Payment of Liens. Tenant shall pay or cause to be paid the total cost and expense of all “Work of Improvement,” as that phrase is defined in the California Mechanics’ Lien law in effect and as amended from time to time. Tenant shall not suffer or permit to be enforced against the Premises or Improvements or any portion thereof, any mechanics’, materialmen’s, contractors’ or subcontractors’ liens arising from any work of improvement, however it may arise. Tenant may, however, in good faith and at Tenant’s sole cost and expense contest the validity of any such asserted lien, claim, or demand, provided Tenant (or any contractor or subcontractor, as applicable) has furnished the release bond (if required by County, Agency or any construction lender) required in California Civil Code section 8000 et seq. (or any comparable statute hereafter enacted for providing a bond freeing the Premises from the effect of such lien claim). In the event a lien or stop-notice is imposed upon the Premises as a result of such construction, repair, alteration, or installation, and provided the lien is not the result of actions of, or work performed by, the Lessor, Tenant shall either: (1) Record a valid Release of Lien, or (2) Procure and record a bond in accordance with Section 8424 of the Civil Code, which releases the Premises from the claim of the lien or stop-notice and from any action brought to foreclose the lien, or (3) Post such security as shall be required by Tenant’s title insurer to insure over such lien or stop-notice, or (4) Should Tenant fail to accomplish either of the three optional actions above within 30 days after Tenant receives notice of the filing of such a lien or stop -notice, it shall constitute an Event of Default hereunder. (b) Indemnification. Tenant shall at all times indemnify, defend with counsel approved in writing by County and/or Agency and hold County and Agency harmless from all claims, losses, demands, damages, cost, expenses, or liability costs for labor or materials in connection with construction, repair, alteration, or installation of structures, improvements, equipment, or facilities within the Premises, and from the cost of defending against such claims, including reasonable attorneys’ fees and costs, but excluding any liability resulting from the gross EXHIBIT 11 Page | 21 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by, the Lessor. (c) Protection Against Liens. Lessor shall have the right to post and maintain on the Premises any notices of non-responsibility provided for under applicable California law. During the course of construction, Tenant shall obtain customary mechanics’ lien waivers and releases. Upon completion of the construction of any Improvements, Tenant shall r ecord a notice of completion in accordance with applicable law. Promptly after the Improvements have been completed, Tenant shall (or shall cause Contractor to) record a notice of completion as defined and provided for in California Civil Code section 8000 et seq. (d) Lessor’s Rights. If Tenant (or any contractor or subcontractor, as applicable) does not cause to be recorded the bond described in California Civil Code section 8000 et seq. or otherwise protect the Premises and Improvements under any alternative or successor statute, and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, materialman’s, contractor’s or subcontractor’s lien claim, and if Tenant fails to stay the execution of judgment by lawful means or to pay the judgment, Lessor shall have the right, but not the duty to pay or otherwise discharge, stay or prevent the execution of any such judgment or lien or both. Upon any such payment by County and/or Agency, Tenant shall immediately upon receipt of written request therefor by County or Agency, reimburse County and/or Agency for all sums paid by County and/or Agency under this paragraph together with all County and/or Agency’s reasonable attorney’s fees and costs, plus interest at the Interest Rate from the date of payment until the date of reimbursement. 5.1.10. No Responsibility. Any approvals by County or Agency with respect to any Improvements shall not make County or Agency responsible for the Improvement with respect to which approval is given or the construction thereof. Tenant shall indemnify, defend and hold Lessor harmless from and against all liability and all claims of liability (including, without limitation, reasonable attorneys’ fees and costs) arising during the Term of this Lease for damage or injury to persons or property or for death of persons arising from or in connection with the Improvement or construction thereof, but excluding any liability resulting from the gross negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by, the Lessor. 5.2 Construction Contracts. 5.2.1. Construction Contract. Tenant shall enter into a written contract with a general contractor (“Contractor”) for construction of the Initial Improvements based upon the “Construction Contract Documents” approved pursuant to the Option Agreement. All construction of the Initial Improvements shall be performed by contractors and subcontractors duly licensed as such under the laws of the State of California. Tenant shall give Lessor a true copy of the contract or contracts with the Contractor. 5.2.2. Assignment to County and/or Agency. Tenant shall obtain the written agreement of the Contractor that, at County and/or Agency’s election and in the event that Tenant fails to perform its contract with the Contractor, such Contractor will recognize County and/or Agency as the assignee of the contract with the Contractor, and that County and/or Agency may, upon such election, assume such contract with credit for payments made prior thereto. EXHIBIT 11 Page | 22 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Notwithstanding the foregoing, the County’s and/or Agency’s rights under this Section 5.2.2 are hereby made subject and subordinate to the lien of each Leasehold Mortgage. 5.3 Tenant’s Assurance of Construction Completion. Prior to commencement of construction of the Initial Improvements, or any phase thereof, within the Premises by Tenant, Tenant shall furnish to Lessor evidence that assures Lessor that sufficient monies will be available to complete the proposed construction. The amount of money available shall be at least the total estimated construction cost. Such evidence may take one of the following forms: 5.3.1. Performance bond and labor and materials bond in a principal sum equal to the total estimated construction cost supplied by Contractor or subcontractors, provided said bonds are issued jointly to Tenant, County, Agency and any Leasehold Mortgagees as obligees. 5.3.2. Irrevocable letter of credit issued to Lessor from a financial institution to be in effect until County and Agency acknowledges satisfactory completion of construction; 5.3.3. Cash deposited with the County or Agency (may be in the form of cashier’s check or money order or may be electronically deposited); 5.3.4. A completion guaranty, in favor of County and Agency from an Affiliate of The Related Companies of California, LLC, in a form reasonably acceptable to Lessor, coupled with a repayment guaranty in favor of the senior construction lender for its loan; 5.3.4. Any combination of the above. All bonds and letters of credit must be issued by a company qualified to do business in the State of California and acceptable to Lessor. All bonds and letters of credit shall be in a form acceptable to Lessor, County’s Risk Manager and City’s Risk Manager in their reasonable discretion, and shall insure faithful and full observance and performance by Tenant of all terms, conditions, covenants, and agreements relating to the construction of improvements within the Premises. Tenant shall provide or cause its Contractor to provide payment and/or performance bonds in connection with the construction of the Initial Improvements, and shall name the County and City as an additional obligee on, with the right to enforce, any such bonds. 5.4 Ownership of Improvements. 5.4.1. For purposes of this Section 5.4, “Term” shall have the meaning stated in Section 2.2.3. 5.4.2. During Term. Fee title to all personal property and Improvements constructed or placed on the Premises by Tenant and paid for by Tenant are and shall be vested in Tenant during the Term of this Lease, until the expiration or earlier termination thereof. Any and all depreciation, amortization and tax credits for federal or state purposes relating to the Improvements located on the Premises and any and all additions thereto shall be deducted or credited exclusively by Tenant during the Term. The Parties agree for themselves and all persons claiming under them that the Improvements are real property. Commented [ST15]: We’ll want confirmation these conditions are satified in the landlord estoppel. EXHIBIT 11 Page | 23 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 5.4.3. Upon Expiration or Earlier Termination of Term. All Improvements on the Premises at the expiration or earlier termination of the Term of this Lease shall, without additional payment to Tenant, then become Lessor’s property free and clear of all claims to or against them by Tenant and free and clear of all Leasehold Mortgages and any other liens and claims arising from Tenant’s use and occupancy of the Premises, and with Taxes paid current as of the expiration or earlier termination date. Tenant shall upon the expiration or earlier termination of the Term deliver possession of the Premises and the Improvements to Lessor in good order, condition and repair consistent with the requirements of this Lease and in compliance with all applicable laws and regulations for the occupancy of the Project, taking into account reasonable wear and tear and the age of the Improvements. Notwithstanding anything to the contrary herein, at all times during the Term of this Lease, (i) the improvements shall be owned by Tenant, (ii) Tenant alone shall be entitled to all of the tax attributes of ownership, including, without limitation, the right to claim depreciation or cost recovery deductions and the right to claim the low-income housing tax credit described in Section 42 of the Internal Revenue Code of 1986, as amended, and (iii) Tenant shall have the right to amortize capital costs and to claim any other federal or state tax benefit attributable to the Project. 5.5 “AS-BUILT” Plans. Within sixty (60) days following completion of any substantial improvement within the Premises, Tenant shall furnish the Lessor a complete set of reproducibles and two sets of prints of “As-Built” plans and a magnetic tape, disk or other storage device containing the “As-Built” plans in a form usable by Lessor, to Lessor’s satisfaction, on Lessor’s computer aided mapping and design (“CAD”) equipment. CAD files are also to be converted to Acrobat Reader (pdf format), which shall be included on the disk or CD ROM. In addition, Tenant shall furnish Lessor copy of the final construction costs for the construction of such improvements. 5.6 Capital Improvement Fund. 5.6.1. As of the conversion of the construction financing for the Project to the term phase financing, Tenant shall establish and maintain a reserve fund (the "Capital Improvement Fund") during the Term of this Lease (as “Term” is defined in Section 2.2) in accordance with the provisions of this Section 5.6 designated to pay for Permitted Capital Expenditures (as defined below) for the Improvements during the Term of this Lease. 5.6.2. Tenant and Lessor agree and acknowledge that the purpose of the Capital Improvement Fund shall be to provide sufficient funds to pay for the costs of major replacements, renovations or significant upgrades of or to the Improvements, including without limitation building facade or structure and major building systems (such as H VAC, mechanical, electrical, plumbing, vertical transportation, security, communications, structural or roof) that significantly affect the capacity, efficiency, useful life or economy of operation of the Improvements or their major systems, after the completion of the Initial Improvements (“Permitted Capital Expenditure(s)”). 5.6.3. The Capital Improvement Fund shall not be used to fund any portion of the construction cost of the Initial Improvements. In addition, Permitted Capital Expenditures shall not include the cost of periodic, recurring or ordinary maintenance expenditures or maintenance, repairs or replacements that keep the Improvements in an ordinarily efficient operating condition, but that do not significantly add to their value or appreciably prolong their useful life. Permitted Capital Expenditures must constitute capital replacements, improvements or equipment under generally Commented [ST16]: Please include as was done in the Stanton Inn ground lease. Thanks. Commented [ST17]: As in Stanton Inn, the reserve deposits will commence concurrent with the conversion to the perm phase. Please sync up with that timing if possible. EXHIBIT 11 Page | 24 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 accepted accounting principles consistently applied or constitute qualifying aesthetic improvements. Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any broken or damaged Improvements, all of which costs shall be separately funded by Tenant. 5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts from the Capital Improvement Fund shall be at Tenant’s reasonable discretion and subject to Lessor's written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor applicable invoices, evidence of payment and other back-up materials concerning the use of amounts from the Capital Improvement Fund. 5.6.5. The Capital Improvement Fund shall be held in an account established with a Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section 5.6.8, below. 5.6.6. Tenant shall have the right to partly or fully satisfy the Capital Improvement Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves) required by Tenant's Leasehold Mortgagees or the Limited Partner, as long as such capital improvement reserves or replacement reserves are in all material respects administered and utilized in accordance, and otherwise comply, with the terms, provisions and requirements of this Section 5.6. 5.6.7. In the event of default by Tenant and the early termination of this Lease, the Lessor shall have full access to the Capital Improvement Fund, provided the Tenant’s Leasehold Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6; provided, however, that Lessor’s rights under this Section 5.6.7 are hereby made subject and subordinate to the lien of each Leasehold Mortgage. 5.6.8. Commencing on the fifteenth (15th) day of the month during which the fifth (5th) anniversary of the Commencement Date occurs, and continuing on or before the fifteenth (15th) day of each month thereafter until five (5) years prior to the expiration of the Term, Tenant shall make a monthly depositan annual contribution to the Capital Improvement Fund in an amount equal to one three-hundred dollars ($300) per unit per year for 66 of the units and five hundred dollars ($500) per unit per year for the 20 MHSA units, with a ten-percent (110%) of total rent collected by Tenant from sub-tenants for the previous month escalator applied every five (5) years commencing on the date set forth in this Section 5.6.8. All interest and earnings on the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant pursuant to this Section 5.6. 5.6.9. Disbursements shall be made from the Capital Improvement Fund only for costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's prior approval of any Capital Improvement Fund disbursements, Tenant shall submit to the Lessor on an annual calendar year basis a capital expenditure plan for the upcoming year which details the amount and purpose of anticipated Capital Improvement Fund expenditures (“Capital Improvement Plan”). Lessor shall approve or disapprove such Capital Improvement Plan within thirty (30) days of receipt, which approval shall not be unreasonably withheld, conditioned or delayed. Any expenditure set forth in the approved Capital Improvement Plan shall be considered pre-approved by Lessor (but only up to the amount of such expenditure set forth in the Capital Improvement Plan) for the duration of the upcoming year. Tenant shall have the right during the course of each year to submit to the Lessor for the Lessor's approval revisions to the then current Capital Improvement Plan, or individual expenditures not noted on the previously submitted Capital Improvement Plan. Commented [ST18]: Capitalized reserve requirement should match what is actually anticipated to be deposited monthly. I’m anticipating $347/unit per year with a 10% escalator every 5 years. EXHIBIT 11 Page | 25 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 In the event of an unexpected emergency that necessitates a Permitted Capital Expenditure not contemplated by the Capital Improvement Plan, the Tenant may complete such work using the funds from the Capital Improvement Fund with contemporaneous or prior (if possible) written notice to the Lessor and provide applicable documentation to the Lessor thereafter for approval. If the Lessor disapproves the emergency expenditure which was not previously approved by Lessor, Tenant shall refund the amount taken from the Capital Improvement Fund within thirty (30) days of written notice from the Lessor of its decision. 5.6.10. Notwithstanding anything above to the contrary, if Tenant incurs expenditures that constitute Permitted Capital Expenditures but which are not funded out of the Capital Improvement Fund because sufficient funds are not then available in such fund, then Tenant may credit the Permitted Capital Expenditures so funded by Tenant out of its own funds against future Capital Improvement Fund contribution obligations of Tenant; provided, that such credit must be applied, if at all, within four (4) years after such Permitted Capital Expenditure is incurred by the Tenant. ARTICLE VI REPAIRS, MAINTENANCE, ADDITIONS AND RECONSTRUCTION 6.1 Maintenance by Tenant. Throughout the Term of this Lease, Tenant shall, at Tenant’s sole cost and expense, keep and maintain the Premises and any and all Improvements now or hereafter constructed and installed on the Premises in good order, condition and repair (i.e., so that the Premises does not deteriorate more quickly than its age and reasonable wear and tear would otherwise dictate) and in a safe and sanitary condition and in compliance with all applicable Laws in all material respects. Tenant shall immediately notify the Lessor of any damage relating to the Premises. 6.2 Interior Improvements, Additions and Reconstruction of Improvements. Following the completion of construction of the Initial Improvements, Tenant shall have the right from time to time to make any interior improvements to the Improvements that are consistent with the Lessor’s approved use of the Premises as reflected in this Lease, without Lessor’s prior written consent, but with prior written notice to the Lessor (except in the event of an emergency, in which case no prior written notice shall be required but Tenant shall notify Lessor of any emergency work done as soon as practicable). Tenant may restore and reconstruct the Improvements into the condition such Improvements were in immediately prior to such damage or destruction, and in that process make any modifications otherwise required by changes in Laws, following any damage or destruction thereto (whether or not required to do so under Article VII); and/or to make changes, revisions or improvements to the Improvements for uses consistent with the Lessor approved use of the Premises as reflected in this Lease. Tenant shall perform all work authorized by this Section at its sole cost and expense, including, without limitation, with insurance proceeds approved for such use in accordance with Article VII, if any, and in compliance with all applicable Laws in all material respects. 6.3 All Other Construction, Demolition, Alterations, Improvements and Reconstruction. Following the completion of construction of the Initial Improvements, and except as specified in Sections 6.1 and 6.2, any construction, alterations, additions, demolition, improvements of any kind shall require the prior written consent of the Lessor, which consent shall not be unreasonably conditioned, delayed or withheld and if not contemplated pursuant to this Lease may require their respective governing body’s approval (e.g. Board of Supervisors’ and City Council Commented [ST19]: For this to be financeable, lender needs to know that it can at least rebuild the same approved project without the requirement of any consent from Lessor. This language conforms to the ground lease for Stanton Inn. Commented [ST20]: Consent to make necessary requires (even if major) should not be required. Lender needs to know that it can make repairs when necessary. EXHIBIT 11 Page | 26 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 approval). Tenant shall perform all work authorized by this Section at its sole cost and expense, including, without limitation, with insurance proceeds approved for such use in accordance with Article VII, if any, and in compliance with all applicable Laws in all material respects. 6.4 Requirements of Governmental Agencies. At all times during the Term of this Lease, Tenant, at Tenant’s sole cost and expense, shall: (i) make all alterations, improvements, demolitions, additions or repairs to the Premises and/or the Improvements required to be made by any law, ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county, local or other governmental agency or entity; (ii) observe and comply in all material respects with all Laws now or hereafter made or issued respecting the Premises and/or the Improvements (subject to Tenant’s right to contest such Laws in accordance with Section 4.4); (iv) indemnify, defend and hold County, Agency, the Premises and the Improvements free and harmless from any and all liability, loss, damages, fines, penalties, claims and actions resulting from Tenant’s failure to comply with and perform the requirements of this Article VI. 6.5 Lessor Obligations. Tenant specifically acknowledges and agrees that County, Agency and Lessor Parties do not and shall not have any obligations with respect to the maintenance, alteration, improvement, demolition, replacement, addition or repair of any Improvements. 6.6 Lessor Reservations. Without limiting Lessor’s rights with respect to the Premises, Lessor reserves for themselves, their successors and assigns those rights necessary to assure proper maintenance and operation of the Premises and to permit any steps to be taken which the Lessor deems necessary or desirable to maintain, repair, improve, modify or reconstruct th e Premises. The rights reserved to Lessor in this section or any other section of this Lease shall be exercised by the Lessor at their sole discretion, unless otherwise provided herein. ARTICLE VII DAMAGE AND RESTORATION 7.1 Damage and Restoration. In the event the whole or any part of the Improvements shall be damaged or destroyed by fire or other casualty, damage or action of the elements which is fully covered by insurance required to be carried by Tenant pursuant to this Lease or in fact caused by Tenant, at any time during the Term, Tenant shall with all due diligence, at Tenant’s sole cost and expense, repair, restore and rebuild the Improvements on substantially the same plan and design as existed immediately prior to such damage or destruction and to substantially the same condition that existed immediately prior to such damage, with any changes made by Tenant to comply with then applicable Laws and with any upgrades or improvements that Tenant may determine in its reasonable discretion. If Tenant desires to change the use of the Premises following such casualty, then Tenant may make appropriate changes to the Premises to accommodate such changed use after approval of such change of use by the Lessor pursuant to Article IV above. This Article shall not apply to cosmetic damage or alterations. In the event that Tenant shall determine, subject to the rights of the Leasehold Mortgagees and Limited Partner, if applicable, by notice to the Lessor given by the later of ninety (90) days after the date of the damage or destruction or thirty (30) days after receipt by Tenant of any such insurance proceeds, that there are not adequate proceeds to restore the Improvements and/or the Premises to substantially the same condition in which they existed prior to EXHIBIT 11 Page | 27 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 the occurrence of such damage or destruction, then Tenant may, with the prior consent of all Leasehold Mortgagees, terminate this Lease as of a date that is not less than thirty (30) days after the date of such notice. If Leasehold Mortgagees refuse to consent to the termination of the Lease by Tenant, the Lease and all terms and conditions shall remain in full force and effect and may be enforced without reservation by the Lessor. Subject to the rights of Leasehold Mortgagees in Section 17.9, if Tenant terminates this Lease pursuant to this Section 7.1, Tenant shall surrender possession of the Premises to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the Lessor) all of its right, title and interest in and to the proceeds from Tenant’s insurance upon the Premises, less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of the loss or collection of the proceeds, (ii) any reasonabl e costs incurred by Tenant in connection with the Premises after the damage or destruction, which costs are eligible for reimbursement from such insurance proceeds, (iii) any amounts applied by Leasehold Mortgagees in accordance with the terms of their respective Leasehold Mortgages, and (iv) the proceeds of any rental loss or business interruption insurance applicable prior to the date of surrender of the Premises to the Lessor. 7.2 Restoration. In the event of any restoration or reconstruction pursuant to this Section, all such work performed by Tenant shall be constructed in a good and workmanlike manner according to and in conformance with the Laws, rules and regulations of all governmental bodies and agencies and the requirements of this Lease applicable to the construction of the Initial Improvements. 7.3 No Rental Abatement. Tenant shall not be entitled to any abatement, allowance, reduction, or suspension of Rent because part or all of the Improvements become untenantable as a result of the partial or total destruction of the Improvements, and Tenant’s obligation to keep and perform all covenants and agreements on its part to be kept and performed hereunder, shall not be decreased or affected in any way by any destruction of or damage to the Improvements; except as otherwise provided herein. 7.4 Application of Insurance Proceeds. If following the occurrence of damage or destruction to the Premises or Improvements, Tenant is obligated to or determines that there are adequate proceeds to restore the Premises and Improvements pursuant to this Article VII, then all proceeds from the insurance required to be maintained by Tenant on the Premises and the Improvements shall be applied, subject to the rights of the Leasehold Mortgagees and Limited Partner, if applicable, to fully restore the same, and, subject to the rights of the Leasehold Mortgagees and Limited Partner, if applicable, any excess proceeds shall be paid to Tenant and any deficit in necessary funds plus the amount of any deductible shall be paid by Tenant. If Tenant after commencing or causing the commencement of the restoration of Premises and Improvements shall determine that the insurance proceeds are insufficient to pay all costs to fully restore the Improvements, Tenant shall pay the deficiency and shall nevertheless proceed to complete the restoration of Premises and the Improvements and pay the cost thereof. Upon lien free completion of the restoration, subject to the rights of the Leasehold Mortgagees, if applicable, any balance of the insurance proceeds remaining over and above the cost of such restoration shall be paid to Tenant. 7.5 Exclusive Remedies. Notwithstanding any destruction or damage to the Premises and/or the Improvements, Tenant shall not be released from any of its obligations under this Lease, except to the extent and upon the conditions expressly stated in this Article VII. County, Agency and Tenant hereby expressly waive the provisions of California Civil Code Sections 1932(2) and EXHIBIT 11 Page | 28 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 1933(4) with respect to any damage or destruction of the Premises and/or the Improvements and agree that their rights shall be exclusively governed by the provisions of this Article VII. 7.6 Damage Near End of Term. If, during the last three (3) years of the Term, as applicable, the Improvements shall be damaged or destroyed for which the repair and/or replacement cost is fifty percent (50%) or more of then replacement cost of the Improvements, then Tenant shall have the option, to be exercised within ninety (90) days after such damage or destruction: 7.6.1. to notify the Lessor of its election to repair or restore the Improvements as provided in this Article VII; or 7.6.2. subject to the rights of Leasehold Mortgagees and such provisions of this Lease that survive termination, to terminate this Lease by notice to the Lessor, which termination shall be deemed to be effective as of the date of the damage or destruction. If Tenant terminates this Lease pursuant to this Section 7.6.2, Tenant shall surrender possession of the Leased Premises to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance upon the Premises less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with the Premises after the damage or destruction, which costs are eligible for reimbursement from such insurance proceeds, and (iii) the proceeds of any rental loss or business interruption insurance applicable prior to the date of surrender of the Premises to the Lessor. ARTICLE VIII INSURANCE AND INDEMNITY 8.1 Tenant's Required Insurance. 8.1.1. Tenant agrees to purchase all required insurance at Tenant's expense and to deposit with Chief Real Estate Officer certificates of insurance, including all endorsements required herein, necessary to satisfy Chief Real Estate Officer that the insurance provisions of this Lease have been complied with and to keep such insurance coverage and the certificates and endorsements therefore on deposit with Chief Real Estate Officer during the entire term of this Lease. 8.1.2. Tenant agrees that it shall not operate on the Premises at any time the required insurance is not in full force and effect as evidenced by a certificate of insurance and necessary endorsements or, in the interim, an official binder being in the possession of Chief Real Estate Officer; rent however shall not be suspended. In no cases shall assurances by Tenant, its employees, agents, including any insurance agent, be construed as adequate evidence of insurance. Chief Real Estate Officer will only accept valid certificates of insurance and endorsements, or in the interim, an insurance binder as adequate evidence of insurance. Tenant also agrees that upon cancellation, termination, or expiration of Tenant's insurance, Chief Real Estate Officer may take whatever steps are necessary to interrupt any operation from or on the Premises until such time as the Chief Real Estate Officer reinstates the Lease. 8.1.3. If Tenant fails to provide Chief Real Estate Officer with a valid certificate of insurance and endorsements, or binder at any time during the term of the Lease, County and Tenant agree that this shall constitute a material breach of the Lease. Whether or not a notice of default has or has not been sent to Tenant, said material breach shall permit Chief Real Estate Officer to take EXHIBIT 11 Page | 29 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 whatever steps are necessary to interrupt any operation from or on the Premises, and to prevent any persons, including, but not limited to, members of the general public, and Tenant's employees and agents, from entering the Premises until such time as the Chief Real Estate Officer is provided with adequate evidence of insurance required herein. Tenant further agrees to hold County harmless for any damages resulting from such interruption of business and possession, including, but not limited to, damages resulting from any loss of income or business resulting from Chief Real Estate Officer's action. 8.1.4. All contractors and subcontractors performing work on behalf of Tenant pursuant to this Lease shall obtain insurance subject to the same terms and conditions as set forth herein for Tenant and limits of insurance as described in Section 8.1.6 (e), Section 8.1.6 (f) and Section 8.1.6 (g). Tenant shall not allow contractors or subcontractors to work if contractors have less than the level of coverage required by County under this Lease. It is the obligation of the Tenant to provide written notice of the insurance requirements to every contractor and to receive proof of insurance prior to allowing any contractor to begin work within the Premises. Such proof of insurance must be maintained by Tenant through the entirety of this Lease and be available for inspection by Chief Real Estate Officer at any reasonable time. 8.1.5. All self-insured retentions (SIRs) shall be clearly stated on the Certificate of Insurance. Any self-insured retention (SIR) in an amount in excess of Fifty Thousand Dollars ($50,000) shall specifically be approved by the County’s Risk Manager, or designee, upon review of Tenant’s current audited financial report. If Tenant’s SIR is approved, Tenant, in addition to, and without limitation of, any other indemnity provision(s) in this Lease, agrees to all of the following: 1) In addition to the duty to indemnify and hold the County harmless against any and all liability, claim, demand or suit resulting from Tenant’s, its agents, employee’s or subcontractor’s performance of this Lease, Tenant shall defend the County at its sole cost and expense with counsel approved by Board of Supervisors against same; and 2) Tenant’s duty to defend, as stated above, shall be absolute and irrespective of any duty to indemnify or hold harmless; and 3) The provisions of California Civil Code Section 2860 shall apply to any and all actions to which the duty to defend stated above applies, and the Tenant’s SIR provision shall be interpreted as though the Tenant was an insurer and the County was the insured. If the Tenant fails to maintain insurance acceptable to the County or City for the full term of this Lease, the County or City may terminate this Lease. 8.1.6. All policies of insurance required under this Article VIII must be issued by an insurer with a minimum rating of A- (Secure A.M. Best's Rating) and VIII (Financial Size Category as determined by the most current edition of the Best's Key Rating Guide/Property- Casualty/United States or ambest.com). It is preferred, but not mandatory, that the insurer must be licensed to do business in the state of California. (a) If the insurance carrier does not have an A.M. Best Rating of A-/VIII, the Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the carrier's performance and financial ratings. EXHIBIT 11 Page | 30 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 (b) If the insurance carrier is not an admitted carrier in the state of California and does not have an A.M. Best rating of A-/VIII, the Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the company's performance and financial ratings. (c.1) The policy or policies of insurance maintained by the TENANT DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Builder's Risk (during the Construction Period) naming retained General Contractor Project value and no coinsurance provision. Commercial General Liability $5,000,000 per occurrence $5,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence (c.2) The policy or policies of insurance maintained by the TENANT’S GENERAL CONTRACTOR DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Commercial General Liability $5,000,000 per occurrence $10,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $2,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence Contractor’s Pollution Liability including NODS $5,000,000 per claims made or per occurrence EXHIBIT 11 Page | 31 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 (d) The policy or policies of insurance maintained by the TENANT’S SUBCONTRACTORS DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employer’s Liability Insurance (not required for self-employed subcontractors) $1,000,000 per occurrence Contractor’s Pollution Liability including NODS (Required only of those subcontractors involved in pollution remediation) $1,000,000 per claims made or per occurrence (e) The policy or policies of insurance maintained by the ARCHITECT- ENGINEER shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Professional Liability (architect, structural, electrical engineer, mechanical/plumbing engineering, environmental engineer, civil engineer, landscape architect, and geotechnical engineer) $2,000,000 per occurrence $2,000,000 aggregate Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence (f) The policy or policies of insurance maintained by the TENANT AFTER CONSTRUCTION shall provide the minimum limits and coverage as set forth below: EXHIBIT 11 Page | 32 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Coverages Minimum Limits Commercial General Liability Including Sexual Misconduct (defined as abuse, molestation and assault and battery) $5,000,000 per occurrence $5,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence Commercial Property Insurance on an "All Risk" or "Special Causes of Loss" basis covering all buildings, contents and any tenant improvements including Business Interruption/Loss of Rents with a 12 month limit 100% of the Replacement Cost Value and no coinsurance provision Tenant shall provide a builder’s risk policy, naming the Contractor, providing coverage for the full project value and no coinsurance provision. The policy shall provide coverage for all perils excluding earthquake, and flood. Tenant is responsible for any deductible amount. The County of Orange and the Housing Authority of the City of Santa Ana shall be named as Loss Payees as its financial interests may appear. This shall be evidenced by a Loss Payee endorsement which shall accompany the Certificate of Insurance. The Builder's Risk policy shall not be required to cover any tools, equipment, or supplies, unless such tools, equipment, or supplies are part of the Work being constructed. The Contractor shall be responsible for securing and maintaining appropriate insurance on any tools, equipment, or supplies that are not part of the work being constructed. The County and the Contractor waive all rights against each other and the subcontractors, sub - subcontractors, officers, and employees of each other, and the Contractor waives all rights against County’s separate contractors, if any, and their subcontractors, sub -subcontractors, officers and employees for damages caused by fire or other perils to the extent paid by the Builder’s Risk insurance, except such rights as they may have to the proceeds of such insurance. The Contractor shall require of its subcontractors and sub-subcontractors by appropriate agreements, similar waivers, each in favor of all other parties enumerated in the preceding sentence. (g) The policy or policies of insurance maintained by the TENANT’S CONTRACTOR AFTER CONSTRUCTION shall provide the minimum limits and coverage as set forth below when performing maintenance and minor work after the building is in operation: Coverages Minimum Limits EXHIBIT 11 Page | 33 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence 8.1.7. Required Coverage Forms. (a) The Commercial General Liability coverage shall be written on Insurance Services Office (ISO) form CG 00 01, or a substitute form providing liability coverage at least as broad. (b) The Business Auto Liability coverage shall be written on ISO form CA 00 01, CA 00 05, CA 00 12, CA 00 20, or a substitute form providing liability coverage as broad. 8.1.8. Required Endorsements. The Commercial General Liability policy shall contain the following endorsements, which shall accompany the Certificate of insurance: 1) An Additional Insured endorsement using ISO form CG 20 26 04 13 or a form at least as broad naming the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, employees, agents as Additional Insureds. Blanket coverage may also be provided which will state, as required by Lease. 2) A primary non-contributing endorsement using ISO form CG 20 01 04 13, or a form at least as broad, evidencing that the TENANT’s insurance is primary and any insurance or self-insurance maintained by the County of Orange shall be excess and non-contributing. 3) A Products and Completed Operations endorsement using ISO Form CG2037 (ed.04/13) or a form at least as broad, or an acceptable alternative is the ISO from CG2010 (ed. 11/85). (Pertains to contractors and subcontractors performing major construction). Contractors shall maintain Products and Completed Operations coverage for ten (10) years following completion of construction. The Contactors Pollution Liability and Pollution Liability policies shall contain the following endorsements, which shall accompany the Certificate of Insurance: 1) An Additional Insured endorsement naming the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, employees, and agents as Additional Insureds. 2) A primary non-contributing endorsement evidencing that the Contractor's insurance is primary and any insurance or self-insurance maintained by County shall be excess and non-contributing. EXHIBIT 11 Page | 34 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 (a) The Workers' Compensation policy shall contain a waiver of subrogation endorsement waiving all rights of subrogation against the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, agents and employees. (b) All insurance policies required by this Lease shall waive all rights of subrogation against the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, agents and employees when acting within the scope of their appointment or employment. (c) The Commercial Property Building policy shall include the County of Orange and City of Santa Ana as both Named Insureds. A Certificate of Insurance shall be submitted as evidence of this requirement. The Builders’ Risk policy shall be endorsed to include the County of Orange and City of Santa Ana as Loss Payees. A Loss Payee endorsement shall be submitted with the Certificate of Insurance as evidence of this requirement. (d) Tenant shall notify County and City in writing within thirty (30) days of any policy cancellation and ten (10) days for non -payment of premium and provide a copy of the cancellation notice to the County and City. Failure to provide written notice of cancellation may constitute a material breach of the Lease, after which the County or City may suspend or terminate this Lease. (e) The Commercial General Liability policy shall contain a severability of interests clause, also known as a "separation of insureds" clause (standard in the ISO CG 001 policy). (f) If Contractor’s Pollution Liability and Pollution Liability are claims-made policies, Contractor shall agree to maintain coverage for five (5) years following completion of the construction. If Contractor’s Professional Liability is a claims-made policy, Contractor shall agree to maintain coverage for ten (10) years following the completion of construction. Products and Completed Operations coverage shall be maintained for ten (10) years following the completion of construction. (g) Insurance certificates should be forwarded to County and City addresses provided in Section 18.19 below. Tenant has ten (10) business days to provide adequate evidence of insurance or it shall constitute an Event of Default. (h) County or City expressly retains the right to require Tenant to increase or decrease insurance of any of the above insurance types throughout the term of this Lease which shall be mutually agreed upon by County, City and Tenant. (i) Chief Real Estate Officer shall notify Tenant in writing of changes in the insurance requirements consistent with subsection (h) above. If Tenant does not deposit copies of certificates of insurance and endorsements with Chief Real Estate Officer incorporating such changes within thirty (30) days of receipt of such notice, it shall constitute an Event of Default. (j) The procuring of such required policy or policies of insurance shall not be construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions and requirements of this Lease, nor in any way to reduce the policy coverage and limits available from the insurer. EXHIBIT 11 Page | 35 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 8.2 Indemnification. Tenant agrees to assume all risks, financial or otherwise, associated with the Premises. Tenant hereby releases and waives all claims and recourse against Lessor, including the right of contribution for loss or damage of persons or property, arising from, growing out of or in any way connected with or related to this Lease, including any damage to or interruption of use of the Premises including, but not limited to, loss of business, damage to, destruction of, or relocation costs of Tenant’s Improvements or impaired utility of the Premises caused by erosion, flood, or flood overflow, or caused by any action undertaken in the operation, maintenance, repair, reconstruction, replacement, enlargement or improvement of the Premises except claims arising from the gross negligence or willful misconduct of County or Agency, their officers, agents, employees and contractors. Tenant hereby agrees to indemnify, defend (with counsel approved in writing by Lessor, in Lessor’s reasonable discretion), and hold harmless, County and the Agency, their respective elected and appointed officials, officers, agents, employees and contractors against any and all claims, losses, demands, damages, cost, expenses or liability for injury to any persons or property, arising out of the operation or maintenance of the Premises, and/or Tenant’s exercise of the rights under this Lease, except for liability arising out of the gross negligence or willful misconduct of County or Agency, their elected and appointed officials, officers, agents, employees or contractors including the cost of defense of any lawsuit arising therefrom, and except for claims arising after the later to occur of the expiration or earlier termination of the Term, or the date Tenant vacates the Premises. If County and/or Agency is named as co-defendant in a lawsuit in connection with this Lease, Tenant shall notify Lessor of such fact and shall represent the County and/or Agency in such legal action unless County or Agency undertakes to represent themselves as co-defendant in such legal action, in which event, Tenant shall pay to Lessor their litigation costs, expenses, and reasonable attorneys' fees. If judgment is entered against County and/or Agency and Tenant by a court of competent jurisdiction because of the concurrent active negligence of County and/or Agency and Tenant, County, Agency and Tenant agree that liability will be apportioned as determined by the court. Neither Party shall request a jury apportionment. A judgment or other judicial determination regarding Lessor’s negligence shall not be a condition precedent to Tenant’s obligations stated in this Section. Tenant acknowledges that it is familiar with the language and provisions of California Civil Code Section 1542 which provides as follows: A general release does not extend to claims which the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that if known by him or her, would have materially affected his or her settlement with the debtor or released party. Tenant, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its provisions to the extent described in this paragraph. The foregoing indemnity and defense obligations of this Lease shall survive its expiration or termination. This Section 8.2 notwithstanding, indemnification with respect to Hazardous Materials shall be governed by Section 4.4.4. 8.3 Damage to Tenant’s Premises. Lessor shall not be liable for injury or damage which may be sustained by the person, goods, wares, merchandise, or other property of Tenant, of Tenant’s employees, invitees, customers, or of any other person in or about the Premises or the Improvements caused by or resulting from any peril which may affect the Premises or Improvements, including fire, steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises or the Improvements, whether such damage or injury results from conditions arising upon the Premises EXHIBIT 11 Page | 36 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 or from other sources; provided, however, Lessor shall be liable for injury or damage under this Section 8.3 resulting from County or Agency, their elected and appointed officials, officers, agents, employees or contractor’s gross negligence or willful misconduct. ARTICLE IX CONDEMNATION 9.1 Definitions. 9.1.1. “Condemnation” means (i) the taking or damaging, including severance damage, by eminent domain or by inverse condemnation or for any public or quasi-public use under any statute, whether by legal proceedings or otherwise, by a Condemnor (hereinafter defined), and (ii) a voluntary sale or transfer to a Condemnor, either under threat of condemnation or while condemnation legal proceedings are pending. 9.1.2. “Date of Taking” means the later of (i) the date actual physical possession is taken by the Condemnor; or (ii) the date on which the right to compensation and damages accrues under the law applicable to the Premises. 9.1.3. “Award” means all compensation, sums or anything of value awarded, paid or received for a Total Taking, a Substantial Taking or a Partial Taking (hereinafter defined), whether pursuant to judgment or by agreement or otherwise. 9.1.4. “Condemnor” means any public or quasi-public authority or private corporation or individual having the power of condemnation. 9.1.5. “Total Taking” means the taking by Condemnation of all of the Premises and all of the Improvements. 9.1.6. “Substantial Taking” means the taking by Condemnation of so much of the Premises or Improvements or both that one or more of the following conditions results, as reasonably determined by Tenant: (i) The remainder of the Premises would not be economically and feasibly usable by Tenant; and/or (ii) A reasonable amount of reconstruction would not make the Premises and Improvements a practical improvement and reasonably suited for the uses and purposes for which the Premises were being used prior to the Condemnation; and/or (iii) The conduct of Tenant’s business on the Premises would be materially and substantially prevented or impaired. 9.1.7. “Partial Taking” means any taking of the Premises or Improvements that is neither a Total Taking nor a Substantial Taking. 9.1.8. “Notice of Intended Condemnation” means any notice or notification on which a reasonably prudent person would rely and which he would interpret as expressing an existing intention of Condemnation as distinguished from a mere preliminary inquiry or proposal. It includes but is not limited to service of a Condemnation summons and complaint on a Party hereto. The notice is considered to have been received when a Party receives from the Condemnor a notice of intent to condemn, in writing, containing a description or map reasonably defining the extent of the Condemnation. EXHIBIT 11 Page | 37 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 9.2 Notice and Representation. 9.2.1. Notification. The Party receiving a notice of one or more of the kinds specified below shall promptly notify the other Party (and the Limited Partner, if during the Compliance Period) of the receipt, contents and dates of such notice: (i) a Notice of Intended Condemnation; (ii) service of any legal process relating to the Condemnation of the Premises or Improvements; (iii) any notice in connection with any proceedings or negotiations with respect to such a Condemnation; (iv) any notice of an intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of Condemnation. 9.2.2. Separate Representation. County, Agency and Tenant each have the right to represent its respective interest in each Condemnation proceeding or negotiation and to make full proof of his claims. No agreement, settlement, sale or transfer to or with the Condemnor shall be made without the consent of County, Agency and Tenant. County, Agency and Tenant shall each execute and deliver to the other any instruments that may be required to effectuate or facilitate the provisions of this Lease relating to Condemnation. 9.3 Total or Substantial Taking. 9.3.1. Total Taking. On a Total Taking, this Lease shall terminate on the Date of Taking. 9.3.2. Substantial Taking. If a taking is a Substantial Taking, Tenant may, with the consent of each Leasehold Mortgagee and the Limited Partner, to the extent required , by notice to Lessor given within ninety (90) days after Tenant receives a Notice of Intended Condemnation, elect to treat the taking as a Total Taking. If Tenant does not so notify Lessor, the taking shall be deemed a Partial Taking. 9.3.3. Early Delivery of Possession. Tenant may continue to occupy the Premises and Improvements until the Condemnor takes physical possession. At any time following Notice of Intended Condemnation, Tenant may in its sole discretion, with the consent of each Leasehold Mortgagee and the Limited Partner, to the extent required, elect to relinquish possession of the Premises to Lessor before the actual Taking. The election shall be made by notice declaring the election and agreeing to pay all Rent required under this Lease to the Date of Taking. Tenant’s right to apportionment of or compensation from the Award shall then accrue as of the date that the Tenant relinquishes possession. 9.3.4. Apportionment of Award. On a Total Taking all sums, including damages and interest, awarded for the fee or leasehold or both shall be distributed and disbursed as finally determined by the court with jurisdiction over the Condemnation proceedings in accordance with applicable law. Notwithstanding anything herein to the contrary, Tenant shall be entitled to receive compensation for the value of its leasehold estate under this Lease including its fee interest in all Improvements, personal property and trade fixtures located on the Premises, its relocation and removal expenses, its loss of business goodwill and any other items to which Tenant may be entitled under applicable law. EXHIBIT 11 Page | 38 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 9.4 Partial Taking. 9.4.1. Effect on Rent. On a Partial Taking this Lease shall remain in full force and effect covering the remainder of the Premises and Improvements, and Tenant shall not be entitled to any refund of the Base Rent. 9.4.2. Restoration of Improvements. Promptly after a Partial Taking, Tenant shall repair, alter, modify or reconstruct the Improvements (“Restoring”) so as to make them reasonably suitable for Tenant’s continued occupancy for the uses and purposes for which the Premises are leased. 9.4.3. Apportionment of Award. On a Partial Taking, Tenant shall be entitled to receive the entire award for such Partial Taking, except that (i) the proceeds of such Partial Taking shall first be applied towards the cost of Restoring the Premises pursuant to Section 9.4.2 and (ii) Lessor shall be entitled to receive any portion of such award allocated to Lessor’s Fee InerestIn terest in the Property (exclusive of the Improvements, as encumbered by this Lease). 9.5 Waiver of Termination Rights. Both Parties waive their rights under Section 1265.130 of the California Code of Civil Procedure (and any successor provision) and agree that the right to terminate this Lease in the event of Condemnation shall be governed by the provisions of this Article IX. ARTICLE X ASSIGNMENT, SUBLETTING AND ENCUMBERING 10.1 General. Except as provided in Sections 10.3 and 17.6.4, below, Tenant shall not mortgage, pledge, hypothecate, encumber, transfer, sublease Tenant’s interest in this Lease or assign (including an assignment by operation of law) Tenant’s interest in the Premises or Improvements or any part or portion thereof (hereinafter referred to collectively as “Transfer”) without the written consent of the Lessor, which consent may not be unreasonably withheld, conditioned or delayed. Lessor’s consent may be subject to approval by their respective governing bodies (e.g. Board of Supervisors and City Council). Tenant’s failure to obtain the Lessor’s written consent to a Transfer shall render such Transfer void. Occupancy of the Premises by a prospective transferee, sublessee, or assignee prior to Lessor’s written consent of a Transfer shall constitute an Event of Default, except as set forth in Section 10.3, below. 10.1.1. Except as provided in Section 10.3, below, if Tenant hereunder is a corporation, limited liability company, an unincorporated association or partnership, the sale or transfer of any stock or interest in said corporation, company, association and partnership in the aggregate exceeding 25% shall require the written consent of the Lessor, as set forth in Section 10.3, above, which consent may not be unreasonably withheld, conditioned or delayed. 10.1.2. Should Lessor consent to any Transfer, such consent and approval shall not constitute a waiver of any of the terms, conditions, covenants, restrictions or reservations of this Lease nor be construed as Lessor’s consent to any further Transfer. Such terms conditions, covenants, restrictions and reservations shall apply to each and every Transfer hereunder and shall be severally binding upon each and every party thereto. Any document to regarding the Transfer of the Commented [ST21]: My changes match Stanton Inn ground lease. Proceeds must flow to the Tenant for this to be financeable, but Lessor is entitles to the amount specific to the fee interest as encumbered by this lease. Most of the value is with the Tenant which is how we are able to get an appraisal to support a loan of this size. EXHIBIT 11 Page | 39 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Premises or any part thereof shall not be inconsistent with the provisions of this Lease and in the event of any such inconsistency, the provisions of this Lease shall control. 10.1.3. This Section shall not be interpreted to prohibit, disallow or require Lessor’s consent to space leases (subleases of less than Tenant’s entire Lease interest), including leases of individual residential units in the Improvements, which are consistent with the approved uses under this Lease. 10.2 Leasehold Mortgage. Under no circumstances may Tenant mortgage, encumber or hypothecate Lessor’s Fee Interest, other than as required by TCAC pursuant to its lease rider, if any, and previously approved by Lessor prior to the Effective Date of this Lease, in connection with the award of low income housing tax credits to Tenant. 10.3 Excluded Transfers. Lessor’s consent, as set forth in Section 10.1, above, shall not be required to for any Excluded Transfer (each party to whom an Excluded Transfer may be made is a “Permitted Transferee”), provided, however, that (1) Tenant shall notify Lessor of such Excluded Transfer at least twenty (20) days prior to the consummation of such Excluded Transfer, and shall provide Lessor with information regarding the transferee evidencing that the Transfer falls within the scope of this Section 10.3 and the definition of Excluded Transfer, set forth in Section 1.1.211.1.18, above, and (2) if such Transfer involves an assignment of Tenant’s rights under this Lease, Tenant or such transferee shall provide Lessor with a written assumption of Tenant’s obligations and liabilities under this Lease executed by such transferee in a form approved by the Lessor, which approval shall not be unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the terms of this Lease; provided, however, that the provisions of this Section 10.3 shall not apply to any Transfer to a Foreclosure Transferee. 10.4 Transfer Procedure. The provisions of this Section 10.4 shall not be applicable to an Excluded Transfer, which shall be governed by Sections 1.1.211.1.18 and 10.3, above. If Tenant desires at any time to enter into a Transfer for which Lessor’s consent is required hereunder, Tenant shall provide Lessor with written notice (“Transfer Notice”) at least ninety (90) days prior to the proposed effective date of the Transfer. The Transfer Notice shall include (i) the name and address of the proposed transferee, (ii) the nature of the Transfer (e.g., whether an assignment, sublease, etc.), (iii) the proposed effective date of the Transfer, (iv) income statements and “fair market” balance sheets of the proposed transferee for the two (2) most recently completed fiscal or calendar years (provided however, if the proposed transferee is a newly formed entity and has not been in existence for such two (2) year period, the financial statements submitted shall be those of its principals), (v) a detailed description of the proposed transferees qualifications and experience that demonstrates the transferee meets the criteria for a Tenant as established by this Lease, and (vi) a bank or other credit reference. Thereafter, Tenant shall furnish such supplemental information as Lessor may reasonably request concerning the proposed transferee. Lessor shall, no later than ninety (90) days after Lessor’s receipt of the information specified above, deliver written notice to Tenant which shall (i) indicate whether Lessor give or withhold consent to the proposed Transfer, and (ii) if Lessor withhold consent to the proposed Transfer, setting forth a detailed explanation of Lessor’s grounds for doing so. If Lessor consents to a proposed Transfer, then Tenant may thereafter effectuate such Transfer to the proposed transferee based upon the specific terms of the Lessor’s approval and after execution of a consent to assignment by Lessor in a form approved by the Lessor, which approval shall not be unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the terms of this Lease; provided, however, that the provisions of this Section 10.4 shall not apply to any Transfer to a Foreclosure Transferee. Commented [ST22]: Have both lessors approved the form of the TCAC lease rider? EXHIBIT 11 Page | 40 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 10.5 Liability of Transferors/Transferees For Lease Obligations. In the case of an assignment, including an assignment pursuant to Section 17.6.5, each Permitted Transferee and any other assignees or transferees of this Lease shall assume in writing all of Tenant’s obligations thereafter arising under this Lease. However, under no circumstances shall any such assignment result in a Leasehold Mortgagee assuming responsibility or liability for any Excluded Defaults (as defined below) or as otherwise expressly provided in this Lease. All assignees or transferees of any interest in this Lease or the Premises or Improvements (whether or not directly liable on this Lease) shall be subject to the terms, conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in Section 17.6.5, the transferor may be released from all liability under this Lease only if the Permitted Transferee or other transferee agrees in writing to assume all of transferor’s obligations and liabilities and provides to Lessor evidence of sufficient and adequate assets, including any required insurance policies, subject to approval by Lessor, which approval shall not be unreasonably withheld, that evidence said Permitted Transferee’s or other transferees’ financial and otherwise competence to assume transferor’s obligations and liability (an “Approved Release”). Except as otherwise provided in Section 17.6.5 and except for an Approved Release, for all other Transfers, any transferor of any interest in this Lease or the Premises or Improvements shall remain primarily liable for all obligations hereunder and shall be subject to th e terms, conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in Section 17.6.5 and except for an Approved Release, the Lessor may proceed directly against the transferor in its sole and absolute discretion, with no obligation to exhaust its remedies against the transferee. Notwithstanding anything to the contrary contained herein, Lessor consent shall not be required for any of the following: (i) the exercise by the Limited Partner of its rights pursuant to Tenant’s Partnership Agreement to remove the general partner of the Tenant and appoint the Limited Partner or an affiliate thereof as interim general partner of the Tenant; (ii) the exercise by the Limited Partner of its right to enforce any repurchase requirements under Tenant’s Partnership Agreement; and/or (iii) a transfer by the Limited Partner of its partnership interest in Tenant to an Affiliate of the Limited Partner. 10.6 Conditions of Certain Lessor Consent. 10.6.1. Lessor may withhold consent to a Transfer (excluding Excluded Transfers which shall not require Lessor consent) at its and absolute sole discretion if any of the following conditions exist: (a) An Event of Default exists under this Lease. (b) The prospective transferee has not agreed in writing to keep, perform, and be bound by all the terms conditions, covenants, restrictions and reservations of this Lease. (c) In the case of an assignment, the prospective transferee has not agreed in writing to assume all of transferor’s obligations and liabilities. (d) The construction of the Initial Improvements has not been completed. (e) Any construction required of Tenant as a condition of this Lease has not been completed. (f) All the material terms, covenants, and conditions of the Transfer that are relevant to the Lessor’s approval of the Transfer have not been disclosed in writing to the Lessor. Commented [ST23]: Negotiated into Stanton Inn. EXHIBIT 11 Page | 41 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 10.7 Transfer of Mortgages of Lessor’s Interest. Notwithstanding anything to the contrary set forth in this Ground Lease, unless required by statute, court order or operation of law, Lessor shall not transfer, assign, pledge or hypothecate its fee interest in the Premises (other than to entities under common control with Lessor or other governmental entities under applicable law) without the prior written consent of Tenant, all Leasehold Mortgagees and the Limited Partner (provided, the Limited Partner’s consent shall be required only during the tax cred it compliance period). Any and all mortgages or liens placed or suffered by the Lessor encumbering the Lessor’s fee interest in the Premises shall be expressly subject and subordinate to this Lease (and all amendments, modifications, extensions and renewals hereof), to all obligations of Lessor hereunder, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder, to each New Lease and to each Leasehold Mortgage. Furthermore, any Person succeeding to the Lessor’s fee interest as a consequence of any conveyance, foreclosure or other transfer shall succeed to all of the obligations of the County hereunder. During the term of any mortgage held by a Leasehold Mortgagee applicable hereinhereunder, Lessor shall, at the request of any such Leasehold Mortgagee, require the holder of each such mortgage, deed of trust and other security instrument encumbering the fee interest (a “Fee Mortgage”) to execute and deliver to the requesting Leasehold Mortgagee a written and recordable subordination agreement providing any such Fee Mortgage is subject and subordinate in all respects to this Lease (and all amendments, modifications, extensions and renewals hereof), to all obligations of Lessor under the Lease, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder, to each New Lease and to each Leasehold Mortgage, and otherwise in form and substance as required by such Leasehold Mortgagee in its sole and absolute, but good faith, discretion. ARTICLE XI DEFAULT AND REMEDIES 11.1 Event of Default. Each of the following events shall constitute an “Event of Default” by Tenant: 11.1.1. Failure to Pay. Tenant’s failure or omission to pay any Rent or other sum payable hereunder on or before the date due where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Tenant; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure §1161 et seq. 11.1.2. Failure to Perform. The failure or inability by Tenant to observe or perform any of its obligations under this Lease (other than those specified in Sections 11.1.1, 11.1.3, 11.1.6, or 11.1.8 herein, which have their own notice and cure periods), where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Tenant or past any such longer period as reasonably agreed upon by the Tenant, Lessor in writing as may be necessary for completion of its cure; provided, however, that any such notice by Lessor shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et. seq.; provided, further, that if the nature of such failure is such that it can be cured by Tenant but that more than thirty (30) days are reasonably required for its cure (for any reason other than financial inability), then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) days, and thereafter diligently pursues such cure to completion. Commented [ST24]: All changes to conform with those made by County in Stanton Inn. EXHIBIT 11 Page | 42 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 11.1.3. Abandonment. The abandonment (as defined in California Civil Code Section 1951.3) or vacation of the Premises by Tenant for a period of thirty (30) days or more. 11.1.4. Assignments. (a) The making by Tenant of any assignment of its leasehold estate under this Lease without Lessor’s consent, as set forth in Article X; (b) A case is commenced by or against Tenant under Chapters 7, 11 or 13 of the Bankruptcy Code, Title 11 of the United States Code as now in force or hereafter amended and if so commenced against Tenant, the same is not dismissed within ninety (90) days of such commencement; (c) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where such seizure is not discharged within sixty (60) days; or (d) Tenant’s convening of a meeting of its creditors or any class thereof for the purpose of effecting a moratorium upon or composition of its debts. In the event of any such default, neither this Lease nor any interests of Tenant in and to the Premises shall become an asset in any of such proceedings. 11.1.5. Failure to Reimburse Lessor. Tenant’s failure to reimburse the Lessor pursuant to Section 3.6.4. 11.1.6. Termination of and Failure to Reinstate Insurance Coverage. Termination of Tenant’s insurance coverage and lack of reinstatement within ten (10) business days after notice from Lessor of such termination. 11.1.7. Failure to Provide Evidence of Insurance. Tenant’s failure to provide Lessor with a valid and adequate certificate of insurance and endorsements, or binder, at any time during the Term of the Lease, within the time period required under Section 8.1.3. 11.1.8. Lessor’s Consent and Approval of Transfer. Occupancy of the Premises by a prospective transferee, sublessee, or assignee which requires Lessor’s consent or approval, before Lessor’s written consent and approval of a Transfer is obtained as required in Section 10.1. 11.1.9. Tenant’s failure to make Additional Rent payment(s) as set forth in Sections 11.3 and 11.10. 11.2 Lessor’s Remedies. If an Event of Default occurs, Lessor shall have the following remedies in addition to all rights and remedies provided by law or equity to which Lessor may resort cumulatively or in the alternative: 11.2.1. Termination of Lease. Subject to Article 17, as applicable, Lessor shall have the right to terminate this Lease and all rights of Tenant hereunder including Tenant’s right to possession of the Premises. In the event that Lessor shall elect to so terminate this Lease then Lessor may recover from Tenant: EXHIBIT 11 Page | 43 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 (a) The worth at the time of award of the unpaid Rent and other charges, which had been earned as of the date of the termination hereof; plus (b) The worth at the time of award of the amount by which the unpaid Rent and other charges which would have been earned after the date of the termination hereof until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (c) The worth at the time of award of the amount by which the unpaid Rent and other charges for the balance of the Term hereof after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus (d) Any other amount necessary to compensate Lessor for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, includ ing, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary repair, renovation and alteration of the Premises, reasonable attorneys' fees, expert witness costs; plus (e) Subject to the rights of any Leasehold Mortgagees and TCAC, the funds in the Capital Improvement Fund; plus (f) Any other amount which Lessor may by law hereafter be permitted to recover from Tenant to compensate Lessor for the detriment caused by Tenant’s default as permitted under applicable California law. The term "Rent" as used herein shall mean as defined in Section 1.1.411.1.47. Additional Rent shall be computed on the basis of the average monthly amount thereof accruing during the 24- month period immediately prior to default, except that if it becomes necessary to compute such Additional Rent before such 24-month period has occurred, then it shall be computed on the basis of the average monthly amount during such shorter period. As used in Sections 11.2.1(a) and 11.2.1(b) above, the "worth at the time of award" shall be computed by allowing interest at the Interest Rate. As used in Sections 11.2.1 (c) above, the "worth at the time of award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%), but not in excess of the Interest Rate. 11.2.2. Continue Lease in Effect. Lessor may continue this Lease in effect without terminating Tenant’s right to possession and to enforce all of Lessor's rights and remedies under this Lease, at law or in equity, including the right to recover the Rent as it becomes due under this Lease; provided, however, that Lessor may at any time thereafter elect to terminate this Lease for the underlying Event(s) of Default by notifying Tenant in writing that Tenant’s right to possession of the Premises has been terminated. 11.2.3. Removal of Personal Property Following Termination of Lease. Lessor shall have the right, following a termination of this Lease and Tenant’s rights of possession of the Premises under Section 11.2.1 above, to re-enter the Premises and, subject to applicable law, to remove Tenant’s personal property from the Premises. Such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant , or disposed of without such storage, in accordance with applicable California law. EXHIBIT 11 Page | 44 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 11.3 Lessor’s Right to Cure Tenant Defaults. If Tenant shall have failed to cure, after expiration of the applicable time for curing, a particular default under this Lease, Lessor may at their election, but are not obligated to, make any payment required of Tenant under this Lease or perform or comply with any term, agreement or condition imposed on Tenant hereunder, and the amount so paid plus the reasonable cost of any such performance or compliance, plus interest on such sum at the Interest Rate from the date of payment, performance or compliance until reimbursed shall be deemed to be Additional Rent payable by Tenant on Lessor’s demand. Tenant’s failure to reimburse the County and/or Agency within 30 days of Lessor’s demand shall constitute an Event of Default under this Lease. No such payment, performance or compliance shall constitute a waiver of default or of any remedy for default, or render County and/or Agency liable for any loss or damage resulting from the same. 11.4 Lessor’s Default. Lessor shall not be considered to be in default under this Lease unless Tenant has given Lessor written notice specifying the default, and either (i) as to monetary defaults, Lessor have failed to cure the same within ten (10) business days after written notice from Tenant, or (ii) as to nonmonetary defaults, Lessor have failed to cure the same within thirty (30) days after written notice from Tenant, or if the nature of Lessor’s nonmonetary default is such that more than thirty (30) days are reasonably required for its cure, then such thirty (30) day period shall be extended automatically so long as County and/or Agency commences a cure within such thirty (30) day period and thereafter diligently pursues such cure to completion. Tenant shall have no right to offset or abate alleged amounts owing by County and/or Agency under this Lease against any amounts owing by Tenant under this Lease. Additionally, Tenant’s sole remedy for any monetary default shall be towards the Lessor’s interest in the property and not to any other assets. Any and all claims or actions accruing hereunder shall be absolutely barred unless such action is commenced within six (6) months of the event or action giving rise to the default. 11.5 Remedies Cumulative. All rights and remedies of Lessor contained in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Lessor shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law, whether or not stated in this Lease. 11.6 Waiver by Lessor. No delay or omission of Lessor to exercise any right or remedy shall be construed as a waiver of such right or remedy or any default by Tenant hereunder. The acceptance by Lessor of Rent or any other sums hereunder shall not be (a) a waiver of any preceding breach or default by Tenant of any provision thereof, other than the failure of Tenant to pay the particular rent or sum accepted, regardless of Lessor’s knowledge of such preceding breach or default at the time of acceptance of such rent or sum, or (b) waiver of Lessor’s right to exercise any remedy available to Lessor by virtue of such breach or default. No act or thing done by County or Agency’s agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender shall be valid unless in writing and signed by Lessor. 11.7 Interest. Any installment or Rent due under this Lease or any other sums not paid to Lessor when due (other than interest) shall bear interest at the Interest Rate from the date such payment is due until paid, provided, however, that the payment of such interest shall not excuse or cure the default. 11.8 Conditions Deemed Reasonable. Tenant acknowledges that each of the conditions to a Transfer, and the rights of Lessor set forth in this Article X in the event of a Transfer is a reasonable restriction for the purposes of California Civil Code Section 1951.4. EXHIBIT 11 Page | 45 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 11.9 Waiver by Tenant. Tenant’s waiver of any breach by Lessor of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition herein contained. 11.10 Tenant Covenants and Agreements. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expenses and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other than Rent required to be paid by it hereunder, or shall fail to perform any other act on its part to be performed hereunder, or to provide any insurance or evidence of insurance to be provided by Tenant within the time period required under this Lease, then in addition to any other remedies provided herein, Lessor may, but shall not be obligated to do so, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on Tenant’s part to be made or performed as provided in this Lease or to provide such insurance. Any payment or performance of any act or the provision of any such insurance by Lessor on Tenant’s behalf shall not give rise to any responsibility of Lessor to continue making the same or similar payments or performing the same or similar acts. All costs, expenses, and other sums incurred or paid by Lessor in connection therewith, together with interest at the Interest Rate from the date incurred or paid by Lessor, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant within thirty (30) days of receipt of a demand and invoice from Lessor, and Tenant’s failure to pay the Lessor, as stated herein, shall constitute an Event of Default under this Lease. ARTICLE XII HOLDING OVER If Tenant holds over after the expiration or earlier termination of the Term hereof without the express written consent of Lessor, Tenant shall become a Tenant at sufferance only, at a monthly rental rate of (a) Fifty Thousand Dollars ($50,000) to the extent the Premises are not subject to any tenant income or rent restrictions and all units may be rented at market-rate rents, or (b) Twenty Five Thousand Dollars ($25,000) to the extent the Premises are subject to any tenant income or rent restrictions (“Hold Over Rent”), increased annually commencing with commencement of the hold over period by an amount equal to the greater of (i) three percent (3%) for each year of the Term, or (ii) a percentage equal to the percentage increase from the Base Period of the Consumer Price Index (“CPI”) for Los Angeles- Riverside-Orange County [All Urban Consumers-All Items, not seasonally adjusted (Base Period 1982-84=100)]. Said CPI for the month of December for the second year of the Term shall be considered the “Base Period.” Said adjustment shall be made by comparing the CPI for the Base Period to the CPI for the month of December immediately preceding each such adjustment. If at any time there shall not exist the CPI, Lessor shall substitute any official index published by the Bureau of Labor Statistics, or successor or similar governmental agency, as may then be in existence, and shall be most nearly equivalent thereto. If Tenant fails to surrender the Premises and the Improvements as stated herein, and Lessor shall take legal action to cause Tenant’s eviction from the Premises and is successful in such action, Tenant shall be responsible for all costs and expenses, including reasonable attorney’s fees and costs, incurred by County and/or Agency in connection with such eviction action; Tenant shall also indemnify and hold Lessor harmless from all loss or liability or reasonable attorney’s fees and costs, including any claim made by any succeeding tenant, incurred by County and/or Agency founded on or resulting from such failure to surrender. ARTICLE XIII ESTOPPEL CERTIFICATES EXHIBIT 11 Page | 46 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 At any time and from time to time, within ten (10) business days after written request by either County, Agency or Tenant (the “requesting party”), the other Party (the “responding party”) shall execute, acknowledge and deliver an estoppel certificate addressed to the requesting party, and/or to such other beneficiary (as described below) as the requesting party shall request, certifying (i) that this Lease is in full force and effect, (ii) that this Lease is unmodified, or, if there have been modifications, identifying the same, (iii) the dates to which Rent has been paid in advance, (iv) that, to the actual knowledge of the responding party, there are no then existing and uncured defaults under the Lease by either County, Agency or Tenant, or, if any such defaults are known, identifying the same, and (v) any other factual matters (which shall be limited to the actual knowledge of the responding party) as may be reasonably requested by the requesting party. Such certificate may designate as the beneficiary thereof the requesting party, and/or any third party having a reasonable need for such a certificate (such as, but not limited to, a prospective purchaser, transferee or lender) and any such certificate may be relied upon by the Parties. ARTICLE XIV FORCE MAJEURE Unless otherwise specifically provided herein, the period for performance of any nonmonetary obligation by either Party shall be extended by the period of any delay in performance caused by Acts of God, strikes, boycotts, lock-outs, inability to procure materials not related to the price thereof, failure of electric power, riots, civil unrest, acts of terrorism, insurrection, war, declaration of a state or national emergency, weather that could not have reasonably been anticipated, changes in the Laws which would prevent the Premise from being operated in accordance with this Lease, or other reasons beyond the reasonable control of County, Agency, Tenant, or their respective agents or representatives (collectively, “Force Majeure Events”). In no event, however, shall Force Majeure Events include the financial inability of a Party to this Lease to pay or perform its obligations hereunder. Further, nothing herein shall extend the time for performance of any monetary obligation owing under this Lease (including Tenant’s obligation to pay Rent owing hereunder). ARTICLE XV RECORDS AND ACCOUNTS 15.1 Financial Statements. Within one hundred eighty (180) days after the end of each accounting year, Tenant shall at hisits own expense submit to Auditor-Controller and the Agency a balance sheet and, income statement and cash flow statement prepared by a Certified Public Accountant (“CPA”) who is a member of the American Institute of Certified Public Accountants (“AICPA”) and the California Society of CPAs, reflecting business transacted on or from the Premises during the preceding accounting year. The Certified Public Accountant must attest that the balance sheet and income statement submitted are an accurate representation of Tenant's records and financial position as reported to the United States of America for income tax purposes. At the same time, Tenant shall submit to Auditor-Controller and Agency a statement certified as to accuracy by a Public Accountant who is a member of AICPA and the California Society of CPAs, wherein the total Gross Receipts for the accounting year are classified according to the categories of business established for percentage rent and listed in Section 3.4.1(d) and for any other business conducted on or from the Premises and are in accordance with GAAP. Tenant shall provide Lessor with copies of EXHIBIT 11 Page | 47 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 any CPA's management letters prepared in conjunction with their audits of Tenant's operations from the Premises. Copies of management letters shall be provided directly to Lessor by the CPA at the same time Tenant’s copy is provided to Tenant. In the event that when such financial statements are submitted, the Tenant has a budget for the following accounting year, Tenant, at the same time, shall also provide Lessor with such budget. 15.1.1. Tenant acknowledges its understanding that any and all of the Financial Statement submitted to the Lessor pursuant to this Lease become Public Records and may be subject to public inspection and copying pursuant to §§ 6250 et. seq. of the California Government Code. 15.1.2. All Tenant's books of account and records and supporting source documents related to this Lease or to business operations conducted within or from the Premises shall be kept and made available at one location within the limits of the County unless an alternative location is approved in writing by the Lessor. Lessor shall, through their duly authorized agents or representatives, have the right to examine and audit said books of account and records and supporting source documents at any and all reasonable times for the purpose of determining the accuracy thereof in connection with such Sections of this Lease as the Parties mutually and reasonably agree the audit is relevant thereto. 15.2 Reports. In the event that the Tenant commissions, requests or is required to produce any reports related to the physical condition of the Improvements or P remises, Tenant shall submit copies of such reports to Lessor along with the financial statements required above in Section 15.1. ARTICLE XVI OPERATIONAL OBLIGATIONS OF TENANT 16.1 Standards of Operation. 16.1.1. Tenant shall operate the Premises in a manner reasonably comparable to other comparable facilities or businesses within the County of Orange. Tenant shall at all times during the Term provide adequate security measures to reasonably protect persons and property on the Premises. 16.1.2. The ultimate purpose of this Lease is to permit the construction and operation of a multifamily affordable residential rental development, including permanent supportive housing, in accordance with Section 4.1.1. Accordingly, Tenant covenants and agrees to operate said Premises fully and continuously to accomplish said purposes and not to abandon or vacate the Premises at any time. 16.1.3. The facilities on the Premises shall be operated during normal business hours, subject to any temporary interruptions in operations or closures due to ordinary maintenance and repair and any Force Majeure Event, defined in Article XIV above. 16.2 Protection of Environment. Tenant shall take all reasonable measures available to: 16.2.1. Avoid any pollution of the atmosphere or littering of land or water caused by or originating in, on, or about Tenant’s facilities. EXHIBIT 11 Page | 48 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 16.2.2. Maintain a reasonable noise level on the Premises so that persons in the general neighborhood will be able to comfortably enjoy the other facilities and amenities in the area. 16.2.3. Prevent the light fixtures of the Premises from emitting light that could negatively affect the operation of cars, boats, or airplanes in the area. 16.2.4. Prevent all pollutants from Tenant’s operations on the Premises from being discharged, including petroleum products of any nature, except as may be permitted in accordance with any applicable permits or as permitted by applicable Law. Tenant and all of Tenant’s agents, employees and contractors shall conduct operations under this Lease so as to ensure that pollutants do not enter the municipal storm drain system (including but not limited to curbs and gutters that are part of the street systems), or directly impact receiving waters (including but not limited to rivers, creeks, streams, estuaries, lakes, harbors, bays and the ocean), except as may be permitted by any applicable permits or as permitted by applicable law. 16.2.5. The Lessor may enter the Premises in accordance with Section 4.5 and/or review Tenant records at all reasonable times to assure that activities conducted on the Premises comply with the requirements of this Section. 16.3 On-Site Manager. Tenant shall employ a competent manager who shall be responsible for the day-to-day operation and level of maintenance, cleanliness, and general order for the Premises. Such person shall be vested with the authority of Tenant with respect to the supervision over the operation and maintenance of the Premises, including the authority to enforce compliance by Tenant’s agents, employees, concessionaires, or licensees with the terms and conditions of this Lease and any and all rules and regulations adopted hereunder. Tenant shall notify Lessor in writing of the name of the Manager currently so employed as provided in Section 19.20 of this Lease. 16.4 Policies and Procedures to be Established by Tenant. Prior to the completion of construction, Tenant shall submit to Lessor proposed policies and procedures pertinent to the operation of the multifamily affordable residential rental development and manner of providing the uses required by this Lease (“Policies and Procedures”). ARTICLE XVII LEASEHOLD MORTGAGES 17.1 Definitions. The following definitions are used in this Article (and in other Sections of this Lease): 17.1.1. “Leasehold Estate” shall mean Tenant’s leasehold estate in and to the Premises, including Tenant’s rights, title and interest in and to the Premises and the Improvements, or any applicable portion thereof or interest therein. 17.1.2. “Leasehold Foreclosure Transferee” shall mean any person (which may, but need not be, a Leasehold Mortgagee) which acquires the Leasehold Estate pursuant to a foreclosure, assignment in lieu of foreclosure or other enforcement of remedies under or in connection with a Leasehold Mortgage. EXHIBIT 11 Page | 49 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 17.1.3. “Leasehold Mortgage” shall mean and includes a mortgage, deed of trust, security deed, conditional deed, deed to secure debt or any other security instrument (including any assignment of leases and rents, security agreement and financing statements) held by a Lender by which Tenant’s Leasehold Estate is mortgaged to secure a debt or other obligation, including a purchase money obligation. 17.1.4. “Leasehold Mortgagee” shall mean a Lender which is the holder of a Leasehold Mortgage. 17.1.5. “Tenant” shall mean all of the following: (i) the Tenant under this Lease; (ii) an approved assignee, transferee or subtenant of the Tenant under this Lease who is or becomes directly and primarily liable to Lessor; and (iii) any further assignee, transferee or subtenant of any of the parties listed in (ii) who is or becomes directly and primarily liable to Lessor. 17.2 Tenant’s Right to Encumber Leasehold Estate; No Right to Encumber Lessor’s Fee Interest. Provided that an Event of Default has not occurred and is continuing, Tenant may, at any time during the Term of this Lease (with consent of Lessor after providing prior written notice to Lessor, no later than 30 days prior to the encumbrance, along with providing evidence that all requirements of this Lease have been complied with), which consent shall not be unreasonably withheld, conditioned or delayed), encumber all or any portion of Tenant’s Leasehold Estate with one (1) or more Leasehold Mortgages (and to amend, modify, and supplement any such encumbrance, including encumbrances refinancing the same); provided, however: 17.2.1. Such Leasehold Mortgage(s) (as of the date recorded) shall not exceed (a) if recorded before completion of the Initial Improvements, One Hundred Percent (100%) of the costs of the Initial Improvements (including closing and financing costs), or (b) if recorded after completion of the Initial Improvements, eighty percent (80%) of the Leasehold Estate value (including the value of all improvements) after completion; 17.2.2. That Tenant shall not have the power to encumber, and no Leasehold Mortgage shall encumber, Lessor’s Fee Interest; 17.2.3. Except as expressly provided in this Lease, the Leasehold Mortgage and all rights acquired under it shall be subject to each and all of the covenants, conditions, and restrictions set forth in this Lease and to all rights and interests of Lessor hereunder; and 17.2.4. Nothing in this Lease shall be construed so as to require or result in a subordination in whole or in part in any way of the Lessor’s Fee Interest to any Leasehold Mortgage, and; 17.2.5. Except as otherwise expressly provided herein, in the event of any conflict between the provisions of this Lease and the provisions of any such Leasehold Mortgage, the provisions of this Lease shall control. Tenant’s encumbrance of its Leasehold Estate with a Leasehold Mortgage, as provided in this Section 17.2, shall not constitute an assignment or other Transfer under Article X or otherwise, nor shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or of the Leasehold Estate so as to require such Leasehold Mortgagee, as such, to assume the Tenant’s obligations and liabilities under this Lease. Commented [ST25]: Tenant must have the free ability to encumber the project so long as the conditions are met and they provide notice. This is consistent with the language agreed to with the County in Stanton Inn. EXHIBIT 11 Page | 50 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Notwithstanding the foregoing, if any Leasehold Mortgagee (or its nominee) acquires title to the Premises by foreclosure or deed in lieu thereof (or by a new lease under Section 17.7), any required consent of the Lessor under this Section 17.2 shall not be unreasonably withheld. In addition and notwithstanding anything to the contrary set forth herein, (i) following a foreclosure or deed in lieu thereof by a Leasehold Mortgagee holding the most-senior Leasehold Mortgage in terms of lien priority (the “Senior Leasehold Mortgagee”), the requirement for Lessor consent to encumbering the Leasehold Estate with Leasehold Mortgages set forth above shall not apply (A) to Senior Leasehold Mortgagee (or its designee) following such foreclosure or deed in lieu of foreclosure, nor (B) in connection with the first transfer from Senior Leasehold Mortgagee (or its designee) to new owner acquiring the Premises from such Senior Leasehold Mortgagee (or its designee) following any such foreclosure or deed in lieu of foreclosure, and (ii) no consent of Lessor shall be required as to any amendment, modification or supplement to any Leasehold Mortgage except to the extent such amendment, modification or supplement (a) increases the principal amount of the loan secured by such Leasehold Mortgage (except in connection with protective advances), or (b) increases the stated interest rate on the loan secured by such Leasehold Mortgage (other than to charge a default rate, as applicable, to replace the interest rate upon the unavailability or illegality of the applicable interest rate index, or, to the extent it is a variable rate, in connection with the variations of such rate as provided in the applicable loan documents). 17.3 Notification to Lessor of Leasehold Mortgage. Tenant or any Leasehold Mortgagee shall, prior to making any Leasehold Mortgage, provide Lessor with written notice of such Leasehold Mortgage and the name and address of the Leasehold Mortgagee. At the time of notice, Tenant or such Leasehold Mortgagee shall furnish to Lessor a complete copy of any trust deed and note to be secured thereby, together with the name and address of the holder thereof. Thereafter, Tenant or any Leasehold Mortgagee shall notify Lessor of any change in the identity or address of such Leasehold Mortgagee. Lessor shall be entitled to rely upon the addresses provided pursuant to this Section for purposes of giving any notices required by this Article XVII. 17.4 Notice and Cure Rights of Leasehold Mortgagees With Respect to Tenant Defaults. Lessor, upon delivery to Tenant of any notice of a default or demand for payment by Tenant under this Lease or a matter as to which Lessor may predicate or claim a default, will promptly deliver a copy of such notice to each Leasehold Mortgagee. Each notice or demand required to be given by Lessor to a Leasehold Mortgagee under this Lease shall be in writing and shall be given by certified or registered mail, postage prepaid, return receipt requested, to such Leasehold Mortgagee at the address(es) provided by such Leasehold Mortgagee, as applicable, to Lessor from time to time in writing and shall be effective upon receipt (or refusal to accept receipt). No notice or demand given by Lessor to Tenant shall be effective until the duplicate copy of such notice or demand to the Tenant shall have been effectively given to each Leasehold Mortgagee in accordance with this Lease. From and after the date such notice has been given to any Leasehold Mortgagee, such Leasehold Mortgagee shall have the same cure period for such default (or act or omission which is the subject matter of such notice) that is provided to Tenant under this Lease or as otherwise agreed upon by County, Agency and the Tenant, to commence and/or complete a cure of such default (or act or omission which is the subject matter of such notice). Lessor shall accept any and all performance by or on behalf of any Leasehold Mortgagee(s), including by any receiver obtained by any Leasehold Mortgagee(s), as if the same had been done by Tenant. Tenant authorizes each Leasehold Mortgagee to take any such action at such Leasehold Mortgagee’s option, and hereby authorizes any Leasehold Mortgagee (or any receiver or agent) to enter upon the Premises for such purpose. EXHIBIT 11 Page | 51 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 17.5 Limitation on Lessor’s Termination Right. If following the delivery of notice pursuant to Section 17.4, above, the default by Tenant continues and is not cured by Tenant (or any Leasehold Mortgagee as allowed under Section 17.4, above), and such failure entitles County and/or Agency to terminate this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall notify in writing each and every Leasehold Mortgagee who has complied with Section 17.3 of Lessor’s intent to so terminate at least ninety (90) days in advance of the proposed effective date of such termination. If any Leasehold Mortgagee, within such ninety (90) day period, (i) notifies Lessor of such Leasehold Mortgagee’s desire to cure such default and initiates such cure and (ii) pays or cause to be paid the amount that is necessary to cure any monetary default as stated in such notice, if any, then Section 17.6 shall apply. The Lessor, at its sole discretion, may permit such additional time as necessary for any Leasehold Mortgagee to commence the cure or make payment(s), as stated herein. If any Leasehold Mortgagee and Limited Partner fails to respond to said notice of termination within the allotted ninety (90) days as consistent with the conditions of this Section 17.5, Lessor are entitled to immediately terminate this Lease. 17.6 Leasehold Mortgagee Foreclosure Period. If any Leasehold Mortgagee complies with Section 17.5 above, then the following provisions shall apply: 17.6.1. If Lessor’s notice under Section 17.5 specifies only monetary Events of Default as the basis for Lessor’s election to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by Lessor in its notice, then such payment shall be deemed to have cured the Event of Default. If Lessor’s notice under Section 17.5 specifies both monetary and non-monetary Events of Default or non-monetary Events of Default as the basis for Lessor’s election to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by Lessor in its notice, as applicable, then the date of termination specified in Lessor’s notice shall b e extended for a period of twelve (12) months, provided that such Leasehold Mortgagee shall, during such twelve (12) month period: (a) pay or cause to be paid all Rent under this Lease as the same becomes due (subject to the notice and cure rights expressly set forth herein); and (b) continue (subject to any stay as described in Section 17.6.2 below) its good faith efforts to perform (and complete performance of) all of Tenant’s nonmonetary obligations under this Lease that are capable of being performed by the Leasehold Mortgagee without having possession of the Premises, excepting nonmonetary obligations (whether or not a default exists with respect thereto) that are not then reasonably susceptible of being cured by Leasehold Mortgagee; and (c) commence and pursue with reasonable diligence until completion (subject to any stay as described in Section 17.6.2 below) a judicial or nonjudicial foreclosure or other enforcement of remedies under its Leasehold Mortgage. 17.6.2. The twelve (12)-month period described in Section 17.6.1, above, shall automatically be extended as long as the Leasehold Mortgagee is diligently and in good faith prosecuting the judicial or nonjudicial foreclosure to completion, in the Lessor’s reasonable discretion based upon evidence provided to Lessor of such good faith prosecution by the Leasehold Mortgagee. In the event of a judicial or non-judicial foreclosure, the twelve (12) month period described in Section 17.6.1, above, shall automatically be extended by the length of any delay caused by any stay (including any automatic stay arising from any bankruptcy or insolvency proceeding involving Tenant), injunction or other order arising under applicable Laws or issued by any court EXHIBIT 11 Page | 52 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 (which term as used herein includes any other governmental or quasi-governmental authority having such power) (the foregoing being collectively referred to as a “Stay”). Further, Leasehold Mortgagee’s obligations stated in Section 17.6.1(b) and (c) shall be automatically suspended during any period that any Stay prevents Leasehold Mortgagee from taking any such actions. Nothing herein, however, shall be construed to extend this Lease beyond the Term hereof nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after the Event of Default has been cured. If the Event of Default has been cured and the Leasehold Mortgagee shall discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if Tenant had not defaulted under this Lease. 17.6.3. In the event the Leasehold Mortgage requires a new lease between the Lessor and the Leasehold Mortgagee, Lessor shall enter into such new lease with the Leasehold Mortgagee pursuant to Section 17.7, below, provided Lessor are provided with the necessary and adequate documents related to the new lease requirements in the Leasehold Mortgage as described in Section 17.7. 17.6.4. So long as any Leasehold Mortgagee is complying with Sections 17.6.1 and 17.6.2 above, then upon the acquisition of Tenant’s Leasehold Estate by a Leasehold Foreclosure Transferee, this Lease shall continue in full force and effect as if Tenant had not defau lted under this Lease; provided that no Leasehold Foreclosure Transferee shall have any liability for the performance of any of the Tenant’s obligations under this Lease until the Leasehold Foreclosure Transferee has acquired the Tenant’s interest under th e Lease, and then the Leasehold Foreclosure Transferee shall be liable for the performance of only those obligations of the Tenant arising from and after the effective date of the Leasehold Foreclosure Transferee’s acquisition of the Tenant’s Leasehold Estate. Any such Leasehold Foreclosure Transferee shall be deemed to be an assignee or transferee and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of the Tenant to be performed hereunder from and after the effective date on which such Leasehold Foreclosure Transferee acquires title to the Leasehold Estate, but only for so long as such purchaser or assignee is the owner of the leasehold estate. 17.6.5. Any Leasehold Mortgagee (or its designee) that becomes a Leasehold Foreclosure Transferee, upon acquiring title to Tenant’s Leasehold Estate without obtaining Lessor’s consent and provided it is not in default of any of the provisions of this Lease, shall have a one-time right to assign the Leasehold Estate to an assignee (a) which is an Affiliate of the Leasehold Foreclosure Transferee, or (b) which has substantial experience, or will employ a property management company with substantial experience, managing, maintaining and operating affordable housing developments like that on the Premises. Upon such assignment, the Leasehold Foreclosure Transferee shall automatically be released of all obligations thereafter accruing under this Lease, provided that, substantially concurrently with such assignment, the assignee delivers to Lessor a written agreement assuming Tenant’s obligations under the Lease thereafter accruing. Any subsequent Transfers occurring after the one-time assignment permitted under this Section shall be subject to Article X. 17.7 Leasehold Mortgagee’s Right to New Lease. 17.7.1. In the event of any termination of this Lease (including any termination because of an Event of Default, or because of any rejection or disaffirmance of this Lease pursuant to bankruptcy law or any other law affecting creditor’s rights, but other than by reason of a Total Taking), Lessor shall give prompt written notice of such termination to each Leasehold Mortgagee EXHIBIT 11 Page | 53 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 and shall (subject to Section 17.8 below if more than one Leasehold Mortgagee then exists) enter in to a new lease (“New Lease”) of the Premises with the Leasehold Mortgagee holding the Leasehold Mortgage that has the most senior lien priority, in accordance with Section 17.8 below, or its designee, upon notice to Lessor by such Leasehold Mortgagee. The New Lease shall commence as of its effective date and shall continue for the remainder of the scheduled Term of this Lease, at the same Rent that is payable under this Lease, and on the same terms, conditions, covenants, restrictions and reservations that are contained in this Lease (including any extension options, purchase options and rights of first refusal, if any, provided for in this Lease), and subject to the rights of any tenants under residential subleases or other subtenants then in valid occupancy of the Premises and Improvements and further subject to any then existing senior Leasehold Mortgagees ; provided that, substantially concurrently with the delivery of a notice by Leasehold Mortgagee requiring Lessor to enter into a New Lease, Leasehold Mortgagee shall pay to Lessor all Rent or any other amounts payable by Tenant hereunder which are then due and shall commence and proceed with diligence to cure all nonmonetary defaults under this Lease, other than those nonmonetary defaults which are personal to the foreclosed tenant and impossible for the Leasehold Mortgagee to remedy. 17.7.2. If such Leasehold Mortgagee elects to enter into a New Lease pursuant to Section 17.7.1 above, then County, Agency and the Leasehold Mortgagee (or its designee) sh all promptly prepare and enter into a written New Lease; but until such written New Lease is mutually executed and delivered, this Lease shall govern, from and after the giving of notice pursuant to Section 17.7.1 but prior to the execution of the New Lease, the Lessor’s and Leasehold Mortgagee's relationship with respect to the Premises and the Improvements and the Leasehold Mortgagee shall (i) be entitled to possession of the Premises and to exercise all rights of Tenant hereunder, (ii) pay to Lessor any Rent accruing under the New Lease as it becomes owing, and (iii) perform or cause to be performed all of the other covenants and agreements under this Lease. Further, at such time as the written New Lease is mutually executed and delivered, Leasehold Mort gagee (or its designee) shall pay to Lessor its reasonable expenses, including reasonable attorneys’ fees and costs, incurred in connection with the preparation, execution and delivery of such written New Lease . In addition, upon execution of any such New Lease, Lessor shall execute, acknowledge and deliver to such Leasehold Mortgagee (or its designee) a grant deed, in recordable form, conveying to such Leasehold Mortgagee (or its designee) fee title to all Improvements in the event that title to such Improvements have vested with the County. 17.7.3. In the event that Lessor receives any net income (i.e., gross income less gross expenses on a cash basis), if any, from the Premises and Improvements during any period that Lessor may control the same, then the Leasehold Mortgagee under the New Lease shall be entitled to such net income received by Lessor except to the extent that it was applied to cure any default of Tenant (excluding specifically the application towards obligations under the County Loan Documents or the Agency Loan Documents). 17.7.4. All rights and claims of Tenant under this Lease shall be subject and subordinate to all right and claims of the tenant under the New Lease. 17.8 Multiple Leasehold Mortgages. If more than one Leasehold Mortgagee shall make a written request upon Lessor for a New Lease in accordance with the provisions of Section 17.7, then such New Lease shall be entered into pursuant to the request of the Leasehold Mortgagee holding the Leasehold Mortgage that has the most senior lien priority. EXHIBIT 11 Page | 54 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Notwithstanding anything herein to the contrary, Lessor shall have no duty or obligation to resolve any disputes or conflicting demands between Leasehold Mortgagees. In the event of any conflicting demands made upon County and/or Agency by multiple Leasehold Mortgagees, Lessor may (subject to any applicable court orders to the contrary) rely on the senior lien priority created when taking into account all subordination and intercreditor agreements then recorded against the Property as determined by a national title company, and, if and to the extent a national title company determines that there are no such subordination and intercreditor agreements so recorded, at the direction of the Leasehold Mortgagee whose Leasehold Mortgage is recorded first in time in the Official Records of the County, as determined by any national title company. 17.9 Condemnation and Insurance Proceeds. Notwithstanding anything to the contrary contained herein, all condemnation proceeds (other than proceeds payable on account of the value of the Lessor’s Fee Interest as encumbered by this Lease) or insurance proceeds shall be subject to and paid in accordance with the requirements of the most senior (in order of lien priority) Leasehold Mortgage, subject, however, to any requirement in this Lease that, to the extent not in con flict with the terms of the applicable Leasehold Mortgage, such proceeds must be used to repair and restore the Improvements to the Premises which were damaged or destroyed by such condemnation or casualty (including, without limitation, as required in Article VII following a casualty and in Section 9.4.3 following a condemnation). The handling and disbursement of any such proceeds used to repair or restore the Improvements to the Premises shall be subject to the requirements of such senior Leasehold Mortgage. The Parties shall give all Leasehold Mortgagee(s) notice of any arbitration or condemnation proceedings, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The Parties hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connection therewith. This provision, and Leasehold Mortgagee’s right to condemnation proceeds provided herein shall survive any termination of this Lease upon a total taking under Section 9.39.3. 17.10 Mortgagee Clauses. A standard mortgagee clause naming each Leasehold Mortgagee may be added to any and all insurance policies required to be carried by Tenant hereunder, provided that any such Leasehold Mortgagee shall hold and apply such insurance proceeds subject to the provisions of this Lease to the extent not in conflict with the terms of such Leasehold Mortgage. 17.11 No Waiver. No payment made to Lessor by a Leasehold Mortgagee shall constitute agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold Mortgagee having made any payment to Lessor pursuant to County and/or Agency’s wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment or portion thereof. 17.12 Fees and Costs. Tenant agrees to reimburse Lessor for its reasonable attorneys' fees and costs incurred in connection with Lessor’s review and/or approval of any documentation which may be required in connection with any Leasehold Mortgage by Tenant as provided herein. 17.13 No Termination, Cancellation, Surrender or Modification. Without the prior written consent of each Leasehold Mortgagee, (a) this Lease may not be terminated or cancelled by mutual agreement of County, Agency and Tenant, (b) Lessor may not accept the surrender this Lease or the Leasehold Estate created hereunder without the consent of each Leasehold Mortgagee, and (c) Commented [ST26]: Mirrors Stanton Inn. We cannot have the default be recording priority when we have subordination agreements in place setting priority and the ground lessors are our junior lenders. Commented [ST27]: Again, this was agreed to in Stanton Inn. Commented [ST28]: From Stanton Inn. Senior deed of trust provisions must control. EXHIBIT 11 Page | 55 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 this Lease may not be amended, modified or supplemented (and any action taken in furtherance of any of the foregoing without the required consent of each Leasehold Mortgagee shall be void and of no effect). In addition, if any term or provision of this Lease gives Tenant the right to terminate or cancel this Lease, in whole or in part, no such termination or cancellation shall be or become effective unless Tenant has first received approval in writing by each Leasehold Mortgagee . 17.14 Effect of Foreclosure upon Base Rent. Notwithstanding anything to the contrary contained elsewhere in this Lease, (i) in no event shall any Leasehold Mortgagee (or its designee) be required to pay or cure, in order to prevent the termination of this Lease, to exercise its cure rights hereunder or to obtain a New Lease or otherwise, any Base Rent or any obligations under the County Loan Documents or the Agency Loan Documents (collectively, “Excluded Defaults”), and (ii) in no event shall any Leasehold Mortgagee (or its designee) or its (or their) successors and assigns be required to pay or cure any Base Rent which otherwise became due and payable prior to completion of any foreclosure under any Leasehold Mortgage (or acceptance of any assignment or deed in lieu thereof) or any obligations under the County Loan Documents or the Agency Loan Documents. Notwithstanding anything to the contrary set forth in this Lease, in no event shall “Annual Project Revenue” for purposes of calculating Base Rent under this Lease, include (i) the proceeds of a foreclosure sale by any Leasehold Mortgagee (or its nominee), or (ii) the proceeds of the first transfer by any such Leasehold Mortgagee (or its nominee) following any foreclosure or deed in lieu of foreclosure of a Leasehold Mortgage. ARTICLE XVIII BEST MANAGEMENT PRACTICES 18.1 Tenant and all of Tenant’s, subtenant, agents, employees and contractors shall conduct operations under this Lease so as to assure that pollutants do not enter municipal storm drain systems , in violation of applicable Laws, which systems are comprised of, but are not limited to curbs and gutters that are part of the street systems (“Stormwater Drainage System”), and to ensure that pollutants do not directly impact “Receiving Waters” (as used herein, Receiving Waters include, but are not limited to, rivers, creeks, streams, estuaries, lakes, harbors, bays and oceans). 18.2 The Santa Ana and San Diego Regional Water Quality Control Boards have issued National Pollutant Discharge Elimination System (“NPDES”) permits (“Stormwater Permits”) to the County of Orange, and to the Orange County Flood Control District (“District”) and cities within Orange County, as co-permittees (hereinafter collectively referred to as “NPDES Parties”) which regulate the discharge of urban runoff from areas within the County of Orange, including the Premises leased under this Lease. The NPDES Parties have enact ed water quality ordinances that prohibit conditions and activities that may result in polluted runoff being discharged into the Stormwater Drainage System. 18.3 To assure compliance with the Stormwater Permits and water quality ordinances, the NPDES Parties have developed a Drainage Area Management Plan (“DAMP”) which includes a Local Implementation Plan (“LIP”) for each jurisdiction that contains Best Management Practices (“BMPs”) that parties using properties within Orange County must adhere to. As used herein, a BMP is defined as a technique, measure, or structural control that is used for a given set of conditions to manage the quantity and improve the quality of stormwater runoff in a cost effective manner. These BMPs are found within the District and/or County’s LIP in the form of Model Maintenance Commented [ST29]: See Stanton Inn. EXHIBIT 11 Page | 56 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Procedures and BMP Fact Sheets (the Model Maintenance Procedures and BMP Fact Sheets contained in the DAMP/LIP shall be referred to hereinafter collectively as “BMP Fact Sheets”) and contain pollution prevention and source control techniques to eliminate non-stormwater discharges and minimize the impact of pollutants on stormwater runoff. 18.4 BMP Fact Sheets that apply to uses authorized under this Lease include the BMP Fact Sheets that are attached hereto as Exhibit C. These BMP Fact Sheets may be modified during the term of the Lease; and the Lessor shall provide Tenant with any such modified BMP Fact Sheets. Tenant, its agents, contractors, representatives and employees and all persons authorized by Tenant to conduct activities on the Premises shall, throughout the term of this Lease, comply with the BMP Fact Sheets as they exist now or are modified, and shall comply with all other requirements of the Stormwater Permits, as they exist at the time this Lease commences or as the Stormwater Permits may be modified. Tenant agrees to maintain current copies of the BMP Fact Sheets on the Premises throughout the term of this Lease. The BMPs applicable to uses authorized under this Lease must be performed as described within all applicable BMP Fact Sheets. 18.5 Tenant may propose alternative BMPs that meet or exceed the pollution prevention performance of the BMP Fact Sheets. Any such alternative BMPs shall be submitted to the Lessor for review and approval prior to implementation. 18.6 Lessor may enter the Premises and/or review Tenant’s records at any reasonabl e time during normal business hours to ensure that activities conducted on the Premises comply with the requirements of this Section. Tenant may be required to implement a self-evaluation program to demonstrate compliance with the requirements of this Section. ARTICLE XIX GENERAL CONDITIONS & MISCELLANEOUS PROVISIONS 19.1 Signs. Tenant agrees not to construct, maintain, or allow any signs, banners, flags, etc., upon the Premises except (a) as approved in writing in advance by Lessor, which approval may be withheld in the sole and absolute discretion of the Lessor, or (b) required by any of Tenant’s lenders, provided that any such signage is in compliance with all applicable Laws. Tenant further agrees not to construct, maintain, or allow billboards or outdoor advertising signs upon the Premises. Unapproved signs, banners, flags, etc., may be removed by Lessor without prior notice to Tenant. 19.2 Nondiscrimination. Tenant agrees not to discriminate against any person or class of persons by reason of sex, age (except as permitted by law), race, color, creed, physical handicap, or national origin in employment practices and in the activities conducted pursuant to this Lease. 19.3 Taxes and Assessments. Pursuant to California Revenue and Taxation Code Section 107.6, Tenant is specifically informed that this Lease may create a possessory interest which is subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and assessments (including but not limited to said possessory interest tax) which become due and payable upon the Premises or upon fixtures, equipment, or other property installed or constructed thereon, shall be the full responsibility of Tenant, and Tenant shall cause said taxes and assessments to be paid promptly. EXHIBIT 11 Page | 57 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 19.4 Quitclaim of Interest upon Termination. Upon termination of this Lease for any reason whatsoever in accordance with the terms of the Lease, Tenant shall execute, acknowledge, and deliver to Lessor, within five (5) business days, a good and sufficient deed, in a form as approved by the Lessor, whereby all right, title, and interest of Tenant in the Premises is quitclaimed back to Lessor (“Quitclaim Deed”). The Quitclaim Deed shall then be recorded by Lessor to remove any cloud on title created by this Lease. In the event that the Tenant fails to provide such Quitclaim Deed within five (5) additional business days after written demand by either the County or City, the Parties agree that the County and City will be damaged and entitled to compensation for those damages. Such actual damages will, however, be extremely difficult to ascertain. Therefore, if the Tenant does not provide the required Quitclaim Deed after such notice and cure period, in addition to any other remedy provided by law or equity, the Tenant shall pay the Lessor $2,000 per day for every day that passes until a Quitclaim Deed is delivered, which amount shall be deemed to constitute a reasonable estimate of Lessor’s damages and not a penalty. Such amount shall become due and payable by Tenant to Lessor for each calendar day that passes beyond the cure period. Notwithstanding the foregoing, if the Tenant has disputed the termination of the Lease by Lessor, upon a final determination by a court of competent jurisdiction that the Lease has not been terminated, Tenant shall not be subject to payment of the foregoing damages. 19.5 Public Records. Tenant acknowledges that any written information submitted to and/or obtained by Lessor from Tenant or any other person or entity having to do with or related to this Lease and/or the Premises, either pursuant to this Lease or otherwise, is a “public record” open to inspection and copying by the public pursuant to the California Public Records Act (Government Code §6250, et seq.) (“CPRA”) as now in force or hereafter amended, or any Law in substitution thereof, or otherwise made available to the public, unless such information is exempt from disclosure pursuant to the applicable sections of CPRA. In the event that a CPRA request is made for any financial statements and records (not including Gross Receipts Statements) and the Lessor determines that the records must be turned over, the Lessor will give Tenant fifteen (15) days’ written notice prior to turning over such records so that Tenant can take any necessary action , including, but not limited to, injunctive relief, to prevent Lessor from turning over such financial statements and records. 19.6 Attorney’s Fees. In any action or proceeding brought to enforce or interpret any provision of this Lease, or where any provision hereof is validly asserted as a defense, each Party shall bear its own attorneys’ fees and costs. 19.7 Payment Card Compliance. Should Tenant conduct credit/debit card transactions in conjunction with Tenant’s business with the County and/or Agency, on behalf of the County and/or Agency, or as part of the business that Tenant conducts on the Premises, Tenant covenants and warrants that it will during the course of such activities be Payment Card Industry Data Security Standard (“PCI/DSS”) and Payment Application Data Security Standard (“PA/DSS”) compliant and will remain compliant during the entire duration of its conduct of such activities. Tenant agrees to immediately notify Lessor in the event Tenant should ever become non-compliant at a time when compliance is required hereunder, and will take all necessary steps to return to compliance and shall be compliant within ten (10) days of the commencement of any such interruption. Upon demand by Lessor, Tenant shall provide to Lessor written certification of Tenant’s PCI/DSS and/or PA/DSS compliance. EXHIBIT 11 Page | 58 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 19.8 Right to Work and Minimum Wage Laws. 19.8.1. In accordance with the United States Immigration Reform and Control Act of 1986, Tenant shall require its employees that directly or indirectly service the Premises, pursuant to the terms and conditions of this Lease, in any manner whatsoever, to verify their identity and eligibility for employment in the United States. Tenant shall also require and verify that its contractors or any other persons servicing the Premises, pursuant to the terms and conditions of this Lease, in any manner whatsoever, verify the identity of their employees and their eligibility for employment in the United States. 19.8.2. Pursuant to the United States of America Fair Labor Standard Act of 1938, as amended, and State of California Labor Code, Section 1178.5, Tenant shall pay no less than the greater of the Federal or California Minimum Wage to all its employees that directly or indirectly service the Premises, in any manner whatsoever. Tenant shall require and verify that all its contractors or other persons servicing the Premises on behalf of the Tenant also pay their employees no less than the greater of the Federal or California Minimum Wage. 19.8.3. Tenant shall comply and verify that its general contractor complies with all other Federal and State of California laws for minimum wage, overtime pay, record keeping, an d child labor standards pursuant to the servicing of the Premises or terms and conditions of this Lease. 19.9 Declaration of Knowledge by Tenant. Tenant warrants that Tenant has carefully examined this Lease and by investigation of the site and of all matters relating to the Lease arrangements has fully informed itself as to all existing conditions and limitations affecting the construction of the Lease improvements and business practices required in the operation and management of the uses contemplated hereunder. 19.10 Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of California and the City. 19.11 Venue. The Parties hereto agree that this Lease has been negotiated and executed in the State of California and shall be governed by and construed under the laws of California. In the event of any legal action to enforce or interpret this Lease, the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California, and the Parties hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. Furthermore, the Parties hereto specifically agree to waive any and all rights to request that an action be transferred for trial to another county. 19.12 Headings and Titles. The captions of the Articles or Sections of this Lease are only to assist the Parties in reading this Lease and shall have no effect upon the construction or interpretation of any part hereof. 19.13 Interpretation. Whenever required by the context of this Lease, the singular shall include the plural and the plural shall include the singular. The masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts or omissions of Tenant, the term “Tenant” shall include Tenant’s agents, employees, contractors, invitees, successors or others using the Premises with Tenant’s expressed or implied permission. In any provision relating to the conduct, acts or omissions of County, the term “County” shall include County’s agents, employees, contractors, invitees, successors or others using the Premises with EXHIBIT 11 Page | 59 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 County’s expressed or implied permission. In any provision relating to the conduct, acts or omissions of Agency, the term “Agency” shall include Agency’s agents, employees, contractors, invitees, successors or others using the Premises with Agency’s expressed or implied permission. 19.14 Ambiguities. Each Party hereto has reviewed this Lease with legal counsel, and has revised (or requested revisions of) this Lease based on the advice of counsel, and therefore any rules of construction requiring that ambiguities are to be resolved against a particular Party shall not be applicable in the construction and interpretation of this Lease or any exhibits hereto. 19.15 Successors and Assigns. Except as otherwise specifically provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and assigns. All rights herein granted to any Leasehold Mortgagee of Tenant shall also apply to any Leasehold Mortgagee of any successor or assign of Tenant. 19.16 Time is of the Essence. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. 19.17 Severability. If any term or provision of this Lease is held invalid or unenforceable to any extent under any applicable law by a court of competent jurisdiction, the remainder of this Lease shall not be affected thereby, and each remaining term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. 19.18 Integration. This Lease, along with any exhibits, attachments or other documents affixed hereto or referred to herein and related Agency permits, constitute the entire agreement between County, Agency and Tenant relative to the leasing of the Premises. This Lease and such exhibits, attachments and other documents may be amended or revoked only by an instrument in writing signed by County, Agency and Tenant. County, Agency and Tenant hereby agree that no prior agreement, understanding or representation pertaining to any matter covered or mentioned in this Lease shall be effective for any purpose. 19.19 Notices. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, or electronic mail, shall be deemed received upon the earlier of (a) if personally delivered, the date of delivery to the address of the person to receive such notice, (b) if mailed, three (3) business days after the date of posting by the United States post office, (c) if given by electronic mail, when sent if before 5:00 p.m., otherwise on the next business day, or (d) if delivered by overnight delivery, one (1) business day after mailing. Any notice, request, demand, direction or other communication sent by electronic mail must be confirmed within by letter mailed or delivered within two business days in accordance with the foregoing. Either Party may change the address for notices by giving the other Party at least ten (10) calendar days’ prior written notice of the new address. If to Lessor: County of Orange c/o CEO/Corporate Real Estate 333 W. Santa Ana Blvd, 3rd Floor Santa, Ana, CA 92702 Attn: Chief Real Estate Officer Commented [ST30]: From Stanton. EXHIBIT 11 Page | 60 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 And to: Housing Authority of the City of Santa Ana 20 Civic Center Plaza (M-26) P.0. Box 1988 Santa Ana, California 92702 Attn: Housing Manager With a copy to: Office of the City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 If to Tenant: c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo, President and Chief Executive Officer And to: With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. And to: U.S. Bancorp Community Development Corporation 1307 Washington Ave., Suite 300 St. Louis, MO 63103 19.20 Amendments. This Lease is the sole and only agreement between the Parties regarding the subject matter hereof; other agreements, either oral or written, are void. Any changes to this Lease shall be in writing and shall be properly executed by all Parties. 19.21 Limited Partner Cure Rights. In the event the Tenant is a partnership, the Lessor agrees to accept a cure of any Event of Default by Tenant made by any one or more of the Tenant’s limited partners as if such cure had been made by Tenant, provided such cure is made in accordance with the applicable provisions of this Lease. 19.22 Dispositions of Abandoned Property. If Tenant abandons or quits the Premises or is dispossessed thereof by process of law or otherwise, title to any personal property belonging to and EXHIBIT 11 Page | 61 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 left on the Premises thirty (30) days after such event shall, at County and/or Agency’s option, be deemed to have been transferred to County and/or Agency. County and/or Agency shall have the right to remove and to dispose of such property at Tenant’s cost, including the cost of labor, materials, equipment and an administrative fee equal to fifteen percent (15%) of the sum of such costs without liability therefor to Tenant or to any person claiming under Tenant, and shall have no need to account therefor. At Lessor's option, Lessor may provide Tenant with an invoice for such costs, which invoice Tenant agrees to pay within fifteen (15) days of receipt. 19.23 Brokers. If Tenant has engaged a broker in this transaction pursuant to a separate agreement, Tenant shall be solely responsible for the payment of any broker commission or similar fee payable pursuant to such separate agreement. Tenant each hereby agree to indemnify and hold the Lessor harmless from and against all costs, expenses or liabilities (including attorney fees and court costs, whether or not taxable and whether or not any action is prosecuted to judgment) incurred by the County and/or Agency in connection with any claim or demand by a person or entity for any broker’s, finder’s or other commission or fee from the County and/or Agency in connection with the Tenant’s entry into this Lease and the transactions contemplated hereby based upon any alleged statement or representation or agreement of the Tenant. No broker, finder or other agent of any Party hereto shall be a third-party beneficiary of this Lease 19.24 No Partnership. This Lease shall not be construed to constitute any form of partnership or joint venture between County, Agency and Tenant. County, Agency and Tenant mutually acknowledge that no business or financial relationship exists between them other than as County, Agency and Tenant, and that County and Agency is not responsible in any way for the debts of Tenant or any other Party. 19.25 Authorization. County, Agency and Tenant (each, a “signing party”) each represents and warrants to the other that the person or persons signing this Lease on behalf of the signing party has full authority to do so and that this Lease binds the signing party. Concurrently with the execution of this Lease, the Tenant shall deliver to the Lessor a certified copy of a resolution of the signing party’s board of directors or other governing board authorizing the execution of this Lease by the signing party. 19.26 Recording. This Lease itself shall not be recorded, but in the event that the Tenant encumbers the leasehold as set forth in Article XVII, a memorandum hereof may be recorded in the form of Exhibit D attached hereto (the “Memorandum”). The Memorandum may be executed concurrently with this Lease and thereafter recorded in the Official Records of the County Recorder on the Effective Date of this Lease has occurred. Tenant shall be responsible for the payment of all charges imposed in connection with the recordation of the Memorandum, including, without limitation, any documentary transfer tax imposed in connection with this transaction and all recording fees and charges. 19.27 Exhibits. This Lease contains the following exhibits, schedules and addenda, each of which is attached to this Lease and incorporated herein in its entirety by this reference: Exhibit A: Legal Description of the Premises Exhibit A-1: Rendering of the Premises Exhibit B: Initial Improvements EXHIBIT 11 Page | 62 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 Exhibit C: Best Management Practices Fact Sheets Exhibit D: Form of Memorandum of Lease 19.28 Consent/Duty to Act Reasonably. Except as otherwise expressly provided herein, whenever this Lease grants County, Agency and/or Tenant the right to take any action, grant any approval or consent, or exercise any discretion, County, Agency and/or Tenant shall act reasonably and in good faith and take no action which might result in the frustration of the other Party’s reasonable expectations concerning the benefits to be enjoyed under this Lease. 19.29 Counterparts. For the convenience of the Parties to this Lease, this Lease may be executed in several original counterparts, each of which shall together constitute but one an d the same agreement. Original executed pages may be assembled together into one fully executed document. 19.30. No Merger. The interests created by this Lease shall not be extinguished by merger of any or all of the ownership interests the Premises or the Improvements in one person or entity. 19.31 Cooperation of County and Agency. County and Agency hereby agree that (a) Agency staff shall be responsible for administering the operation of the Project to insure it is being used in conformance with this Lease, and (b) Agency staff shall serve as administrator of the Lease with the Tenant and coordinate with the County as necessary. County and Agency hereby agree to work cooperatively and expeditiously to provide written consent (or written refusal to provide consent) to Tenant, the Leasehold Mortgagees and Limited Partner hereunder. [Signatures On Following Pages] EXHIBIT 11 Page | 63 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 IN WITNESS WHEREOF, the Parties have executed this Lease on the date first written above. TENANT WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ____________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ____________________ Dora Leong Gallo, President and Chief Executive Officer APPROVED AS TO FORM: SONIA CARAVALHO AUTHORITY GENERAL COUNSEL By: ________________________ Ryan O. Hodge, Assistant City Attorney Date _______________________ LESSOR HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE HOUSING SUCCESSOR AGENCY a public body, corporate and politic By: ________________________ Steven A. Mendoza, Executive Director Date _______________________ EXHIBIT 11 June 9, 2022 EXHIBIT 11 Page | 64 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 APPROVED AS TO FORM: COUNTY COUNSEL By: ________________________ Deputy Date _______________________ COUNTY OF ORANGE, a political subdivision of the State of California __________________________________ Thomas A. Miller, Chief Real Estate Officer Orange County, California EXHIBIT 11 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 11 Page | 67 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 EXHIBIT A-1 RENDERING OF THE PROPERTY EXHIBIT 11 EXHIBIT 11 A-3THE CROSSROADS AT WASHINGTON SANTA ANA, CA 0 20 40 80 ENTITLEMENT SUBMITTAL DP NO. 2019-39, MASTER ID NO. 2019-155122 © 2020 WILLIAM HEZMALHALCH ARCHITECTS, INC. DBA WHA. | 2018265 | 02-03-2020 CONCEPTUAL PERSPECTIVE RENDERING | SANTA ANA BOULEVARD NOTE: ARTIST CONCEPTION; LANDSCAPE, COLORS, MATERIALS AND APPLICATION MAY VARY. EXHIBIT 11 A-4THE CROSSROADS AT WASHINGTON SANTA ANA, CA 0 20 40 80 ENTITLEMENT SUBMITTAL DP NO. 2019-39, MASTER ID NO. 2019-155122 © 2020 WILLIAM HEZMALHALCH ARCHITECTS, INC. DBA WHA. | 2018265 | 02-03-2020 CONCEPTUAL PERSPECTIVE RENDERING | WASHINGTON AVENUE NOTE: ARTIST CONCEPTION; LANDSCAPE, COLORS, MATERIALS AND APPLICATION MAY VARY. EXHIBIT 11 A-5THE CROSSROADS AT WASHINGTON SANTA ANA, CA 0 20 40 80 ENTITLEMENT SUBMITTAL DP NO. 2019-39, MASTER ID NO. 2019-155122 © 2020 WILLIAM HEZMALHALCH ARCHITECTS, INC. DBA WHA. | 2018265 | 02-03-2020 70'-11"18'-0"18'-0"24'-0"18'-0"8'-6" TYP.10'-6"55'-11" 5'-0" 8'-6"4'-3"5'-0"6'-1"7'-5"5'-9"5'-0"15'-0"R42'-0"TRASH TRUCK TURNING RADIUS10'-0"8'-2"10'-0"T 7'-0" 7'-3" 47'-4" 6'-0" 6'-0"6'-0"6'-0"5'-0"7'-2"8'-9" 10'-0" 15'-0" 19'-2"14'-1" 70'-11"18'-0"18'-0"24'-0"18'-0"8'-6" TYP.10'-6"55'-11" 5'-0" 8'-6"4'-3"5'-0"6'-1"7'-5"5'-9"5'-0"15'-0"R42'-0"TRASH TRUCK TURNING RADIUS10'-0"8'-2"10'-0"T 7'-0" 7'-3" 47'-4" 6'-0" 6'-0"6'-0"6'-0"5'-0"7'-2"8'-9" 10'-0" 15'-0" 43 Cubic Yards Required (86 Units x 0.5 CY/Unit) 48 Cubic Yards Provided (12 Bins x 4 CY/Bin) Notes: • Minimum vertical clearance of 25’ at the staging area for bin service clearance. • Minimum 13’ vertical clearance for scout truck. • All staging areas are to be onsite. No street staging is permitted. • All driveway and staging areas must be able to sustain a minimum gross weight of 60,000 lbs. per vehicle. • Maximum size of bin shall be 4 cubic yards. • Maximum number of pick-ups is 2 times per week for residential projects only. 0 10 20 40 ARCHITECTURAL SITE PLAN 0 10 20 40 N E. SANTA ANA BLVD.EVA SOUND WALL ALONG PROPERTY LINE EMER G E N C Y V E H I C L E TURN A R O U N D LINE OF UNITS ABOVE TRAS H T R U C K TURN A R O U N D LEGEND ACCESSIBLE PARKING SPACE ACCESSIBLE PATH OF TRAVEL ELECTRIC VEHICLE PARKING TANDEM PARKING SPACE # FIRE HYDRANT VEHICULAR ACCESS EMERGENCY VEHICLE ACCESS TRASH / RECYCLING WAS H I N G T O N A V E Tandem Parking. The term “tandem space or stall”...shall mean a parking stall that is not independently accessible because another stall is located immediately behind it. INDICATES NUMBER OF TANDEM SPACES 11T 38T 31T 21T EV PARKING CALGreen 2016, 4.106.2 Infrastructure for future installation of EV charging equipment Parking Ratio Parking Provided EV Spaces 3% of Parking Prov. 1 Space Req 7 Spaces 1 Space 4 Spaces Req 113 Spaces 3 Spaces 1 Acc. Space ACCESSIBLE PARKING CBC 11B-208.2.3.1 Table 11B-208.2 11B-208.2.4: Van Parking Spaces Per Table 11B-208.2 Parking Provided Acc. Spaces 1-25 Spaces 1 Space Req 7 Spaces 1 Space 101-150 Spaces 5 Spaces Req 113 Spaces 4 Spaces 1 Van Space PARKING PROVIDED Use Type Parking Count Standard Spaces 82 Spaces Tandem Spaces (31.7%)38 Spaces TOTAL PARKING PROVIDED (13.7% REDUCTION)120 Spaces * SEE CS-2 FOR PARKING ALLOCATION NOTES SEE CIVIL SITE PLANS FOR EXISTING CONDITIONS, IMPROVEMENTS AND UTILITIES SEE LANDSCAPE FOR PLANTING, WALKWAYS, SITE AMENITIES, WALLS AND FENCING #T EV PROPOSED TRANSFORMER LOCATION * 5 FREEW A Y O F F- R A M P COMMUNITY SERVING RETAIL (2-STORY VOLUME) 1,060 S.F. MULTI-PURPOSE ROOM EMER G E N C Y V E H I C L E TURN A R O U N D 40' X 16' TRASH TRUCK STAGING AREA T/R T/R T/R T/R 40' X 1 6 ' TRAS H T R U C K STAGI N G A R E A 40' X 1 6 ' TRAS H T R U C K STAGI N G A R E A *PROVIDE 4" ROLLED CURB, SEE CIVIL150' HOSE PULL DISTANCE * 286.9' PL 150.4' PL 1 6 6 . 0 ' ( 4 5 ' R A D ) P L 62.7' ( 7 2 ' R A D ) P L25.1' PL621.3' P L 193.7' PL133.8' PL MAINT. SHOP SOCIAL SERVICE LOUNGE SOCIAL SERVICE OFFICE MAIL ENTRY FOYER TECH LAB STORCONF OFFICE OFFICE WORK AREA LOBBY RECPT GALLERY LAUNDRY UNIT E UNIT BUNIT B UNIT B JANITOR M W POOL EQ. UNIT BUNIT B UNIT A UNIT B UNIT A UNIT C UNIT C UNIT C UNIT C UNIT C UNIT C UNIT C UNIT C UNIT D2 UNIT D2UNIT D2 UNIT D1 UNIT D1 SIDE YARD SETBACK 0'-0" REQUIRED SIDE Y A R D S E T B A C K 0 ' - 0 " R E Q U I R E D FRONT YARD SETBACK 0'-0" REQUIRED REAR YARD SETBACK 15'-0" REQUIREDMECH DOG RUN RR POOL TOT LOT BBQ & PICNIC AREA BBQ AREA GATEGATEUNIT D1EVEVEVEVRETAILRETAILRETAILUNIT A STOR. LOCKERS ELEV. MACH.EVUSPSSTAFFSTAFFBIKE RACKS EXHIBIT 11 Page | 68 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 EXHIBIT B INITIAL IMPROVEMENTS The proposed Project includes the development of two residential buildings with 86 units surrounding two interior, landscaped courtyard/amenity spaces. The Project includes 16 studio units, 26 one bedroom units, 22 two-bedroom units, 17 three-bedroom units, and 5 four-bedroom units. All units will be flat apartments located on the first, second, third and fourth floors. In addition, a proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate 5 ramp. Approximately 3,500 square foot of interior community amenities and leasing offices is designed to accommodate supportive and management services. The Project will be 100% affordable to households earning no more than 30 percent of Area Median Income (AMI) for Orange County of which 43 units will be set-aside for Permanent Supportive Housing (PSH), with one exempt 2-bedroom managers unit. The unit mix and rent restrictions are as follows, provided, however, the rent and income restrictions applicable to the Project shall be set forth in and subject to the terms of the County Loan Regulatory Agreement: Bedroom Size 30% AMI (PSH) 30% AMI Manager’s Unit Total Units Studios 16 16 One-Bedroom 26 26 Two-Bedroom 1 20 1 22 Three-Bedroom 17 17 Four-Bedroom 5 5 TOTAL 43 42 1 86 [We understand that there will be float up language inSection 2(g) of the County’s Loan Regulatory Agreement and the Agency’s Regulatory Agreement(s). Please mirror that float up language here on this exhibit (as the County did on Stanton Inn) or include a cross reference to those sections here with an indication that it appliesregarding a loss of subsidy is incorporated herein as if set forth at full length herein. Thanks.] EXHIBIT 11 Page | 69 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 EXHIBIT C Best Management Practices (“BMPs” Fact Sheets) Best Management Practices can be found at: http://www.ocwatersheds.com/documents/bmp which website may change from time to time. BMPs apply to the TENANT's defined Premises and BMPs also apply to the TENANT’s Contractor therefore TENANT shall cause Contractor to be responsible for implementing and complying with all BMP Fact Sheet requirements that apply to construction activity with respect to the Improvements, and also including, without limiting the generality of the foregoing, site preparation, landscaping, installation of utilities, street construction or improvement and grading or filling in or on the Premises. TENANT is to be aware that the BMP clause within this Lease, along with all related BMP Exhibits, may be revised, and may incorporate more than what is initially being presented in this Lease. Suggested BMPs Fact Sheets may include, but may not be limited to, the following list shown below and can be found at: http://www.ocwatersheds.com/documents/bmp/industrialcommercialbusinessesactivities (which website may change from time to time): IC3 Building Maintenance IC4 Carpet Cleaning IC6 Contaminated or Erodible Surface Areas IC7 Landscape Maintenance IC9 Outdoor Drainage from Indoor Areas IC10 Outdoor Loading/Unloading of Materials IC12 Outdoor Storage of Raw Materials, Products, and Containers IC14 Painting, Finishing, and Coatings of Vehicles, Boats, Buildings, and Equipment IC15 Parking & Storage Area Maintenance IC17 Spill Prevention and Cleanup IC21 Waste Handling and Disposal IC22 Eating and Drinking Establishments IC23 Fire Sprinkler Testing/Maintenance IC24 Wastewater Disposal Guidelines EXHIBIT 11 Page | 70 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 EXHIBIT D FORM OF MEMORANDUM OF LEASE MEMORANDUM OF LEASE This is a Memorandum of Lease (“Memorandum”) made and entered into as of this __________ day of __________, 20___, by and between the County of Orange, a political subdivision of the State of California, the Housing Authority of the City of Santa Ana, a public body, corporate and politic (collectively, the “Lessor”) and __________, (“Tenant”), residing at _________, upon the following terms: 1. Lease. The provisions set forth in a written ground lease between the parties hereto dated __________ (“Lease”), are hereby incorporated by reference into this Memorandum. 2. Subject Premises. The Premises which are the subject of the Lease are more particularly described as on Exhibit A, attached hereto 3. Effective Date of Lease. The Lease shall be deemed to have commenced on __________ (the “Effective Date”) as set forth within the terms of the Lease. 4. Term. The Term of the Lease shall be Sixty-Five (65) years from the Effective Date as stated in the written Lease. The Term shall commence on the date hereof and terminate Sixty-Two (62) years from the Commencement Date, which is the date on which a Certificate of Occupancy is issued for the Project, provided, however the Term shall be no longer than sixty five (65) years from the Effective Date. 5. Duplicate Copies of the originals of the Lease are in the possession of the Lessor and Tenant and reference should be made thereto for a more detailed description thereof and for resolution of any questions pertaining thereto. The addresses for Lessor and Tenant are as follows: If to Lessor: County of Orange c/o CEO/Corporate Real Estate 333 W. Santa Ana Blvd, 3rd Floor Santa, Ana, CA 92702 Attn: Chief Real Estate Officer And to: Housing Authority of the City of Santa Ana 20 Civic Center Plaza (M-26) P.0. Box 1988 Santa Ana, California 92702 Attn: Housing Manager With a copy to: Office of the City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 EXHIBIT 11 Page | 71 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 If to Tenant: c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo And to: With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. 6. Purpose. It is expressly understood and agreed by all Parties that the sole purpose of this Memorandum is to give record notice of the Lease; it being distinctly understood and agreed that said Lease constitutes the entire lease and agreement between Lessor and Tenant with respect to the Premises and is hereby incorporated by reference. The Lease contains and sets forth additional rights, terms, conditions, duties, and obligations not enumerated within this instrument which govern the Lease. This Memorandum is for informational purposes only and nothing contained herein may be deemed in any way to modify or vary any of the terms or conditions of the Lease. In the event of any inconsistency between the terms of the Lease and this instrument, the terms of the Lease shall control. The rights and obligations set forth herein shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, representatives, successors, and assigns. EXHIBIT 11 Page | 72 4894-6811-3695v.2 0017787-000542 4894-6811-3695v.2 0017787-000542 IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum pursuant to due authorization on the dates herein acknowledged. COUNTY: By: ______________________ Name: ______________________ Title: ______________________ AGENCY: By: ______________________ Name: ______________________ Title: ______________________ TENANT: By: ______________________ Name: ______________________ Title: ______________________ By: ______________________ Name: ______________________ Title: ______________________ EXHIBIT 11 Document comparison by Workshare Compare on Wednesday, June 8, 2022 2:49:21 PM Input: Document 1 ID file://C:\Users\switt\Documents\US BANK - CCRC - CROSSROADS AT WASHINGTON - DWT _ATT Comments to Ground Lease Agreement (1001985-1).docx Description US BANK - CCRC - CROSSROADS AT WASHINGTON - DWT _ATT Comments to Ground Lease Agreement (1001985-1) Document 2 ID file://C:\Users\switt\Documents\Crossroads at Washington Ground Lease - County Clean - 6-8-22.docx Description Crossroads at Washington Ground Lease - County Clean - 6-8-22 Rendering set Standard Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 74 Deletions 87 Moved from 1 Moved to 1 Style changes 0 EXHIBIT 11 Format changes 0 Total changes 163 EXHIBIT 11 Page 1 RECORDING REQUESTED BY: Department of Toxic Substances Control and Housing Authority of the City of Santa Ana 20 Civic Center Plaza (M- 26) Santa Ana, California 92701 WHEN RECORDED, MAIL TO: Department of Toxic Substances Control 5796 Corporate Ave Cypress, California 90630 Attention: A. Edward Morelan PG., CEG., Branch Chief Site Mitigation and Cleanup SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE LAND USE COVENANT AND AGREEMENT ENVIRONMENTAL RESTRICTIONS County of Orange, Assessor Parcel Number(s): 398-092-14 The Crossroads at Washington 401955 _____________________________________________________________________ EXHIBIT 12 Page 2 This Land Use Covenant and Agreement ("Covenant") is made by and between Housing Authority of the City of Santa Ana (the "Covenantor"), the current owner of property located at 1126 and 1146 East Washington Avenue, Santa Ana, in the County of Orange, State of California (the "Property"), and the Department of Toxic Substances Control (the "Department"). Pursuant to Civil Code section 1471, the Department has determined that this Covenant is reasonably necessary to protect present or future human health or safety or the environment as a result of the presence on the land of hazardous materials as defined in Health and Safety Code section 25260. The Covenantor and the Department hereby agree that, pursuant to Civil Code section 1471 and Health and Safety Code section 25355.5, the use of the Property be restricted as set forth in this Covenant and that the Covenant shall co nform with the requirements of California Code of Regulations, title 22, section 67391.1 . ARTICLE I STATEMENT OF FACTS 1.1. Property Location. The Property that is partially subject to this Covenant, totaling approximately 1.49 acres. is more particularly described in the attached Exhibit A, “Legal Description”, and depicted in Exhibit B, Plot Plan. The Property is located in the area now generally bounded by East Washington Avenue to the north, Interstate-5 off-ramp to the east, and parcel 398-092-13 to the south. The Property is also identified as County of Orange, Assessor Parcel Number 398-092-14. (a) A limited portion of the Property will be subject to the restrictions of this Covenant (“Restricted Area”), and is more particularly described in Exhibit "C," It is located [describe restricted area location, with gps coordinates (33.754899, - 117.854681 to the north east, 33.754899, -117.854856 to the north west, 3.754748, - 117.854856 to the south west, and 33.754748, -117854681 to the south east) and/or physical/permanent architectural landmarks. 1.2. Remediation of Property. This Property has been investigated and/or remediated under the Department’s oversight. The Department approved a Supplemental Site Investigation, Screening Level Human Health Risk Assessment, Removal Action Workplan in accordance with Health and Safety Code, division 20, chapter 6.8. The remediation activities conducted at the Property include EXHIBIT 12 Page 3 (1) excavation and offsite disposal of soil contaminated with arsenic, lead, chromium, and petroleum hydrocarbons, and (2) institutional controls to restrict construction over the area of soil vapor contaminated with Tetrachloroethene beneath the western portion of the North parcel. Hazardous substances, including Tetrachloroethene, remain at the Property above levels acceptable for unrestricted land use. 1.3. Basis for Environmental Restrictions. As a result of the presence of hazardous substances, which are also hazardous materials as defined in Health and Safety Code section 25260, at the Property, the Department has concluded that it is reasonably necessary to restrict the use of the Restricted Area described in Exhibit C, in order to protect present or future human health or safety or the environment, and that this Covenant is required as part of the Department-approved remedy for the Property. The Department has also concluded that the Property, as remediated and when used in compliance with the Environmental Restrictions of this Covenant, does not present an unacceptable risk to present and future human health or safety or the environment. ARTICLE II DEFINITIONS 2.1. Department. "Department" means the California Department of Toxic Substances Control and includes its successor agencies, if any. 2.2. Environmental Restrictions. “Environmental Restrictions” means all protective provisions, covenants, restrictions, requirements, prohibitions, and terms and conditions as set forth in this Covenant. 2.3. Improvements. “Improvements” includes, but is not limited to buildings, structures, roads, driveways, improved parking areas, wells, pipelines, or other utilities. 2.4. Lease. “Lease” means lease, rental agreement, or any other document that creates a right to use or occupy any portion of the Property. 2.5. Occupant. "Occupant" or “Occupants” means Owner and any person or entity entitled by ownership, leasehold, or other legal relationship to the right to occupy any portion of the Property. 2.6. Owner. "Owner" or “Owners” means the Covenantor, and any successor in interest including any heir and assignee, who at any time holds title to all or any EXHIBIT 12 Page 4 portion of the Property. (May add paragraph 2.7 to define “Remedial System” if necessary.) ARTICLE III GENERAL PROVISIONS 3.1. Runs with the Land. This Covenant sets forth Environmental Restrictions that apply to and encumber the Restricted Area and every portion thereof no matter how it is improved, held, used, occupied, leased, sold, hypothecated, encumbered, or conveyed. This Covenant: (a) runs with the land pursuant to Civil Code section 1471 and Health and Safety Code section 25355.5; (b) inures to the benefit of and passes with each and every portion of the Restricted Area; (c) is for the benefit of and is enforceable by the Department; and (d) is imposed upon the entire Restricted Area unless expressly stated as applicable only to a specific portion thereof. 3.2. Binding upon Owners/Occupants. This Covenant: (a) binds all Owners of the Property, their heirs, successors, and assignees; and (b) the agents, employees, and lessees of the Owners and the Owners’ heirs, successors, and assignees. Pursuant to Civil Code section 1471, all successive Owners of the Property are expressly bound hereby for the benefit of the Department; this Covenant, however, is binding on all Owners and Occupants, and their respective successors and assignees, only during their respective periods of ownership or occupancy except that such Owners or Occupants shall continue to be liable for any violations of, or non-compliance with, the Environmental Restrictions of this Covenant or any acts or omissions during their ownership or occupancy. 3.3. Incorporation into Deeds and Leases. This Covenant shall be incorporated by reference in each and every deed and Lease for any portion of the Property. 3.4. Conveyance of Property. The Owner and new Owner shall provide Notice to the Department not later than 30 calendar days after any conveyance or receipt of any ownership interest in the Property (excluding Leases, and mortgages, liens, and other non-possessory encumbrances). The Notice shall include the name and mailing address of the new Owner of the Property and shall reference the site name and site code as listed on page one of this Covenant. The notice shall also include the Assessor’s Parcel EXHIBIT 12 Page 5 Number(s) noted on page one. If the new Owner’s property has been assigned a different Assessor Parcel Number, each such Assessor Parcel Number that covers the Property must be provided. The Department shall not, by reason of this Covenant, have authority to approve, disapprove, or otherwise aff ect proposed conveyance, except as otherwise provided by law or by administrative order. 3.5. Costs of Administering the Covenant to Be Paid by Owner. The Department has already incurred and will in the future incur costs associated with this Covenant. Therefore, the Covenantor hereby covenants for the Covenantor and for all subsequent Owners that, pursuant to California Code of Regulations, title 22, section 67391.1(h), the Owner agrees to pay the Department’s cost s in administering, implementing and enforcing this Covenant. ARTICLE IV RESTRICTIONS AND REQUIREMENTS 4.1. Prohibited Uses. The Restricted Area shall not be used for any of the following purposes without prior written approval by the Department: (a) A residence, including any mobile home or factory-built housing, constructed, or installed for use as residential human habitation. (b) A hospital for humans. (c) A public or private school for persons under 18 years of age. (d) A day care center for children. (e) A habitable structure of any kind. 4.2. Soil Management. Soil management activities on the Restricted Area are subject to the following requirements in addition to any other applicable Environmental Restrictions: (a) No activities that will disturb the soil at or below 5 feet below grade (e.g., excavation, grading, removal, trenching, filling, earth movement , mining, or drilling) shall be allowed on the Restricted Area without pre-approval by the Department in writing. (b) Any soil brought to the surface by grading, excavation, trenching or backfilling shall be managed in accordance with all applicable provisions of state and federal law. EXHIBIT 12 Page 6 4.3. Prohibited Activities. The following activities shall not be conducted on the Restricted Area: (a) Drilling for any water, oil, or gas without prior written approval by the Department. (b) Extraction or removal of groundwater without a Groundwater Management Plan pre-approved by the Department in writing. 4.4. Access for Department. The Department shall have reasonable right of entry and access to the Restricted Area for inspection, investigation, remediation, monitoring, and other activities as deemed necessary by the Department in order to protect human health or safety or the environment. 4.6. Inspection and Reporting Requirements. The Owner shall conduct an annual inspection of the Restricted Area verifying compliance with this Covenant and shall submit an annual inspection report to the Department for its approval by January 15th of each year. The annual inspection report must include the dates, times, and names of those who conducted the inspection and reviewed the annual inspection report. It also shall describe how the observations that were the basis for the statements and conclusions in the annual inspection report were performed (e.g., drive by, fly over, walk in, etc.). If any violation is noted, the annual inspection report must detail the steps taken to correct the violation and return to compliance. If the Owner identifies any violations of this Covenant during the annual inspection or at any other time, the Owner must within 10 calendar days of identifying the violation: (a) determine the identity of the party in violation; (b) send a letter advising the party of the violation of the Covenant; and (c) demand that the violation cease immediately. Additionally, a copy of any correspondence related to the violation of this Covenant shall be sent to the Department within 10 calendar days of its original transmission. ARTICLE V ENFORCEMENT 5.1. Enforcement. Failure of the Owner or Occupant to comply with this Covenant shall be grounds for the Department to require modification or removal of any Improvements constructed or placed upon any portion of the Restricted Area in violation of this Covenant. Violation of this Covenant, such as failure to submit (including EXHIBIT 12 Page 7 submission of any false statement) record or report to the Department, shall be grounds for the Department to pursue administrative, civil, or criminal actions, as provided by law. ARTICLE VI VARIANCE, REMOVAL AND TERM 6.1. Variance from Environmental Restrictions. Any person may apply to the Department for a written variance from any of the Environmental Restrictions imposed by this Covenant. Such application shall be made in accordance with Health and Safety Code section 25223. 6.2 Removal of Environmental Restrictions. Any person may apply to the Department to remove any of the Environmental Restrictions imposed by this Covenant or terminate the Covenant in its entirety. Such application shall be made in accordance with Health and Safety Code section 25224. 6.3 Term. Unless ended in accordance with paragraph 6.2, by law, or by the Department in the exercise of its discretion, this Covenant shall continue in effect for 62 years from the effective date of the agreement. ARTICLE VII MISCELLANEOUS 7.1. No Dedication Intended. Nothing set forth in this Covenant shall be construed to be a gift or dedication, or offer of a gift or dedication, of the Property, or any portion thereof, to the general public or anyone else for any purpose whatsoever. 7.2. Recordation. The Covenantor shall record this Covenant, with all referenced Exhibits, in the County of Orange within 10 calendar days of the Covenantor's receipt of a fully executed original. 7.3. Notices. Whenever any person gives or serves any Notice ("Notice" as used herein includes any demand or other communication with respect to this Covenant), each such Notice shall be in writing and shall be deemed effective: (a) when delivered, if personally delivered to the person being served or to an officer of a corporate party being served; or (b) five calendar days after deposit in the mail, if mailed by United States mail, postage paid, certified, return receipt requested: To Owner: Housing Authority of the City of Santa Ana EXHIBIT 12 Page 8 20 Civic Center Plaza Santa Ana, CA 92702 And To Department: Branch Chief – Branch Chief Edward Morelan PG, CEG Any party may change its address or the individual to whose attention a Notice is to be sent by giving advance written Notice in compliance with this paragraph. 7.4. Partial Invalidity. If this Covenant or any of its terms are determined by a court of competent jurisdiction to be invalid for any reason, the surviving portions of this Covenant shall remain in full force and effect as if such portion found invalid had not been included herein. 7.5. Statutory References. All statutory or regulatory references include successor provisions. 7.6. Incorporation of Exhibits. All exhibits and attachments to this Covenant are incorporated herein by reference. IN WITNESS WHEREOF, the Covenantor and the Department hereby execute this Covenant. Covenantor: Housing Authority of the City of Santa Ana By: ___________________________________ Steven A. Mendoza Title: ___________________________________ Executive Director Date: ___________________________________ By: ___________________________________ Title: ___________________________________ EXHIBIT 12 Page 9 Date: ___________________________________ Department of Toxic Substances Control: By: ___________________________________ A. Edward Morelan, PG, CEG Title: ___________________________________ Branch Chief Date: ____________________________________ EXHIBIT 12 Page 10 State of California County of _________ On ________________________ before me, (space above this line is for name and title of the officer/notary), 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 tha t 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, _______________________________ (seal) Signature of 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. EXHIBIT 12 Page 11 State of California County of _________ On ________________________ before me, (space above this line is for name and title of the officer/notary), 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 tha t 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, _______________________________ (seal) Signature of 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. EXHIBIT 12 Page 12 State of California County of _________ On ________________________ before me, (space above this line is for name and title of the officer/notary), 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, _______________________________ (seal) Signature of 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. EXHIBIT 12 CPCE LOCATION EXHIBIT1126 & 1146 E. WASHINGTON AVE.SANTA ANA, CA 92701GNIREENE IGN600 Wilshire Blvd., Suite 1470, Los Angeles, California 90017tel 213.988.8802 fax 213.988.8803 www.fuscoe.comEXHIBIT 12 Department of Toxic Substances Control Jared Blumenfeld Secretary for Environmental Protection Meredith Williams, Ph.D., Director 5796 Corporate Avenue Cypress, California 90630 Gavin Newsom Governor Minor revisions and/or updates may be made to the sample Agreement prior to execution. Site Name: Address: Grantee/Applicant: Name: Organization: Address: Grant No. [Autogenerate “ECRG-2021- XXXX” when DTSC approves Grant Application] Equitable Community Revitalization Grant Agreement This Equitable Community Revitalization Grant Agreement (AGREEMENT) is entered into by and between [grantee name] (GRANTEE) and the Department of Toxic Substances Control (DTSC) (together the PARTIES). RECITALS WHEREAS, A.Senate Bill 158 (2021) authorizes DTSC to implement a new grant program to investigate and clean up contaminated properties in communities overburdened by pollution. B.Pursuant to Senate Bill 158, DTSC established the Equitable Community Revitalization Grant (ECRG), which provides financial assistance to communities via reimbursable grants to investigate and clean up brownfields through a competitive process. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 2 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. C. GRANTEE has submitted the application attached hereto as Exhibit A [upload] (ECRG Application) to DTSC for an ECRG in connection with certain property, or group of properties, commonly known as [site name(s)], in [city/town], California (Site). The Site is [The Sites are (for CWA)] depicted in the Site Map and Site Diagram [Site Maps and Site Diagrams (if needed for CWA)] in Exhibit B [upload] and Exhibit C [upload], respectively, and incorporated herein by reference. D. GRANTEE has provided documentation indicating that GRANTEE [is the owner of the Site] or [has written consent from the Site owner for GRANTEE to access the Site for the purposes of conducting ECRG Activities, which agreement is attached hereto as Exhibit D]. E. The CalEnviroScreen percentile score to the Site is [insert]. GRANTEE proposes to [Proposed Reuse]. [Describe what will improve and future use and benefits to the vulnerable community]. F. GRANTEE is willing to undertake the Proposed Reuse and requests DTSC provide ECRG funding to finance all, or a portion of: [a Community-wide Assessment, Site-specific Environmental Investigation, or Site-specific Environmental Cleanup] activities up to [$]. G. GRANTEE prepared a Scope of ECRG Activities attached hereto as Exhibit E [upload]. H. GRANTEE prepared a ECRG Activities Budget Detail Table outlining activities to be completed within two (2) years from execution date of this AGREEMENT, attached hereto as Exhibit F [upload]. I. GRANTEE provided a copy of the regulatory oversight agreement or application for oversight with a regulatory oversight agency [upload], attached hereto as Exhibit G [name State or local agency] to provide [Site-specific Environmental Investigation or Site-specific Environmental Cleanup oversight]. Regulatory oversight for Community-wide Assessment Grants is not required (but is still considered an allowable cost). J. DTSC determined that the ECRG Application is complete and that GRANTEE and the Site meet the eligibility requirements to receive the ECRG. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 3 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. NOW, THEREFORE, in consideration of the terms, conditions, recitals, and covenants contained herein, the PARTIES agree as follows: I. The term of this ECRG shall be a period of twenty-four months (24) months from AGREEMENT execution date, unless DTSC extends this AGREEMENT in writing. II. DTSC will allocate up to [$] to GRANTEE to complete the ECRG Activities within the specified two-year timeframe. III. GRANTEE will carry out the ECRG Activities in accordance with all applicable State and local laws. 1. FUND CONDITIONS 1.1 GRANTEE understands and agrees that all ECRG funds DTSC, provided via the reimbursement process, shall be used solely for the ECRG Activities to address hazardous substances within the Site as depicted in Exhibit C. 1.2 GRANTEE further understands and agrees that the receipt of any ECRG funds and all work performed on the Site using ECRG funds are conditioned upon GRANTEE’s full compliance with this AGREEMENT and the regulatory oversight agency. 1.3 GRANTEE agrees to document and keep separate all expenditures of the ECRG funds within the approved ECRG Activities Budget Detail Table. GRANTEE shall not exceed any of the costs shown in the approved ECRG Activities Budget. It is the responsibility of GRANTEE to pay any cost of the ECRG Activities that exceeds the ECRG allocated amount. 1.4 DTSC will disburse the approved amount to GRANTEE, subject to the availability of funds through normal DTSC reimbursement processes. Notwithstanding any other provision of this AGREEMENT, no disbursement shall be required at any time or in any manner which is in violation of, or in conflict with, federal or state laws, rules, or regulations. 2. CONTRACTING 2.1 If GRANTEE contracts for services to be reimbursed by the ECRG, those contracts shall generally be procured through a competitive process. GRANTEE shall make available to DTSC, upon request, records of procurement to demonstrate that contract pricing represents reasonable market rates. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 4 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 2.2 GRANTEE will undertake good faith efforts to contract for services and supplies with qualified Small Business Enterprises (SBEs), Disabled Veteran Enterprises (DVEs), and other disadvantaged and underrepresented group owned business enterprises. 3. EQUITABLE DEVELOPMENT GRANT COMMITMENTS 3.1 GRANTEE agrees to promote equitable development in one or more of the following ways: 3.1.1 Advance economic opportunity – Promote local entrepreneurs, enhance community-serving establishments and increase quality living wage jobs for local people. 3.1.2 Prevent displacement – Promote policies and actions that allow anyone who wants to live in a community to do so, especially current residents, and discourage displacement of viable small businesses that serve community needs. 3.1.3 Promote broader mobility and connectivity - Prioritize an effective and affordable public transportation network that supports transit- dependent communities and provides equitable access to core services and amenities, including employment, education, and health and social services. 3.1.4 Develop healthy and safe communities – Create built environments that enhance community health through public amenities (schools, parks, open spaces, complete streets, health care, and other services), access to affordable healthy food, improved air quality, and safe and inviting environments. 3.1.5 Promote environmental justice – Eliminate disproportionate environmental burdens and ensure an equitable share of environmental benefits for existing communities. Secure resources to mitigate and reverse the effects of environmental hazards past and present. 3.2 GRANTEE made the following measurable and quantifiable commitments in the Application, hereto attached as Exhibit H [upload Grant Commitments]. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 5 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 4. SITE ACCESS 4.1 GRANTEE shall ensure DTSC's employees, contractors, and consultants have access to the Site at all reasonable times for the duration of AGREEMENT. Nothing in this AGREEMENT is intended or shall be construed to limit in any way the right of entry or inspection that DTSC or any other agency may otherwise have by operation of law. 4.2 GRANTEE shall allow DTSC to take photographs of the Site, including activities at the Site, whenever DTSC accesses the Site pursuant to this AGREEMENT. 5. PUBLIC ENGAGEMENT 5.1 GRANTEE shall ensure that all ongoing and/or planned community engagement requirements are implemented in a timely manner. This includes public notifications and opportunities for public involvement on the ECRG Activities and the Proposed Reuse. 5.2 Upon request by DTSC, GRANTEE shall provide DTSC with copies of all community engagement activity related documents. 6. INVOICES 6.1 GRANTEE shall submit invoice reimbursement packages, or invoice batches through the DTSC Fluxx Portal. 6.2 Due to administrative costs required to process and reimburse invoices, Invoice reimbursement packages shall be submitted immediately whereupon the total $15,000 minimum per package/batch is reached (unless otherwise directed by DTSC), with the exception of the Final Invoice. 6.3 The Final Invoice may be submitted upon completion of ECRG Activities, when no more costs will be incurred, but no later than 26 months from the date of ECRG Grant award, or as otherwise directed by DTSC. 6.4 Invoice reimbursement requests must contain at least the information in substance and form of Exhibit I [Summary of Costs Form] attached hereto and the appropriate invoices specific to the approved ECRG Activities and Budget Detail Table. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 6 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 6.5 GRANTEE’s reimbursement requests for ECRG project management costs, if approved, should also be presented to DTSC as an invoice following the format described in Exhibit I. 6.6 Reimbursement requests shall include invoices supporting ECRG Activities specified in the Scope of ECRG Activities and associated Budget Detail Table. 6.7 DTSC will process reimbursement payments for acceptable invoices submitted through Fluxx. 6.8 GRANTEE shall ensure that none of the costs DTSC reimburses via the ECRG Grant are reimbursed by another source of public funding (e.g., DTSC’s Revolving Loan Fund Program or Site Cleanup Subaccount Program). 7. REPORTING 7.1 GRANTEE must submit quarterly reports on or before April 30, July 31, October 30, and January 31 within the term of the ECRG Grant. 7.2 Quarterly reports should follow the format DTSC provides, which may generally include ECRG Activity status and progress toward the Proposed Reuse, any hurdles that may affect the ECRG Activities or the Proposed Reuse, expended ECRG Grant funds for the quarter, and amount of ECRG Grant funds that are anticipated to be requested for reimbursement in the next quarter. 7.3 All work on the ECRG Activities performed pursuant to this AGREEMENT and with ECRG Grant funds shall be performed in a manner that meets or exceeds industry standards. 8. PERMITS AND LICENSES 8.1 GRANTEE, at its sole cost and expense, and from sources other than the ECRG Grant funds, shall be responsible for obtaining all professional, and equipment qualifications necessary to be qualified to perform this work under federal, state and local law, including permits, licenses, approvals, certifications, and inspections. GRANTEE shall ensure that all such qualifications are maintained in good standing during the term of this ECRG Grant. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 7 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 8.2 GRANTEE represents that none of the contractors or subcontractors undertaking the ECRG Activities is currently suspended, debarred, or otherwise declared ineligible to receive proceeds of the ECRG Grant funds. 9. PREVAILING WAGES 9.1 GRANTEE must carry out the ECRG Activities in accordance with State prevailing wages for all contracts and subcontracts and costs that will be reimbursed by ECRG Grant funds pursuant to California Labor Code Section 1720 et seq. 10. EQUAL EMPLOYMENT 10.1 GRANTEE shall comply with all State and Federal Equal Employment Opportunity laws. 11. ADA COMPLIANCE 11.1 GRANTEE will assure the State that it complies with the American with Disabilities Act (ADA) of 1990, which prohibits discrimination on the basis of disability, as well as all applicable regulations and guidelines issued pursuant to the ADA (42 U.S.C. § 12101 et seq.). 12. GRANT CLOSEOUT 12.1 GRANTEE shall provide DTSC with a Grant Closeout Notice to notify DTSC when the ECRG Activities have been completed, and no later than the last day of the two-year period covered under the grant award. 12.2 Within 60 days of submitting the Grant Closeout Notice, GRANTEE shall submit a closeout report, in the format DTSC provides, to summarize all actions taken, the resources committed, and any significant problems completing the ECRG Activities. The closeout report shall document that the ECRG Activities were performed in accordance with this AGREEMENT and regulatory agency oversight agreement. Closeout report shall include before and after photos of the site. 12.3 GRANTEE shall submit a Reuse and Grant Commitments letter report within 60 days following the completion of the Proposed Reuse. The report shall describe the Site’s new use, document performance of the Grant Commitments and include before and after photos of the Site. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 8 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 13. NOTIFICATIONS 13.1 All notices, requests, instructions, or other documents to be provided hereunder to either party by the other shall be in writing and addressed to the following contacts. To DTSC: DTSC ECRG Grant Contact DTSC ECRG Project Manager Name, Title: Name, Title: Address: Address: City, Zip: City, Zip: Phone: Phone: Fax: Fax: Email: Email: To GRANTEE: GRANTEE Organization Main Contact GRANTEE ECRG Project Manager Name, Title: Name, Title: Organization: Address: Address: City, Zip: City, Zip: Phone: Phone: Fax: Fax: Email: Email: 13.2 GRANTEE shall not transfer ownership of the Site during the term of this AGREEMENT without DTSC’s prior written approval. GRANTEE shall provide at least 60-days advance notice in writing to DTSC of any prospective change in GRANTEE’s title, name, partnership, or ownership along with sufficient documentation to allow DTSC to review the changes and determine if GRANTEE will continue to meet ECRG eligibility requirements. 14. WAIVER 14.1 Any forbearance DTSC issues with respect to any provision in this AGREEMENT shall in no way constitute DTSC’s waiver of any rights or privileges granted hereunder. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 9 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 14.2 No failure to exercise any power or right provided hereunder, or to insist on strict compliance with its obligations hereunder, shall constitute a waiver of right to DTSC’s demand at any time exact compliance with the terms hereof. 15. NONCOMPLIANCE AND TERMINATION 15.1 In the event GRANTEE fails to comply with any term, condition, or obligation of this AGREEMENT, GRANTEE shall be deemed in noncompliance of this AGREEMENT. Events by which GRANTEE shall be deemed to be in noncompliance include, but are not limited to, the following: 15.1.1 GRANTEE fails to timely respond to DTSC requests made in connection with this AGREEMENT; 15.1.2 GRANTEE fails to timely respond to regulatory entities providing oversight for the Site; 15.1.3 GRANTEE makes any false warranty, representation, or statement in, or in connection with, this AGREEMENT or the ECRG Application; 15.1.4 GRANTEE fails to provide complete or timely quarterly reports; 15.1.5 GRANTEE makes changes to the Proposed Reuse that cause the Site to no longer meet eligibility criteria for ECRG Grant; 15.1.6 GRANTEE fails to complete the ECRG Activities within the timeframe(s) required by this AGREEMENT; 15.1.7 GRANTEE fails to provide notification of change in partnership and Site ownership without prior notification and written consent. 15.2 In the event of GRANTEE noncompliance, DTSC shall provide written Notice of Noncompliance to GRANTEE. The Notice of Noncompliance shall provide a reasonable time for GRANTEE to cure, not less than 10 calendar days from the date of the notice. If GRANTEE fails to cure the noncompliance to the satisfaction of DTSC within the time period prescribed in the Notice of Noncompliance, DTSC may terminate the ECRG Grant and pursue any remedies available at law or in equity. 15.3 If GRANTEE is in noncompliance, DTSC may immediately withhold from GRANTEE all or any portion of the ECRG funding until such time the noncompliance is cured pursuant to this AGREEMENT. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 10 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 16. RECORD RETENTION, INSPECTION, AND DISCLOSURE 16.1 Within ten days of request by DTSC, GRANTEE shall provide DTSC with copies of Proposed Reuse plans to DTSC’s designated environmental project manager. 16.2 Within ten days of request by DTSC, GRANTEE shall provide DTSC with any documents or correspondence provided to the applicable regulatory oversight agency. 16.3 GRANTEE shall keep any applicable electronic data management system (e.g., EnviroStor or GeoTracker) up to date and in compliance with all electronic reporting requirements. 16.4 GRANTEE agrees to maintain financial and programmatic records pertaining to all matters relative to this ECRG Grant in accordance with generally accepted accounting principles and procedures. All such records and supporting documents shall be made available, upon request, for inspection or audit by DTSC or its representatives. GRANTEE shall retain all its records and supporting documentation applicable to this ECRG Grant for a period of five (5) years, after completion of ECRG Activities, except records that are subject to audit findings, which shall be retained an additional three (3) years after such findings have been resolved, if three years would extend retention past the initial five-year period. 16.5 GRANTEE agrees to permit DTSC or its designated representative to inspect and/or audit its records and books relative to this ECRG Grant at any time during normal business hours and under reasonable circumstances and to copy therefrom any information that DTSC deems relevant to this ECRG Grant. DTSC shall provide written notice to GRANTEE prior to implementing this provision. GRANTEE agrees to deliver the records or have the records delivered to DTSC or its designated representative at an address designated by such party. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 11 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 16.6 Upon request by DTSC, GRANTEE shall provide DTSC with copies of photographs GRANTEE has in its possession of the Site and activities at the Site, as well as copies of drawings GRANTEE has in its possession in connection with the Proposed Reuse plans for the Site. GRANTEE grants DTSC the right to distribute, transmit, publish, or copy, in any medium, either in whole or in part, the photographs or drawings DTSC obtains pursuant to this AGREEMENT for any use, including, but not limited to, project documentation, public outreach, web and social media content, and marketing materials. This subsection does not apply to photos or drawings that contain confidential business information. 16.7 GRANTEE grants DTSC the right to distribute, transmit, publish, or copy, in any medium, either in whole or in part, narratives, descriptions, and any other information provided to DTSC by GRANTEE pursuant to or in connection with this AGREEMENT and/or ECRG Application for any use, including, but not limited to, public outreach, web and social media content, and marketing materials. This subsection does not apply to confidential business information. 16.8 To the extent GRANTEE submits information to DTSC under this AGREEMENT that it alleges is confidential business information, GRANTEE shall clearly identify the information as such. 16.9 GRANTEE agrees that all data, plans, drawings, specifications, reports, computer programs, operating manuals, notes and other written or graphic work produced in the performance of this AGREEMENT and/or the ECRG Application shall be in the public domain to the extent to which release of such materials is required under the California Public Records Act. 17. NON-DISCRIMINATION 17.1 During the performance of the ECRG, GRANTEE, its contractors, and subcontractors will comply with Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Gov. Code §11135-11139.5) prohibiting discrimination based on sex, race, color, religion, ancestry, national origin, ethnic group identification, age, mental disability, physical disability, medical condition, genetic information, marital status, or sexual orientation. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 12 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 17.2 In compliance with Government Code section 11135, and if GRANTEE is a public entity, in compliance with Government Code sections 7290 et seq., GRANTEE agrees to make language assistance available free of charge to individuals with communication disabilities or limited proficiency in English, including interpreter services and written information in the prevalent languages in the community, in conducting public outreach and community engagement related to the ECRG Activities. 18. INDEMNIFICATION 18.1 GRANTEE agrees to protect, indemnify, defend and hold harmless, DTSC, its officers, administrators, agents, servants, employees and all other persons or legal entities to whom GRANTEE may be liable from, for or against any and all claims, demands, suits, losses, damages, judgments, costs and expenses, whether direct, indirect or consequential and including, but not limited to, all fees, expenses and charges of attorneys and other professionals, court costs, and other fees and expenses for bodily injury, including death, personal injury and property damage, arising out of or in connection with the performance of any work or any GRANTEE responsibility or obligation as provided herein and caused in whole or in part by any GRANTEE act, error, or omission, or GRANTEE agents, servants, employees, or assigns. 19. ASSIGNMENT 19.1 GRANTEE shall not assign or attempt to assign directly nor indirectly, any of its rights under this AGREEMENT or under any instrument referred to herein without DTSC’s prior written consent. 20. NO THIRD PARTY RIGHTS 20.1 This ECRG Grant is not intended to create or vest any rights in any third party, nor to create any third-party beneficiaries. 21. NO ORAL MODIFICATION 21.1 The terms of this AGREEMENT may not be amended except in writing, signed by all the parties hereto. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 13 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. 22. NONCOMPLIANCE STATUS 22.1 Under the laws of the State of California, GRANTEE shall not be: a. In violation of any order or resolution not subject to review promulgated by the California Air Resources Board or an air pollution control district; b. Subject to cease-and-desist order not subject to review issued pursuant to Section 13301 of the Water Code for violation of waste discharge requirements or discharge prohibitions; or c. Out of compliance with any applicable laws, ordinances, regulations, orders, and permits. 23. AFFIRMATION 23.1 The GRANTEE affirms that GRANTEE did not cause nor contribute to the release or threatened release of a hazardous substance at the Site(s) and is exempt from liability for any previous contamination at the Site(s). 24. SEVERABILITY 24.1 If any provision of this AGREEMENT shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired by such holding. 25. COUNTERPARTS 25.1 This AGREEMENT may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute the same instrument. April 28, 2022 EXHIBIT 13 Equitable Community Revitalization Grant Agreement [GRANTEE’s Name] Page 14 of 14 Minor revisions and/or updates may be made to the sample Agreement prior to execution. IN THE WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON THE DATE SET FORTH BELOW AND GRANTEE ACCEPTS THE AFOREMENTIONED TERMS AND CONDITIONS ELECTRONICALLY. [INSERT GRANTEE NAME] A [Insert Entity Type] BY: [Insert GRANTEE Signer’s Name and Title] Authorized Signatory Date: _____________________________________________ Department of Toxic Substances Control Site Mitigation and Restoration Program BY: Date: _____________________________________________ References: Exhibit A – Signed ECRG Application Exhibit B – Site Map Exhibit C – Site Diagram Exhibit D – Site Access Agreement Exhibit E – Scope of ECRG Activities Exhibit F – ECRG Activities Budget Detail Table Exhibit G – Regulatory Oversight Agreement Exhibit H – Grant Commitments Exhibit I – Summary of Costs Form* April 28, 2022 EXHIBIT 13 Exhibit I: Summary of Costs Grantee Name Date:Month DD, YYYY Street Address City, ST ZIP Code Agreement Number:ECRG-2021-XXXX Grant Period:MM/DD/YYYY to MM/DD/YYYY Site Name Site Address City, ST Zip Code Billing Period:MM/DD/YYYY to MM/DD/YYYY Budget Item Expended To Date TOTAL -$ Direct questions regarding billing to:Name XXX-XXX-XXXX Ext. XXXX Email address Budgeted Current -$ -$ Billing AmountAmount Sample*This is a sample format to summarize invoice requests for approved ECRG activities. Submission will be done through the grant portal. Minor revisions and/or updates may be made to the sample Agreement prior to execution. April 28, 2022 EXHIBIT 13 2206002.SA Page 1 19090.018.019 June 3, 2022 SUMMARY REPORT PURSUANT TO SECTION 33433 OF THE CALIFORNIA HEALTH AND SAFETY CODE ON A GROUND LEASE BY AND BETWEEN THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA AND THE COUNTY OF ORANGE AND WASHINGTON SANTA ANA HOUSING PARTNERS, L.P. The following Summary Report has been prepared pursuant to the requirements imposed by California Health and Safety Code Section 33433 (Section 33433). The report sets forth certain details of the proposed Ground Lease by and between the Housing Authority of the City of Santa Ana (Agency), the County of Orange (County) (collectively, the County and the Agency are referred to as “Lessor”) and Washington Santa Ana Housing Partners, L.P. (Tenant). In 2007, the former Community Redevelopment Agency of the City of Santa Ana (Former Redevelopment Agency) used Property Tax Increment Housing Set-Aside (Set-Aside) funds to purchase the property located at 1126, 1136 and 1146 Washington Avenue (Agency Site). Following the dissolution of redevelopment in California in 2012, this property was transferred as a housing asset to the Agency, acting as the housing successor to the Former Redevelopment Agency. The County owns an adjacent property to the south of the Agency Site (County Site). The County and Agency have executed a Joint Powers Agreement to provide a combined Agency Site and County Site (collectively “Site”), totaling approximately 2.28 acres of undeveloped land, to allow for the development of multifamily affordable housing project (Project). To effectuate the development of the Project, the Agency and County propose to ground lease the Site to the Tenant for no more than 65 years. The Tenant proposes to construct and operate an 86-unit apartment project that will be subject to long-term income and affordability covenants. Eighty-five (85) of the units will be restricted to Extremely Low Income households, and one unit will be reserved for an on-site manager. The Site will be conveyed to the Tenant in the form of a ground lease that will remain in effect for 65 years. In addition, the Agency will provide financial assistance to the Tenant per the requirements imposed by loan agreements that are separate from the Ground Lease. EXHIBIT 14 2206002.SA Page 2 19090.018.019 June 3, 2022 Due to the fact that the Agency Site was purchased with Set-Aside funds, the proposed conveyance of the property is subject to the reporting requirements imposed by Section 33433. Specifically, Section 33433 requires the conveying entity to prepare a report that summarizes the financial terms associated with the proposed disposition transaction. The following Summary Report is based upon the information contained within the Ground Lease, and is organized into the following seven sections: I. Salient Points of the Ground Lease: This section summarizes the major responsibilities imposed on the Agency, the County and the Tenant by the Ground Lease. II. Cost of the Ground Lease to the Agency and the Former Redevelopment Agency: This section details the total cost to the Agency/Former Redevelopment Agency associated with implementing the Ground Lease. III. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Property’s Zoning: This section estimates the values of the interests to be conveyed or leased determined at the highest uses permitted under the requirements imposed by the zoning in place on the Agency Site. IV. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the valuation estimate for the Agency Site based on the required scope of development, and the other conditions and covenants required by the Ground Lease. V. Consideration Received and Comparison with the Established Value: This section describes the compensation to be received by the Agency, and explains any difference between the compensation to be received and the established value of the Agency Site. VI. Blight Elimination: This section describes the existing blighting conditions on the Site, and explains how the Ground Lease will assist in alleviating the blighting influence. VII. Conformance with the AB1290 Implementation Plan: This section describes how the Ground Lease achieves goals identified in the Agency’s adopted AB1290 Implementation Plan. This report and the Ground Lease are to be made available for public inspection prior to the approval of the Ground Lease. I. SALIENT POINTS OF THE GROUND LEASE A. Project Description The following describes the scope of development for the Project: EXHIBIT 14 2206002.SA Page 3 19090.018.019 June 3, 2022 1. The Project will include 86 apartment units which will be constructed in two four-story residential buildings surrounding two interior, landscaped courtyard/amenity spaces. 2. The Project’s unit mix is as follows: a. Sixteen (16) studio units; b. Twenty-six (26) one-bedroom units; c. Twenty-two (22) two-bedroom units; d. Seventeen (17) three-bedroom units; and e. Five (5) four-bedroom units. 3. A sound wall is being positioned along the eastern property line adjacent to the US Interstate 5 ramp. 4. The Project’s affordability mix is summarized as follows: a. Eighty-five (85) units will be rented to Extremely Low Income households earning less than or equal to 30% of the Orange County median income (AMI); and b. One unit will be un-restricted and rented to an on-site manager. 5. Forty-three (43) units will be set-aside for Permanent Supportive Housing (PSH). B. Agency Responsibilities The Ground Lease requires the Agency to accept the following responsibilities: 1. Together with the County, the Agency will convey the Site to the Tenant in the form of a long-term ground lease for the purposes of constructing and operating the Project. 2. The Ground Lease will have the following terms: a. The Ground Lease will commence on the Effective Date subject to the preconditions identified in Section 5.1.2; b. The Ground Lease will have no longer than a 65-year term; and c. The Ground Lease shall be executed by the Executive Director and/or other Agency designee. EXHIBIT 14 2206002.SA Page 4 19090.018.019 June 3, 2022 3. The Agency agrees to ground lease the Agency Site to the Tenant based on the following payment terms: a. “Agency Base Rent” of $4,108,136, which is equal to the appraised fair market value of the Agency Site. b. The Agency Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. c. The Agency Base Rent will be repaid through a share of the Project’s Residual Receipts. d. Once the Agency Base Rent has been repaid in full, the Tenant shall have no further obligation for Agency Base Rent. e. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid Agency Base Rent. 4. Through separate Loan Agreements, the Agency will provide the Tenant with not less than $4.53 million in financial assistance (Agency Loans) based on the following: a. The Agency will provide a $3.01 million loan of HOME Program funds (HOME Loan) allocated to the City of Santa Ana (City) by the United States Department of Housing and Urban Development (HUD). b. The Agency will provide a $1.64 million loan of Neighborhood Stabilization Program funds (NSP Loan) allocated to the City by HUD. 5. The Agency Loans will be repaid out of the same applicable percentage of Residual Receipts as used to repay the Agency Base Rent. 6. The Agency will provide two (2) business days’ prior written notice to Tenant to enter the Site. C. County Responsibilities The Ground Lease requires the County to accept the following responsibilities: 1. Together with the Agency, the County will convey the Site to the Tenant in the form of a long-term ground lease for the purposes of constructing and operating the Project. 2. The Ground Lease will have the following terms: a. The Ground Lease will commence on the Effective Date subject to the preconditions identified in Section 5.1.2; EXHIBIT 14 2206002.SA Page 5 19090.018.019 June 3, 2022 b. The Ground Lease will have no longer than a 65-year term; and c. The Ground Lease shall be executed by the Chief Real Estate Officer. 3. The County agrees to ground lease the County Site to the Tenant based on the following payment terms: a. “County Base Rent” of $2,341,864, which is equal to the appraised fair market value of the County Site. b. The County Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. c. The County Base Rent will be repaid through a share of the Project’s Residual Receipts. d. Once the County’s Base Rent has been repaid in full, the Tenant shall have no further obligation for County Base Rent. e. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid County Base Rent. 4. Through a separate Loan Agreement, the County will provide the Tenant with not less than $2.65 million in financial assistance (County Loan). 5. The County Loan will be repaid out of the same applicable percentage of Residual Receipts as used to repay the County Base Rent. 6. The County will provide two (2) business days’ prior written notice to Tenant to enter the Site. D. Tenant’s Responsibilities The Ground Lease requires the Tenant to accept the following responsibilities: 1. Accept conveyance of the Site from the County/Agency in the form of a long-term ground lease. The Ground Lease will have the following terms: a. The Ground Lease will commence on the Effective Date subject to the preconditions identified in Section 5.1.2; and b. The Ground Lease will have no longer than a 65-year term. 2. The Tenant is required to pay ground rent as follows: EXHIBIT 14 2206002.SA Page 6 19090.018.019 June 3, 2022 a. “Agency Base Rent” of $4,108,136, which is equal to the appraised fair market value of the Agency Site. i. The Agency Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. ii. The Agency Base Rent will be repaid through a share of the Project’s Residual Receipts. iii. Once the Agency Base Rent has been repaid in full, the Tenant shall have no further obligation for Agency Base Rent. iv. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid Agency Base Rent. b. “County Base Rent” of $2,341,864, which is equal to the appraised fair market value of the County Site. i. The County Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. ii. The County Base Rent will be repaid through a share of the Project’s Residual Receipts. iii. Once the County’s Base Rent has been repaid in full, the Tenant shall have no further obligation for County Base Rent. iv. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid County Base Rent. 3. Prior to commencement of construction of the Initial Improvements, the Tenant shall provide to the Lessor information demonstrating that the Tenant has secured sufficient financing to construct the Project. 4. Tenant shall provide the Lessor with written construction status reports on a monthly basis starting at the commencement of construction. 5. The Tenant shall pay all Taxes, Operating Costs and Utility Costs during the Ground Lease Term. 6. The Tenant may use the Site for the construction, development, entitlement, operation, maintenance, replacement and repair of the Project. 7. The Tenant shall obtain all the required land use approvals, entitlements and permits necessary for the development of the Site. EXHIBIT 14 2206002.SA Page 7 19090.018.019 June 3, 2022 8. The Tenant shall comply with all applicable laws. 9. Tenant shall ensure that the following requirements are satisfied: a. Enter into a written contract with a general contractor based upon the “Construction Contract Documents” approved pursuant to the Option Agreement; b. Obtain written agreement from the general contractor that the construction contract can be assigned to the County and/or Agency if the Tenant fails to perform; c. Provide evidence to Lessor that assures the Tenant has sufficient monies available to complete the proposed construction; d. Within sixty (60) days following completion of any substantial improvements, the Tenant shall provide the Lessor with a complete set of reproducibles and two sets of “As-Built” plans; e. At the conversion of construction financing for the Project, the Tenant shall establish and maintain a Capital Improvement Fund during the Ground Lease Term. The Tenant shall deposit $347 per unit per year, with a ten percent (10%) escalator applied every five years, into the Capital Improvement Fund; f. Tenant shall maintain the premises in good order, condition and repair throughout the Ground Lease Term; g. Tenant must maintain all required insurance throughout the Ground Lease Term. h. Within one hundred eighty (180) days after the end of each accounting year, the Tenant shall submit to the Auditor Controller and the Agency a balance sheet, income statement and cash flow statement prepared by a Certified Public Accountant (CPA) reflecting the business transacted during the preceding accounting year. EXHIBIT 14 2206002.SA Page 8 19090.018.019 June 3, 2022 II. COST OF THE GROUND LEASE TO THE AGENCY / FORMER REDEVELOPMENT AGENCY The costs incurred by the Agency and the Former Redevelopment Agency to implement the Ground Lease are estimated as follows: Property Acquisition Cost $1,911,000 Property Management / Miscellaneous Costs 103,000 Total Agency Cost $2,014,000 The Agency will ground lease the Agency Site to the Tenant for an Agency Base Rent of $4.11 million. The Agency Base Rent will be repaid through residual receipts over the Ground Lease Term, and any remaining balance will be due at the end of the Ground Lease Term. However, given that residual receipts payments are completely dependent on the cash flow produced by the Project over time, it is too speculative to predict the net present value of the payments that will be applied to the Agency Base Rent. III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN Section 33433 requires the Agency to identify the value of the interests being conveyed at the highest and best uses permitted under zoning in place on the Site. The valuation must be based on the assumption that near-term development is required, but the valuation does not take into consideration any extraordinary use, quality and/or income restrictions being imposed on the development by the Agency. An appraisal prepared by Kinetic Valuation Group on November 1, 2019 estimates the market value of the Site at $6.45 million, or $65 per square foot of land area. Based on the 63,423 square feet of land area attributed to the Agency Site, the market value of the Agency Site is estimated at $4.11 million. IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED Keyser Marston Associates, Inc. (KMA), the Agency’s financial consultant, prepared a reuse valuation analysis of the Project based on the financial terms and conditions imposed by the Ground Lease and separate Agency Loan documents. The KMA analysis concluded that the fair reuse value of the Site is negative $4.6 million. This means that the Site needs to be conveyed at no cost plus $4.6 million in financial assistance needs to be provided to the Project in order to make the scope of development required by the Ground Lease financially feasible. Through separate loan agreements, the City proposes to provide $4.6 million in financial assistance to the Project. EXHIBIT 14 2206002.SA Page 9 19090.018.019 June 3, 2022 V. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED VALUE The Ground Lease imposes extraordinary controls on the Project. The impacts created by these requirements reduce the value of the Project from $4.11 million at the highest use permitted under the current zoning, to the established fair reuse value of negative $4.6 million. The Ground Lease requires the Tenant to pay Base Rent to the Agency based on Residual Receipts payments that are generated from cash flow generated by the Project over time. At the end of the Ground Lease Term, the Tenant must repay any outstanding balance of Agency Base Rent. Given that the Base Rent Payments received by the Agency will be greater than the established fair reuse value of negative $4.60 million, it can be concluded that the Agency is receiving fair consideration for the interests being conveyed to the Tenant. VI. BLIGHT ELIMINATION The Project includes 85 units that will be subject to long-term income and affordability covenants. In accordance with California Redevelopment Law, as portrayed in the California Health and Safety Code Section 33433, the conveyance of property that results in the provision of housing for low- or moderate-income persons satisfies the blight elimination criteria imposed by Section 33433. Furthermore, the conveyance of the Agency Site will assist in the elimination of blight by allowing for the redevelopment a vacant property. Thus, the Project fulfills the blight elimination requirement. VII. CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN The last AB1290 Implementation Plan completed by the Agency was for the 2010 to 2015 period. The Implementation Plan contemplates the development of affordable housing within the Merged Project Area. Specifically, under the heading Short-Term Goals and Objectives, the Implementation Plan includes the following: “Expand the community’s supply of housing, including opportunities for low and moderate income housing.” Therefore, the proposed Project is in conformance with the AB 1290 Implementation Plan. EXHIBIT 14 1 RESOLUTION NO. 2022- A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA APPROVING THE GROUND LEASE OF THE HOUSING AUTHORITY OWNED PROPERTY AT 1126, 1136, & 1146 EAST WASHINGTON AVENUE, SANTA ANA, CA 92701 (APNs 398-092-14 & 398-092-13) BE IT RESOLVED BY THE MEMBERS OF THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA, AS FOLLOWS: Section 1. The Housing Authority of the City of Santa Ana conclusively finds, determines and declares as follows: A.The Housing Authority of the City of Santa Ana (“Authority”) is a California housing authority duly organized and existing under the California Housing Authorities Law, Part 2 of Division 24, Section 34200, et seq., of the Health and Safety Code, and has been authorized to transact business and exercise the power of a California housing authority pursuant to action of the City Council of the City of Santa Ana (“City Council”). B.The City of Santa Ana (“City”) is a California municipal corporation and charter city. C.The Authority serves as the Housing Successor to the former Community Redevelopment Agency of the City (“Former Redevelopment Agency”). D.In 2007, the Former Redevelopment Agency used Low and Moderate Income Housing Asset Funds, also known as Property Tax Increment Housing Set-Aside funds (“Set-Aside Funds”) to purchase that certain real property located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-14 & 398-092-13) (“Authority Site”). E.The County of Orange (“County”) owns an adjacent property to the south of the Authority Site (“County Site”). The County and Authority have executed a Joint Powers Agreement to provide a combined Authority Site and County Site (collectively, “Site”) totaling approximately 2.28 acres of undeveloped land. F.The Related Companies of California (“Developer”) has proposed the development of The Crossroads at Washington multifamily affordable housing project on the Site, which will have 85 new affordable units and 1 manager’s unit, with 42 three- and four-bedroom units for large families, and 43 one- and two-bedroom affordable units for persons experiencing homelessness (“Project”). All of the affordable units in the Project will be for extremely low-income households at 30% Area Median Income. EXHIBIT 15 2 G. To effectuate the development of the Project on the Site, the Authority and County propose to enter into a ground lease with Washington Santa Ana Housing Partners, L.P., a California limited partnership formed by the Developer (“Tenant”) for no more than sixty-five (65) years (“Ground Lease”). A true and correct copy of the Ground Lease is attached hereto as Exhibit A and incorporated herein by reference. H. Since the Authority Site was purchased with Set-Aside Funds, the conveyance of the Site through the Ground Lease to the Tenant is subject to the reporting requirements imposed by California Health and Safety Code section 33433 (“H&S 33433”). Specifically, H&S 33433 requires the conveying entity to prepare a report that summarizes the financial terms associated with the proposed disposition transaction. I. The H&S 33433 Summary Report is based upon the information contained within the Ground Lease, and is organized into the following seven sections: i. Salient Points of the Ground Lease; ii. Cost of the Ground Lease to the Agency and the Former Redevelopment Agency; iii. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Property’s Zoning; iv. Estimated Reuse Value of the Interests to be Conveyed; v. Consideration Received and Comparison with the Established Value; vi. Blight Elimination; and, vii. Conformance with the AB1290 implementation Plan. J. The Authority made available for public inspection and copying at a cost not to exceed the cost of duplication, the H&S 33433 Summary Report no later than the time of publication of the first notice of the hearing. A true and correct copy of the H&S 33433 Summary Report is attached herewith as Exhibit B and incorporated herein by reference K. Pursuant to H&S 33433, the Housing Successor must also first secure approval of the proposed ground lease agreement from its local legislative body after a public hearing. L. The Project includes 85 units that will be subject to long-term income and affordability covenants. In accordance with California Redevelopment Law, as portrayed in H&S 33433, the conveyance of property that results in the provision of housing for low- or moderate-income persons satisfies the blight elimination criteria imposed by H&S 33433. Furthermore, the conveyance of the Agency Site will assist in the elimination of blight by allowing for the redevelopment of a vacant property. Thus, the Project fulfills the blight elimination requirement. M. The last AB1290 Implementation Plan completed by the Former Redevelopment Agency was for the 2010 to 2015 period. The EXHIBIT 15 3 Implementation Plan contemplates the development of affordable housing within the Merged Project Area. Specifically, under the heading Short- Term Goals and Objectives, the Implementation Plan includes the following: “Expand the community’s supply of housing, including opportunities for low and moderate income housing.” Therefore, the Project is in conformance with the AB 1290 Implementation Plan. N. The Ground Leases imposes extraordinary controls on the Project. The impacts created by these requirements reduce the value of the Project from $4.11 million at the highest use permitted under the current zoning, to the established fair reuse value of negative $4.6 million. The Ground Lease requires the Tenant to pay Base Rent to the Authority based on Residual Receipts payments that are generated from cash flow generated by the Project over time. At the end of the Ground Lease Term, the Tenant must repay any outstanding balance of Authority Base Rent. Given that the Base Rent Payments received by the Agency will be greater than the established fair reuse value of negative $4.60 million, it can be concluded that the Agency is receiving fair consideration for the interests being conveyed to the Tenant. O. The Authority has prepared such notices, plans and reports as may be required in connection with its consideration of this matter and has made available for public inspection all such matters prior to its consideration of and action on this matter. P. On June 21, 2022, the Authority held a duly noticed public hearing, and at that time considered all testimony, written and oral. Notice of the time and place of the hearing was published in a newspaper of general circulation in the community once per week for two successive weeks, as specified in Government Code section 6066, prior to the hearing. Section 2. The Authority, acting as the Housing Successor Agency, approves the lease of the Site to Tenant for the development of the Project pursuant to the terms of the Ground Lease attached hereto as Exhibit A and incorporated herein by reference. The Authority hereby authorizes the Executive Director of the Authority to execute the Ground Lease with the County and the Tenant for the development of the Project on the Site, subject to non-substantive changes approved by the Executive Director of the Authority and the Authority Counsel. Section 3. The Authority hereby finds and determines, based on all documentation, testimony and other evidence in the record before it, that the Ground Lease of the Authority Site: (a) will assist in the elimination of blight and provide housing for low- or moderate-income persons, as defined in Health and Safety Code section 50093; (b) is consistent with the implementation plan adopted pursuant to Health and Safety Code section 33490; and, (c) the consideration being paid to the Authority is not less than the fair reuse value for the use and with the covenants and conditions and development costs authorized by the Ground Lease. EXHIBIT 15 4 Section 4. This Resolution shall take effect immediately upon its adoption by the Authority Board, and the Recording Secretary for the Authority shall attest to and certify the vote adopting this Resolution. ADOPTED this _____ day of ______________, 2022. _____________________ Vicente Sarmiento Chair APPROVED AS TO FORM: Sonia R. Carvalho, General Counsel By:_____________________ Ryan O. Hodge Assistant Counsel AYES: Boardmembers: __________________________ NOES: Boardmembers: __________________________ ABSTAIN: Boardmembers: __________________________ NOT PRESENT: Boardmembers: __________________________ CERTIFICATION OF ATTESTATION AND ORIGINALITY I, DAISY GOMEZ, Recording Secretary to the Housing Authority, do hereby attest to and certify the attached Resolution No. 2022- to be the original resolution adopted by the Housing Authority of the City of Santa Ana on June 21, 2022. Date: ____________________ ______________________________ Daisy Gomez, Recording Secretary EXHIBIT 15 Exhibit A: Ground Lease EXHIBIT 15 Page | 1 4894-6811-3695v.2 0017787-000542 GROUND LEASE THIS GROUND LEASE (“Lease”) is made and effective as of the ___ day of __________, 2022 (“Effective Date”) by and between the COUNTY OF ORANGE, a political subdivision of the State of California, the HOUSING AUTHORITY OF THE CITY OF SANTA ANA, a public body, corporate and politic, as tenants-in-common (respectively, the “County” and the “Agency”, and collectively “Lessor”) and WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership (hereinafter called “Tenant”) (also referred to hereinafter each as “Party” or collectively as the “Parties”). RECITALS A. County and Agency are tenants-in-common of a certain property that encompasses the Premises (as hereinafter defined). B. County and Agency have executed a Joint Powers Agreement (“Joint Powers Agreement”), pursuant to which the County and Agency agreed to lease the Premises to the Tenant to develop, entitle and construct an 86-unit multifamily affordable housing project, as more fully described herein, upon the fulfillment of certain conditions precedent as set forth therein. C. The Parties have executed an Option Agreement, dated February 25, 2020 (“Option Agreement”), pursuant to which the Lessor had agreed to lease the Premises to the Tenant upon the fulfillment of certain conditions precedent. D. The County and Agency acknowledge that the conditions precedent required by the Joint Powers Agreement and Option Agreement have been fulfilled and therefore the Parties desire that Tenant shall ground lease the Premises from Lessor on the terms set forth herein. E. Lessor and Tenant have jointly agreed to enter into this Lease as of the date set forth above. F. On July 2, 2019, the Agency authorized the Executive Director of the Agency and the Recording Secretary to execute a pre-commitment letter with the Tenant to enter into negotiations for a sixty-five (65) year ground-lease of 1126 E. Washington Ave for the development of the Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14). G. On July 2, 2019, the City of Santa Ana authorized the City Manager and the Clerk of the Council to execute a pre-commitment letter with the Tenant for $3,971,440 in affordable housing funds consisting of $963,951 in Neighborhood Stabilization Program funds and $3,007,489 in HOME Investment Partnerships Program funds, for the development of the Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14). EXHIBIT 15 Page | 2 4894-6811-3695v.2 0017787-000542 NOW, THEREFORE, in consideration of the above recitals, which are hereby incorporated into this Lease by reference, and mutual covenants and agreements hereinafter contained, County, Agency and Tenant mutually agree to the following: ARTICLE I DEFINITIONS 1.1 Definitions: The following defined terms used in this Lease shall have the meanings set forth below. Other terms are defined in other provisions of this Lease, and shall have the definitions given to such terms in such other provisions. 1.1.1. “Affiliate” shall mean, with respect to any person (which as used herein includes an individual, trust or entity), any other person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such person. 1.1.2. “Agency” shall mean the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under the California Redevelopment Law. The principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702. “Agency” shall also refer to the City of Santa Ana where the context dictates, to the effect that the City of Santa Ana shall have all rights granted to the Agency hereunder. 1.1.3. “Aggregate Transfer” shall refer to the total “Ownership Interest(s)” in Tenant transferred or assigned in one transaction or a series of related transactions (other than an Excluded Transfer) occurring since the latest of (a) the Effective Date, (b) the e xecution by Tenant of this Lease, or (c) the most recent Tenant Ownership Change; provided, however, that there shall be no double counting of successive transfers of the same interest in the case of a transaction or series of related transactions involving successive transfers of the same interest. Isolated and unrelated transfers shall not be treated as a series of related transactions for purposes of the definition of “Aggregate Transfer.” 1.1.4. “Annual Operating Expenses” means all regular and customary annual expenses incurred in relation to the operation of the Premises, including the Improvements, as reflected on the annual budget that Tenant shall prepare and abide by each year during the Term of this Ground Lease, commencing on the Commencement Date, as approved in writing by the Lessor, in Lessor’s reasonable discretion. Said Annual Operating Expenses shall include a reasonable property management and administrative fee, fees related to the tax credit syndication of the Premises, utility charges, operating and maintenance expenses, Project property taxes and Project insurance premiums, and such other costs as approved by the Lessor, in his/her reasonable discretion. Tenant will deliver an annual budget for the following year no later than December 1 for each year following issuance of a permanent certificate of occupancy for the Improvements. Lessor shall deliver any comments, or its approval to such operating budget within thirty (30) days of receipt thereof. If an operating budget for the following year has not been approved by Lessor and Tenant prior to January 1 of such year, the annual operating budget from the previous year, increased by three percent (3%), with the actual cost of property tax and insurance premiums, shall apply until a new operating budget is approved. Notwithstanding the foregoing, in no event shall Annual Operating Expenses include any costs, fees, fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and accounting fees and expenses) which are due to or arising out of the Tenant’s (A) breach or default of any mortgage loan, (B) fraudulent acts or willful misconduct EXHIBIT 15 Page | 3 4894-6811-3695v.2 0017787-000542 or (C) breach or default under any other contract, lease or agreement pertaining to the Project. Annual Operating Expenses shall also not include other expenses not related to the Project’s operations such as depreciation, amortization, accrued principal and interest expense on deferred payment debt and capital improvement expenditures. 1.1.5. “Annual Project Revenue” means all annual revenue generated by the Project from any source, including, but not limited to, rent payments, governmental assistance housing payments, laundry and other vending machine and pay telephone income. Notwithstanding the foregoing, Annual Project Revenue shall not include the following items: (a) security deposits from subtenants (except when applied by Tenant to rent or other amounts owing by subtenants); (b) capital contributions to Tenant by its members, partners or shareholders (including capital contributions required to pay deferred developer fee); (c) condemnation or insurance proceeds; (d) there shall be no line item, expense, or revenue shown allocable to vacant unit(s) at the Project; or (e) receipt by an Affiliate of management fees or other bona fide arms-length payments for reasonable and necessary Operating Expenses associated with the Project. 1.1.6. “Auditor-Controller" shall mean the Auditor-Controller, County of Orange, or designee, or upon written notice to Tenant, such other person as may be designated by the Board of Supervisors. 1.1.7. “Base Rent” shall mean a total of six million four hundred and fifty thousand dollars ($6,450,000) due and owing and payable in full on the Commencement Date, but if not paid in full on the Commencement Date, then the Base Rent amount paid in accordance with this Lease, including pursuant to Article III, below, with four million, one hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) being paid to the Agency pursuant to Section 3.1.2 and two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) being paid to the County pursuant to Section 3.1.1. Address APN Size (Acres) Size (SF) Land Percentage Value Allocation City Owned Site 398-092-14 1.456 63,423 63.69% $4,108,136 County Owned Site 398-092-13 0.83 36,155 36.31% $2,341,864 Total 2.286 99,578 100.00% $6,450,000 1.1.8. “Board of Supervisors” shall mean the Board of Supervisors of the County of Orange, a political subdivision of the State of California, the governing body of the County. 1.1.9. “Certificate of Occupancy” shall mean a temporary or final certificate of occupancy (or other equivalent entitlement, however designated) which entitles Tenant to commence normal operation and occupancy of the Improvements. 1.1.10. “Chief Real Estate Officer” shall mean the Chief Real Estate Officer, County Executive Office, County of Orange, or designee, or upon written notice to Tenant, such other person as may be designated by the County Board of Supervisors. 1.1.11. “City” shall mean the City of Santa Ana, California, a charter city and municipal corporation. “City” shall also refer to the Agency where the context dictates, to the effect EXHIBIT 15 Page | 4 4894-6811-3695v.2 0017787-000542 that the Agency shall have all the rights granted to the City hereunder. “City Council” shall mean the City Council of the City of Santa Ana. 1.1.12. “Claims” shall mean liens, claims, demands, suits, judgments, liabilities, damages, fines, losses, penalties, costs and expenses (including without limitation reasonable attorneys' fees and expert witness costs, and costs of suit), and sums reasonably paid in settlement of any of the foregoing. 1.1.13. “Commencement Date” shall mean the date on which a Certificate of Occupancy is issued for the Project, and on which the Term shall commence and Base Rent shall become due and payable. 1.1.14. “Contractor” shall mean Tenant’s general contractor for the construction of the Improvements. 1.1.15. “County” shall mean the County of Orange, a political subdivision of the State of California. 1.1.16. “Effective Date” is defined in the introductory paragraph to this Lease and is the date on which the Tenant is entitled to commence construction pursuant to Article V, below. 1.1.17. “Event of Default” is defined in Section 11.1. 1.1.18. “Excluded Transfer” shall mean any of the following: (a) A transfer by any direct or indirect partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or indirect owner in Tenant’s ownership structure) as of the Effective Date or the date on which a Tenant Ownership Change occurred as to the interest transferred, to any other direct or indirect partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or indirect owner in Tenant’s ownership structure) as of the Effective Date, including in each case to or from a trust for the benefit of the immediate family of any direct or indirect partner or member of Tenant who is an individual; (b) A transfer of an Ownership Interest in Tenant or in constituent entities of Tenant (i) to a member of the immediate family of the transferor (which for purposes of this Lease shall be limited to the transferor’s spouse, children, parents, siblings, and grandchildren); (ii) to a trust for the benefit of a member of the immediate family of the transferor; (iii) from such a trust or any trust that is an owner in a constituent entity of Tenant as of the Effective Date, to the settlor or beneficiaries of such trust or to one or more other trusts created by or for the benefit of any of the foregoing persons, whether any such transfer described in this subsection is the result of gift, devise, intestate succession, or operation of law; or (iv) in connection with a pledge by any partners or members of a constituent entity of Tenant to an affiliate of such partner or member; (c) A transfer of a direct or indirect interest resulting from public trading in the stock or securities of an entity, when such entity is a corporation or other entity whose stock and/or securities is/are traded publicly on a national stock exchange or traded in the over -the-counter market and the price for which is regularly quoted in recognized national quotation services; EXHIBIT 15 Page | 5 4894-6811-3695v.2 0017787-000542 (d) A mere change in the form, method, or status of ownership (including, without limitation, the creation of single-purpose entities) as long as the ultimate beneficial ownership remains the same as of the Effective Date, or is otherwise excluded in accordance with subsections (a) – (c) above; (e) A transfer to an Affiliated nonprofit public benefit corporation or for- profit corporation, or to a limited partnership whose general partner is a nonprofit corporation, for- profit corporation or limited liability company Affiliated with the Tenant or the Tenant’s general partner, subject to the County and Agency’s right to reasonably approve the agreement to effect such assignment or transfer; (f) The lease, assignment of lease or sublease of any individual residential unit in the Improvements; (g) A transfer of the Tenant’s interest in the Premises by foreclosure or deed in lieu of foreclosure (i) to any bona fide third-party lender holding a lien encumbering the Premises (or its nominee), and (ii) by a Lender Foreclosure Transferee to a third-party made in accordance with Section 17.6.5; (h) Transfers of any limited partnership or membership interest in the Tenant to an investor solely in connection with the tax credit syndication of the Premises in accordance with Section 42 of the Internal Revenue Code of 1986, as amended (the “Tax Credit Laws”), (including, without limitation, a subsequent transfer of the Limited Partner’s interest to an Affiliate of the Limited Partner), provided, such syndication shall not extend the Term of this Lease; (i) The grant or exercise of an option agreement or right of first refusal solely in connection with the tax credit syndication of the Premises in accordance with the Tax Credit Laws provided that the syndication shall not extend the Term of this Lease; (j) The removal and replacement of one or both of Tenant’s general partners pursuant to the terms of Tenant’s Partnership Agreement as of the Effective Date and replacement by the Limited Partner, or an Affiliate thereof; or (k) Any assignment of the Lease by Tenant to an Affiliate of Tenant or to a Mortgagee as security in which there is no change to the direct and indirect beneficial ownership of the leasehold interest. 1.1.19. “Force Majeure Event” is defined in Article XIV. 1.1.20. “Hazardous Material(s)” is defined in Section 4.5. 1.1.21. “HCD” shall mean the California Department of Housing and Community Development. 1.1.22. “Improvement Costs” shall mean the final actual construction costs incurred by Tenant in connection with the construction of the Improvements and in accordance with the terms of this Lease, excluding ordinary repair and maintenance costs and any Permitted Capital Expenditures paid for out of the Capital Improvement Fund. EXHIBIT 15 Page | 6 4894-6811-3695v.2 0017787-000542 1.1.23. “Improvements” shall mean and includes all buildings (including above- ground and below ground portions thereof, and all foundations and supports), building systems and equipment (such as HVAC, electrical and plumbing equipment), physical structures, fixtures, hardscape, paving, curbs, gutters, sidewalks, fences, landscaping and all other improvements of any type or nature whatsoever now or hereafter made or constructed on the Premises. The term Improvements shall mean the Initial Improvements and any replacement improvements c onstructed in accordance with the terms of this Lease. During the entire Term, the Improvements will be restricted to the following uses: (a) multifamily affordable housing, (b) permanent supportive housing units and related services, and (c) related commercial and community-serving uses as needed for the siting of the affordable housing and supportive housing units, as approved by the Lessor. 1.1.24. “Includes” shall mean “includes but is not limited to” and “including” shall mean “including but is not limited to.” 1.1.25. “Initial Improvements” shall mean the improvements first constructed by Tenant on the Premises at its sole cost and expense as more particularly described in Exhibit B attached hereto and incorporated by reference herein. 1.1.26. “Interest Rate” shall mean the lower of: (a) the reference or prime rate of U.S. Bank National Association, in effect from time to time plus three percent (3%); or (b) the highest rate of interest permissible under the Laws not to exceed the rate of twelve percent (12%) per annum. 1.1.27. “Laws” shall mean all laws, codes, ordinances, statutes, orders and regulations now or hereafter made or issued by any federal, state, county, local or other governmental agency or entity that are binding on and applicable to the Premises and Improvements. 1.1.28. “Lease” shall mean this Ground Lease (including any and all addenda, amendments and exhibits hereto), as now or hereafter amended. 1.1.29. “Leasehold Estate” is defined in Section 17.1.1. 1.1.30. “Leasehold Foreclosure Transferee” is defined in Section 17.1.2. 1.1.31. “Leasehold Mortgage” is defined in Section 17.1.3. 1.1.32. “Leasehold Mortgagee” is defined in Section 17.1.4. 1.1.33. “Lender” shall mean: (a) a bank, savings bank, investment bank, savings and loan association, mortgage company, insurance company, trust company, commercial credit corporation, real estate investment trust, pension trust or real estate mortgage investment conduit; or (b) some other type of lender engaged in the business of making commercial loans, provided that such other type of lender has total assets of at least $2,000,000 and capital/statutory surplus or shareholder’s equity of at least $500,000,000 (or a substantially similar financial capacity if the foregoing tests are not applicable to such type of lender); or (c) a local, state or federal governmental EXHIBIT 15 Page | 7 4894-6811-3695v.2 0017787-000542 entity, including but not limited to HCD, which provides predevelopment, acquisition, construction and/or permanent financing for Tenant’s acquisition and development of the Property. 1.1.34. “Lessor’s Interest” shall mean all of County’s and Agency’s interests in the real property, the Premises, this Lease as tenants-in-common and their existing and reversionary interest in the real property, Premises, as well as the Improvements upon the expiration of the Term or earlier termination thereof. 1.1.35. “Lessor Parties” shall mean, collectively and individually, the County, the Agency and their respective Affiliates, governing boards, agents, employees, members, officers, directors and attorneys. 1.1.36. “Limited Partner” shall mean any limited partner or investor member (and its successors and/or assigns) of Tenant and shall include all references to “investor” in this Ground Lease. 1.1.37. “Net Refinancing Proceeds” is defined in Section 3.2. 1.1.38. “Net Syndication Proceeds” is defined in Section 3.2. 1.1.39. “New Lease” is defined in Section 17.7.1. 1.1.40. “Operating Costs” is defined in Section 3.6.5. 1.1.41. “Trust” shall mean Orange County Housing Finance Trust, a California public agency formed pursuant to California Government Code section 6500, et. seq. 1.1.42. “Ownership Interests” shall mean the share(s) of stock, partnership interests, membership interests, other equity interests or any other direct or indirect ownership interests in Tenant, regardless of the form of ownership and regardless of whether such interests are owned directly or through one or more layers of constituent partnerships, corporations, limited liability companies, or trusts. 1.1.43. “Partnership Related Fees” shall mean the following fees of Tenant (or partners thereof pursuant to Tenant’s Partnership Agreement) which are actually paid including: (i) a limited partner asset management fee payable to the Limited Partner in the annual amount of $5,000 (increased annually by 3%); and (ii) partnership management fee (administrative and/or managing general partner) payable to the general partners of Tenant in the aggregate annual amount of $20,000 (increased annually by 3%). 1.1.44. “Person” shall include firms, associations, partnerships, joint ventures, trusts, corporations and other legal entities, including public or governmental bodies, agencies or instrumentalities, as well as natural persons. 1.1.45. “Premises” shall mean that certain real property containing approximately 2.28 acres of undeveloped land in the City, together with all easements, rights and privileges appurtenant thereto, to be leased to Tenant pursuant to this Lease and on which Tenant intends to EXHIBIT 15 Page | 8 4894-6811-3695v.2 0017787-000542 construct the Improvements. The legal description of the Premises is attached hereto as Exhibit A. A rendering showing the approximate boundaries of the Premises is attached hereto as Exhibit A-1. 1.1.46. “Project” shall mean the Improvements, and all related appurtenances, constructed by Tenant on the Premises. 1.1.47. “Rent” shall mean and includes the County Base Rent, the Agency Base Rent, and Additional Rent payable by Tenant under this Lease. 1.1.48. “Residual Receipts” means the Annual Project Revenue less (A) Annual Operating Expenses (hereinafter defined), (B) obligated debt service on Leasehold Mortgages for the funding of the Improvements approved in writing by the Lessor at the closing of the construction and permanent financing for the Improvements or as permitted hereunder or otherwise approved pursuant to Section 17.2, below, (C) payment obligations approved in writing by the Lessor at the closing of the construction financing for the Improvements, (D) Partnership Related Fees (including accrued by unpaid Partnership Related Fees from the prior year or years), (E) repayment of loans, if any, made by Limited Partner to Tenant for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (F) repayment of loans, if any, made by a general partner of Tenant solely for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (G) deferred developer fee, and (H) scheduled deposits to reserves approved in writing by the Lessor at the closing of the construction financing for the Improvements (or such higher reserve deposits as may be reasonably required by any Leasehold Mortgagee). 1.1.49. “Risk Manager” shall mean the Manager of County Executive Office, Risk Management, County of Orange, or designee, or upon written notice to Tenant, such other person as may be designated by the Board of Supervisors and the Risk Manager for the City of Santa Ana, or designee, or upon written notice to Tenant, such other person as may be designated by the City Council. 1.1.50. “Taxes” is defined in Section 3.11.2. 1.1.51. “TCAC” is defined as the California Tax Credit Allocation Committee. 1.1.52. “Tenant Group” shall mean Tenant and Tenant’s Affiliates, agents, employees, members, officers, directors and attorneys. 1.1.53. “Tenant Ownership Change” shall mean (a) any transfer or assignment by Tenant of the Leasehold Estate or (b) any “Aggregate Transfer” of at least twenty five percent (25%) of the “Ownership Interest(s)” in Tenant, in each case that is not an “Excluded Transfer.” 1.1.54. “Tenant’s Partnership Agreement” shall mean Tenants Amended and Restated Agreement of Limited Partnership dated as of _______________. 1.1.55. “Term” is defined in Section 2.2. 1.1.56. “Transfer” is defined in Section 10.1.1. 1.1.57. “Transfer Notice” is defined in Section 10.4. EXHIBIT 15 Page | 9 4894-6811-3695v.2 0017787-000542 1.1.58. “Treasurer-Tax Collector” shall mean the Treasurer-Tax Collector, County of Orange, or designee, or upon written notice to Tenant, such other person or entity as may be designated by the Board of Supervisors. 1.1.59. “Trust MHSA Loan” shall mean that certain loan in the amount of two million, five hundred thousand dollars ($2,500,000), representing a Trust Mental Health Service Act loan from the Orange County Housing Trust to the Tenant. 1.1.60. “Utility Costs” is defined in Section 3.6.6. 1.1.61. “Work” shall mean both Tenant’s construction activity with respect to the Improvements, including permitted future changes, alterations and renovations thereto and also including, without limiting the generality of the foregoing, site preparation, landscaping, installa tion of utilities, street construction or improvement and grading or filling in or on the Premises. ARTICLE II LEASE OF PROPERTY 2.1 Lease of Premises. 2.1.1. Lessor hereby leases the Premises to Tenant for the Term, and Tenant hereby leases the Premises from Lessor for the Term, subject to the terms, conditions, covenants, restrictions and reservations of this Lease. 2.1.2. Warranty of Peaceful Possession. Lessor covenants and warrants that, subject to the Tenant’s payment of Rent and performance and observation of all of the covenants, obligations and agreements herein contained and provided to Tenant, Tenant shall and may peaceably and quietly have, hold, occupy, use and enjoy the Premises during the Term and may exercise all of its rights hereunder. Except as otherwise set forth herein, the Lessor covenants and agrees that they shall not grant any mortgage or lien on or in respect of its fee interest in the Premises unless the same is expressly subject and subordinate to this Lease or any New Lease . 2.2 Term. The “Term” of this Lease shall commence on the Effective Date of this Lease, and shall expire at 12:00 midnight Pacific Standard Time on the 62nd anniversary of the Commencement Date, unless sooner terminated as a result of Tenant’s non-compliance with any terms, conditions, covenants, restrictions or reservations of this Lease. Notwithstanding the foregoing, the Term shall not exceed sixty five (65) years from the Effective Date. 2.3 Termination at End of Term. This Lease shall terminate without need of further actions of any Party at 12:00 midnight Pacific Standard Time on the last day of the Term. 2.4 Condition of the Premises. TENANT HEREBY ACCEPTS THE PREMISES “AS IS”, AND ACKNOWLEDGES THAT THE PREMISES IS IN SATISFACTORY CONDITION. COUNTY AND AGENCY MAKES NO WARRANTY, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR TENANT’S PROPOSED USES. COUNTY AND AGENCY MAKE NO COVENANTS OR WARRANTIES, IMPLIED OR OTHERWISE, RESPECTING THE CONDITION OF THE SOIL, SUBSOIL, OR ANY OTHER CONDITIONS OF THE PREMISES OR THE EXHIBIT 15 Page | 10 4894-6811-3695v.2 0017787-000542 PRESENCE OF HAZARDOUS MATERIALS, NOR DOES COUNTY OR AGENCY COVENANT OR WARRANT, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR THE PROPOSED DEVELOPMENT, CONSTRUCTION OR USE BY TENANT. COUNTY AND AGENCY SHALL NOT BE RESPONSIBLE FOR ANY LAND SUBSIDENCE, SLIPPAGE, SOIL INSTABILITY OR DAMAGE RESULTING THEREFROM. COUNTY AND AGENCY SHALL NOT BE REQUIRED OR OBLIGATED TO MAKE ANY CHANGES, ALTERATIONS, ADDITIONS, IMPROVEMENTS OR REPAIRS TO THE PREMISES. TENANT SHALL RELY ON ITS OWN INSPECTION AS TO THE SUITABILITY OF THE PREMISES FOR THE INTENDED USE. TENANT INITIALS: ______ ______ 2.5 Limitations of the Leasehold. This Lease and the rights and privileges granted Tenant in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of record as of the date hereof or otherwise disclosed to Tenant prior to the date hereof. Nothing contained in this Lease or in any document related hereto shall be construed to imply the conveyance to Tenant of rights in the Premises which exceed those owned by Lessor, or any representation or warranty, either express or implied, relating to the nature or condition of the Premises or County’s or Agency’s interest therein. 2.6 Tenant’s Investigation. Tenant acknowledges that it is solely responsible for investigating the Premises to determine the suitability thereof for the uses contemplated by Tenant. Tenant further acknowledges by executing this Lease that it has completed its investigation and h as made such determinations as Tenant believes may be required under the circumstances. ARTICLE III TOTAL RENT 3.1 Base Rent. Throughout the Term of this Lease, regardless of an earlier termination date Tenant shall pay to the County and the Agency the Base Rent as set forth herein. 3.1.1 County Base Rent. Until the satisfaction, expiration or termination of the Trust MHSA Loan, Tenant shall make annual payments to County of thirteen and fifty-three one hundredths of one percent (13.53%) of the then available Residual Receipts (defined above), but only to the extent said Residual Receipts are available, until the amount of two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) is fully paid (“County Base Rent”). After the satisfaction, expiration, or termination of the Trust MHSA Loan, County Base Rent shall automatically reset to thirty-three and four-tenths percent (33.4%) of the then available Residual Receipts. County Base Rent shall only become due after the Tenant has repaid that certain loan from the County awarded under the 2016 Permanent Supportive Housing Notice of Funding Availability, Addendum One, evidenced by a Loan Agreement, Promissory Note and Leasehold Deed of Trust, in the amount of $2,650,701 (collectively, and together with the other loan documents evidencing, securing and relating to said loan from the County, the “County Loan Documents”), which is also being paid out of the same applicable percentage of the Residual Receipts. On the last day of the Term the then outstanding amount of the County Base Rent shall be paid in full if not already paid by that time. County Base Rent will bear interest commencing on the Commencement Date at the simple rate of three percent (3%) per year until paid in full. Once the County Base Rent has been paid in full with interest, Tenant shall have no further obligation for County Base Rent under this Lease. EXHIBIT 15 Page | 11 4894-6811-3695v.2 0017787-000542 3.1.2 Agency Base Rent. Until the satisfaction, expiration or termination of the Trust MHSA Loan, Tenant shall also make annual payments to Agency of twenty-three and seventy one one-hundredths of one percent (23.71%) of the then available Residual Receipts (defined above), but only to the extent said Residual Receipts are available , until the amount of four million, one hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) is fully paid (“Agency Base Rent”). After the satisfaction, expiration, or termination of the Trust MHSA Loan, Agency Base Rent shall automatically reset to thirty-three and three-tenths percent (33.3%) of the then available Residual Receipts. Agency Base Rent shall only become due after the Tenant has repaid those two certain loans from the City, each evidenced by a Loan Agreement, Promissory Note, Deed of Trust, and Affordability Restrictions on Transfer of Property for an Agency HOME loan in the amount of $3,007,489.00, , for an Agency Neighborhood Stabilization Program loan in the amount of $1,637,420, for a total of $4,644,909(collectively, and together with the other loan documents evidencing, securing and relating to said loans from the Agency, the “Agency Loan Documents”), which is also being paid out of the same applicable percentage of the Residual Receipts. On the last day of the Term the then outstanding amount of the Agency Base Rent shall be paid in full if not already paid by that time. Agency Base Rent will bear interest commencing on the Commencement Date at the simple rate of three percent (3%) per year until paid in full. Once the Agency Base Rent has been paid in full, Tenant shall have no further obligation for Agency Base Rent under this Lease. 3.1.3 Trust MHSA Loan. The Parties recognize that during the Term of the Trust MHSA Loan, Tenant will be making annual payments to the Trust of twelve and seventy six one- hundredths percent (12.76%) of the then available Residual Receipts, until the Trust MHSA Loan is fully paid. At such time as the Trust MHSA Loan has been paid in full, or has been otherwise satisfied or terminated, the County Base Rent and Agency Base Rent shall be 33.4% and 33.3%, respectively, of the then available Residual Receipts, based on the loan amounts set forth above, without further actions of the Parties. 3.2 Net Refinancing Proceeds/Net Syndication Proceeds. Any Net Refinancing Proceeds or Net Syndication Proceeds received by Tenant shall be used to pay any unpaid Base Rent. Additionally, the Tenant’s right and obligation to use such net proceeds to pay Base Rent is subject to the rights of Leasehold Mortgagees to control the use of such proceeds pursuant to the terms of their respective loan documents, all of which have been reviewed and reasonably approved by the Lessor and is further subject to the consent of TCAC to the extent required under the applicable regulations or the extended use agreement. Without limiting application of those loan documents and TCAC regulations and requirements, in no case shall Tenant be permitted to retain Net Refinancing Proceeds or Net Syndication Proceeds without the prior written consent of the Lessor, until full satisfaction of the unpaid Base Rent. Notwithstanding the foregoing, this Section 3.2 shall not apply to (i) any Excluded Transfer or (ii) any financing described in Section 17.2. “Net Refinancing Proceeds” shall be defined as the proceeds from the refinancing of any loan approved by Lessor hereunder or otherwise permitted under this Lease, net of all of the following: the amount of the financing which is satisfied out of such proceeds, closing costs, costs to construct and/or rehabilitate the Project, including the costs necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), the Improvement Costs, the soft costs related to the construction and/or rehabilitation of the Project (such as architecture, engineering and other consultant costs, and all required relocation costs), and all hard costs of the rehabilitation and/or construction, all of which have been reviewed and reasonably approved by the Lessor. EXHIBIT 15 Page | 12 4894-6811-3695v.2 0017787-000542 “Net Syndication Proceeds” shall be defined as syndication proceeds net of final Project hard and soft construction costs, including all Improvement Costs and reasonable and customary syndication closing costs, including developer fee, based on a cost certification completed at the end of construction, and syndication costs all of which has been reviewed and reasonably approved by the Lessor. 3.3 Triple Net Rent. It is the intent of the Parties that all Rent shall be absolutely net to Lessor and that, except as otherwise provided herein, Tenant will pay all costs, charges, insurance premiums, taxes, utilities, expenses and assessments of every kind and nature incurred for, against or in connection with the Premises which arise or become due during the Term as a result of Tenant’s use and occupancy of the Premises. Under no circumstances or conditions, whether now existing or hereafter arising, or whether beyond the present contemplation of the Parties, shall County or Agency be obligated or required to make any payment of any kind whatsoever or be under any other obligation or liability under this Lease except as expressly provided herein. 3.4 Insufficient Funds. For purposes of this Section 3.4, Rent shall have the same meaning as stated in Section 1.1.47. If any payment of Rent or other fees made by check is returned due to insufficient funds or otherwise, County and Agency shall have the right to require Tenant to make all subsequent Rent payments by cashier’s check, certified check or automated clearing house debit system. All Rent or other fees shall be paid in lawful money of the United States of America, without offset or deduction or prior notice or demand. No payment by Tenant or receipt by County and Agency of a lesser amount than the Rent or other fees due shall be deemed to be other than on account of the Rent or other fees due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord a nd satisfaction, and County and Agency shall accept such check or payment without prejudice to County’s and Agency’s right to recover the balance of the Rent or other fees or pursue any other remedy available to the County or Agency in this Lease. 3.5 Reserved. 3.6 Additional Rent. 3.6.1. Additional Rent. During the Term, the Base Rent shall be absolutely net to County and Agency so that all costs (including but not limited to Operating Costs and Utility Costs, as defined below), fees, taxes (including but not limited to Real Estate Taxes and Equipment Taxes, as defined below), charges, expenses, impositions, reimbursements, and obligations of every kind relating to the Premises shall be paid or discharged by Tenant as additional rent (“Additional Rent”). Additional Rent shall also include such amounts as described in Article XI. As more particularly set forth in Sections 3.6.3 and 3.6.6, below, Tenant has the right to pay under protest the foregoing Additional Rent, as applicable, and defend against the same. Any imposition rebates shall belong to Tenant. 3.6.2. Taxes. During the Term, Tenant shall pay directly to the taxing authorities all Taxes (as herein defined) at least ten (10) days prior to delinquency thereof. For purposes hereof, “Taxes” shall include any form of assessment, license fee, license tax, business license fee, commercial rental tax, levy, penalty, sewer use fee, real property tax, charge, possessory interest tax, tax or similar imposition (other than inheritance or estate taxes), imposed by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, EXHIBIT 15 Page | 13 4894-6811-3695v.2 0017787-000542 agricultural, lighting, drainage, flood control, water pollution control, public transit or other special district thereof, as against any legal or equitable interest of County or Agency in the Premises or any payments in lieu of taxes required to be made by County or Agency, including, but not limited to, the following: (a) Any assessment, tax, fee, levy, improvement district tax, charge or similar imposition in substitution, partially or totally, of any assessment, tax, fee, levy, charge or similar imposition previously included within the definition of Taxes. It is the intention of Tenant and Lessor that all such new and increased assessments, taxes, fees, levies, charges and similar impositions be included within the definition of “Taxes” for the purpose of this Lease. (b) Any assessment, tax, fee, levy, charge or similar imposition allocable to or measured by the area of the Premises or the rent payable hereunder, including, without limitation, any gross income tax or excise tax levied by the city, county, state or federal government, or any political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; (c) Any assessment, tax, fee, levy, charge or similar imposition upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises, including any possessory interest tax levied on the Tenant’s interest under this Lease; (d) Any assessment, tax, fee, levy, charge or similar imposition by any governmental agency related to any transportation plan, fund or system instituted within the geographic area of which the Premises are a part. The definition of “Taxes,” including any additional tax the nature of which was previously included within the definition of “Taxes,” shall include any increases in such taxes, levies, charges or assessments occasioned by increases in tax rates or increases in assessed valuations, whether occurring as a result of a sale or otherwise. 3.6.3. Contest of Taxes. Tenant shall have the right to contest, oppose or object to the amount or validity of any Taxes or other charge levied on or assessed against the Premises and/or Improvements or any part thereof; provided, however, that the contest, opposition or objection must be filed before such time the Taxes or other charge at which it is directed becomes delinquent. Furthermore, no such contest, opposition or objection shall be continued or maintained afte r the date the tax, assessment or other charge at which it is directed becomes delinquent unless Tenant has either: (i) paid such tax, assessment or other charge under protest prior to its becoming delinquent; or (ii) obtained and maintained a stay of all proceedings for enforcement and collection of the tax, assessment or other charge by posting such bond or other matter required by law for such a stay; or (iii) delivered to Lessor a good and sufficient undertaking in an amount specified by Lessor and issued by a bonding corporation authorized to issue undertakings in California conditioned on the payment by Tenant of the tax, assessments or charge, together with any fines, interest, penalties, costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final determination of Tenant’s contest, opposition or objection to such tax, assessment or other charge. 3.6.4. Payment by Lessor. Should Tenant fail to pay any Taxes required by this Article III to be paid by Tenant within the time specified herein, subject to Tenant’s right to contest EXHIBIT 15 Page | 14 4894-6811-3695v.2 0017787-000542 such Taxes in accordance with Section 3.6.3, and if such amount is not paid by Tenant within fifteen (15) days after receipt of Lessor’s written notice advising Tenant of such nonpayment, County and/or Agency may, without further notice to or demand on Tenant, pay, discharge or adjust such tax, assessment or other charge for the benefit of Tenant. In such event Tenant shall promptly on written demand of County or Agency reimburse County and/or Agency for the full amount paid by County and/or Agency in paying, discharging or adjusting such tax, assessment or other charge, together with interest at the Interest Rate from the date advanced until the date repaid. 3.6.5. Operating Costs. Tenant shall pay all Operating Costs during the Term prior to delinquency. As used in this Lease, the term “Operating Costs” shall mean all charges, costs and expenses related to the Premises, including, but not limited to, management, operation, maintenance, overhaul, improvement, replacement or repair of the Improvements and/or the Premises. 3.6.6. Utility Costs. Tenant shall pay all Utility Costs during the Term prior to delinquency. As used in this Lease, the term “Utility Costs” shall include all charges, surcharges, taxes, connection fees, service fees and other costs of installing and using all utilities required for or utilized in connection with the Premises and/or the Improvements, including without limitation, costs of heating, ventilation and air conditioning for the Premises, costs of furnishing gas, electricity and other fuels or power sources to the Premises, and the costs of furnishing water and sewer services to the Premises. Tenant agrees to indemnify and hold harmless the County and Agency against any liability, claim, or demand for the late payment or non-payment of Utility Costs. ARTICLE IV USE OF PREMISES 4.1 Permitted Use of Premises. Tenant may use the Premises for the construction, development, entitlement, operation, maintenance, replacement and repair of the Project, including the Improvements, as follows: 4.1.1. Required Services and Uses. Lessor’s primary purpose for entering into this Lease is to promote the development of the Improvements consistent with this Lease . In furtherance of that purpose, Tenant shall construct and during the entire Term operate, maintain, replace and repair the Improvements in a manner consistent with the Laws and for the following uses: (a) multifamily affordable housing, and appurtenant improvements, including, without limitation, parking, (b) permanent supportive housing units and related services, and (c) related commercial and community-serving uses, as approved by the Lessor. 4.1.2. Ancillary Services and Uses. Subject to the prior written approval of Lessor, which approval may be granted or withheld in the sole discretion of the Lessor, Tenant may provide those additional services and uses which are ancillary to and compatible with the required services and uses set forth in Section 4.1.1., above. 4.1.3. Additional Concessions or Services. Tenant may establish, maintain, and operate such other additional facilities, concessions, and services as Tenant and Lessor may jointly EXHIBIT 15 Page | 15 4894-6811-3695v.2 0017787-000542 from time to time reasonably determine to be reasonably necessary for the use of the Premises and which are otherwise permitted by Law for the sole purpose to provide affordable housing and/or emergency shelter. 4.1.4. Restricted Use. The services and uses listed in this Section 4.1, both required and optional, shall be the only services and uses permitted. Tenant agrees not to use the Premises for any other purpose or engage in or permit any other activity within or from the Premises unless approved in writing by the Lessor, which approval may be granted or withheld in the sole discretion of the Lessor. 4.1.5. Continuous Use. During the Term, Tenant shall continuously conduct Tenant’s business in the Premises in the manner provided under this Lease and shall not discontinue use of the Premises for any period of time except in the case of a Force Majeure Event or as permitted in advance and in writing by the Lessor. 4.1.6. Alcohol Restrictions. Tenant shall not permit the sale or service of alcoholic beverages on the Premises. 4.1.7. Permits and Licenses. Tenant shall be solely responsible to obtain, at its sole cost and expense, any and all permits, licenses or other approvals required for the uses permitted herein and shall maintain such permits, licenses or other approvals for the entire Term. 4.2 Nuisance; Waste. Tenant shall not maintain, commit, or permit the maintenance or commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable to the Premises and Improvements or any part thereof. Tenant shall not commit or allow to be committed any waste in or upon the Premises or Improvements and shall keep the Premises and the Improvements thereon in good condition, repair and appearance. 4.3 Compliance with Laws. Tenant shall not use or permit the Premises or the Improvements or any portion thereof to be used in any manner or for any purpose that violates any applicable Laws. Tenant shall have the right to contest, in good faith, any such Laws, and to delay compliance with such Laws during the pendency of such contest (so long as there is no material threat to life, health or safety that is not mitigated by Tenant to the satisfaction of the applicable authorities). Lessor may cooperate with Tenant in all reasonable respects in such contest, including joining with Tenant in any such contest if County and/or Agency’s joinder is required in order to maintain such contest; provide, however, that any such contest shall be without cost to Lessor, and Tenant shall indemnify, defend (with attorneys acceptable to Lessor), and hold harmless the Lessor from any and all claims, liabilities, losses, damages, or actions of any kind and nature, including reasonable attorneys’ fees, arising or related to Tenant’s failure to observe or comply with the contested Law during the pendency of the contest. 4.4 Hazardous Materials. 4.4.1. Definition of Hazardous Materials. For purposes of this Lease, the term “Hazardous Material” or “Hazardous Materials” shall mean any hazardous or toxic substance, material, product, byproduct, or waste, which is or shall become regulated by any governmental entity, including, without limitation, the County and/or Agency acting in their governmental capacity, the State of California or the United States government. EXHIBIT 15 Page | 16 4894-6811-3695v.2 0017787-000542 4.4.2. Use of Hazardous Materials. Except for those Hazardous Materials which are customarily used in connection with the construction, operation, maintenance and repair of the Improvements or used in connection with any permitted use of the Premises and Improvements under this Lease (which Hazardous Materials shall be used in compliance with all applicable Laws), Tenant or Tenant’s employees, agents, independent contractors or invitees (collectively “Tenant Parties”) shall not cause or permit any Hazardous Materials to be brought upon, stored, kept, used, generated, released into the environment or disposed of on, under, from or about the Premises (which for purposes of this Section shall include the subsurface soil and ground water). 4.4.3. Tenant Obligations. If the presence of any Hazardous Materials on, under or about the Premises caused or permitted by Tenant or Tenant Parties, and excluding Hazardous Materials existing on the Premises prior to the Effe ctive Date (the “Existing Hazardous Materials”), results in (i) injury to any person, (ii) injury to or contamination of the Premises (or a portion thereof), or (iii) injury to or contamination or any real or personal property wherever situated, Tenant, at its sole cost and expense, shall promptly take all actions necessary or appropriate to return the Premises to the condition existing prior to the introduction of such Hazardous Materials to the Premises and to remedy or repair any such injury or contamina tion. Without limiting any other rights or remedies of County or Agency under this Lease, Tenant shall pay the cost of any cleanup or remedial work performed on, under, or about the Premises as required by this Lease or by applicable Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous Materials caused or permitted by Tenant or Tenant Parties, excluding the Existing Hazardous Materials. Notwithstanding the foregoing, Tenant shall not take any remedial action in response to the presence, discharge or release, of any Hazardous Materials on, under or about the Premises caused or permitted by Tenant or Tenant Parties, or enter into any settlement agreement, consent decree or other compromise with any governmental or quasi-governmental entity without first obtaining the prior written consent of the Lessor. All work performed or caused to be performed by Tenant as provided for above shall be done in good and workmanlike manner and in compliance with plans, specifications, permits and other requirements for such work approved by Lessor. 4.4.4. Indemnification for Hazardous Materials. (a) To the fullest extent permitted by law, Tenant hereby agrees to indemnify, hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its elected officials, officers, employees, agents, independent contractors, and the Premises, from and against any and all liabilities, losses, damages (including, but not limited, damages for the loss or restriction on use of rentable or usable space or any amenity of the Premises or damages arising from any adverse impact on marketing and diminution in the value of the Premises), judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses (including, but not limited to, reasonable attorneys' fees, disbursements and court costs and all other professional or consultant's expenses), whether foreseeable or unforeseeable (collectively, "Liabilities"), arising out of the presence, use, generation, storage, treatment, on or off-site disposal or transportation of Hazardous Materials on, into, from, under or about the Premises by Tenant or Tenant Parties, and excluding all Existing Hazardous Materials. To clarify, the foregoing indemnification shall not apply to any Lia bilities arising out of Tenant’s discovery of Existing Hazardous Materials on the Premises or attributable to the presence of Existing Hazardous Materials on the Premises. (b) The foregoing indemnity shall also specifically include the cost of any required or necessary repair, restoration, clean-up or detoxification of the Premises and the preparation of any closure or other required plans; provided, however, Tenant shall have no EXHIBIT 15 Page | 17 4894-6811-3695v.2 0017787-000542 obligation or responsibility for the cost of any repair, remediation, restoration, clean-up or detoxification of the Premises related to Existing Hazardous Materials. (c) The foregoing indemnity and defense obligations (and exclusions therefrom) of this Lease shall survive its expiration or termination; provided, however, that the indemnity contained in this Section 4.4.4 shall not apply to any Liabilities arising or occurring (a) prior to the Effective Date of this Ground Lease, (b) after the expiration or earlier termination of the Term of this Ground Lease, (c) as a result of the grossly negligent or wrongful acts or omissions of Lessor, or (d) related to Existing Hazardous Materials on the Premises. 4.5 Access by Lessor. Lessor reserves the right for County, Agency and their authorized representatives to enter the Premises upon two (2) business days’ prior written notice to Tenant, during normal business hours, in order to determine whether Tenant is complying with Tenant’s obligations hereunder, or to enforce any rights given to County or Agency under this Lease. Lessor and its representatives shall report to the Tenant’s on-site office and must be accompanied by a representative of Tenant at all times while on the Property and obey Tenant’s rules and regulations. Tenant acknowledges Lessor have the authority to enter the Premises and perform work on the Premises at any time as needed to provide immediate or necessary protection for the general public. Lessor will take all necessary measures not to unreasonably interfere with Tenant’s business at the Premises in exercising its rights under this Section. Lessor shall indemnify and hold Tenant harmless from and against any loss, cost, damage or liability, including, without limitation, attorneys’ fees, which results from Lessor’s willful misconduct or gross negligence, or willful misconduct or gross negligence committed by any party acting under Lessor’s authority, of the rights granted by this Section 4.5. ARTICLE V CONSTRUCTION OF IMPROVEMENTS 5.1 Construction of Improvements. 5.1.1. Initial Improvements. Upon the fulfillment of the Preconditions set forth in Section 5.1.2, below, and payment for and issuance of all permits required under the Laws (whether from County or City in their governmental capacity, or otherwise), Tenant shall construct the Initial Improvements. 5.1.2. Preconditions. No work for development of the Initial Improvements shall be commenced, and no building or other materials shall be delivered to the Premises, until: (a) Lessor has provided approval in writing that all the conditions set forth in Section 5 of the Option Agreement have been satisfied; (b) Tenant has obtained a permit through the City, submitted Project design, conceptual development, plans and special provisions for the construction of Improvements in accordance with the Lessor’s criteria, standard and practices; (c) Tenant has given Lessor written notice of the proposed commencement of construction of the Premises or the delivery of construction materials in order to allow Lessor to take EXHIBIT 15 Page | 18 4894-6811-3695v.2 0017787-000542 all necessary actions under California Civil Code section 3094, including posting of a notice of non - responsibility at the Premises; and (d) Tenant has provided to Lessor evidence that (i) Tenant has entered into a Construction Contract with a Contractor in accordance with Section 5.2 below, (ii) Tenant has secured the construction funding required under Section 5.1.4 below, and (iii) Tenant has provided Lessor with assurances sufficient to construct the Initial Improvements in accordance with Section 5.3 below. 5.1.3. Utilities. To the extent not already constructed, Tenant, at no cost to Lessor, shall construct or cause to be constructed all water, gas, heat, light, power, air conditioning, telephone, broadband internet, and other utilities and related services supplied to and/or used on the Premises at Tenant’s sole cost and expense for the purposes of conducting Tenant’s operations thereon. All such utilities shall be separately metered from any utilities which may be used by County and/or Agency in conducting its operations, if any, on or about the Premises. Nothing contained in this Section is to be construed or implied to give Tenant the right or permission to install or to permit any utility poles or communication towers to be constructed or installed on the Premises. 5.1.4. Construction Funding. Prior to commencement of construction of the Initial Improvements, Tenant shall provide to Lessor evidence reasonably satisfactory to Lessor of funding available to Tenant that is sufficient to pay for Tenant’s estimated total cost of constructing the Initial Improvements, which evidence may consist of (i) a written commitment to Tenant from a Lender selected by Tenant to provide a construction loan to Tenant for the purpose of constructing the Initial Improvements (which may be secured by a Leasehold Mortgage encumbering Tenant’s leasehold interest under this Lease), (ii) actual equity funds then held by Tenant or irrevocably committed to be paid to Tenant for the purpose of constructing the Initial Improvements, or (iii) any combination of the foregoing. Tenant may from time to time change any o f the foregoing funding sources and the allocation thereof, so long as the aggregate available funding continues to be sufficient to pay for Tenant’s estimated remaining cost of constructing the Initial Improvements, provided that Tenant shall promptly notify Lessor of any such change. 5.1.5. Compliance with Laws and Permits. Tenant shall cause all Improvements made by Tenant to be constructed in substantial compliance with all applicable Laws, including all applicable grading permits, building permits, and other permits and approvals issued by governmental agencies and bodies having jurisdiction over the construction thereof. No permit, approval, or consent given hereunder by County and/or Agency, in their governmental capacity, shall affect or limit Tenant’s obligations hereunder, nor shall any approvals or consents given by County and/or Agency, as a Party to this Lease, be deemed approval as to compliance or conformance with applicable governmental codes, laws, rules, or regulations. 5.1.6. Reports. Not less than monthly from the commencement of construction of the Initial Improvements, Tenant shall provide Lessor with written construction status reports in the form of AIA No. G702 (“Application and Certification for Payment”) or comparable form, augmented by oral reports if so requested by County or Agency. 5.1.7. Certificate of Occupancy. Tenant shall provide Lessor with a copy of the Certificate of Occupancy promptly following issuance thereof. The date of issuance of the Certificate of Occupancy shall be the Commencement Date hereunder. EXHIBIT 15 Page | 19 4894-6811-3695v.2 0017787-000542 5.1.8. Insurance. Tenant (or the Contractor, as applicable) shall deliver to Lessor both (i) certificates of insurance evidencing coverage for “builder’s risk,” as specified in Section 8.1, and (ii) evidence of worker’s compensation insurance, which provide the requisite insurance levels in accordance with Article VIII, for all persons employed in connection with the construction of any Improvements upon the Premises and with respect to whom death or bodily injury claims could be asserted against County and/or Agency or the Premises. Tenant shall (or shall cause Contractor to) maintain, keep in force and pay all premiums required to maintain and keep in said insurance herein at all times during which construction Work is in progress. 5.1.9. Mechanic’s Liens. (a) Payment of Liens. Tenant shall pay or cause to be paid the total cost and expense of all “Work of Improvement,” as that phrase is defined in the California Mechanics’ Lien law in effect and as amended from time to time. Tenant shall not suffer or permit to be enforced against the Premises or Improvements or any portion thereof, any mechanics’, materialmen’s, contractors’ or subcontractors’ liens arising from any work of improvement, however it may arise. Tenant may, however, in good faith and at Tenant’s sole cost and expense contest the validity of any such asserted lien, claim, or demand, provided Tenant (or any contractor or subcontractor, as applicable) has furnished the release bond (if required by County, Agency or any construction lender) required in California Civil Code section 8000 et seq. (or any comparable statute hereafter enacted for providing a bond freeing the Premises from the effect of such lien claim). In the event a lien or stop-notice is imposed upon the Premises as a result of such construction, repair, alteration, or installation, and provided the lien is not the result of actions of, or work performed by, the Lessor, Tenant shall either: (1) Record a valid Release of Lien, or (2) Procure and record a bond in accordance with Section 8424 of the Civil Code, which releases the Premises from the claim of the lien or stop-notice and from any action brought to foreclose the lien, or (3) Post such security as shall be required by Tenant’s title insurer to insure over such lien or stop-notice, or (4) Should Tenant fail to accomplish either of the three optional actions above within 30 days after Tenant receives notice of the filing of such a lien or stop-notice, it shall constitute an Event of Default hereunder. (b) Indemnification. Tenant shall at all times indemnify, defend with counsel approved in writing by County and/or Agency and hold County and Agency harmless from all claims, losses, demands, damages, cost, expenses, or liability costs for labor or materials in connection with construction, repair, alteration, or installation of structures, improvements, equipment, or facilities within the Premises, and from the cost of defending against such claims, including reasonable attorneys’ fees and costs, but excluding any liability resulting from the gross negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by, the Lessor. (c) Protection Against Liens. Lessor shall have the right to post and maintain on the Premises any notices of non-responsibility provided for under applicable California EXHIBIT 15 Page | 20 4894-6811-3695v.2 0017787-000542 law. During the course of construction, Tenant shall obtain customa ry mechanics’ lien waivers and releases. Upon completion of the construction of any Improvements, Tenant shall record a notice of completion in accordance with applicable law. Promptly after the Improvements have been completed, Tenant shall (or shall cause Contractor to) record a notice of completion as defined and provided for in California Civil Code section 8000 et seq. (d) Lessor’s Rights. If Tenant (or any contractor or subcontractor, as applicable) does not cause to be recorded the bond described in California Civil Code section 8000 et seq. or otherwise protect the Premises and Improvements under any alternative or successor statute, and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, materialman’s, contractor’s or subcontractor’s lien claim, and if Tenant fails to stay the execution of judgment by lawful means or to pay the judgment, Lessor shall have the right, but not the duty to pay or otherwise discharge, stay or prevent the execution of any such judgment or lien or both. Upon any such payment by County and/or Agency, Tenant shall immediately upon receipt of written request therefor by County or Agency, reimburse County and/or Agency for all sums paid by County and/or Agency under this paragraph together with all County and/or Agency’s reasonable attorney’s fees and costs, plus interest at the Interest Rate from the date of payment until the date of reimbursement. 5.1.10. No Responsibility. Any approvals by County or Agency with respect to any Improvements shall not make County or Agency responsible for the Improvement with respect to which approval is given or the construction thereof. Tenant shall indemnify, defend and hold Lessor harmless from and against all liability and all claims of liability (including, without limitation, reasonable attorneys’ fees and costs) arising during the Term of this Lease for damage or injury to persons or property or for death of persons arising from or in connection with the Improvement or construction thereof, but excluding any liability resulting from the gross negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by, the Lessor. 5.2 Construction Contracts. 5.2.1. Construction Contract. Tenant shall enter into a written contract with a general contractor (“Contractor”) for construction of the Initial Improvements based upon the “Construction Contract Documents” approved pursuant to the Option Agreement. All construction of the Initial Improvements shall be performed by contractors and subcontractors duly licensed as such under the laws of the State of California. Tenant shall give Lessor a true copy of the contract or contracts with the Contractor. 5.2.2. Assignment to County and/or Agency. Tenant shall obtain the written agreement of the Contractor that, at County and/or Agency’s election and in the event that Tenant fails to perform its contract with the Contractor, such Contractor will recognize County and/or Agency as the assignee of the contract with the Contractor, and that County and/or Agency may, upon such election, assume such contract with credit for payments made prior thereto . Notwithstanding the foregoing, the County’s and/or Agency’s rights under this Section 5.2.2 are hereby made subject and subordinate to the lien of each Leasehold Mortgage. 5.3 Tenant’s Assurance of Construction Completion. Prior to commencement of construction of the Initial Improvements, or any phase thereof, within the Premises by Tenant, Tenant shall furnish to Lessor evidence that assures Lessor that sufficient monies will be available to EXHIBIT 15 Page | 21 4894-6811-3695v.2 0017787-000542 complete the proposed construction. The amount of money available shall be at least the total estimated construction cost. Such evidence may take one of the following forms: 5.3.1. Performance bond and labor and materials bond in a principal sum equal to the total estimated construction cost supplied by Contractor or subcontractors, provided said bonds are issued jointly to Tenant, County, Agency and any Leasehold Mortgagees as obligees. 5.3.2. Irrevocable letter of credit issued to Lessor from a financial institution to be in effect until County and Agency acknowledges satisfactory completion of construction; 5.3.3. Cash deposited with the County or Agency (may be in the form of cashier’s check or money order or may be electronically deposited); 5.3.4. A completion guaranty, in favor of County and Agency from an Affiliate of The Related Companies of California, LLC, in a form reasonably acceptable to Lessor, coupled with a repayment guaranty in favor of the senior construction lender for its loan; 5.3.4. Any combination of the above. All bonds and letters of credit must be issued by a company qualified to do business in the State of California and acceptable to Lessor. All bonds and letters of credit shall be in a form acceptable to Lessor, County’s Risk Manager and City’s Risk Manager in their reasonable discretion, and shall insure faithful and full observance and performance by Tenant of all terms, conditions, covenants, and agreements relating to the construction of improvements within the Premises. Tenant shall provide or cause its Contractor to provide payment and/or performance bonds in connection with the construction of the Initial Improvements, and shall name the County and City as an additional obligee on, with the right to enforce, any such bonds. 5.4 Ownership of Improvements. 5.4.1. For purposes of this Section 5.4, “Term” shall have the meaning stated in Section 2.2.3. 5.4.2. During Term. Fee title to all personal property and Improvements constructed or placed on the Premises by Tenant and paid for by Tenant are and shall be vested in Tenant during the Term of this Lease, until the expiration or earlier termination thereof. Any and all depreciation, amortization and tax credits for federal or state purposes relating to the Improvements located on the Premises and any and all additions thereto shall be deducted or credited exclusively by Tenant during the Term. The Parties agree for themselves and all persons claiming under them that the Improvements are real property. 5.4.3. Upon Expiration or Earlier Termination of Term. All Improvements on the Premises at the expiration or earlier termination of the Term of this Lease shall, without additional payment to Tenant, then become Lessor’s property free and clear of all claims to or against them by Tenant and free and clear of all Leasehold Mortgages and any other liens and claims arising from Tenant’s use and occupancy of the Premises, and with Taxes paid current as of the expirat ion or earlier termination date. Tenant shall upon the expiration or earlier termination of the Term deliver possession of the Premises and the Improvements to Lessor in good order, condition and repair consistent with the requirements of this Lease and in compliance with all applicable laws and EXHIBIT 15 Page | 22 4894-6811-3695v.2 0017787-000542 regulations for the occupancy of the Project, taking into account reasonable wear and tear and the age of the Improvements. Notwithstanding anything to the contrary herein, at all times during the Term of this Lease, (i) the improvements shall be owned by Tenant, (ii) Tenant alone shall be entitled to all of the tax attributes of ownership, including, without limitation, the right to claim depreciation or cost recovery deductions and the right to claim the low-income housing tax credit described in Section 42 of the Internal Revenue Code of 1986, as amended, and (iii) Tenant shall have the right to amortize capital costs and to claim any other federal or state tax benefit attributable to the Project. 5.5 “AS-BUILT” Plans. Within sixty (60) days following completion of any substantial improvement within the Premises, Tenant shall furnish the Lessor a complete set of reproducibles and two sets of prints of “As-Built” plans and a magnetic tape, disk or other storage device containing the “As-Built” plans in a form usable by Lessor, to Lessor’s satisfaction, on Lessor’s computer aided mapping and design (“CAD”) equipment. CAD files are also to be converted to Acrobat Reader (pdf format), which shall be included on the disk or CD ROM. In addition, Tenant shall furnish Lessor copy of the final construction costs for the construction of such improvements. 5.6 Capital Improvement Fund. 5.6.1. As of the conversion of the construction financing for the Project to the term phase financing, Tenant shall establish and maintain a reserve fund (the "Capital Improvement Fund") during the Term of this Lease (as “Term” is defined in Section 2.2) in accordance with the provisions of this Section 5.6 designated to pay for Permitted Capital Expenditures (as defined below) for the Improvements during the Term of this Lease. 5.6.2. Tenant and Lessor agree and acknowledge that the purpose of the Capital Improvement Fund shall be to provide sufficient funds to pay for the costs of major replacements, renovations or significant upgrades of or to the Improvements, including without limitation building facade or structure and major building systems (such as HVAC, mechanical, electrical, plumbing, vertical transportation, security, communications, structural or roof) that significantly affect the capacity, efficiency, useful life or economy of operation of the Improvements or the ir major systems, after the completion of the Initial Improvements (“Permitted Capital Expenditure(s)”). 5.6.3. The Capital Improvement Fund shall not be used to fund any portion of the construction cost of the Initial Improvements. In addition, Permitted Capital Expenditures shall not include the cost of periodic, recurring or ordinary maintenance expenditures or maintenance, repairs or replacements that keep the Improvements in an ordinarily efficient operating condition, but that do not significantly add to their value or appreciably prolong their useful life. Permitted Capital Expenditures must constitute capital replacements, improvements or equipment under generally accepted accounting principles consistently applied or constitute qualifying aesthe tic improvements. Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any broken or damaged Improvements, all of which costs shall be separately funded by Tenant. 5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts from the Capital Improvement Fund shall be at Tenant’s reasonable discretion and subject to Lessor's written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor EXHIBIT 15 Page | 23 4894-6811-3695v.2 0017787-000542 applicable invoices, evidence of payment and other back-up materials concerning the use of amounts from the Capital Improvement Fund. 5.6.5. The Capital Improvement Fund shall be held in an account established with a Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section 5.6.8, below. 5.6.6. Tenant shall have the right to partly or fully satisfy the Capital Improvement Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves) required by Tenant's Leasehold Mortgagees or the Limited Partner, as long as such capital improvement reserves or replacement reserves are in all material respects administered and utilized in accordance, and otherwise comply, with the terms, provisions and requirements of this Sect ion 5.6. 5.6.7. In the event of default by Tenant and the early termination of this Lease, the Lessor shall have full access to the Capital Improvement Fund, provided the Tenant’s Leasehold Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6; provided, however, that Lessor’s rights under this Section 5.6.7 are hereby made subject and subordinate to the lien of each Leasehold Mortgage. 5.6.8. Commencing on the fifteenth (15th) day of the month during which the fift h (5th) anniversary of the Commencement Date occurs, and continuing on or before the fifteenth (15th) day of each month thereafter until five (5) years prior to the expiration of the Term, Tenant shall make an annual contribution to the Capital Improvement Fund in an amount equal to three-hundred dollars ($300) per unit per year for 66 of the units and five hundred dollars ($500) per unit per year for the 20 MHSA units, with a ten-percent (10%) escalator applied every five (5) years commencing on the date set forth in this Section 5.6.8. All interest and earnings on the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant pursuant to this Section 5.6. 5.6.9. Disbursements shall be made from the Capital Improvement Fund only for costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's prior approval of any Capital Improvement Fund disbursements, Tenant shall submit to the Lessor on an annual calendar year basis a capital expenditure plan for the upcoming year which details the amount and purpose of anticipated Capital Improvement Fund expenditures (“Capital Improvement Plan”). Lessor shall approve or disapprove such Capital Improvement Plan within thirty (30) days of receipt, which approval shall not be unreasonably withheld, conditioned or delayed. Any expenditure set forth in the approved Capital Improvement Plan shall be considered pre-approved by Lessor (but only up to the amount of such expenditure set forth in the Capital Improvement Plan) for the duration of the upcoming year. Tenant shall have the right during the course of each year to submit to the Lessor for the Lessor's approval revisions to the then current Capital Improvement Plan, or individual expenditures not noted on the previously submitted Capital Improvement Plan. In the event of an unexpected emergency that necessitates a Permitted Capital Expenditure not contemplated by the Capital Improvement Plan, the Tenant may complete such work using the funds from the Capital Improvement Fund with contemporaneous or prior (if possible) written notice to the Lessor and provide applicable documentation to the Lessor thereafter for approval. If the Lessor disapproves the emergency expenditure which was not previously approved by Lessor, Tenant shall refund the amount taken from the Capital Improvement Fund within thirty (30) days of written notice from the Lessor of its decision. EXHIBIT 15 Page | 24 4894-6811-3695v.2 0017787-000542 5.6.10. Notwithstanding anything above to the contrary, if Tenant incurs expenditures that constitute Permitted Capital Expenditures but which are not funded out of the Capital Improvement Fund because sufficient funds are not then available in such fund, then Tenant may credit the Permitted Capital Expenditures so funded by Tenant out of its own funds against future Capital Improvement Fund contribution obligations of Tenant; provided, that such credit must be applied, if at all, within four (4) years after such Permitted Capital Expenditure is incurred by the Tenant. ARTICLE VI REPAIRS, MAINTENANCE, ADDITIONS AND RECONSTRUCTION 6.1 Maintenance by Tenant. Throughout the Term of this Lease, Tenant shall, at Tenant’s sole cost and expense, keep and maintain the Premises and any and all Improvements now or hereafter constructed and installed on the Premises in good order, condition and repair (i.e., so that the Premises does not deteriorate more quickly than its age and reasonable wear and tear would otherwise dictate) and in a safe and sanitary condition and in compliance with all applicable Laws in all material respects. Tenant shall immediately notify the Lessor of any damage relating to the Premises. 6.2 Interior Improvements, Additions and Reconstruction of Improvements. Following the completion of construction of the Initial Improvements, Tenant shall have the right from time to time to make any interior improvements to the Improvements that are consistent with the Lessor’s approved use of the Premises as reflected in this Lease, without Lessor’s prior written consent, but with prior written notice to the Lessor (except in the event of an emergency, in which case no prior written notice shall be required but Tenant shall notify Lessor of any emergency work done as soon as practicable). Tenant may restore and reconstruct the Improvements into the condition such Improvements were in immediately prior to such damage or destruction , and in that process make any modifications otherwise required by changes in Laws, following any damage or destruction thereto (whether or not required to do so under Article VII); and/or to make changes, revisions or improvements to the Improvements for uses consistent with the Lessor approved use of the Premises as reflected in this Lease. Tenant shall perform all work authorized by this Section at its sole cost and expense, including, without limitation, with insurance proceeds approved for such use in accordance with Article VII, if any, and in compliance with all applicable Laws in all material respects. 6.3 All Other Construction, Demolition, Alterations, Improvements and Reconstruction. Following the completion of construction of the Initial Improvements, and except as specified in Sections 6.1 and 6.2, any construction, alterations, additions, demolition, improvements of any kind shall require the prior written consent of the Lessor, which consent shall not be unreasonably conditioned, delayed or withheld and if not contemplated pursuant to this Lease may require their respective governing body’s approval (e.g. Board of Supervisors’ and City Council approval). Tenant shall perform all work authorized by this Section at its sole cost and expense , including, without limitation, with insurance proceeds approved for such use in accordance with Article VII, if any, and in compliance with all applicable Laws in all material respects. 6.4 Requirements of Governmental Agencies. At all times during the Term of this Lease, Tenant, at Tenant’s sole cost and expense, shall: (i) make all alterations, improvements, demolitions, additions or repairs to the Premises and/or the Improvements required to be made by any law, ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county, EXHIBIT 15 Page | 25 4894-6811-3695v.2 0017787-000542 local or other governmental agency or entity; (ii) observe and comply in all material respects with all Laws now or hereafter made or issued respecting the Premises and/or the Improvements (subje ct to Tenant’s right to contest such Laws in accordance with Section 4.4); (iv) indemnify, defend and hold County, Agency, the Premises and the Improvements free and harmless from any and all liability, loss, damages, fines, penalties, claims and actions resulting from Tenant’s failure to comply with and perform the requirements of this Article VI. 6.5 Lessor Obligations. Tenant specifically acknowledges and agrees that County, Agency and Lessor Parties do not and shall not have any obligations with respect to the maintenance, alteration, improvement, demolition, replacement, addition or repair of any Improvements. 6.6 Lessor Reservations. Without limiting Lessor’s rights with respect to the Premises, Lessor reserves for themselves, their successors and assigns those rights necessary to assure proper maintenance and operation of the Premises and to permit any steps to be taken which the Lessor deems necessary or desirable to maintain, repair, improve, modify or reconstruct the Premises. The rights reserved to Lessor in this section or any other section of this Lease shall be exercised by the Lessor at their sole discretion, unless otherwise provided herein. ARTICLE VII DAMAGE AND RESTORATION 7.1 Damage and Restoration. In the event the whole or any part of the Improvements shall be damaged or destroyed by fire or other casualty, damage or action of the elements which is fully covered by insurance required to be carried by Tenant pursuant to this Lease or in fact cause d by Tenant, at any time during the Term, Tenant shall with all due diligence, at Tenant’s sole cost and expense, repair, restore and rebuild the Improvements on substantially the same plan and design as existed immediately prior to such damage or destruction and to substantially the same condition that existed immediately prior to such damage, with any changes made by Tenant to comply with then applicable Laws and with any upgrades or improvements that Tenant may determine in its reasonable discretion. If Tenant desires to change the use of the Premises following such casualty, then Tenant may make appropriate changes to the Premises to accommodate such changed use after approval of such change of use by the Lessor pursuant to Article IV above. This Article shall not apply to cosmetic damage or alterations. In the event that Tenant shall determine, subject to the rights of the Leasehold Mortgagees and Limited Partner, if applicable, by notice to the Lessor given by the later of ninety (90) days after the date of the damage or destruction or thirty (30) days after receipt by Tenant of any such insurance proceeds, that there are not adequate proceeds to restore the Improvements and/or the Premises to substantially the same condition in which they existed pri or to the occurrence of such damage or destruction, then Tenant may, with the prior consent of all Leasehold Mortgagees, terminate this Lease as of a date that is not less than thirty (30) days after the date of such notice. If Leasehold Mortgagees refuse to consent to the termination of the Lease by Tenant, the Lease and all terms and conditions shall remain in full force and effect and may be enforced without reservation by the Lessor. Subject to the rights of Leasehold Mortgagees in Section 17.9, if Tenant terminates this Lease pursuant to this Section 7.1, Tenant shall surrender possession of the Premises to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the Lessor) all of its right, title and interest in and to the proceeds from EXHIBIT 15 Page | 26 4894-6811-3695v.2 0017787-000542 Tenant’s insurance upon the Premises, less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with the Premises after the damage or destruction, which costs are eligible for reimbursement from such insurance proceeds, (iii) any amounts applied by Leasehold Mortgagees in accordance with the terms of their respective Leasehold Mortgages, and (iv) the proceeds of any rental loss or business interruption insurance applicable prior to the date of surrender of the Premises to the Lessor. 7.2 Restoration. In the event of any restoration or reconstruction pursuant to this Section, all such work performed by Tenant shall be constructed in a good and workmanlike manner according to and in conformance with the Laws, rules and regulations of all governmental bodies and agencies and the requirements of this Lease applicable to the construction of the Initial Improvements. 7.3 No Rental Abatement. Tenant shall not be entitled to any abatement, allowance, reduction, or suspension of Rent because part or all of the Improvements become untenantable as a result of the partial or total destruction of the Improvements, and Tenant’s obligation to keep and perform all covenants and agreements on its part to be kept and performed hereunder, shall not be decreased or affected in any way by any destruction of or damage to the Improvements; except as otherwise provided herein. 7.4 Application of Insurance Proceeds. If following the occurrence of damage or destruction to the Premises or Improvements, Tenant is obligated to or determines that there are adequate proceeds to restore the Premises and Improvements pursuant to this Article VII, then all proceeds from the insurance required to be maintained by Tenant on the Premises and the Improvements shall be applied, subject to the rights of the Leasehold Mortgagees and Limited Partner, if applicable, to fully restore the same, and, subject to the rights of the Leasehold Mortgagees and Limited Partner, if applicable, any excess proceeds shall be paid to Tenant and any deficit in necessary funds plus the amount of any deductible shall be paid by Tenant. If Tenant after commencing or causing the commencement of the restoration of Premises and Improvements shall determine that the insurance proceeds are insufficient to pay all costs to fully restore the Improvements, Tenant shall pay the deficiency and shall nevertheless proceed to complete the restoration of Premises and the Improvements and pay the cost thereof. Upon lien free completion of the restoration, subject to the rights of the Leasehold Mortgagees, if applicable, any balance of the insurance proceeds remaining over and above the cost of such restora tion shall be paid to Tenant. 7.5 Exclusive Remedies. Notwithstanding any destruction or damage to the Premises and/or the Improvements, Tenant shall not be released from any of its obligations under this Lease, except to the extent and upon the conditions expressly stated in this Article VII. County, Agency and Tenant hereby expressly waive the provisions of California Civil Code Sections 1932(2) and 1933(4) with respect to any damage or destruction of the Premises and/or the Improvements and agree that their rights shall be exclusively governed by the provisions of this Article VII. 7.6 Damage Near End of Term. If, during the last three (3) years of the Term, as applicable, the Improvements shall be damaged or destroyed for which the repair and/or replacement cost is fifty percent (50%) or more of then replacement cost of the Improvements, then Tenant shall have the option, to be exercised within ninety (90) days after such damage or destruction: 7.6.1. to notify the Lessor of its election to repair or restore the Improvements as provided in this Article VII; or EXHIBIT 15 Page | 27 4894-6811-3695v.2 0017787-000542 7.6.2. subject to the rights of Leasehold Mortgagees and such provisions of this Lease that survive termination, to terminate this Lease by notice to the Lessor, which termination shall be deemed to be effective as of the date of the damage or destruction. If Tenant terminates this Lease pursuant to this Section 7.6.2, Tenant shall surrender possession of the Leased Premises to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance upon the Premises less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with the Premises after the damage or destruction, which costs are eligible for reimbursement from such insurance proceeds, and (iii) the proceeds of any rental loss or business interruption insurance applicable prior to the date of surrender of the Premises to the Lessor. ARTICLE VIII INSURANCE AND INDEMNITY 8.1 Tenant's Required Insurance. 8.1.1. Tenant agrees to purchase all required insurance at Tenant's expense and to deposit with Chief Real Estate Officer certificates of insurance, including all endorsements required herein, necessary to satisfy Chief Real Estate Officer that the insurance provisions of this Lease have been complied with and to keep such insurance coverage and the certificates and endorsements therefore on deposit with Chief Real Estate Officer during the entire term of this Lease. 8.1.2. Tenant agrees that it shall not operate on the Premises at any time the required insurance is not in full force and effect as evidenced by a certificate of insurance and necessary endorsements or, in the interim, an official binder being in the possession of Chief Real Estate Officer; rent however shall not be suspended. In no cases shall assurances by Tenant, its employees, agents, including any insurance agent, be construed as adequate evidence of insurance. Chief Real Estate Officer will only accept valid certificates of insurance and endorsements, or in the interim, an insurance binder as adequate evidence of insurance. Tenant also agrees that upon cancellation, termination, or expiration of Tenant's insurance, Chief Real Estate Officer may take whatever steps are necessary to interrupt any operation from or on the Premises until such time as the Chief Real Estate Officer reinstates the Lease. 8.1.3. If Tenant fails to provide Chief Real Estate Officer with a valid certificate of insurance and endorsements, or binder at any time during the term of the Lease, County and Tenant agree that this shall constitute a material breach of the Lease. Whether or not a notice of default has or has not been sent to Tenant, said material breach shall permit Chief Real Estate Officer to take whatever steps are necessary to interrupt any operation from or on the Premises, and to prevent any persons, including, but not limited to, members of the general public, and Tenant's employees and agents, from entering the Premises until such time as the Chief Real Estate Officer is provided with adequate evidence of insurance required herein. Tenant further agrees to hold County harmless for any damages resulting from such interruption of business and possession, including, but not limited to, damages resulting from any loss of income or business resulting from Chief Real Estate Officer's action. 8.1.4. All contractors and subcontractors performing work on behalf of Tenant pursuant to this Lease shall obtain insurance subject to the same terms and conditions as set forth herein for Tenant and limits of insurance as described in Section 8.1.6 (e), Section 8.1.6 (f) and EXHIBIT 15 Page | 28 4894-6811-3695v.2 0017787-000542 Section 8.1.6 (g). Tenant shall not allow contractors or subcontractors to work if contractors have less than the level of coverage required by County under this Lease. It is the obligation of the Tenant to provide written notice of the insurance requirements to every contractor and to receive proof of insurance prior to allowing any contractor to begin work within the Premises. Such proof of insurance must be maintained by Tenant through the entirety of this Lease and be available for inspection by Chief Real Estate Officer at any reasonable time. 8.1.5. All self-insured retentions (SIRs) shall be clearly stated on the Certificate of Insurance. Any self-insured retention (SIR) in an amount in excess of Fifty Thousand Dollars ($50,000) shall specifically be approved by the County’s Risk Manager, or designee, upon review of Tenant’s current audited financial report. If Tenant’s SIR is approved, Tenant, in addition to, and without limitation of, any other indemnity provision(s) in this Lease, agrees to all of the following: 1) In addition to the duty to indemnify and hold the County harmless against any and all liability, claim, demand or suit resulting from Tenant’s, its agents, employee’s o r subcontractor’s performance of this Lease, Tenant shall defend the County at its sole cost and expense with counsel approved by Board of Supervisors against same; and 2) Tenant’s duty to defend, as stated above, shall be absolute and irrespective of any dut y to indemnify or hold harmless; and 3) The provisions of California Civil Code Section 2860 shall apply to any and all actions to which the duty to defend stated above applies, and the Tenant’s SIR provision shall be interpreted as though the Tenant was an insurer and the County was the insured. If the Tenant fails to maintain insurance acceptable to the County or City for the full term of this Lease, the County or City may terminate this Lease. 8.1.6. All policies of insurance required under this Article VIII must be issued by an insurer with a minimum rating of A- (Secure A.M. Best's Rating) and VIII (Financial Size Category as determined by the most current edition of the Best's Key Rating Guide/Property- Casualty/United States or ambest.com). It is preferred, but not mandatory, that the insurer must be licensed to do business in the state of California. (a) If the insurance carrier does not have an A.M. Best Rating of A-/VIII, the Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the carrier's performance and financial ratings. (b) If the insurance carrier is not an admitted carrier in the state of California and does not have an A.M. Best rating of A-/VIII, the Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the company's performance and financial ratings. (c.1) The policy or policies of insurance maintained by the TENANT DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Builder's Risk (during the Construction Period) naming retained General Contractor Project value and no coinsurance provision. EXHIBIT 15 Page | 29 4894-6811-3695v.2 0017787-000542 Commercial General Liability $5,000,000 per occurrence $5,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence (c.2) The policy or policies of insurance maintained by the TENANT’S GENERAL CONTRACTOR DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Commercial General Liability $5,000,000 per occurrence $10,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $2,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence Contractor’s Pollution Liability including NODS $5,000,000 per claims made or per occurrence (d) The policy or policies of insurance maintained by the TENANT’S SUBCONTRACTORS DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum EXHIBIT 15 Page | 30 4894-6811-3695v.2 0017787-000542 Employer’s Liability Insurance (not required for self-employed subcontractors) $1,000,000 per occurrence Contractor’s Pollution Liability including NODS (Required only of those subcontractors involved in pollution remediation) $1,000,000 per claims made or per occurrence (e) The policy or policies of insurance maintained by the ARCHITECT- ENGINEER shall provide the minimum limits and coverage as set fort h below: Coverages Minimum Limits Professional Liability (architect, structural, electrical engineer, mechanical/plumbing engineering, environmental engineer, civil engineer, landscape architect, and geotechnical engineer) $2,000,000 per occurrence $2,000,000 aggregate Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence (f) The policy or policies of insurance maintained by the TENANT AFTER CONSTRUCTION shall provide the minimum limits and coverage as set forth below: Coverages Minimum Limits Commercial General Liability Including Sexual Misconduct (defined as abuse, molestation and assault and battery) $5,000,000 per occurrence $5,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence EXHIBIT 15 Page | 31 4894-6811-3695v.2 0017787-000542 Commercial Property Insurance on an "All Risk" or "Special Causes of Loss" basis covering all buildings, contents and any tenant improvements including Business Interruption/Loss of Rents with a 12 month limit 100% of the Replacement Cost Value and no coinsurance provision Tenant shall provide a builder’s risk policy, naming the Contractor, providing coverage for the full project value and no coinsurance provision. The policy shall provide coverage for all perils excluding earthquake, and flood. Tenant is responsible for any deductible amount. The County of Orange and the Housing Authority of the City of Santa Ana shall be named as Loss Payees as its financial interests may appear. This shall be evidenced by a Loss Payee endorsement which shall accompany the Certificate of Insurance. The Builder's Risk policy shall not be required to cover any tools, equipment, or supplies, unless such tools, equipment, or supplies are part of the Work being constructed. The Contractor shall be responsible for securing and maintaining appropriate insurance on any tools, equipment, or supplies that are not part of the work being constructed. The County and the Contractor waive all rights against each other and the subcontractors, sub- subcontractors, officers, and employees of each other, and the Contractor waives all rights against County’s separate contractors, if any, and their subcontractors, sub-subcontractors, officers and employees for damages caused by fire or other perils to the extent paid by the Builder’s Risk insurance, except such rights as they may have to the proceeds of such insurance. The Contractor shall require of its subcontractors and sub-subcontractors by appropriate agreements, similar waivers, each in favor of all other parties enumerated in the preceding sentence . (g) The policy or policies of insurance maintained by the TENANT’S CONTRACTOR AFTER CONSTRUCTION shall provide the minimum limits and coverage as set forth below when performing maintenance and minor work after the building is in operation: Coverages Minimum Limits Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Automobile Liability including coverage for owned, non-owned and hired vehicles $1,000,000 limit per occurrence Workers' Compensation Statutory Minimum Employers' Liability Insurance $1,000,000 per occurrence EXHIBIT 15 Page | 32 4894-6811-3695v.2 0017787-000542 8.1.7. Required Coverage Forms. (a) The Commercial General Liability coverage shall be written on Insurance Services Office (ISO) form CG 00 01, or a substitute form providing liability coverage at least as broad. (b) The Business Auto Liability coverage shall be written on ISO form CA 00 01, CA 00 05, CA 00 12, CA 00 20, or a substitute form providing liability coverage as broad. 8.1.8. Required Endorsements. The Commercial General Liability policy shall contain the following endorsements, which shall accompany the Certificate of insurance: 1) An Additional Insured endorsement using ISO form CG 20 26 04 13 or a form at least as broad naming the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, employees, agents as Additional Insureds. Blanket coverage may also be provided which will state, as required by Lease. 2) A primary non-contributing endorsement using ISO form CG 20 01 04 13, or a form at least as broad, evidencing that the TENANT’s insurance is primary and any insurance or self-insurance maintained by the County of Orange shall be excess and non-contributing. 3) A Products and Completed Operations endorsement using ISO Form CG2037 (ed.04/13) or a form at least as broad, or an acceptable alternative is the ISO from CG2010 (ed. 11/85). (Pertains to contractors and subcontractors performing major construction). Contractors shall maintain Products and Completed Operations coverage for ten (10) years following completion of construction. The Contactors Pollution Liability and Pollution Liability policies shall contain the following endorsements, which shall accompany the Certificate of Insurance: 1) An Additional Insured endorsement naming the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, employees, and agents as Additional Insureds. 2) A primary non-contributing endorsement evidencing that the Contractor's insurance is primary and any insurance or self-insurance maintained by County shall be excess and non-contributing. (a) The Workers' Compensation policy shall contain a waiver of subrogation endorsement waiving all rights of subrogation against the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, agents and employees. (b) All insurance policies required by this Lease shall waive all rights of subrogation against the County of Orange, City of Santa Ana, and their respective elected and appointed officials, officers, agents and employees when acting within the scope of their appointment or employment. (c) The Commercial Property Building policy shall include the County of Orange and City of Santa Ana as both Named Insureds. A Certificate of Insurance shall be submitted as evidence of this requirement. The Builders’ Risk policy shall be endorsed to include the County of EXHIBIT 15 Page | 33 4894-6811-3695v.2 0017787-000542 Orange and City of Santa Ana as Loss Payees. A Loss Payee endorsement shall be submitted with the Certificate of Insurance as evidence of this requirement. (d) Tenant shall notify County and City in writing within thirty (30) days of any policy cancellation and ten (10) days for non-payment of premium and provide a copy of the cancellation notice to the County and City. Failure to provide written notice of cancellation may constitute a material breach of the Lease, after which the County or City may suspend or terminate this Lease. (e) The Commercial General Liability policy shall contain a severability of interests clause, also known as a "separation of insureds" clause (standard in the ISO CG 001 policy). (f) If Contractor’s Pollution Liability and Pollution Liability are claims-made policies, Contractor shall agree to maintain coverage for five (5) years following completion of the construction. If Contractor’s Professional Liability is a claims-made policy, Contractor shall agree to maintain coverage for ten (10) years following the completion of construction. Products and Completed Operations coverage shall be maintained for ten (10) years following the completion of construction. (g) Insurance certificates should be forwarded to County and City addresses provided in Section 18.19 below. Tenant has ten (10) business days to provide adequate evidence of insurance or it shall constitute an Event of Default. (h) County or City expressly retains the right to require Tenant to increase or decrease insurance of any of the above insurance types throughout the term of this Lease which shall be mutually agreed upon by County, City and Tenant. (i) Chief Real Estate Officer shall notify Tenant in writing of changes in the insurance requirements consistent with subsection (h) above. If Tenant does not deposit copies of certificates of insurance and endorsements with Chief Real Estate Officer incorporating such changes within thirty (30) days of receipt of such notice, it shall constitute an Event of Default. (j) The procuring of such required policy or policies of insurance shall not be construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions and requirements of this Lease, nor in any way to reduce the policy coverage and limits available from the insurer. 8.2 Indemnification. Tenant agrees to assume all risks, financial or otherwise, associated with the Premises. Tenant hereby releases and waives all claims and recourse against Lessor, including the right of contribution for loss or damage of persons or property, arising from, growing out of or in any way connected with or related to this Lease, including any damage to or interruption of use of the Premises including, but not limited to, loss of business, damage to, destruction of, or relocation costs of Tenant’s Improvements or impaired utility of the Premises caused by erosion, flood, or flood overflow, or caused by any action undertaken in the operation, maintenance, repair, reconstruction, replacement, enlargement or improvement of the Premises except claims arising from the gross negligence or willful misconduct of County or Agency, their officers, agents, employees and contractors. Tenant hereby agrees to indemnify, defend (with counsel approved in writing by Lessor, in Lessor’s reasonable discretion), and hold harmless, County and the Agency, their respective elected and appointed officials, officers, agents, employees and contractors against any EXHIBIT 15 Page | 34 4894-6811-3695v.2 0017787-000542 and all claims, losses, demands, damages, cost, expenses or liability for injury to any persons or property, arising out of the operation or maintenance of the Premises, and/or Tenant’s exercise of the rights under this Lease, except for liability arising out of the gross negligence or willful misconduct of County or Agency, their elected and appointed officials, officers, agents, employees or contractors including the cost of defense of any lawsuit arising therefrom , and except for claims arising after the later to occur of the expiration or earlier termination of the Term, or the date Tenant vacates the Premises. If County and/or Agency is named as co-defendant in a lawsuit in connection with this Lease, Tenant shall notify Lessor of such fact and shall represent the County and/or Agency in such legal action unless County or Agency undertakes to represent themselves as co-defendant in such legal action, in which event, Tenant shall pay to Lessor their litigation costs, expenses, and reasonable attorneys' fees. If judgment is entered against County and/or Agency and Tenant by a court of competent jurisdiction because of the concurrent active negligence of County and/or Agency and Tenant, County, Agency and Tenant agree that liability will be apportioned as determined by the court. Neither Party shall request a jury apportionment. A judgment or other judicial determination regarding Lessor’s negligence shall not be a condition precedent to Tenant’s obligations stated in this Section. Tenant acknowledges that it is familiar with the language and provisions of California Civil Code Section 1542 which provides as follows: A general release does not extend to claims which the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that if known by him or her, would have materially affected his or her settlement with the debtor or released party. Tenant, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its provisions to the extent described in this paragraph. The foregoing indemnity and defense obligations of this Lease shall survive its expiration or termination. This Section 8.2 notwithstanding, indemnification with respect to Hazardous Materials shall be governed by Section 4.4.4. 8.3 Damage to Tenant’s Premises. Lessor shall not be liable for injury or damage which may be sustained by the person, goods, wares, merchandise, or other property of Tenant, of Tenant’s employees, invitees, customers, or of any other person in or about the Premises or the Improvements caused by or resulting from any peril which may affect the Premises or Improvements, including fire, steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises or the Improvements, whether such damage or injury results from conditions arising upon the Premises or from other sources; provided, however, Lessor shall be liable for injury or damage under this Section 8.3 resulting from County or Agency, their elected and appointed officials, officers, agents, employees or contractor’s gross negligence or willful misconduct. ARTICLE IX CONDEMNATION 9.1 Definitions. 9.1.1. “Condemnation” means (i) the taking or damaging, including severance damage, by eminent domain or by inverse condemnation or for any public or quasi-public use under any statute, whether by legal proceedings or otherwise, by a Condemnor (hereinafter defined), and EXHIBIT 15 Page | 35 4894-6811-3695v.2 0017787-000542 (ii) a voluntary sale or transfer to a Condemnor, either under threat of condemnation or while condemnation legal proceedings are pending. 9.1.2. “Date of Taking” means the later of (i) the date actual physical possession is taken by the Condemnor; or (ii) the date on which the right to compensation and damages accrues under the law applicable to the Premises. 9.1.3. “Award” means all compensation, sums or anything of value awarded, paid or received for a Total Taking, a Substantial Taking or a Partial Taking (hereinafter defined), whether pursuant to judgment or by agreement or otherwise. 9.1.4. “Condemnor” means any public or quasi-public authority or private corporation or individual having the power of condemnation. 9.1.5. “Total Taking” means the taking by Condemnation of all of the Premises and all of the Improvements. 9.1.6. “Substantial Taking” means the taking by Condemnation of so much of the Premises or Improvements or both that one or more of the following conditions results , as reasonably determined by Tenant: (i) The remainder of the Premises would not be economically and feasibly usable by Tenant; and/or (ii) A reasonable amount of reconstruction would not make the Premises and Improvements a practical improvement and reasonably suited for the uses and purposes for which the Premises were being used prior to the Condemnation; and/or (iii) The conduct of Tenant’s business on the Premises would be materially and substantially prevented or impaired. 9.1.7. “Partial Taking” means any taking of the Premises or Improvements that is neither a Total Taking nor a Substantial Taking. 9.1.8. “Notice of Intended Condemnation” means any notice or notification on which a reasonably prudent person would rely and which he would interpret as expressing an existing intention of Condemnation as distinguished from a mere preliminary inquiry or proposal. It includes but is not limited to service of a Condemnation summons and complaint on a Party hereto. The notice is considered to have been received when a Party receives from the Condemnor a notice of intent to condemn, in writing, containing a description or map reasonably defining the extent of the Condemnation. 9.2 Notice and Representation. 9.2.1. Notification. The Party receiving a notice of one or more of the kinds specified below shall promptly notify the other Party (and the Limited Partner, if during the Compliance Period) of the receipt, contents and dates of such notice: (i) a Notice of Intended Condemnation; (ii) service of any legal process relating to the Condemnation of t he Premises or Improvements; (iii) any notice in connection with any proceedings or negotiations with respect to such a Condemnation; (iv) any notice of an intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of Condemnation. 9.2.2. Separate Representation. County, Agency and Tenant each have the right to represent its respective interest in each Condemnation proceeding or negotiation and to make full proof of his claims. No agreement, settlement, sale or transfer to or with the Condemnor shall be EXHIBIT 15 Page | 36 4894-6811-3695v.2 0017787-000542 made without the consent of County, Agency and Tenant. County, Agency and Tenant shall each execute and deliver to the other any instruments that may be required to effectuate or facilitate the provisions of this Lease relating to Condemnation. 9.3 Total or Substantial Taking. 9.3.1. Total Taking. On a Total Taking, this Lease shall terminate on the Date of Taking. 9.3.2. Substantial Taking. If a taking is a Substantial Taking, Tenant may, with the consent of each Leasehold Mortgagee and the Limited Partner, to the extent required, by notice to Lessor given within ninety (90) days after Tenant receives a Notice of Intended Condemnation, elect to treat the taking as a Total Taking. If Tenant does not so notify Lessor, the taking shall be deemed a Partial Taking. 9.3.3. Early Delivery of Possession. Tenant may continue to occupy the Premises and Improvements until the Condemnor takes physical possession. At any time following Notice of Intended Condemnation, Tenant may in its sole discretion, with the consent of each Leasehold Mortgagee and the Limited Partner, to the extent required, elect to relinquish possession of the Premises to Lessor before the actual Taking. The election shall be made by notice declaring the election and agreeing to pay all Rent required under this Lease to the Date of Taking. Tenant’s right to apportionment of or compensation from the Award shall then accrue as of the date that the Tenant relinquishes possession. 9.3.4. Apportionment of Award. On a Total Taking all sums, including damages and interest, awarded for the fee or leasehold or both shall be distributed and disbursed as finally determined by the court with jurisdiction over the Condemnation proceedings in accordance with applicable law. Notwithstanding anything herein to the contrary, Tenant shall be entitled to receive compensation for the value of its leasehold estate under this Lease including its fee interest in all Improvements, personal property and trade fixtures located on the Premises, its relocation and removal expenses, its loss of business goodwill and any other items to which Tenant may be entitled under applicable law. 9.4 Partial Taking. 9.4.1. Effect on Rent. On a Partial Taking this Lease shall remain in full force and effect covering the remainder of the Premises and Improvements, and Tenant shall not be entitled to any refund of the Base Rent. 9.4.2. Restoration of Improvements. Promptly after a Partial Taking, Tenant shall repair, alter, modify or reconstruct the Improvements (“Restoring”) so as to make them reasonably suitable for Tenant’s continued occupancy for the uses and purposes for which the Premises are leased. 9.4.3. Apportionment of Award. On a Partial Taking, Tenant shall be entitled to receive the entire award for such Partial Taking, except that (i) the proceeds of such Partial Taking shall first be applied towards the cost of Restoring the Premises pursuant to Section 9.4.2 and (ii) Lessor shall be entitled to receive any portion of such award allocated to Lessor’s Fee Interest in the Property (exclusive of the Improvements, as encumbered by this Lease). EXHIBIT 15 Page | 37 4894-6811-3695v.2 0017787-000542 9.5 Waiver of Termination Rights. Both Parties waive their rights under Section 1265.130 of the California Code of Civil Procedure (and any successor provision) and agree that the right to terminate this Lease in the event of Condemnation shall be governed by the provisions of this Article IX. ARTICLE X ASSIGNMENT, SUBLETTING AND ENCUMBERING 10.1 General. Except as provided in Sections 10.3 and 17.6.4, below, Tenant shall not mortgage, pledge, hypothecate, encumber, transfer, sublease Tenant’s interest in this Lease or assign (including an assignment by operation of law) Tenant’s interest in the Premises or Improvements or any part or portion thereof (hereinafter referred to collectively as “Transfer”) without the written consent of the Lessor, which consent may not be unreasonably withheld, conditioned or delayed. Lessor’s consent may be subject to approval by their respective governing bodies (e.g. Board of Supervisors and City Council). Tenant’s failure to obtain the Lessor’s written consent to a Transfer shall render such Transfer void. Occupancy of the Premises by a prospective transferee, sublessee, or assignee prior to Lessor’s written consent of a Transfer shall constitute an Event of Default, except as set forth in Section 10.3, below. 10.1.1. Except as provided in Section 10.3, below, if Tenant hereunder is a corporation, limited liability company, an unincorporated association or partnership, the sale or transfer of any stock or interest in said corporation, company, association and partnership in the aggregate exceeding 25% shall require the written consent of the Lessor, as set forth in Section 10.3, above, which consent may not be unreasonably withheld, conditioned or delayed. 10.1.2. Should Lessor consent to any Transfer, such consent and approval shall not constitute a waiver of any of the terms, conditions, covenants, restrictions or reservations of this Lease nor be construed as Lessor’s consent to any further Transfer. Such terms conditions, covenants, restrictions and reservations shall apply to each and every Transfer hereunder and shall be severally binding upon each and every party thereto. Any document to regarding the Transfer of the Premises or any part thereof shall not be inconsistent with the provisions of this Lease and in the event of any such inconsistency, the provisions of this Lease shall control. 10.1.3. This Section shall not be interpreted to prohibit, disallow or require Lessor’s consent to space leases (subleases of less than Tenant’s entire Lease interest), including leases of individual residential units in the Improvements, which are consistent with the approved uses under this Lease. 10.2 Leasehold Mortgage. Under no circumstances may Tenant mortgage, encumber or hypothecate Lessor’s Fee Interest, other than as required by TCAC pursuant to its lease rider, if any, and previously approved by Lessor prior to the Effective Date of this Lease, in connection with the award of low income housing tax credits to Tenant. 10.3 Excluded Transfers. Lessor’s consent, as set forth in Section 10.1, above, shall not be required to for any Excluded Transfer (each party to whom an Excluded Transfer may be made is a “Permitted Transferee”), provided, however, that (1) Tenant shall notify Lessor of such Excluded Transfer at least twenty (20) days prior to the consummation of such Excluded Transfer, and shall provide Lessor with information regarding the transferee evidencing that the Transfer falls within the EXHIBIT 15 Page | 38 4894-6811-3695v.2 0017787-000542 scope of this Section 10.3 and the definition of Excluded Transfer, set forth in Section 1.1.18, above, and (2) if such Transfer involves an assignment of Tenant’s rights under this Lease, Tenant or such transferee shall provide Lessor with a written assumption of Tenant’s obligations and liabilities under this Lease executed by such transferee in a form approved by the Lessor, which approval shall not be unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the terms of this Lease; provided, however, that the provisions of this Section 10.3 shall not apply to any Transfer to a Foreclosure Transferee. 10.4 Transfer Procedure. The provisions of this Section 10.4 shall not be applicable to an Excluded Transfer, which shall be governed by Sections 1.1.18 and 10.3, above. If Tenant desires at any time to enter into a Transfer for which Lessor’s consent is required hereunder, Tenant shall provide Lessor with written notice (“Transfer Notice”) at least ninety (90) days prior to the proposed effective date of the Transfer. The Transfer Notice shall include (i) the name and address of the proposed transferee, (ii) the nature of the Transfer (e.g., whether an assignment, sublease, etc.), (iii) the proposed effective date of the Transfer, (iv) income statements and “fair market” balance sheets of the proposed transferee for the two (2) most recently completed fiscal or calendar years (provided however, if the proposed transferee is a newly formed entity and has not been in existence for such two (2) year period, the financial statements submitted shall be those of its principals), (v) a detailed description of the proposed transferees qualifications and experience that demonstrates the transferee meets the criteria for a Tenant as established by this Lease, and (vi) a bank or other credit reference. Thereafter, Tenant shall furnish such supplemental information as Lessor may reasonably request concerning the proposed transferee. Lessor shall, no later than ninety (90) days after Lessor’s receipt of the information specified above, deliver written notice to Tenant which shall (i) indicate whether Lessor give or withhold consent to the proposed Transfer, and (ii) if Lessor withhold consent to the proposed Transfer, setting forth a detailed explanation of Lessor’s grounds for doing so. If Lessor consents to a proposed Transfer, then Tenant may thereafter effectuate such Transfer to the proposed transferee based upon the specific terms of the Lessor’s approval and after execution of a consent to assignment by Lessor in a form approved by the Lessor, which approval shall not be unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the terms of this Lease; provided, however, that the provisions of this Section 10.4 shall not apply to any Transfer to a Foreclosure Transferee. 10.5 Liability of Transferors/Transferees For Lease Obligations. In the case of an assignment, including an assignment pursuant to Section 17.6.5, each Permitted Transferee and any other assignees or transferees of this Lease shall assume in writing all of Tenant’s obligations thereafter arising under this Lease. However, under no circumstances shall any such assignment result in a Leasehold Mortgagee assuming responsibility or liability for any Excluded Defaults (as defined below) or as otherwise expressly provided in this Lease. All assignees or transferees of any interest in this Lease or the Premises or Improvements (whether or not directly liable on this Lease) shall be subject to the terms, conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in Section 17.6.5, the transferor may be released from all liability under this Lease only if the Permitted Transferee or other transferee agrees in writing to assume all of transferor’s obligations and liabilities and provides to Lessor evidence of sufficient and adequate assets, including any required insurance policies, subject to approval by Lessor, which approval shall not be unreasonably withheld, that evidence said Permitted Transferee’s or other transferees’ financial and otherwise competence to assume transferor’s obligations and liability (an “Approved Release”). Except as otherwise provided in Section 17.6.5 and except for an Approved Release, for all other Transfers, any transferor of any interest in this Lease or the Premises or Improvements shall remain primarily liable for all obligations hereunder and shall be subject to the terms, conditions, EXHIBIT 15 Page | 39 4894-6811-3695v.2 0017787-000542 covenants, restrictions and reservations of this Lease. Except as otherwise provided in Section 17.6.5 and except for an Approved Release, the Lessor may proceed directly against the transferor in its sole and absolute discretion, with no obligation to exhaust its remedies against the transferee. Notwithstanding anything to the contrary contained herein, Lessor consent shall not be required for any of the following: (i) the exercise by the Limited Partner of its rights pursuant to Tenant’s Partnership Agreement to remove the general partner of the Tenant and appoint the Limited Partner or an affiliate thereof as interim general partner of the Tenant; (ii) the exercise by the Limited Partner of its right to enforce any repurchase requirements under Tenant’s Partnership Agreement; and/or (iii) a transfer by the Limited Partner of its partnership interest in Tenant to an Affiliate of the Limited Partner. 10.6 Conditions of Certain Lessor Consent. 10.6.1. Lessor may withhold consent to a Transfer (excluding Excluded Transfers which shall not require Lessor consent) at its and absolute sole discretion if any of the following conditions exist: (a) An Event of Default exists under this Lease. (b) The prospective transferee has not agreed in writing to keep, perform, and be bound by all the terms conditions, covenants, restrictions and reservations of this Lease. (c) In the case of an assignment, the prospective transferee has not agreed in writing to assume all of transferor’s obligations and liabilities. (d) The construction of the Initial Improvements has not been completed. (e) Any construction required of Tenant as a condition of this Lease has not been completed. (f) All the material terms, covenants, and conditions of the Transfer that are relevant to the Lessor’s approval of the Transfer have not been disclosed in writing to the Lessor. 10.7 Transfer of Mortgages of Lessor’s Interest. Notwithstanding anything to the contrary set forth in this Ground Lease, unless required by statute, court order or operation of law, Lessor shall not transfer, assign, pledge or hypothecate its fee interest in the Premises (other than to entities under common control with Lessor or other governmental entities under applicable law) without the prior written consent of Tenant, all Leasehold Mortgagees and the Limited Partner (provided, the Limited Partner’s consent shall be required only during the tax credi t compliance period). Any and all mortgages or liens placed or suffered by the Lessor encumbering the Lessor’s fee interest in the Premises shall be expressly subject and subordinate to this Lease (and all amendments, modifications, extensions and renewals hereof), to all obligations of Lessor hereunder, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder, to each New Lease and to each Leasehold Mortgage. Furthermore, any Person succeeding to the Lessor’s fee interest as a consequence of any conveyance, foreclosure or other transfer shall succeed to all of the obligations of the County hereunder. During the term of any mortgage held by a Leasehold Mortgagee hereunder, Lessor shall, at the request of any such Leasehold Mortgagee, require the holder of each such mortgage, deed of trust and other security instrument encumbering the fee interest (a “Fee Mortgage”) to execute and deliver to the requesting Leasehold Mortgagee a written EXHIBIT 15 Page | 40 4894-6811-3695v.2 0017787-000542 and recordable subordination agreement providing any such Fee Mortgage is subject and subordinate in all respects to this Lease (and all amendments, modifications, extensions and renewals hereof), to all obligations of Lessor under the Lease, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder, to each New Lease and to each Leasehold Mortgage, and otherwise in form and substance as required by such Leasehold Mortgagee in its sole, but good faith, discretion. ARTICLE XI DEFAULT AND REMEDIES 11.1 Event of Default. Each of the following events shall constitute an “Event of Default” by Tenant: 11.1.1. Failure to Pay. Tenant’s failure or omission to pay any Rent or other sum payable hereunder on or before the date due where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Tenant; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure §1161 et seq. 11.1.2. Failure to Perform. The failure or inability by Tenant to observe or perform any of its obligations under this Lease (other than those specified in Sections 11.1.1, 11.1.3, 11.1.6, or 11.1.8 herein, which have their own notice and cure periods), where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Tenant or past any such longer period as reasonably agreed upon by the Tenant, Lessor in writing as may be necessary for completion of its cure; provided, however, that any such notice by Lessor shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et. seq.; provided, further, that if the nature of such failure is such that it can be cured by Tenant but that more than thirty (30) days are reasonably required for its cure (for any reason other than financial inability), then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) days, and thereafter diligently pursues such cure to completion. 11.1.3. Abandonment. The abandonment (as defined in California Civil Code Section 1951.3) or vacation of the Premises by Tenant for a period of thirty (30) days or more. 11.1.4. Assignments. (a) The making by Tenant of any assignment of its leasehold estate under this Lease without Lessor’s consent, as set forth in Article X; (b) A case is commenced by or against Tenant under Chapters 7, 11 or 13 of the Bankruptcy Code, Title 11 of the United States Code as now in force or hereafter amended and if so commenced against Tenant, the same is not dismissed within ninety (90) days of such commencement; (c) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where such seizure is not discharged within sixty (60) days; or EXHIBIT 15 Page | 41 4894-6811-3695v.2 0017787-000542 (d) Tenant’s convening of a meeting of its creditors or any class thereof for the purpose of effecting a moratorium upon or composition of its debts. In the event of any such default, neither this Lease nor any interests of Tenant in and to the Premises shall become an asset in any of such proceedings. 11.1.5. Failure to Reimburse Lessor. Tenant’s failure to reimburse the Lessor pursuant to Section 3.6.4. 11.1.6. Termination of and Failure to Reinstate Insurance Coverage. Termination of Tenant’s insurance coverage and lack of reinstatement within ten (10) business days after notice from Lessor of such termination. 11.1.7. Failure to Provide Evidence of Insurance. Tenant’s failure to provide Lessor with a valid and adequate certificate of insurance and endorsements, or binder, at any time during the Term of the Lease, within the time period required under Section 8.1.3. 11.1.8. Lessor’s Consent and Approval of Transfer. Occupancy of the Premises by a prospective transferee, sublessee, or assignee which requires Lessor’s consent or approval, before Lessor’s written consent and approval of a Transfer is obtained as required in Section 10.1. 11.1.9. Tenant’s failure to make Additional Rent payment(s) as set forth in Sections 11.3 and 11.10. 11.2 Lessor’s Remedies. If an Event of Default occurs, Lessor shall have the following remedies in addition to all rights and remedies provided by law or equity to which Lessor may resort cumulatively or in the alternative: 11.2.1. Termination of Lease. Subject to Article 17, as applicable, Lessor shall have the right to terminate this Lease and all rights of Tenant hereunder including Tenant’s right to possession of the Premises. In the event that Lessor shall elect to so terminate this Lease then Lessor may recover from Tenant: (a) The worth at the time of award of the unpaid Rent and other charges, which had been earned as of the date of the termination hereof; plus (b) The worth at the time of award of the amount by which the unpaid Rent and other charges which would have been earned after the date of the termination hereof until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (c) The worth at the time of award of the amount by which the unpaid Rent and other charges for the balance of the Term hereof after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus (d) Any other amount necessary to compensate Lessor for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary repair, renovation and alteration of the Premises, reasonable attorneys' fees, expert witness costs; plus EXHIBIT 15 Page | 42 4894-6811-3695v.2 0017787-000542 (e) Subject to the rights of any Leasehold Mortgagees and TCAC, the funds in the Capital Improvement Fund; plus (f) Any other amount which Lessor may by law hereafter be permitted to recover from Tenant to compensate Lessor for the detriment caused by Tenant’s default as permitted under applicable California law. The term "Rent" as used herein shall mean as defined in Section 1.1.47. Additional Rent shall be computed on the basis of the average monthly amount thereof accruing during the 24-month period immediately prior to default, except that if it becomes necessary to compute such Additional Rent before such 24-month period has occurred, then it shall be computed on the basis of the average monthly amount during such shorter period. As used in Sections 11.2.1(a) and 11.2.1(b) above, the "worth at the time of award" shall be computed by allowing interest at the Interest Rate. As used in Sections 11.2.1 (c) above, the "worth at the time of award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%), but not in excess of the Interest Rate. 11.2.2. Continue Lease in Effect. Lessor may continue this Lease in effect without terminating Tenant’s right to possession and to enforce all of Lessor's rights and remedies under this Lease, at law or in equity, including the right to recover the Rent as it becomes due under this Lease; provided, however, that Lessor may at any time thereafter elect to terminate this Lease for the underlying Event(s) of Default by notifying Tenant in writing that Tenant’s right to possession of the Premises has been terminated. 11.2.3. Removal of Personal Property Following Termination of Lease. Lessor shall have the right, following a termination of this Lease and Tenant’s rights of possession of the Premises under Section 11.2.1 above, to re-enter the Premises and, subject to applicable law, to remove Tenant’s personal property from the Premises. Such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant , or disposed of without such storage, in accordance with applicable California law. 11.3 Lessor’s Right to Cure Tenant Defaults. If Tenant shall have failed to cure, after expiration of the applicable time for curing, a particular default under this Lease, Lessor may at their election, but are not obligated to, make any payment required of Tenant under this Lease or perform or comply with any term, agreement or condition imposed on Tenant hereunder, and the amount so paid plus the reasonable cost of any such performance or compliance, plus interest on such sum at the Interest Rate from the date of payment, performance or compliance until reimbursed shall be deemed to be Additional Rent payable by Tenant on Lessor’s demand. Tenant’s failure to reimburse the County and/or Agency within 30 days of Lessor’s demand shall constitute an Event of Default under this Lease. No such payment, performance or compliance shall constitute a waiver of default or of any remedy for default, or render County and/or Agency liable for any loss or damage resulting from the same. 11.4 Lessor’s Default. Lessor shall not be considered to be in default under this Lease unless Tenant has given Lessor written notice specifying the default, and either (i) as to monetary defaults, Lessor have failed to cure the same within ten (10) business days after written notice from Tenant, or (ii) as to nonmonetary defaults, Lessor have failed to cure the same within thirty (30) days after written notice from Tenant, or if the nature of Lessor’s nonmonetary default is such that more than thirty (30) days are reasonably required for its cure, then such thirty (30) day period shall be EXHIBIT 15 Page | 43 4894-6811-3695v.2 0017787-000542 extended automatically so long as County and/or Agency commences a cure within such thirty (30) day period and thereafter diligently pursues such cure to completion. Tenant shall have no right to offset or abate alleged amounts owing by County and/or Agency under this Lease against any amounts owing by Tenant under this Lease. Additionally, Tenant’s sole remedy for any moneta ry default shall be towards the Lessor’s interest in the property and not to any other assets. Any and all claims or actions accruing hereunder shall be absolutely barred unless such action is commenced within six (6) months of the event or action giving rise to the default. 11.5 Remedies Cumulative. All rights and remedies of Lessor contained in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Lessor shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law, whether or not stated in this Lease. 11.6 Waiver by Lessor. No delay or omission of Lessor to exercise any right or remedy shall be construed as a waiver of such right or remedy or any default by Tenant hereunder. The acceptance by Lessor of Rent or any other sums hereunder shall not be (a) a waiver of any preceding breach or default by Tenant of any provision thereof, other than the failu re of Tenant to pay the particular rent or sum accepted, regardless of Lessor’s knowledge of such preceding breach or default at the time of acceptance of such rent or sum, or (b) waiver of Lessor’s right to exercise any remedy available to Lessor by virtue of such breach or default. No act or thing done by County or Agency’s agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender shall be valid unless in writing and signed b y Lessor. 11.7 Interest. Any installment or Rent due under this Lease or any other sums not paid to Lessor when due (other than interest) shall bear interest at the Interest Rate from the date such payment is due until paid, provided, however, that the payment of such interest shall not excuse or cure the default. 11.8 Conditions Deemed Reasonable. Tenant acknowledges that each of the conditions to a Transfer, and the rights of Lessor set forth in this Article X in the event of a Transfer is a reasonable restriction for the purposes of California Civil Code Section 1951.4. 11.9 Waiver by Tenant. Tenant’s waiver of any breach by Lessor of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition herein contained. 11.10 Tenant Covenants and Agreements. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expenses and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other than Rent required to be paid by it hereunder, or shall fail to perform any other act on its part to be performed hereunder, or to provide any insurance or evidence of insurance to be provided by Tenant within the time period required under this Lease, then in addition to any other remedies provided herein, Lessor may, but shall not be obligated to do so, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on Tenant’s part to be made or performed as provided in this Lease or to provide such insurance. Any payment or performance of any act or the provision of any such insurance by Lessor on Tenant’s behalf shall not give rise to any responsibility of Lessor to continue making the same or similar payments or performing the same or similar acts. All costs, expenses, and other sums incurred or paid by Lessor in connection therewith, together with interest at the Interest Rate from the date incurred or paid by EXHIBIT 15 Page | 44 4894-6811-3695v.2 0017787-000542 Lessor, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant within thirty (30) days of receipt of a demand and invoice from Lessor, and Tenant’s failure to pay the Lessor, as stated herein, shall constitute an Event of Default under this Lease. ARTICLE XII HOLDING OVER If Tenant holds over after the expiration or earlier termination of the Term hereof without the express written consent of Lessor, Tenant shall become a Tenant at sufferance only, at a monthly rental rate of (a) Fifty Thousand Dollars ($50,000) to the extent the Premises are not subject to any tenant income or rent restrictions and all units may be rented at market -rate rents, or (b) Twenty Five Thousand Dollars ($25,000) to the extent the Premises are subject to any tenant income or rent restrictions (“Hold Over Rent”), increased annually commencing with commencement of the hold over period by an amount equal to the greater of (i) three percent (3%) for each year of the Term, or (ii) a percentage equal to the percentage increase from the Base Period of the Consumer Price Index (“CPI”) for Los Angeles- Riverside-Orange County [All Urban Consumers-All Items, not seasonally adjusted (Base Period 1982-84=100)]. Said CPI for the month of December for the second year of the Term shall be considered the “Base Period.” Said adjustment shall be made by comparing the CPI for the Base Period to the CPI for the month of December immediately preceding each such adjustment. If at any time there shall not exist the CPI, Lessor shall substitute any official index published by the Bureau of Labor Statistics, or successor or similar governmental agency, as may then be in existence, and shall be most nearly equivalent thereto. If Tenant fails to surrender the Premises and the Improvements as stated herein, and Lessor shall take legal action to cause Tenant’s eviction from the Premises and is successful in such action, Tenant shall be responsible for all costs and expenses, including reasonable attorney’s fees and costs, incurred by County and/or Agency in connection with such eviction action; Tenant shall also indemnify and hold Lessor harmless from all loss or liability or reasonable attorney’s fees and costs, including any claim made by any succeeding tenant, incurred by County and/or Agency founded on or resulting from such failure to surrender. ARTICLE XIII ESTOPPEL CERTIFICATES At any time and from time to time, within ten (10) business days after written request by either County, Agency or Tenant (the “requesting party”), the other Party (the “responding party”) shall execute, acknowledge and deliver an estoppel certificate addressed to the requesting party, and/or to such other beneficiary (as described below) as the requesting party shall request, certifying (i) that this Lease is in full force and effect, (ii) that this Lease is unmodified, or, if there have been modifications, identifying the same, (iii) the dates to which Rent has been paid in advance, (iv) that, to the actual knowledge of the responding party, there are no then existing and uncured defaults under the Lease by either County, Agency or Tenant, or, if any such defaults are known, identifying the same, and (v) any other factual matters (which shall be limited to the actual knowledge of the responding party) as may be reasonably requested by the requesting party. Such certificate may designate as the beneficiary thereof the requesting party, and/or any third party having a reasonable need for such a certificate (such as, but not limited to, a prospective purchaser, transferee or lender) and any such certificate may be relied upon by the Parties. ARTICLE XIV FORCE MAJEURE EXHIBIT 15 Page | 45 4894-6811-3695v.2 0017787-000542 Unless otherwise specifically provided herein, the period for performance of any nonmonetary obligation by either Party shall be extended by the period of any delay in performance caused by Acts of God, strikes, boycotts, lock-outs, inability to procure materials not related to the price thereof, failure of electric power, riots, civil unrest, acts of terrorism, insurrection, war, declaration of a state or national emergency, weather that could not have reasonably been anticipated, changes in the Laws which would prevent the Premise from being operated in accordance with this Lease, or other reasons beyond the reasonable control of County, Agency, Tenant, or their respective agents or representatives (collectively, “Force Majeure Events”). In no event, however, shall Force Majeure Events include the financial inability of a Party to this Lease to pay or perform its obligations hereunder. Further, nothing herein shall extend the time for performance of any monetary obligation owing under this Lease (including Tenant’s obligation to pay Rent owing hereunder). ARTICLE XV RECORDS AND ACCOUNTS 15.1 Financial Statements. Within one hundred eighty (180) days after the end of each accounting year, Tenant shall at its own expense submit to Auditor-Controller and the Agency a balance sheet, income statement and cash flow statement prepared by a Certified Public Accountant (“CPA”) who is a member of the American Institute of Certified Public Accountants (“AICPA”) and the California Society of CPAs, reflecting business transacted on or from the Premises during the preceding accounting year. The Certified Public Accountant must attest that the balance sheet and income statement submitted are an accurate representation of Tenant's records and financial position as reported to the United States of America for income tax purposes and are in accordance with GAAP. Tenant shall provide Lessor with copies of any CPA's management letters prepared in conjunction with their audits of Tenant's operations from the Premises. Copies of management letters shall be provided directly to Lessor by the CPA at the same time Tenant’s copy is provided to Tenant. In the event that when such financial statements are submitted, the Tenant has a budget for the following accounting year, Tenant, at the same time, shall also provide Lessor with such budget. 15.1.1. Tenant acknowledges its understanding that any and all of the Financial Statement submitted to the Lessor pursuant to this Lease become Public Records and may be subject to public inspection and copying pursuant to §§ 6250 et. seq. of the California Government Code. 15.1.2. All Tenant's books of account and records and supporting source documents related to this Lease or to business operations conducted within or from the Premises shall be kept and made available at one location within the limits of the County unless an alternative location is approved in writing by the Lessor. Lessor shall, through their duly authorized agents or representatives, have the right to examine and audit said books of account and records and supporting source documents at any and all reasonable times for the purpose of determining the accuracy thereof in connection with such Sections of this Lease as the Parties mutually and reasonably agree the audit is relevant thereto. 15.2 Reports. In the event that the Tenant commissions, requests or is required to produce any reports related to the physical condition of the Improvements or Premises, Tenant shall submit copies of such reports to Lessor along with the financial statements required above in Section 15.1. EXHIBIT 15 Page | 46 4894-6811-3695v.2 0017787-000542 ARTICLE XVI OPERATIONAL OBLIGATIONS OF TENANT 16.1 Standards of Operation. 16.1.1. Tenant shall operate the Premises in a manner reasonably comparable to other comparable facilities or businesses within the County of Orange. Tenant shall at all times during the Term provide adequate security measures to reasonably protect persons and property on the Premises. 16.1.2. The ultimate purpose of this Lease is to permit the construction and operation of a multifamily affordable residential rental development, including permanent supportive housing, in accordance with Section 4.1.1. Accordingly, Tenant covenants and agrees to operate said Premises fully and continuously to accomplish said purposes and not to abandon or vacate the Premises at any time. 16.1.3. The facilities on the Premises shall be operated during normal business hours, subject to any temporary interruptions in operations or closures due to ordinary maintenance and repair and any Force Majeure Event, defined in Article XIV above. 16.2 Protection of Environment. Tenant shall take all reasonable measures available to: 16.2.1. Avoid any pollution of the atmosphere or littering of land or water caused by or originating in, on, or about Tenant’s facilities. 16.2.2. Maintain a reasonable noise level on the Premises so that persons in the general neighborhood will be able to comfortably enjoy the other facilities and amenities in the area. 16.2.3. Prevent the light fixtures of the Premises from emitting light that could negatively affect the operation of cars, boats, or airplanes in the area. 16.2.4. Prevent all pollutants from Tenant’s operations on the Premises from being discharged, including petroleum products of any nature, except as may be permitted in accordance with any applicable permits or as permitted by applicable Law. Tenant and all of Tenant’s agents, employees and contractors shall conduct operations under this Lease so as to ensure that pollutants do not enter the municipal storm drain system (including but not limited to curbs and gutters that are part of the street systems), or directly impact receiving waters (including but not limited to rivers, creeks, streams, estuaries, lakes, harbors, bays and the ocean), except as may be permitted by any applicable permits or as permitted by applicable law. 16.2.5. The Lessor may enter the Premises in accordance with Section 4.5 and/or review Tenant records at all reasonable times to assure that activities conducted on the Premises comply with the requirements of this Section. 16.3 On-Site Manager. Tenant shall employ a competent manager who shall be responsible for the day-to-day operation and level of maintenance, cleanliness, and general order for the Premises. Such person shall be vested with the authority of Tenant with respect to the supervision over the operation and maintenance of the Premises, including the authority to enforce compliance by Tenant’s agents, employees, concessionaires, or licensees with the terms and conditions of this Lease EXHIBIT 15 Page | 47 4894-6811-3695v.2 0017787-000542 and any and all rules and regulations adopted hereunder. Tenant shall notify Lessor in writing of the name of the Manager currently so employed as provided in Section 19.20 of this Lease. 16.4 Policies and Procedures to be Established by Tenant. Prior to the completion of construction, Tenant shall submit to Lessor proposed policies and procedures pertinent to the operation of the multifamily affordable residential rental development and manner of providing the uses required by this Lease (“Policies and Procedures”). ARTICLE XVII LEASEHOLD MORTGAGES 17.1 Definitions. The following definitions are used in this Article (and in other Sections of this Lease): 17.1.1. “Leasehold Estate” shall mean Tenant’s leasehold estate in and to the Premises, including Tenant’s rights, title and interest in and to the Premises and the Improvements, or any applicable portion thereof or interest therein. 17.1.2. “Leasehold Foreclosure Transferee” shall mean any person (which may, but need not be, a Leasehold Mortgagee) which acquires the Leasehold Estate pursuant to a foreclosure, assignment in lieu of foreclosure or other enforcement of remedies under or in connection with a Leasehold Mortgage. 17.1.3. “Leasehold Mortgage” shall mean and includes a mortgage, deed of trust, security deed, conditional deed, deed to secure debt or any other security instrument (including any assignment of leases and rents, security agreement and financing statements) held by a Lender by which Tenant’s Leasehold Estate is mortgaged to secure a debt or other obligation, including a purchase money obligation. 17.1.4. “Leasehold Mortgagee” shall mean a Lender which is the holder of a Leasehold Mortgage. 17.1.5. “Tenant” shall mean all of the following: (i) the Tenant under this Lease; (ii) an approved assignee, transferee or subtenant of the Tenant under this Lease who is or becomes directly and primarily liable to Lessor; and (iii) any further assignee, transferee or subtenant of any of the parties listed in (ii) who is or becomes directly and primarily liable to Lessor. 17.2 Tenant’s Right to Encumber Leasehold Estate; No Right to Encumber Lessor’s Fee Interest. Provided that an Event of Default has not occurred and is continuing, Tenant may, at any time during the Term of this Lease (with consent of Lessor after prior written notice providing evidence that all requirements of this Lease have been complied with, which consent shall not be unreasonably withheld, conditioned or delayed), encumber all or any portion of Tenant’s Leasehold Estate with one (1) or more Leasehold Mortgages; provided, however: 17.2.1. Such Leasehold Mortgage(s) (as of the date recorded) shall not exceed (a) if recorded before completion of the Initial Improvements, One Hundred Percent (100%) of the costs of the Initial Improvements (including closing and financing costs), or (b) if recorded after completion of the Initial Improvements, eighty percent (80%) of the Leasehold Estate value (including the value of all improvements) after completion; EXHIBIT 15 Page | 48 4894-6811-3695v.2 0017787-000542 17.2.2. That Tenant shall not have the power to encumber, and no Leasehold Mortgage shall encumber, Lessor’s Fee Interest; 17.2.3. Except as expressly provided in this Lease, the Leasehold Mortgage and all rights acquired under it shall be subject to each and all of the covenants, conditions, and restrictions set forth in this Lease and to all rights and interests of Lessor hereunder; and 17.2.4. Nothing in this Lease shall be construed so as to require or result in a subordination in whole or in part in any way of the Lessor’s Fee Interest to any Leasehold Mortgage, and; 17.2.5. Except as otherwise expressly provided herein, in the event of any conflict between the provisions of this Lease and the provisions of any such Leasehold Mortgage, the provisions of this Lease shall control. Tenant’s encumbrance of its Leasehold Estate with a Leasehold Mortgage, as provided in this Section 17.2, shall not constitute an assignment or other Transfer under Article X or otherwise, nor shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or of the Leasehold Estate so as to require such Leasehold Mortgagee, as such, to assume the Tenant’s obligations and liabilities under this Lease. Notwithstanding the foregoing, if any Leasehold Mortgagee (or its nominee) acquires title to the Premises by foreclosure or deed in lieu thereof (or by a new lease under Section 17.7), any required consent of the Lessor under this Section 17.2 shall not be unreasonably withheld. In addition and notwithstanding anything to the contrary set forth herein, (i) following a foreclosure or deed in lieu thereof by a Leasehold Mortgagee holding the most-senior Leasehold Mortgage in terms of lien priority (the “Senior Leasehold Mortgagee”), the requirement for Lessor consent to encumbering the Leasehold Estate with Leasehold Mortgages set forth above shall not apply (A) to Senior Leasehold Mortgagee (or its designee) following such foreclosure or deed in lieu of foreclosure, nor (B) in connection with the first transfer from Senior Leasehold Mortgagee (or its designee) to new owner acquiring the Premises from such Senior Leasehold Mortgagee (or its designee) following any such foreclosure or deed in lieu of foreclosure, and (ii) no consent of Lessor shall be required as to any amendment, modification or supplement to any Leasehold Mortgage except to the extent such amendment, modification or supplement (a) increases the principal amount of the loan secured by such Leasehold Mortgage (except in connection with protective advances), or (b) increases the stated interest rate on the loan secured by such Leasehold Mortgage (other than to charge a default rate, as applicable, to replace the interest rate upon the unavailability or illegality of the applicable interest rate index, or, to the extent it is a variable rate, in connection with the variations of such rate as provided in the applicable loan documents). 17.3 Notification to Lessor of Leasehold Mortgage. Tenant or any Leasehold Mortgagee shall, prior to making any Leasehold Mortgage, provide Lessor with written notice of such Leasehold Mortgage and the name and address of the Leasehold Mortgagee. At the time of notice, Tenant or such Leasehold Mortgagee shall furnish to Lessor a complete copy of any trust deed and note to be secured thereby, together with the name and address of the holder thereof. Thereafter, Tenant or any Leasehold Mortgagee shall notify Lessor of any change in the identity or address of such Leasehold Mortgagee. Lessor shall be entitled to rely upon the addresses provided pursuant to this Section for purposes of giving any notices required by this Article XVII. EXHIBIT 15 Page | 49 4894-6811-3695v.2 0017787-000542 17.4 Notice and Cure Rights of Leasehold Mortgagees With Respect to Tenant Defaults. Lessor, upon delivery to Tenant of any notice of a default or demand for payment by Tenant under this Lease or a matter as to which Lessor may predicate or claim a default, will promptly deliver a copy of such notice to each Leasehold Mortgagee. Each notice or demand required to be given by Lessor to a Leasehold Mortgagee under this Lease shall be in writing and shall be given by certified or registered mail, postage prepaid, return receipt requested, to such Leasehold Mortgagee at the address(es) provided by such Leasehold Mortgagee, as applicable, to Lessor from time to time in writing and shall be effective upon receipt (or refusal to accept receipt). No notice or demand given by Lessor to Tenant shall be effective until the duplicate copy of such notice or demand to the Tenant shall have been effectively given to each Leasehold Mortgagee in accordance with this Lease. From and after the date such notice has been given to any Leasehold Mortgagee, such Leasehold Mortgagee shall have the same cure period for such default (or act or omission which is the subject matter of such notice) that is provided to Tenant under this Lease or as otherwise agreed upon by County, Agency and the Tenant, to commence and/or complete a cure of such default (or act or omission which is the subject matter of such notice). Lessor shall accept any and all performance by or on behalf of any Leasehold Mortgagee(s), including by any receiver obtained by any Leasehold Mortgagee(s), as if the same had been done by Tenant. Tenant authorizes each Leasehold Mortgagee to take any such action at such Leasehold Mortgagee’s option, and hereby authorizes any Leasehold Mortgagee (or any receiver or agent) to enter upon the Premises for such purpose. 17.5 Limitation on Lessor’s Termination Right. If following the delivery of notice pursuant to Section 17.4, above, the default by Tenant continues and is not cured by Tenant (or any Leasehold Mortgagee as allowed under Section 17.4, above), and such failure entitles County and/or Agency to terminate this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall notify in writing each and every Leasehold Mortgagee who has complied with Section 17.3 of Lessor’s intent to so terminate at least ninety (90) days in advance of the proposed effective date of such termination. If any Leasehold Mortgagee, within such ninety (90) day period, (i) notifies Lessor of such Leasehold Mortgagee’s desire to cure such default and initiates such cure and (ii) pays or cause to be paid the amount that is necessary to cure any monetary default as stated in such notice, if any, then Section 17.6 shall apply. The Lessor, at its sole discretion, may permit such additional time as necessary for any Leasehold Mortgagee to commence the cure or m ake payment(s), as stated herein. If any Leasehold Mortgagee and Limited Partner fails to respond to said notice of termination within the allotted ninety (90) days as consistent with the conditions of this Section 17.5, Lessor are entitled to immediately terminate this Lease. 17.6 Leasehold Mortgagee Foreclosure Period. If any Leasehold Mortgagee complies with Section 17.5 above, then the following provisions shall apply: 17.6.1. If Lessor’s notice under Section 17.5 specifies only monetary Events of Default as the basis for Lessor’s election to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by Lessor in its notice, then such payment shall be deemed to have cured the Event of Default. If Lessor’s notice under Section 17.5 specifies both monetary and non-monetary Events of Default or non-monetary Events of Default as the basis for Lessor’s election to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by Lessor in its notice, as applicable, then the date of termination specified in Lessor’s notice shall be extended for a period of twelve (12) months, provided that such Leasehold Mortgagee shall, during such twelve (12) month period: EXHIBIT 15 Page | 50 4894-6811-3695v.2 0017787-000542 (a) pay or cause to be paid all Rent under this Lease as the same becomes due (subject to the notice and cure rights expressly set forth herein); and (b) continue (subject to any stay as described in Section 17.6.2 below) its good faith efforts to perform (and complete performance of) all of Tenant’s nonmonetary obligations under this Lease that are capable of being performed by the Leasehold Mortgagee without having possession of the Premises, excepting nonmonetary obligations (whether or not a default exists with respect thereto) that are not then reasonably susceptible of being cured by Leasehold Mortgagee; and (c) commence and pursue with reasonable diligence until completion (subject to any stay as described in Section 17.6.2 below) a judicial or nonjudicial foreclosure or other enforcement of remedies under its Leasehold Mortgage. 17.6.2. The twelve (12)-month period described in Section 17.6.1, above, shall automatically be extended as long as the Leasehold Mortgagee is diligently and in good faith prosecuting the judicial or nonjudicial foreclosure to completion, in the Lessor’s reasonable discretion based upon evidence provided to Lessor of such good faith prosecution by the Leasehold Mortgagee. In the event of a judicial or non-judicial foreclosure, the twelve (12) month period described in Section 17.6.1, above, shall automatically be extended by the length of any delay caused by any stay (including any automatic stay arising from any bankruptcy or insolvency proceeding involving Tenant), injunction or other order arising under applicable Laws or issued by any court (which term as used herein includes any other governmental or quasi -governmental authority having such power) (the foregoing being collectively referred to as a “Stay”). Further, Leasehold Mortgagee’s obligations stated in Section 17.6.1(b) and (c) shall be automatically suspended during any period that any Stay prevents Leasehold Mortgagee from taking any such actions. Nothing herein, however, shall be construed to extend this Lease beyond the Term hereof nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after the Event of Default has been cured. If the Event of Default has been cured and the Leasehold Mortgagee shall discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if Tenant had not defaulted under this Lease. 17.6.3. In the event the Leasehold Mortgage requires a new lease between the Lessor and the Leasehold Mortgagee, Lessor shall enter into such new lease with the Leasehold Mortgagee pursuant to Section 17.7, below, provided Lessor are provided with the necessary and adequate documents related to the new lease requirements in the Leasehold Mortgage as described in Section 17.7. 17.6.4. So long as any Leasehold Mortgagee is complying with Sections 17.6.1 and 17.6.2 above, then upon the acquisition of Tenant’s Leasehold Estate by a Leasehold Foreclosure Transferee, this Lease shall continue in full force and effect as if Tenant had not defaulted under this Lease; provided that no Leasehold Foreclosure Transferee shall have any liability for the performance of any of the Tenant’s obligations under this Lease until the Leasehold Foreclosure Transferee has acquired the Tenant’s interest under the Lease, and then the Leasehold Foreclosure Transferee shall be liable for the performance of only those obligations of the Tenant arising from and after the effective date of the Leasehold Foreclosure Transferee’s acquisition of the Tenant’s Leasehold Estate. Any such Leasehold Foreclosure Transferee shall be deemed to be an assignee or transferee and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of the Tenant to be performed hereunder from and after the effective date on which such EXHIBIT 15 Page | 51 4894-6811-3695v.2 0017787-000542 Leasehold Foreclosure Transferee acquires title to the Leasehold Estate, but only for so long as such purchaser or assignee is the owner of the leasehold estate. 17.6.5. Any Leasehold Mortgagee (or its designee) that becomes a Leasehold Foreclosure Transferee, upon acquiring title to Tenant’s Leasehold Estate without obtaining Lessor’s consent and provided it is not in default of any of the provisions of this Lease , shall have a one-time right to assign the Leasehold Estate to an assignee (a) which is an Affiliate of the Leasehold Foreclosure Transferee, or (b) which has substantial experience, or will employ a property management company with substantial experience, managing, maintaining and operating affordable housing developments like that on the Premises. Upon such assignment, the Leasehold Foreclosure Transferee shall automatically be released of all obligations thereafter accruing under this Lease, provided that, substantially concurrently with such assignment, the assignee delivers to Lessor a written agreement assuming Tenant’s obligations under the Lease thereafter accruing. Any subsequent Transfers occurring after the one-time assignment permitted under this Section shall be subject to Article X. 17.7 Leasehold Mortgagee’s Right to New Lease. 17.7.1. In the event of any termination of this Lease (including any termination because of an Event of Default, or because of any rejection or disaffirmance of this Lease pursuant to bankruptcy law or any other law affecting creditor’s rights, but other than by reason of a Total Taking), Lessor shall give prompt written notice of such termination to each Leasehold Mortgagee and shall (subject to Section 17.8 below if more than one Leasehold Mortgagee then exists) enter into a new lease (“New Lease”) of the Premises with the Leasehold Mortgagee holding the Leasehold Mortgage that has the most senior lien priority, in accordance with Section 17.8 below, or its designee, upon notice to Lessor by such Leasehold Mortgagee. The New Lease shall commence as of its effective date and shall continue for the remainder of the scheduled Term of this Lease, at the same Rent that is payable under this Lease, and on the same terms, conditions, covenants, restrictions and reservations that are contained in this Lease (including any extension options, purchase options and rights of first refusal, if any, provided for in this Lease), and subject to the rights of any tenants under residential subleases or other subtenants then in valid occupancy of the Premises and Improvements and further subject to any then existing senior Leasehold Mortgagees; provided that, substantially concurrently with the delivery of a notice by Leasehold Mortgagee requiring Lessor to enter into a New Lease, Leasehold Mortgagee shall pay to Lessor all Rent or any other amounts payable by Tenant hereunder which are then due and shall commence and proceed with diligence to cure all nonmonetary defaults under this Lease, other than those nonmonetary defaults which are personal to the foreclosed tenant and impossible for the Leasehold Mortgagee to remedy. 17.7.2. If such Leasehold Mortgagee elects to enter into a New Lease pursuant to Section 17.7.1 above, then County, Agency and the Leasehold Mortgagee (or its designee) shall promptly prepare and enter into a written New Lease; but until such written New Lease is mutually executed and delivered, this Lease shall govern, from and after the giving of notice pursuant to Section 17.7.1 but prior to the execution of the New Lease, the Lessor’s and Leasehold Mortgagee's relationship with respect to the Premises and the Improvements and the Leasehold Mortgagee shall (i) be entitled to possession of the Premises and to exercise all rights of Tenant hereunder, (ii) pay to Lessor any Rent accruing under the New Lease as it becomes owing, and (iii) perform or cause to be performed all of the other covenants and agreements under this Lease. Further, at such time as the written New Lease is mutually executed and delivered, Leasehold Mortgagee (or its designee) shall pay to Lessor its reasonable expenses, including reasonable attorneys’ fees and costs, incurred in EXHIBIT 15 Page | 52 4894-6811-3695v.2 0017787-000542 connection with the preparation, execution and delivery of such written New Lease . In addition, upon execution of any such New Lease, Lessor shall execute, acknowledge and deliver to such Leasehold Mortgagee (or its designee) a grant deed, in recordable form, conveying to such Leasehold Mortgagee (or its designee) fee title to all Improvements in the event that title to such Improvements have vested with the County. 17.7.3. In the event that Lessor receives any net income (i.e., gross income less gross expenses on a cash basis), if any, from the Premises and Improvements during any period that Lessor may control the same, then the Leasehold Mortgagee under the New Lease shall be entitled to such net income received by Lessor except to the extent that it was applied to cure any default of Tenant (excluding specifically the application towards obligations under the County Loan Documents or the Agency Loan Documents). 17.7.4. All rights and claims of Tenant under this Lease shall be subject and subordinate to all right and claims of the tenant under the New Lease. 17.8 Multiple Leasehold Mortgages. If more than one Leasehold Mortgagee shall make a written request upon Lessor for a New Lease in accordance with the provisions of Section 17.7, then such New Lease shall be entered into pursuant to the request of the Leasehold Mortgagee holding the Leasehold Mortgage that has the most senior lien priority. Notwithstanding anything herein to the contrary, Lessor shall have no duty or obligation to resolve any disputes or conflicting demands between Leasehold Mortgagees. In the event of any conflicting demands made upon County and/or Agency by multiple Leasehold Mortgagees, Lessor may (subject to any applicable court orders to the contrary) rely on the senior lien priority created when taking into account all subordination and intercreditor agreements then recorded against the Property as determined by a national title company, and, if and to the extent a national title company determines that there are no such subordination and intercreditor agreements so recorded, at the direction of the Leasehold Mortgagee whose Leasehold Mortgage is recorded first in time in the Official Records of the County, as determined by any national title company. 17.9 Condemnation and Insurance Proceeds. Notwithstanding anything to the contrary contained herein, all condemnation proceeds (other than proceeds payable on account of the value of the Lessor’s Fee Interest as encumbered by this Lease) or insurance proceeds shall be subject to and paid in accordance with the requirements of the most senior (in order of lien priority) Leasehold Mortgage, subject, however, to any requirement in this Lease that , to the extent not in conflict with the terms of the applicable Leasehold Mortgage, such proceeds must be used to repair and restore the Improvements to the Premises which were damaged or destroyed by such condemnation or casualty (including, without limitation, as required in Article VII following a casualty and in Section 9.4.3 following a condemnation). The handling and disbursement of any such proceeds used to repair or restore the Improvements to the Premises shall be subject to the requirements of such senior Leasehold Mortgage. The Parties shall give all Leasehold Mortgagee(s) notice of any arbitration or condemnation proceedings, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The Parties hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connect ion therewith. This provision, and Leasehold Mortgagee’s right to condemnation proceeds provided herein shall survive any termination of this Lease upon a total taking under Section 9.3. EXHIBIT 15 Page | 53 4894-6811-3695v.2 0017787-000542 17.10 Mortgagee Clauses. A standard mortgagee clause naming each Leasehold Mortgagee may be added to any and all insurance policies required to be carried by Tenant hereunder, provided that any such Leasehold Mortgagee shall hold and apply such insurance proceeds subject to the provisions of this Lease to the extent not in conflict with the terms of such Leasehold Mortgage. 17.11 No Waiver. No payment made to Lessor by a Leasehold Mortgagee shall constitute agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold Mortgagee having made any payment to Lessor pursuant to County and/or Agency’s wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment or portion thereof. 17.12 Fees and Costs. Tenant agrees to reimburse Lessor for its reasonable attorneys' fees and costs incurred in connection with Lessor’s review and/or approval of any documentation which may be required in connection with any Leasehold Mortgage by Tenant as provided herein. 17.13 No Termination, Cancellation, Surrender or Modification. Without the prior written consent of each Leasehold Mortgagee, (a) this Lease may not be terminated or cancelled by mutual agreement of County, Agency and Tenant, (b) Lessor may not accept the surrender this Lease or the Leasehold Estate created hereunder without the consent of each Leasehold Mortgagee, and (c) this Lease may not be amended, modified or supplemented (and any action taken in furtherance of any of the foregoing without the required consent of each Leasehold Mortgagee shall be void and of no effect). In addition, if any term or provision of this Lease gives Tenant the right to terminate or cancel this Lease, in whole or in part, no such termination or cancellation shall be or become effective unless Tenant has first received approval in writing by each Leasehold Mortgagee. 17.14 Effect of Foreclosure upon Base Rent. Notwithstanding anything to the contrary contained elsewhere in this Lease, (i) in no event shall any Leasehold Mortgagee (or its designee) be required to pay or cure, in order to prevent the termination of this Lease, to exercise its cure rights hereunder or to obtain a New Lease or otherwise, any Base Rent or any obligations under the County Loan Documents or the Agency Loan Documents (collectively, “Excluded Defaults”), and (ii) in no event shall any Leasehold Mortgagee (or its designee) or its (or their) successors and assigns be required to pay or cure any Base Rent which otherwise became due and payable prior to completion of any foreclosure under any Leasehold Mortgage (or acceptance of any assignment or deed in lieu thereof) or any obligations under the County Loan Documents or the Agency Loan Documents. Notwithstanding anything to the contrary set forth in this Lease, in no event shall “Annual Project Revenue” for purposes of calculating Base Rent under this Lease, include (i) the proceeds of a foreclosure sale by any Leasehold Mortgagee (or its nominee), or (ii) the proceeds of the first transfer by any such Leasehold Mortgagee (or its nominee) following any foreclosure or deed in lieu of foreclosure of a Leasehold Mortgage. EXHIBIT 15 Page | 54 4894-6811-3695v.2 0017787-000542 ARTICLE XVIII BEST MANAGEMENT PRACTICES 18.1 Tenant and all of Tenant’s, subtenant, agents, employees and contractors shall conduct operations under this Lease so as to assure that pollutants do not enter municipal storm drain systems , in violation of applicable Laws, which systems are comprised of, but are not limited to curbs and gutters that are part of the street systems (“Stormwater Drainage System”), and to ensure that pollutants do not directly impact “Receiving Waters” (as used herein, Receiving Waters include, but are not limited to, rivers, creeks, streams, estuaries, lakes, harbors, bays and oceans). 18.2 The Santa Ana and San Diego Regional Water Quality Control Boards have issued National Pollutant Discharge Elimination System (“NPDES”) permits (“Stormwater Permits”) to the County of Orange, and to the Orange County Flood Control District (“District”) and cities within Orange County, as co-permittees (hereinafter collectively referred to as “NPDES Parties”) which regulate the discharge of urban runoff from areas within the County of Orange, including the Premises leased under this Lease. The NPDES Parties have enacted water quality ordinances that prohibit conditions and activities that may result in polluted runoff being discharged into the Stormwater Drainage System. 18.3 To assure compliance with the Stormwater Permits and water quality ordinances, the NPDES Parties have developed a Drainage Area Management Plan (“DAMP”) which includes a Local Implementation Plan (“LIP”) for each jurisdiction that contains Best Management Practices (“BMPs”) that parties using properties within Orange County must adhere to. As used herein, a BMP is defined as a technique, measure, or structural control that is used for a given set of conditions to manage the quantity and improve the quality of stormwater runoff in a cost effective manner. These BMPs are found within the District and/or County’s LIP in the form of Model Maintenance Procedures and BMP Fact Sheets (the Model Maintenance Procedures and BMP Fact Sheets contained in the DAMP/LIP shall be referred to hereinafter collectively as “BMP Fact Sheets”) and contain pollution prevention and source control techniques to eliminate non-stormwater discharges and minimize the impact of pollutants on stormwater runoff. 18.4 BMP Fact Sheets that apply to uses authorized under this Lease include the BMP Fact Sheets that are attached hereto as Exhibit C. These BMP Fact Sheets may be modified during the term of the Lease; and the Lessor shall provide Tenant with any such modified BMP Fact Sheets. Tenant, its agents, contractors, representatives and employees and all persons authorized by Tenant to conduct activities on the Premises shall, throughout the term of this Lease, comply with the BMP Fact Sheets as they exist now or are modified, and shall comply with all other requirements of the Stormwater Permits, as they exist at the time this Lease commences or as the Stormwater Permits may be modified. Tenant agrees to maintain current copies of the BMP Fact Sheets on the Premises throughout the term of this Lease. The BMPs applicable to uses authorized under this Lease must be performed as described within all applicable BMP Fact Sheets. 18.5 Tenant may propose alternative BMPs that meet or exceed the pollution prevention performance of the BMP Fact Sheets. Any such alternative BMPs shall be submitted to the Lessor for review and approval prior to implementation. EXHIBIT 15 Page | 55 4894-6811-3695v.2 0017787-000542 18.6 Lessor may enter the Premises and/or review Tenant’s records at any reasonable time during normal business hours to ensure that activities conducted on the Premises comply with the requirements of this Section. Tenant may be required to implement a self-evaluation program to demonstrate compliance with the requirements of this Section. ARTICLE XIX GENERAL CONDITIONS & MISCELLANEOUS PROVISIONS 19.1 Signs. Tenant agrees not to construct, maintain, or allow any signs, banners, flags, etc., upon the Premises except (a) as approved in writing in advance by Lessor, which approval may be withheld in the sole and absolute discretion of the Lessor, or (b) required by any of Tenant’s lenders, provided that any such signage is in compliance with all applicable Laws. Tenant further agrees not to construct, maintain, or allow billboards or outdoor advertising signs upon the Premises. Unapproved signs, banners, flags, etc., may be removed by Lessor without prior notice to Tenant. 19.2 Nondiscrimination. Tenant agrees not to discriminate against any person or class of persons by reason of sex, age (except as permitted by law), race, color, creed, physical handicap, or national origin in employment practices and in the activities conducted pursuant to this Lease. 19.3 Taxes and Assessments. Pursuant to California Revenue and Taxation Code Section 107.6, Tenant is specifically informed that this Lease may create a possessory interest which is subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and assessments (including but not limited to said possessory interest tax) which become due and payable upon the Premises or upon fixtures, equipment, or other property installed or constructed thereon, shall be the full responsibility of Tenant, and Tenant shall cause said taxes and assessments to be paid promptly. 19.4 Quitclaim of Interest upon Termination. Upon termination of this Lease for any reason whatsoever in accordance with the terms of the Lease, Tenant shall execute, acknowledge, and deliver to Lessor, within five (5) business days, a good and sufficient deed, in a form as approved by the Lessor, whereby all right, title, and interest of Tenant in the Premises is quitclaimed back to Lessor (“Quitclaim Deed”). The Quitclaim Deed shall then be recorded by Lessor to remove any cloud on title created by this Lease. In the event that the Tenant fails to provide such Quitclaim Deed within five (5) additional business days after written demand by either the County or City, the Parties agree that the County and City will be damaged and entitled to compensation for those damages. Such actual damages will, however, be extremely difficult to ascertain. Therefore, if the Tenant does not provide the required Quitclaim Deed after such notice and cure period, in addition to any other remedy provided by law or equity, the Tenant shall pay the Lessor $2,000 per day for every day that passes until a Quitclaim Deed is delivered, which amount shall be deemed to constitute a reasonable estimate of Lessor’s damages and not a penalty. Such amount shall become due and payable by Tenant to Lessor for each calendar day that passes beyond the cure period. Notwithstanding the foregoing, if the Tenant has disputed the termination of the Lease by Lessor, upon a final determination by a court of competent jurisdiction that the Lease has not been terminated, Tenant shall not be subject to payment of the foregoing damages. 19.5 Public Records. Tenant acknowledges that any written information submitted to and/or obtained by Lessor from Tenant or any other person or entity having to do with or related to this Lease and/or the Premises, either pursuant to this Lease or otherwise, is a “public record” open to inspection and copying by the public pursuant to the California Public Records Act (Government EXHIBIT 15 Page | 56 4894-6811-3695v.2 0017787-000542 Code §6250, et seq.) (“CPRA”) as now in force or hereafter amended, or any Law in substitution thereof, or otherwise made available to the public, unless such information is exempt from disclosure pursuant to the applicable sections of CPRA. In the event that a CPRA request is made for any financial statements and records (not including Gross Receipts Statements) and the Lessor determines that the records must be turned over, the Lessor will give Tenant fifteen (15) days’ written notice prior to turning over such records so that Tenant can take any necessary action, including, but not limited to, injunctive relief, to prevent Lessor from turning over such financial statements and records. 19.6 Attorney’s Fees. In any action or proceeding brought to enforce or interpret any provision of this Lease, or where any provision hereof is validly asserted as a defense, each Party shall bear its own attorneys’ fees and costs. 19.7 Payment Card Compliance. Should Tenant conduct credit/debit card transactions in conjunction with Tenant’s business with the County and/or Agency, on behalf of the County and/or Agency, or as part of the business that Tenant conducts on the Premises, Tenant covenants a nd warrants that it will during the course of such activities be Payment Card Industry Data Security Standard (“PCI/DSS”) and Payment Application Data Security Standard (“PA/DSS”) compliant and will remain compliant during the entire duration of its conduct of such activities. Tenant agrees to immediately notify Lessor in the event Tenant should ever become non-compliant at a time when compliance is required hereunder, and will take all necessary steps to return to compliance and shall be compliant within ten (10) days of the commencement of any such interruption. Upon demand by Lessor, Tenant shall provide to Lessor written certification of Tenant’s PCI/DSS and/or PA/DSS compliance. 19.8 Right to Work and Minimum Wage Laws. 19.8.1. In accordance with the United States Immigration Reform and Control Act of 1986, Tenant shall require its employees that directly or indirectly service the Premises, pursuant to the terms and conditions of this Lease, in any manner whatsoever, to verify their identity and eligibility for employment in the United States. Tenant shall also re quire and verify that its contractors or any other persons servicing the Premises, pursuant to the terms and conditions of this Lease, in any manner whatsoever, verify the identity of their employees and their eligibility for employment in the United States. 19.8.2. Pursuant to the United States of America Fair Labor Standard Act of 1938, as amended, and State of California Labor Code, Section 1178.5, Tenant shall pay no less than the greater of the Federal or California Minimum Wage to all its employees t hat directly or indirectly service the Premises, in any manner whatsoever. Tenant shall require and verify that all its contractors or other persons servicing the Premises on behalf of the Tenant also pay their employees no less than the greater of the Federal or California Minimum Wage. 19.8.3. Tenant shall comply and verify that its general contractor complies with all other Federal and State of California laws for minimum wage, overtime pay, record keeping, and child labor standards pursuant to the servicing of the Premises or terms and conditions of this Lease. 19.9 Declaration of Knowledge by Tenant. Tenant warrants that Tenant has carefully examined this Lease and by investigation of the site and of all matters relating to the Lease arrangements has fully informed itself as to all existing conditions and limitations affecting the EXHIBIT 15 Page | 57 4894-6811-3695v.2 0017787-000542 construction of the Lease improvements and business practices required in the operation and management of the uses contemplated hereunder. 19.10 Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of California and the City. 19.11 Venue. The Parties hereto agree that this Lease has been negotiated and executed in the State of California and shall be governed by and construed under the laws of California. In the event of any legal action to enforce or interpret this Lease, the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California, and the Parties hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. Furthermore, the Parties hereto specifically agree to waive any and all rights to request that an action be transferred for trial to another county. 19.12 Headings and Titles. The captions of the Articles or Sections of this Lease are only to assist the Parties in reading this Lease and shall have no effect upon the construction or interpretation of any part hereof. 19.13 Interpretation. Whenever required by the context of this Lease, the singular shall include the plural and the plural shall include the singular. The masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts or omissions of Tenant, the term “Tenant” shall include Tenant’s agents, employees, contractors, invitees, successors or others using the Premises with Tenant’s expressed or implied permission. In any provision relating to the conduct, acts or omissions of County, the term “County” shall include County’s agents, employees, contractors, invitees, successors or others using the Premises with County’s expressed or implied permission. In any provision relating to the conduct, acts or omissions of Agency, the term “Agency” shall include Agency’s agents, employees, contractors, invitees, successors or others using the Premises with Agency’s expressed or implied permission. 19.14 Ambiguities. Each Party hereto has reviewed this Lease with legal counsel, and has revised (or requested revisions of) this Lease based on the advice of counsel, and therefore any rules of construction requiring that ambiguities are to be resolved against a particular Party shall not be applicable in the construction and interpretation of this Lease or any exhibits hereto. 19.15 Successors and Assigns. Except as otherwise specifically provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and assigns. All rights herein granted to any Leasehold Mortgagee of Tenant shall also apply to any Leasehold Mortgagee of any successor or assign of Tenant. 19.16 Time is of the Essence. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. 19.17 Severability. If any term or provision of this Lease is held invalid or unenforceable to any extent under any applicable law by a court of competent jurisdiction, the remainder of this Lease shall not be affected thereby, and each remaining term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. EXHIBIT 15 Page | 58 4894-6811-3695v.2 0017787-000542 19.18 Integration. This Lease, along with any exhibits, attachments or other documents affixed hereto or referred to herein and related Agency permits, constitute the entire agreement between County, Agency and Tenant relative to the leasing of the Premises. This Lease and such exhibits, attachments and other documents may be amended or revoked only by an instrument in writing signed by County, Agency and Tenant. County, Agency and Tenant hereby agree that no prior agreement, understanding or representation pertaining to any matter covered or mentioned in this Lease shall be effective for any purpose. 19.19 Notices. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, or electronic mail, shall be deemed received upon the earlier of (a) if personally delivered, the date of delivery to the address of the person to receive such notice, (b) if mailed, three (3) business days after the date of posting by the United States post office, (c) if given by electronic mail, when sent if before 5:00 p.m., otherwise on the next business day, or (d) if delivered by overnight delivery, one (1) business day after mailing. Any notice, request, demand, direction or other communication sent by electronic mail must be confirmed within by letter mailed or delivered within two business days in accordance with the foregoing. Either Party may change the address for notices by giving the other Party at least ten (10) calendar days’ prior written notice of the new address. If to Lessor: County of Orange c/o CEO/Corporate Real Estate 333 W. Santa Ana Blvd, 3rd Floor Santa, Ana, CA 92702 Attn: Chief Real Estate Officer And to: Housing Authority of the City of Santa Ana 20 Civic Center Plaza (M-26) P.0. Box 1988 Santa Ana, California 92702 Attn: Housing Manager With a copy to: Office of the City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 If to Tenant: c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo, President and Chief Executive Officer EXHIBIT 15 Page | 59 4894-6811-3695v.2 0017787-000542 And to: With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. And to: U.S. Bancorp Community Development Corporation 1307 Washington Ave., Suite 300 St. Louis, MO 63103 19.20 Amendments. This Lease is the sole and only agreement between the Parties regarding the subject matter hereof; other agreements, either oral or written, are void. Any changes to this Lease shall be in writing and shall be properly executed by all Parties. 19.21 Limited Partner Cure Rights. In the event the Tenant is a partnership, the Lessor agrees to accept a cure of any Event of Default by Tenant made by any one or more of the Tenant’s limited partners as if such cure had been made by Tenant, provided such cure is made in accordance with the applicable provisions of this Lease. 19.22 Dispositions of Abandoned Property. If Tenant abandons or quits the Premises or is dispossessed thereof by process of law or otherwise, title to any personal property belonging to a nd left on the Premises thirty (30) days after such event shall, at County and/or Agency’s option, be deemed to have been transferred to County and/or Agency. County and/or Agency shall have the right to remove and to dispose of such property at Tenant’s cost, including the cost of labor, materials, equipment and an administrative fee equal to fifteen percent (15%) of the sum of such costs without liability therefor to Tenant or to any person claiming under Tenant, and shall ha ve no need to account therefor. At Lessor's option, Lessor may provide Tenant with an invoice for such costs, which invoice Tenant agrees to pay within fifteen (15) days of receipt. 19.23 Brokers. If Tenant has engaged a broker in this transaction pursuant to a separate agreement, Tenant shall be solely responsible for the payment of any broker commission or similar fee payable pursuant to such separate agreement. Tenant each hereby agree to indemnify and hold the Lessor harmless from and against all costs, expenses or liabilities (including attorney fees and court costs, whether or not taxable and whether or not any action is prosecuted to judgment) incurred by the County and/or Agency in connection with any claim or demand by a person or entity for any broker’s, finder’s or other commission or fee from the County and/or Agency in connection with the Tenant’s entry into this Lease and the transactions contemplated hereby based upon any alleged statement or representation or agreement of the Tenant. No broker, finder or other agent of any Party hereto shall be a third-party beneficiary of this Lease 19.24 No Partnership. This Lease shall not be construed to constitute any form of partnership or joint venture between County, Agency and Tenant. County, Agency and Tenant mutually acknowledge that no business or financial relationship exists between them other than as EXHIBIT 15 Page | 60 4894-6811-3695v.2 0017787-000542 County, Agency and Tenant, and that County and Agency is not responsible in any way for the debts of Tenant or any other Party. 19.25 Authorization. County, Agency and Tenant (each, a “signing party”) each represents and warrants to the other that the person or persons signing this Lease on behalf of the signing party has full authority to do so and that this Lease binds the signing party. Concurrently with the execution of this Lease, the Tenant shall deliver to the Lessor a certified copy of a resolution of the signing party’s board of directors or other governing board authorizing the execution of this Lease by the signing party. 19.26 Recording. This Lease itself shall not be recorded, but in the event that the Tenant encumbers the leasehold as set forth in Article XVII, a memorandum hereof may be recor ded in the form of Exhibit D attached hereto (the “Memorandum”). The Memorandum may be executed concurrently with this Lease and thereafter recorded in the Official Records of the County Recorder on the Effective Date of this Lease has occurred. Tenant shall be responsible for the payment of all charges imposed in connection with the recordation of the Memorandum, including, without limitation, any documentary transfer tax imposed in connection with this transact ion and all recording fees and charges. 19.27 Exhibits. This Lease contains the following exhibits, schedules and addenda, each of which is attached to this Lease and incorporated herein in its entirety by this reference: Exhibit A: Legal Description of the Premises Exhibit A-1: Rendering of the Premises Exhibit B: Initial Improvements Exhibit C: Best Management Practices Fact Sheets Exhibit D: Form of Memorandum of Lease 19.28 Consent/Duty to Act Reasonably. Except as otherwise expressly provided herein, whenever this Lease grants County, Agency and/or Tenant the right to take any action, grant any approval or consent, or exercise any discretion, County, Agency and/or Tenant shall act reasonably and in good faith and take no action which might result in the frustration of the other Party’s reasonable expectations concerning the benefits to be enjoyed under this Lease. 19.29 Counterparts. For the convenience of the Parties to this Lease, this Lease may be executed in several original counterparts, each of which shall together constitute but one and the same agreement. Original executed pages may be assembled together into one fully executed document. 19.30. No Merger. The interests created by this Lease shall not be extinguished by merger of any or all of the ownership interests the Premises or the Improvements in one person or entity. 19.31 Cooperation of County and Agency. County and Agency hereby agree that (a) Agency staff shall be responsible for administering the operation of the Project to insure it is being used in conformance with this Lease, and (b) Agency staff shall serve as administrator of the Lease with the Tenant and coordinate with the County as necessary. County and Agency hereby agree to EXHIBIT 15 Page | 61 4894-6811-3695v.2 0017787-000542 work cooperatively and expeditiously to provide written consent (or written refusal to provide consent) to Tenant, the Leasehold Mortgagees and Limited Partner hereunder. [Signatures On Following Pages] EXHIBIT 15 Page | 62 4894-6811-3695v.2 0017787-000542 IN WITNESS WHEREOF, the Parties have executed this Lease on the date first written above. TENANT WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a California limited partnership By: Related/Washington Santa Ana Development Co., LLC, a California limited liability company, its Administrative General Partner By: ____________________________ Frank Cardone, President By: Supportive Housing LLC, a California limited liability company By: A Community of Friends, a California nonprofit public benefit corporation, its sole member/manager By: ____________________ Dora Leong Gallo, President and Chief Executive Officer APPROVED AS TO FORM: SONIA CARAVALHO AUTHORITY GENERAL COUNSEL By: ________________________ Ryan O. Hodge, Assistant City Attorney Date _______________________ LESSOR HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE HOUSING SUCCESSOR AGENCY a public body, corporate and politic By: ________________________ Steven A. Mendoza, Executive Director Date _______________________ EXHIBIT 15 Page | 63 4894-6811-3695v.2 0017787-000542 APPROVED AS TO FORM: COUNTY COUNSEL By: ________________________ Deputy Date _______________________ COUNTY OF ORANGE, a political subdivision of the State of California __________________________________ Thomas A. Miller, Chief Real Estate Officer Orange County, California EXHIBIT 15 Exhibit A Legal Description (After Lot Merger) PARCEL 1: THAT PORTION OF THE RANCHO SANTIAGO DE SANTA ANA IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA PER MAP RECORDED IN BOOK 3 PAGE 420 OF PATENTS, RECORDS OF LOS ANGELES COUNTY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST TERMINUS OF THAT CERTAIN COURSE ON THE SOUTHWEST LINE OF SAID LAND SHOWN AS HAVING A BEARING AND DISTANCE OF “NORTH 60°05’57” EAST 133.86 FEET” PER RECORD OF SURVEY NO. 2002-1059 RECORDED IN BOOK 194 PAGES 28 THROUGH 36 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA; THENCE ALONG SAID SOUTHWEST LINE NORTH 60°05'57" EAST, 133.81 FEET; THENCE NORTH 64°53'54" EAST, 193.71 FEET; THENCE NORTH 21°00'44" WEST, 62.74 FEET; THENCE NORTH 21°00'43" WEST, 224.19 FEET; THENCE NORTH 32°46'09" WEST, 150.43 FEET TO THE BEGINNING OF A NON- TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 82°28'26" EAST; THENCE SOUTHERLY ALONG SAID CURVE, 166.04 FEET, THROUGH A CENTRAL ANGLE OF 211°24'37" TO THE BEGINNING OF A REVERSE CURVE, CONCAVE WESTERLY AND HAVING A RADIUS OF 71.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 66°06'57" EAST; THENCE NORTHEASTERLY ALONG SAID CURVE, 52.77 FEET, THROUGH A CENTRAL ANGLE OF 42°35'14"; THENCE NORTH 55°21'04" WEST, 25.14 FEET; THENCE SOUTH 00°16'37" WEST, 621.36 FEET TO THE POINT OF BEGINNING. EXHIBIT 15 Page | 65 4894-6811-3695v.2 0017787-000542 EXHIBIT A-1 RENDERING OF THE PROPERTY EXHIBIT 15 EXHIBIT 15 A-3THE CROSSROADS AT WASHINGTON SANTA ANA, CA 0 20 40 80 ENTITLEMENT SUBMITTAL DP NO. 2019-39, MASTER ID NO. 2019-155122 © 2020 WILLIAM HEZMALHALCH ARCHITECTS, INC. DBA WHA. | 2018265 | 02-03-2020 CONCEPTUAL PERSPECTIVE RENDERING | SANTA ANA BOULEVARD NOTE: ARTIST CONCEPTION; LANDSCAPE, COLORS, MATERIALS AND APPLICATION MAY VARY. EXHIBIT 15 A-4THE CROSSROADS AT WASHINGTON SANTA ANA, CA 0 20 40 80 ENTITLEMENT SUBMITTAL DP NO. 2019-39, MASTER ID NO. 2019-155122 © 2020 WILLIAM HEZMALHALCH ARCHITECTS, INC. DBA WHA. | 2018265 | 02-03-2020 CONCEPTUAL PERSPECTIVE RENDERING | WASHINGTON AVENUE NOTE: ARTIST CONCEPTION; LANDSCAPE, COLORS, MATERIALS AND APPLICATION MAY VARY. EXHIBIT 15 A-5THE CROSSROADS AT WASHINGTON SANTA ANA, CA 0 20 40 80 ENTITLEMENT SUBMITTAL DP NO. 2019-39, MASTER ID NO. 2019-155122 © 2020 WILLIAM HEZMALHALCH ARCHITECTS, INC. DBA WHA. | 2018265 | 02-03-2020 70'-11"18'-0"18'-0"24'-0"18'-0"8'-6" TYP.10'-6"55'-11" 5'-0" 8'-6"4'-3"5'-0"6'-1"7'-5"5'-9"5'-0"15'-0"R42'-0"TRASH TRUCK TURNING RADIUS10'-0"8'-2"10'-0"T 7'-0" 7'-3" 47'-4" 6'-0" 6'-0"6'-0"6'-0"5'-0"7'-2"8'-9" 10'-0" 15'-0" 19'-2"14'-1" 70'-11"18'-0"18'-0"24'-0"18'-0"8'-6" TYP.10'-6"55'-11" 5'-0" 8'-6"4'-3"5'-0"6'-1"7'-5"5'-9"5'-0"15'-0"R42'-0"TRASH TRUCK TURNING RADIUS10'-0"8'-2"10'-0"T 7'-0" 7'-3" 47'-4" 6'-0" 6'-0"6'-0"6'-0"5'-0"7'-2"8'-9" 10'-0" 15'-0" 43 Cubic Yards Required (86 Units x 0.5 CY/Unit) 48 Cubic Yards Provided (12 Bins x 4 CY/Bin) Notes: • Minimum vertical clearance of 25’ at the staging area for bin service clearance. • Minimum 13’ vertical clearance for scout truck. • All staging areas are to be onsite. No street staging is permitted. • All driveway and staging areas must be able to sustain a minimum gross weight of 60,000 lbs. per vehicle. • Maximum size of bin shall be 4 cubic yards. • Maximum number of pick-ups is 2 times per week for residential projects only. 0 10 20 40 ARCHITECTURAL SITE PLAN 0 10 20 40 N E. SANTA ANA BLVD.EVA SOUND WALL ALONG PROPERTY LINE EMER G E N C Y V E H I C L E TURN A R O U N D LINE OF UNITS ABOVE TRAS H T R U C K TURN A R O U N D LEGEND ACCESSIBLE PARKING SPACE ACCESSIBLE PATH OF TRAVEL ELECTRIC VEHICLE PARKING TANDEM PARKING SPACE # FIRE HYDRANT VEHICULAR ACCESS EMERGENCY VEHICLE ACCESS TRASH / RECYCLING WAS H I N G T O N A V E Tandem Parking. The term “tandem space or stall”...shall mean a parking stall that is not independently accessible because another stall is located immediately behind it. INDICATES NUMBER OF TANDEM SPACES 11T 38T 31T 21T EV PARKING CALGreen 2016, 4.106.2 Infrastructure for future installation of EV charging equipment Parking Ratio Parking Provided EV Spaces 3% of Parking Prov. 1 Space Req 7 Spaces 1 Space 4 Spaces Req 113 Spaces 3 Spaces 1 Acc. Space ACCESSIBLE PARKING CBC 11B-208.2.3.1 Table 11B-208.2 11B-208.2.4: Van Parking Spaces Per Table 11B-208.2 Parking Provided Acc. Spaces 1-25 Spaces 1 Space Req 7 Spaces 1 Space 101-150 Spaces 5 Spaces Req 113 Spaces 4 Spaces 1 Van Space PARKING PROVIDED Use Type Parking Count Standard Spaces 82 Spaces Tandem Spaces (31.7%)38 Spaces TOTAL PARKING PROVIDED (13.7% REDUCTION)120 Spaces * SEE CS-2 FOR PARKING ALLOCATION NOTES SEE CIVIL SITE PLANS FOR EXISTING CONDITIONS, IMPROVEMENTS AND UTILITIES SEE LANDSCAPE FOR PLANTING, WALKWAYS, SITE AMENITIES, WALLS AND FENCING #T EV PROPOSED TRANSFORMER LOCATION * 5 FREEW A Y O F F- R A M P COMMUNITY SERVING RETAIL (2-STORY VOLUME) 1,060 S.F. MULTI-PURPOSE ROOM EMER G E N C Y V E H I C L E TURN A R O U N D 40' X 16' TRASH TRUCK STAGING AREA T/R T/R T/R T/R 40' X 1 6 ' TRAS H T R U C K STAGI N G A R E A 40' X 1 6 ' TRAS H T R U C K STAGI N G A R E A *PROVIDE 4" ROLLED CURB, SEE CIVIL150' HOSE PULL DISTANCE * 286.9' PL 150.4' PL 1 6 6 . 0 ' ( 4 5 ' R A D ) P L 62.7' ( 7 2 ' R A D ) P L25.1' PL621.3' P L 193.7' PL133.8' PL MAINT. SHOP SOCIAL SERVICE LOUNGE SOCIAL SERVICE OFFICE MAIL ENTRY FOYER TECH LAB STORCONF OFFICE OFFICE WORK AREA LOBBY RECPT GALLERY LAUNDRY UNIT E UNIT BUNIT B UNIT B JANITOR M W POOL EQ. UNIT BUNIT B UNIT A UNIT B UNIT A UNIT C UNIT C UNIT C UNIT C UNIT C UNIT C UNIT C UNIT C UNIT D2 UNIT D2UNIT D2 UNIT D1 UNIT D1 SIDE YARD SETBACK 0'-0" REQUIRED SIDE Y A R D S E T B A C K 0 ' - 0 " R E Q U I R E D FRONT YARD SETBACK 0'-0" REQUIRED REAR YARD SETBACK 15'-0" REQUIREDMECH DOG RUN RR POOL TOT LOT BBQ & PICNIC AREA BBQ AREA GATEGATEUNIT D1EVEVEVEVRETAILRETAILRETAILUNIT A STOR. LOCKERS ELEV. MACH.EVUSPSSTAFFSTAFFBIKE RACKS EXHIBIT 15 Page | 66 4894-6811-3695v.2 0017787-000542 EXHIBIT B INITIAL IMPROVEMENTS The proposed Project includes the development of two residential buildings with 86 units surrounding two interior, landscaped courtyard/amenity spaces. The Project includes 16 studio units, 26 one bedroom units, 22 two-bedroom units, 17 three-bedroom units, and 5 four-bedroom units. All units will be flat apartments located on the first, second, third and fourth floors. In addition, a proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate 5 ramp. Approximately 3,500 square foot of interior community amenities and leasing offices is designed to accommodate supportive and management services. The Project will be 100% affordable to households earning no more than 30 percent of Area Median Income (AMI) for Orange County of which 43 units will be set-aside for Permanent Supportive Housing (PSH), with one exempt 2-bedroom managers unit. The unit mix and rent restrictions are as follows, provided, however, the rent and income restrictions applicable to the Project shall be set forth in and subject to the terms of the County Loan Regulatory Agreement: Bedroom Size 30% AMI (PSH) 30% AMI Manager’s Unit Total Units Studios 16 16 One-Bedroom 26 26 Two-Bedroom 1 20 1 22 Three-Bedroom 17 17 Four-Bedroom 5 5 TOTAL 43 42 1 86 Section 2(g) of the County Loan Regulatory Agreement regarding a loss of subsidy is incorporated herein as if set forth at full length herein. EXHIBIT 15 Page | 67 4894-6811-3695v.2 0017787-000542 EXHIBIT C Best Management Practices (“BMPs” Fact Sheets) Best Management Practices can be found at: http://www.ocwatersheds.com/documents/bmp which website may change from time to time. BMPs apply to the TENANT's defined Premises and BMPs also apply to the TENANT’s Contractor therefore TENANT shall cause Contractor to be responsible for implementing and complying with all BMP Fact Sheet requirements that apply to construction activity with respect to the Improvements, and also including, without limiting the generality of the foregoing, site preparation, landscaping, installation of utilities, street construction or improvement and grading or filling in or on the Premises. TENANT is to be aware that the BMP clause within this Lease, along with all related BMP Exhibits, may be revised, and may incorporate more than what is initially being presented in this Lease. Suggested BMPs Fact Sheets may include, but may not be limited to, the following list shown below and can be found at: http://www.ocwatersheds.com/documents/bmp/industrialcommercialbusinessesactivities (which website may change from time to time): IC3 Building Maintenance IC4 Carpet Cleaning IC6 Contaminated or Erodible Surface Areas IC7 Landscape Maintenance IC9 Outdoor Drainage from Indoor Areas IC10 Outdoor Loading/Unloading of Materials IC12 Outdoor Storage of Raw Materials, Products, and Containers IC14 Painting, Finishing, and Coatings of Vehicles, Boats, Buildings, and Equipment IC15 Parking & Storage Area Maintenance IC17 Spill Prevention and Cleanup IC21 Waste Handling and Disposal IC22 Eating and Drinking Establishments IC23 Fire Sprinkler Testing/Maintenance IC24 Wastewater Disposal Guidelines EXHIBIT 15 Page | 68 4894-6811-3695v.2 0017787-000542 EXHIBIT D FORM OF MEMORANDUM OF LEASE MEMORANDUM OF LEASE This is a Memorandum of Lease (“Memorandum”) made and entered into as of this __________ day of __________, 20___, by and between the County of Orange, a political subdivision of the State of California, the Housing Authority of the City of Santa Ana, a public body, corporate and politic (collectively, the “Lessor”) and __________, (“Tenant”), residing at _________, upon the following terms: 1. Lease. The provisions set forth in a written ground lease between the parties hereto dated __________ (“Lease”), are hereby incorporated by reference into this Memorandum. 2. Subject Premises. The Premises which are the subject of the Lease are more particularly described as on Exhibit A, attached hereto 3. Effective Date of Lease. The Lease shall be deemed to have commenced on __________ (the “Effective Date”) as set forth within the terms of the Lease. 4. Term. The Term of the Lease shall be Sixty-Five (65) years from the Effective Date as stated in the written Lease. The Term shall commence on the date hereof and terminate Sixty-Two (62) years from the Commencement Date, which is the date on which a Certificate of Occupancy is issued for the Project, provided, however the Term shall be no longer than sixty five (65) years from the Effective Date. 5. Duplicate Copies of the originals of the Lease are in the possession of the Lessor and Tenant and reference should be made thereto for a more detailed description thereof and for resolution of any questions pertaining thereto. The addresses for Lessor and Tenant are as follows: If to Lessor: County of Orange c/o CEO/Corporate Real Estate 333 W. Santa Ana Blvd, 3rd Floor Santa, Ana, CA 92702 Attn: Chief Real Estate Officer And to: Housing Authority of the City of Santa Ana 20 Civic Center Plaza (M-26) P.0. Box 1988 Santa Ana, California 92702 Attn: Housing Manager With a copy to: Office of the City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 EXHIBIT 15 Page | 69 4894-6811-3695v.2 0017787-000542 If to Tenant: c/o The Related Companies of California, LLC 19201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Attention: President c/o A Community of Friends 3701 Wilshire Boulevard, Suite 700 Los Angeles, CA 90010 Attention: Dora Leong Gallo And to: With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 64th Floor Los Angeles. CA 90071 Attention: Lance Bocarsly, Esq. 6. Purpose. It is expressly understood and agreed by all Parties that the sole purpose of this Memorandum is to give record notice of the Lease; it being distinctly understood and agreed that said Lease constitutes the entire lease and agreement between Lessor and Tenant with respect to the Premises and is hereby incorporated by reference. The Lease contains and sets forth additional rights, terms, conditions, duties, and obligations not enumerated within this instrument which govern the Lease. This Memorandum is for informational purposes only and nothing contained herein may be deemed in any way to modify or vary any of the terms or conditions of the Lease. In the event of any inconsistency between the terms of the Lease and this instrument, the terms of the Lease shall control. The rights and obligations set forth herein shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, representatives, successors, and assigns. EXHIBIT 15 Page | 70 4894-6811-3695v.2 0017787-000542 IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum pursuant to due authorization on the dates herein acknowledged. COUNTY: By: ______________________ Name: ______________________ Title: ______________________ AGENCY: By: ______________________ Name: ______________________ Title: ______________________ TENANT: By: ______________________ Name: ______________________ Title: ______________________ By: ______________________ Name: ______________________ Title: ______________________ EXHIBIT 15 Exhibit B: H&S 33433 Summary Report EXHIBIT 15 2206002.SA Page 1 19090.018.019 June 3, 2022 SUMMARY REPORT PURSUANT TO SECTION 33433 OF THE CALIFORNIA HEALTH AND SAFETY CODE ON A GROUND LEASE BY AND BETWEEN THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA AND THE COUNTY OF ORANGE AND WASHINGTON SANTA ANA HOUSING PARTNERS, L.P. The following Summary Report has been prepared pursuant to the requirements imposed by California Health and Safety Code Section 33433 (Section 33433). The report sets forth certain details of the proposed Ground Lease by and between the Housing Authority of the City of Santa Ana (Agency), the County of Orange (County) (collectively, the County and the Agency are referred to as “Lessor”) and Washington Santa Ana Housing Partners, L.P. (Tenant). In 2007, the former Community Redevelopment Agency of the City of Santa Ana (Former Redevelopment Agency) used Property Tax Increment Housing Set-Aside (Set-Aside) funds to purchase the property located at 1126, 1136 and 1146 Washington Avenue (Agency Site). Following the dissolution of redevelopment in California in 2012, this property was transferred as a housing asset to the Agency, acting as the housing successor to the Former Redevelopment Agency. The County owns an adjacent property to the south of the Agency Site (County Site). The County and Agency have executed a Joint Powers Agreement to provide a combined Agency Site and County Site (collectively “Site”), totaling approximately 2.28 acres of undeveloped land, to allow for the development of multifamily affordable housing project (Project). To effectuate the development of the Project, the Agency and County propose to ground lease the Site to the Tenant for no more than 65 years. The Tenant proposes to construct and operate an 86-unit apartment project that will be subject to long-term income and affordability covenants. Eighty-five (85) of the units will be restricted to Extremely Low Income households, and one unit will be reserved for an on-site manager. The Site will be conveyed to the Tenant in the form of a ground lease that will remain in effect for 65 years. In addition, the Agency will provide financial assistance to the Tenant per the requirements imposed by loan agreements that are separate from the Ground Lease. EXHIBIT 15 2206002.SA Page 2 19090.018.019 June 3, 2022 Due to the fact that the Agency Site was purchased with Set-Aside funds, the proposed conveyance of the property is subject to the reporting requirements imposed by Section 33433. Specifically, Section 33433 requires the conveying entity to prepare a report that summarizes the financial terms associated with the proposed disposition transaction. The following Summary Report is based upon the information contained within the Ground Lease, and is organized into the following seven sections: I. Salient Points of the Ground Lease: This section summarizes the major responsibilities imposed on the Agency, the County and the Tenant by the Ground Lease. II. Cost of the Ground Lease to the Agency and the Former Redevelopment Agency: This section details the total cost to the Agency/Former Redevelopment Agency associated with implementing the Ground Lease. III. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Property’s Zoning: This section estimates the values of the interests to be conveyed or leased determined at the highest uses permitted under the requirements imposed by the zoning in place on the Agency Site. IV. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the valuation estimate for the Agency Site based on the required scope of development, and the other conditions and covenants required by the Ground Lease. V. Consideration Received and Comparison with the Established Value: This section describes the compensation to be received by the Agency, and explains any difference between the compensation to be received and the established value of the Agency Site. VI. Blight Elimination: This section describes the existing blighting conditions on the Site, and explains how the Ground Lease will assist in alleviating the blighting influence. VII. Conformance with the AB1290 Implementation Plan: This section describes how the Ground Lease achieves goals identified in the Agency’s adopted AB1290 Implementation Plan. This report and the Ground Lease are to be made available for public inspection prior to the approval of the Ground Lease. I. SALIENT POINTS OF THE GROUND LEASE A. Project Description The following describes the scope of development for the Project: EXHIBIT 15 2206002.SA Page 3 19090.018.019 June 3, 2022 1. The Project will include 86 apartment units which will be constructed in two four-story residential buildings surrounding two interior, landscaped courtyard/amenity spaces. 2. The Project’s unit mix is as follows: a. Sixteen (16) studio units; b. Twenty-six (26) one-bedroom units; c. Twenty-two (22) two-bedroom units; d. Seventeen (17) three-bedroom units; and e. Five (5) four-bedroom units. 3. A sound wall is being positioned along the eastern property line adjacent to the US Interstate 5 ramp. 4. The Project’s affordability mix is summarized as follows: a. Eighty-five (85) units will be rented to Extremely Low Income households earning less than or equal to 30% of the Orange County median income (AMI); and b. One unit will be un-restricted and rented to an on-site manager. 5. Forty-three (43) units will be set-aside for Permanent Supportive Housing (PSH). B. Agency Responsibilities The Ground Lease requires the Agency to accept the following responsibilities: 1. Together with the County, the Agency will convey the Site to the Tenant in the form of a long-term ground lease for the purposes of constructing and operating the Project. 2. The Ground Lease will have the following terms: a. The Ground Lease will commence on the Effective Date subject to the preconditions identified in Section 5.1.2; b. The Ground Lease will have no longer than a 65-year term; and c. The Ground Lease shall be executed by the Executive Director and/or other Agency designee. EXHIBIT 15 2206002.SA Page 4 19090.018.019 June 3, 2022 3. The Agency agrees to ground lease the Agency Site to the Tenant based on the following payment terms: a. “Agency Base Rent” of $4,108,136, which is equal to the appraised fair market value of the Agency Site. b. The Agency Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. c. The Agency Base Rent will be repaid through a share of the Project’s Residual Receipts. d. Once the Agency Base Rent has been repaid in full, the Tenant shall have no further obligation for Agency Base Rent. e. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid Agency Base Rent. 4. Through separate Loan Agreements, the Agency will provide the Tenant with not less than $4.53 million in financial assistance (Agency Loans) based on the following: a. The Agency will provide a $3.01 million loan of HOME Program funds (HOME Loan) allocated to the City of Santa Ana (City) by the United States Department of Housing and Urban Development (HUD). b. The Agency will provide a $1.64 million loan of Neighborhood Stabilization Program funds (NSP Loan) allocated to the City by HUD. 5. The Agency Loans will be repaid out of the same applicable percentage of Residual Receipts as used to repay the Agency Base Rent. 6. The Agency will provide two (2) business days’ prior written notice to Tenant to enter the Site. C. County Responsibilities The Ground Lease requires the County to accept the following responsibilities: 1. Together with the Agency, the County will convey the Site to the Tenant in the form of a long-term ground lease for the purposes of constructing and operating the Project. 2. The Ground Lease will have the following terms: a. The Ground Lease will commence on the Effective Date subject to the preconditions identified in Section 5.1.2; EXHIBIT 15 2206002.SA Page 5 19090.018.019 June 3, 2022 b. The Ground Lease will have no longer than a 65-year term; and c. The Ground Lease shall be executed by the Chief Real Estate Officer. 3. The County agrees to ground lease the County Site to the Tenant based on the following payment terms: a. “County Base Rent” of $2,341,864, which is equal to the appraised fair market value of the County Site. b. The County Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. c. The County Base Rent will be repaid through a share of the Project’s Residual Receipts. d. Once the County’s Base Rent has been repaid in full, the Tenant shall have no further obligation for County Base Rent. e. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid County Base Rent. 4. Through a separate Loan Agreement, the County will provide the Tenant with not less than $2.65 million in financial assistance (County Loan). 5. The County Loan will be repaid out of the same applicable percentage of Residual Receipts as used to repay the County Base Rent. 6. The County will provide two (2) business days’ prior written notice to Tenant to enter the Site. D. Tenant’s Responsibilities The Ground Lease requires the Tenant to accept the following responsibilities: 1. Accept conveyance of the Site from the County/Agency in the form of a long-term ground lease. The Ground Lease will have the following terms: a. The Ground Lease will commence on the Effective Date subject to the preconditions identified in Section 5.1.2; and b. The Ground Lease will have no longer than a 65-year term. 2. The Tenant is required to pay ground rent as follows: EXHIBIT 15 2206002.SA Page 6 19090.018.019 June 3, 2022 a. “Agency Base Rent” of $4,108,136, which is equal to the appraised fair market value of the Agency Site. i. The Agency Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. ii. The Agency Base Rent will be repaid through a share of the Project’s Residual Receipts. iii. Once the Agency Base Rent has been repaid in full, the Tenant shall have no further obligation for Agency Base Rent. iv. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid Agency Base Rent. b. “County Base Rent” of $2,341,864, which is equal to the appraised fair market value of the County Site. i. The County Base Rent will bear interest at a simple rate of three percent (3%) per year commencing on the Commencement Date. ii. The County Base Rent will be repaid through a share of the Project’s Residual Receipts. iii. Once the County’s Base Rent has been repaid in full, the Tenant shall have no further obligation for County Base Rent. iv. Any net refinancing/net syndication proceeds received by the Tenant shall be used to pay any unpaid County Base Rent. 3. Prior to commencement of construction of the Initial Improvements, the Tenant shall provide to the Lessor information demonstrating that the Tenant has secured sufficient financing to construct the Project. 4. Tenant shall provide the Lessor with written construction status reports on a monthly basis starting at the commencement of construction. 5. The Tenant shall pay all Taxes, Operating Costs and Utility Costs during the Ground Lease Term. 6. The Tenant may use the Site for the construction, development, entitlement, operation, maintenance, replacement and repair of the Project. 7. The Tenant shall obtain all the required land use approvals, entitlements and permits necessary for the development of the Site. EXHIBIT 15 2206002.SA Page 7 19090.018.019 June 3, 2022 8. The Tenant shall comply with all applicable laws. 9. Tenant shall ensure that the following requirements are satisfied: a. Enter into a written contract with a general contractor based upon the “Construction Contract Documents” approved pursuant to the Option Agreement; b. Obtain written agreement from the general contractor that the construction contract can be assigned to the County and/or Agency if the Tenant fails to perform; c. Provide evidence to Lessor that assures the Tenant has sufficient monies available to complete the proposed construction; d. Within sixty (60) days following completion of any substantial improvements, the Tenant shall provide the Lessor with a complete set of reproducibles and two sets of “As-Built” plans; e. At the conversion of construction financing for the Project, the Tenant shall establish and maintain a Capital Improvement Fund during the Ground Lease Term. The Tenant shall deposit $347 per unit per year, with a ten percent (10%) escalator applied every five years, into the Capital Improvement Fund; f. Tenant shall maintain the premises in good order, condition and repair throughout the Ground Lease Term; g. Tenant must maintain all required insurance throughout the Ground Lease Term. h. Within one hundred eighty (180) days after the end of each accounting year, the Tenant shall submit to the Auditor Controller and the Agency a balance sheet, income statement and cash flow statement prepared by a Certified Public Accountant (CPA) reflecting the business transacted during the preceding accounting year. EXHIBIT 15 2206002.SA Page 8 19090.018.019 June 3, 2022 II. COST OF THE GROUND LEASE TO THE AGENCY / FORMER REDEVELOPMENT AGENCY The costs incurred by the Agency and the Former Redevelopment Agency to implement the Ground Lease are estimated as follows: Property Acquisition Cost $1,911,000 Property Management / Miscellaneous Costs 103,000 Total Agency Cost $2,014,000 The Agency will ground lease the Agency Site to the Tenant for an Agency Base Rent of $4.11 million. The Agency Base Rent will be repaid through residual receipts over the Ground Lease Term, and any remaining balance will be due at the end of the Ground Lease Term. However, given that residual receipts payments are completely dependent on the cash flow produced by the Project over time, it is too speculative to predict the net present value of the payments that will be applied to the Agency Base Rent. III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN Section 33433 requires the Agency to identify the value of the interests being conveyed at the highest and best uses permitted under zoning in place on the Site. The valuation must be based on the assumption that near-term development is required, but the valuation does not take into consideration any extraordinary use, quality and/or income restrictions being imposed on the development by the Agency. An appraisal prepared by Kinetic Valuation Group on November 1, 2019 estimates the market value of the Site at $6.45 million, or $65 per square foot of land area. Based on the 63,423 square feet of land area attributed to the Agency Site, the market value of the Agency Site is estimated at $4.11 million. IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED Keyser Marston Associates, Inc. (KMA), the Agency’s financial consultant, prepared a reuse valuation analysis of the Project based on the financial terms and conditions imposed by the Ground Lease and separate Agency Loan documents. The KMA analysis concluded that the fair reuse value of the Site is negative $4.6 million. This means that the Site needs to be conveyed at no cost plus $4.6 million in financial assistance needs to be provided to the Project in order to make the scope of development required by the Ground Lease financially feasible. Through separate loan agreements, the City proposes to provide $4.6 million in financial assistance to the Project. EXHIBIT 15 2206002.SA Page 9 19090.018.019 June 3, 2022 V. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED VALUE The Ground Lease imposes extraordinary controls on the Project. The impacts created by these requirements reduce the value of the Project from $4.11 million at the highest use permitted under the current zoning, to the established fair reuse value of negative $4.6 million. The Ground Lease requires the Tenant to pay Base Rent to the Agency based on Residual Receipts payments that are generated from cash flow generated by the Project over time. At the end of the Ground Lease Term, the Tenant must repay any outstanding balance of Agency Base Rent. Given that the Base Rent Payments received by the Agency will be greater than the established fair reuse value of negative $4.60 million, it can be concluded that the Agency is receiving fair consideration for the interests being conveyed to the Tenant. VI. BLIGHT ELIMINATION The Project includes 85 units that will be subject to long-term income and affordability covenants. In accordance with California Redevelopment Law, as portrayed in the California Health and Safety Code Section 33433, the conveyance of property that results in the provision of housing for low- or moderate-income persons satisfies the blight elimination criteria imposed by Section 33433. Furthermore, the conveyance of the Agency Site will assist in the elimination of blight by allowing for the redevelopment a vacant property. Thus, the Project fulfills the blight elimination requirement. VII. CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN The last AB1290 Implementation Plan completed by the Agency was for the 2010 to 2015 period. The Implementation Plan contemplates the development of affordable housing within the Merged Project Area. Specifically, under the heading Short-Term Goals and Objectives, the Implementation Plan includes the following: “Expand the community’s supply of housing, including opportunities for low and moderate income housing.” Therefore, the proposed Project is in conformance with the AB 1290 Implementation Plan. EXHIBIT 15