HABITAT FOR HUMANITY OF ORANGE COUNTY (4)

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(ii) Developer shall recapture its "initial subsidy," in accordance with Government Code Section 65915(c)(2)(C)(v), in an amount equal to the fair market value of the Affordable Unit at the time of the initial sale from Developer to the Homebuyer, minus the Affordable Sales Price, plus any down payment assistance or mortgage assistance. (iii) Developer shall recapture its "proportionate share of appreciation," in accordance with Government Code Section 65915(c)(2)(C)(v), in an amount equal to: (A) the ratio of the City's initial subsidy to the fair market value of the home at the time of the initial sale multiplied by (B) the fair market value of the Affordable Unit at the time of the sale from the Homebuyer to a new Eligible Household. (iv) The proceeds of the sale of an Affordable Unit from a Homebuyer to a new Eligible Household shall be disbursed in the following priority: first, to satisfy a first deed of trust from a primary lender, as approved by City at the time of the initial sale, or subsequent approval in the event of a refinance event; second, to the Developer for the equity share determined in accordance with this Section 3.6.1; and, third, the remainder to the selling Homebuyer. (v) Developer shall use one hundred percent (100%) of the proceeds to promote homeownership for lower income households as defined by Section 50079.5 of the Health and Safety Code within the jurisdiction of the City. By way of example, and without approval from the City or limiting any the eligible uses, these uses may include: financing a silent second for a homeownership program, neighborhood improvements and revitalization; outreach and qualification of new homebuyers; financial education and counseling; advocacy and policy work; and, homeowner support networks. Developer is solely responsible for determining compliance with requirements of state law for using proceeds referenced herein. 3.6.2 To determine the fair market value of the Affordable Unit for purposes of this Section 3.6, Developer shall require an appraisal by a qualified appraisal at the time of the initial sale to an Eligible Household and for the initial re -sale by a Homebuyer. If a Homebuyer disputes the appraised value, the Homebuyer may pay for the costs of a second appraisal and, if there is still disagreement, the average of the two appraisals shall be used to determine the fair market value. 4. OPERATION OF THE PROJECT BY DEVELOPER 4.1 Recording of Documents. 4.1.1 Prior to issuance of a building permit for the Project, Developer and the City shall record or cause to be recorded in the Official Records for Orange County, California, an executed original of this Agreement. City shall cooperate with Developer in promptly executing in recordable form this Agreement. The date of recording of the Agreement shall be the Effective Date of the Agreement. Upon the date of recording, the terms and conditions of this Agreement shall be binding upon and run with the Property and each Affordable Unit for the Total Affordability Term. It is the express intent and agreement between the Parties that this Agreement 12 55394.00101\42405923.1