STATE OF CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT "HCD" - (SANTA ANA ARTS COLLECTIVE, L.P. & META HOUSING PROJECT)

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Meta Housing Corporation, City of Santa Ana, and Santa Ana Arts Collective L.P. 16-AHSC-11199 Page 13 of 17 EXHIBIT D 46. Reserve Accounts The Sponsor shall establish and maintain reserve accounts as required by the Department and as further described in the Regulatory Agreement. All withdrawals shall require prior written approval from the Department, as provided in the Regulatory Agreement. 47. Operating Reserve Account The Sponsor shall fund an operating reserve account in accordance with Section 8308 of the UMRs and subject to the requirements thereof. The specific amount of the Operating Reserve Account shall be set forth in the Regulatory Agreement. 48. Replacement Reserve Account The Sponsor shall establish a replacement reserve account in accordance with Section 8309 of the UMRs. The replacement reserve account shall be funded by monthly deposits from operating income or a combination of operating income and development sources as indicated in the Regulatory Agreement. The amount of the monthly deposits may be adjusted, as determined by the Department, in its sole discretion, based on reserve studies performed by an independent third party at the Sponsor's expense as requested by the Department or as based on other reliable indicators of future reserve needs. 49. Capitalized Reserve Accounts If AHSC funds are used to fund a reserve account, the Department shall disburse such funds in a manner to ensure the proper funding of the reserve. The proceeds of the AHSC Loan may be used to capitalize only operating and replacement reserve accounts and amounts required by UMRs Sections 8308 and 8309. Proceeds of the AHSC Loan may not be used to capitalize rental subsidy reserves or reserves established to pay recurring operating costs, including, but not limited, to the required 0.42 percent annual payment on the AHSC Loan. 50. CaIHFA and HUD Funded Proiects Projects subject to the HUD Section 811 and 202 programs or receiving a permanent loan from CaIHFA shall not be subject to AHSC reserve requirements during the time such projects are regulated by HUD or CaIHFA and the Sponsor complies with the applicable CaIHFA or HUD reserve requirements. 51. Property Management Documents The Sponsor shall obtain the MHP Operations Manual, which sets forth the obligations and requirements for the use, operation and occupancy of the Affordable Housing Development, including but not limited to the Department's approval of the following (in the format provided or approved by the Department); a) a proposal for management agent with management agent's qualifications attached; b) a management contract; c) a management plan; d) an operating AHSC Loan - Rental Affordable Housing Development NOFA Date: 01/29/16 Approved Date: 03/09/17 Prep Date: 07/20/17