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HomeMy WebLinkAbout80A - JOINT - AMCALREQUEST FOR COUNCIL/ HOUSING AUTHORITY ACTION CITY COUNCIL MEETING DATE: FEBRUARY 7, 2017 TITLE: 071 CITY OF SANTA ANA CONDITIONAL LOAN AGREEMENT AND HOUSING SUCCESSOR AGENCY LOAN AGREEMENT WITH AMCAL MULTI -HOUSING, INC. FOR THE FIRST STREET APARTMENTS PROJECT; APPROPRIATION ADJUSTMENTS FOR THE LOAN AGREEMENTS (STRATEGIC PLAN NO. 5,3C) CITY MA A ER 6ECUTI IRECTOR RECOMMENDED ACTION CITY COUNCIL ACTION CLERK OF COUNCIL USE ONLY: F-1TWJJ-..T00T01 El As Recommended F As Amended 13 Ordinance on 1 81 Reading [I Ordinance on 21d Reading [I Implementing Resolution 171 Set Public Hearing For_ CONTINUED TO 03/0AO/7, U FILE NUMBER 1 . Authorize the City Manager and the Clerk of the Council to execute a conditional loan agreement with AMCAL Multi -Housing, Inc. for $2,600,000 in inclusionary housing in -lieu fees anticipated from the Heritage Village OC, LLC, that will be contingent on the City's actual receipt of an in -lieu fee payment of $2,600,000 from Heritage Village OC, LLC, to create 69 units of affordable housing at 1440 East First Street in Santa Ana, subject to non -substantive changes approved by the City Manager and City Attorney. 2. Approve an appropriation adjustment recognizing $2,600,000 inclusionary housing in -lieu fees from Heritage Village OC, LLC for deposit into Inclusionary Housing Fund revenue account no. (41718002-57896) and appropriating same to the Loans and Grants expenditure account no. (41718820-69152) for the $2,600,000 conditional loan agreement with AMCAL Multi - Housing, Inc. 3. Approve an appropriation adjustment recognizing the Housing Successor Agency's fund balance in the amount of $6,195,000 in revenue account no. (60718002-50001) and appropriating same to the Low and Moderate Income Housing Asset Fund's Loan and Grants expenditure account no. (60718830-69152) for the $6,195,000 loan agreement with AMCAL Multi -Housing, Inc. 80A-1 Loan Agreements with AMCAL Multi -Housing, Inc. and Appropriation Adjustments February 7, 2017 Page 2 HOUSING AUTHORITY ACTION 1. Authorize the City Manager/Executive Director to execute a loan agreement with AMCAL Multi -Housing, Inc. for $6,195,000 in Housing Successor Agency funds, to create 69 units of affordable housing at 1440 East First Street in Santa Ana, subject to non -substantive changes approved by the City Manager/Executive Director and City Attorney. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION ACTION At its regular meeting on January 25, 2017, by a vote of 6:0, the Community Redevelopment and Housing Commission approved the recommended actions. DISCUSSION At its regular meeting on December 20, 2016, by a vote of 4:2 (Martinez, Pulido dissented; Benavides absent), the City Council authorized the City Manager to execute a conditional loan commitment letter with AMCAL Multi -Housing, Inc. (AMCAL) for $2,600,000 of inclusionary housing in -lieu fees anticipated from the Heritage Village OC, LLC, that will be contingent on the City's actual receipt of an in -lieu fee payment of $2,600,000 from Heritage Village OC, LLC. The City Council also authorized the City Manager and the City Attorney to draft loan agreements for City Council consideration in an amount not to exceed $2,600,000 for the First Street Apartments Project located at 1440 East First Street (Exhibit 1). This conditional loan agreement for $2,600,000 (Exhibit 2) will allow AMCAL to move forward with the First Street Apartments Project to obtain their necessary low-income housing tax credit financing. AMCAL expects to submit an application for their low-income housing tax credit financing on March 1, 2017 for the first competitive application funding round deadline and approval of this loan agreement will permit AMCAL to submit their application. The conditional loan agreement is contingent on the City's actual receipt of an in -lieu fee payment of $2,600,000 from Heritage Village OC, LLC (Heritage Village) because the Heritage Village requested to allocate the in -lieu fees from their Heritage Village Project to AMCAL and City Council approved the allocation of those funds on April 19, 2016, but the City has not yet received the in -lieu fee payment of $2,600,000. If the City does not receive the in -lieu fee payment of $2,600,000 from the Heritage Village, the City Manager and the Clerk of the Council will not execute the loan agreement with AMCAL. As such AMCAL will be unable to meet their March 1, 2017 deadline to apply for tax credits. Additionally, on December 20, 2016, by a vote of 4:2 (Martinez, Pulido dissented; Benavides absent), the Housing Authority also authorized the City Manager/Executive Director and the City Attorney to draft loan agreements for Housing Authority consideration in an amount not to exceed $6,195,000 for the First Street Apartments Project (Exhibit 3). Project Description AMCAL's project, located at 1440 East First Street in Santa Ana, will provide 69 units of affordable workforce housing. The residential units will be located within six buildings. The rental units (less 80A-2 Loan Agreements with AMCAL Multi -Housing, Inc. and Appropriation Adjustments February 7, 2017 Page 3 one manager's unit) are 100% affordable to family households earning between 30% and 60% of the Area Median Income (AMI). The unit mix currently consists of six four-bedroom units, 28 three-bedroom units and 35 two-bedroom units (one being a manager's unit). Eight of the units will be assisted by the Santa Ana Housing Authority's Project -Based Voucher Program. The unit mix and affordabilitv restrictions are as follows: On-site amenities will include a community room and amenity space including tot lots/play areas for children, outdoor seating, BBQs, a flex play space and planters. The community room will be incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. AMCAL will engage the non-profit organization LifeSTEPS to provide free on-site social services to project tenants. Services will be provided in the form of classes and workshops with the subject matter tailored by a social service coordinator to the specific needs of the community. The City's inclusionary housing funds will be provided by means of a 55 -year City loan carrying a three percent interest rate and payable by residual receipts. The Housing Successor Agency funds will also be provided by means of a 55 -year loan carrying a three percent interest rate and payable by residual receipts. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #5 - Community Health, Livability, Engagement & Sustainability, Objective #3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods), Strategy C (Provide that Santa Ana residents, employees, artists and veterans receive priority for affordable housing created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed under state law). FISCAL IMPACT Upon actual receipt of the funds, approval of the appropriation adjustment will recognize $2,600,000 in the Inclusionary Housing Fund revenue account no. (41718002-57896) and increase the Inclusionary Housing Fund Loans and Grant account no, (41718820-69152) by the same amount in the FY 2016-17 budget. The $2,600,000 loan amount will be encumbered in FY 2016-17, but anticipated expenditure will most likely occur in FY 2017-18. FOOTIMW 30%AMI 369 AMI 40% AMI 46% AMI 60% AMI 60% AMI Unit Size No. Units Proposed Proposed Proposed Proposea- Proposed Proposed Tots I I Rent No. Units Rent No. Units Rent No. Units Rent No. Units Rent No. Units Rent Two 29 $ 604 0 0 0 4 $ 1,043 1 $ 1,263 34 Bedroom Three 4 $ 700 0 0 0 17 $ 1,207 7 $ 1,461 28 Bedroom Four 1 $ 780 0 0 0 0 $ 1,345 5 $ 1,628 6 Bedroom Total 34 21 13 68 1. The one two-becroom Managers Unit is not included 2. Rents are based on the most current 2016 rents published by the Tax Credit Allocation Committee, Utility Allowances am deducted from rents using the following amounts per the Califomia Utility Allowance Calculator (CUAC): $54 for 2 Bdmn units; $60 for 3 Bdrm units; $68 for 4 Scrim unts. On-site amenities will include a community room and amenity space including tot lots/play areas for children, outdoor seating, BBQs, a flex play space and planters. The community room will be incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. AMCAL will engage the non-profit organization LifeSTEPS to provide free on-site social services to project tenants. Services will be provided in the form of classes and workshops with the subject matter tailored by a social service coordinator to the specific needs of the community. The City's inclusionary housing funds will be provided by means of a 55 -year City loan carrying a three percent interest rate and payable by residual receipts. The Housing Successor Agency funds will also be provided by means of a 55 -year loan carrying a three percent interest rate and payable by residual receipts. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #5 - Community Health, Livability, Engagement & Sustainability, Objective #3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods), Strategy C (Provide that Santa Ana residents, employees, artists and veterans receive priority for affordable housing created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed under state law). FISCAL IMPACT Upon actual receipt of the funds, approval of the appropriation adjustment will recognize $2,600,000 in the Inclusionary Housing Fund revenue account no. (41718002-57896) and increase the Inclusionary Housing Fund Loans and Grant account no, (41718820-69152) by the same amount in the FY 2016-17 budget. The $2,600,000 loan amount will be encumbered in FY 2016-17, but anticipated expenditure will most likely occur in FY 2017-18. FOOTIMW Loan Agreements with AMCAL Multi -Housing, Inc. and Appropriation Adjustments February 7, 2017 Page 4 Approval of the appropriation adjustment will recognize $6,195,000 in the Low and Moderate Income Housing Asset Fund's revenue account (no. 60718002-50001) and increase the Loan and Grants expenditure account no. (60718830-69152) by the same amount in the FY 2016-17 budget. The $6,195,000 loan amount will be encumbered in FY 2016-17, but anticipated expenditure will most likely occur in FY 2017-18. ko b2e �r�t C o Aerz---- Deputy City Manager City Manager's Office APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez Executive Director Finance and Management Services Agency Exhibits: 1. 1440 East First Street Site Map 2. Inclusionary Housing Funds Loan Agreement 3. Housing Successor Agency Funds Loan Agreement FORM M2 0 1 RI 00 SD -21 RI Rl R3 r kRl') 0 .1 m 2 RI ni 11H IT RI 0 M 2 M2 T Rl Ill R3 IT' 11 2 M2 R3 cl ,12 161, �2, A C, p ,L5jC2 C2 C2 M2 mi F—p M2 FR2F-ml- R2 m I M2-1�1 M2 mi R IT R2 R2 c C2-HDII FC2 F -l -K71 MilA V2 R mi C5 C2 F -m-11 mi 5 M2 ECr 0 R3 ElDmi E21 '9 - R3 R3 R3 Rl Ri mi M2 mi 0 —1 �1— Ri RI I FR1 Rl .11� -) Rl 2 SD -16 Rl FR1 F RI RI R4 M2 Rl Ri v Rl M2 RI RI Rl HU mi HR1 RI E M Fm, R4 Al GENE`ALAGROJUIJPALt CR COMMEFDALFSDEN�AL m SINGLE FAMILY FESDEN�AL -B FAFNNGMODRMflON GC GD�M�TM� FQ TV\CFAMILYRESDENCE 0 w O]MMEFUALSDU�MAIN mi LIGHTINDUSRAL w MULTR-ED�STYMULflRLE cl CCMMUNITYOOMMMAL M2 HEWYINDUSTRAL FAMILYFESDENCE Cl -MD COMM.ODMMEFQAUMUS3JMDlSTR� MO MILITAR(OPERNWNS R4 SJBJ�NARAFTM�� C2 C4NIPALOOMMLROAL 0 OPEN SFACE RE FEEIDM�ALEETATE m GENTFALEWN� p PF!D�OWL SD SPECHCDEVEOPMW C&A C�TRk-BUSNE35ARflSTMIL�GE POD PLANNED COMMUNITY DR43-OPMENT m =FIGPLAN C4 PLANNEDSKOPRNGM� PRO 11ANNEDFE31D��ALD�� 05 AFM9RALCOMMEFDAL MR. GPA 2016-1 & AA 2016-1 AMCAL FIRST STREET FAMILY APARTMENTS 1440 EAST FIRST STREET 500 Flh7 1000 FEE7 P L A N N I N G A N D B U I L D I N G A G E N C Y EXHIBIT 1 80A-5 A FORM EXHIBIT 2 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Community Development Agency 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Division Manager SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Government Code Section 6103] by and between the CITY OF SANTA ANA, and AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership (1440 East First Street, Santa Ana, California) Dated: February_, 2017 80A-7 LOAN AGREEMENT INCLUSIONARY HOUSING PROGRAM THIS LOAN AGREEMENT (the "Agreement") dated, for identification purposes only, as of February _, 2017, is made and entered into by and between the City of Santa Ana, a charter city and municipal corporation ("City"), and AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership ("Developer") with reference to the following: RECITALS: A. The City's Housing Opportunity Ordinance ("Ordinance") was originally adopted by the City Council on November 28, 2011 (Ordinance No. NS -2825), and is codified in Article XVIIIJ of the Santa Ana Municipal Code ("SAMC"). The Ordinance was amended by the City Council on September 1, 2015 (Ordinance No. NS -2881), and on October 6, 2015 (Ordinance No. NS -2885). The Ordinance established standards and procedures to encourage the development of housing that is affordable to a range of households with varying income levels. Pursuant to SAMC section 41-1904(c), developers may pay an in -lieu fee in certain instances to satisfy the inclusionary requirements. These funds are deposited into the Inclusionary Housing Fund, as defined by SAMC section 41-1901, and are to be used to increase and improve the supply of affordable housing per SAMC section 41-1909. B. Developer requested financial assistance in connection with the proposed development of a sixty-nine (69) unit affordable workforce housing complex ("Project") to be located at 1440 East First Street, Santa Ana, California, and legally described within Exhibit A attached hereto and incorporated herein ("Property"). The residential units will be located within six (6) buildings. The rental units (less one manager's unit) are 100% affordable to family households earning between 30% and 60% of the Area Median Income ("AMI"). The unit mix currently consists of six (6) four-bedroom units, twenty-eight (28) thtee-bedroom units, and thirty-five (35) two-bedroom units (one being a manager's unit). Eight (8) of the units will be assisted by the Santa Ana Housing Authority's Project -Based Voucher Program. On-site amenities will include a community room and amenity space including tot lots/play areas for children, outdoor seating, BBQ's, a flex play space and planters. The community room will be incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. Developer will engage a qualified non-profit organization approved by the City (of which LifeSTEPS is hereby approved by the City) to provide free on-site social services to Project tenants. Services will be provided in the form of classes and workshops with the subject matter tailored by a social service coordinator to the specific needs of the community. C. The City reviewed Developer's request for assistance and at the City Council meeting on December 20, 2016, the City Council authorized and approved issuance of a conditional, pre -commitment letter evidencing the preliminary award of $2,600,000 of funds to the Project ("Inclusionary Loan"), to be Raided exclusively from inclusionary housing in -lieu fee 2 F4611IM46 payments made pursuant to the Housing Opportunity Ordinance by the developer of that certain mixed-use development to be located at 2001 East Dyer Road, Santa Ana, California. D. The amount of the Inclusionary Loan was determined based upon the City's review of the Developer's request for the receipt of the Inclusionary Loan and the development proforma and projected cash flows for the Project submitted by the Developer to the City as of March 18, 2016 ("Proforma"). The City Manager has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the Inclusionary Loan is not materially increased or extended. E. In furtherance of the Inclusionary Housing Program, Developer has applied to the City for a loan with which to: 1. Provide deeper affordability and construct the improvements to the Property, and 2. Thereafter to maintain, operate and professionally manage the Project as decent, safe, sanitary and affordable rental housing. F. The City, on certain terms and conditions, desires to make such hiclusionary Loan to Developer in order to make possible the construction of the Project, thereby expanding the supply of decent, safe, sanitary and affordable housing. G. If there is any inconsistency between Federal, State, and local guidelines with regard to any of the terms and conditions contained herein, the more stringent shall apply. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Developer agree as follows: DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above and in all other Project Documents, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Article 1. "Affordable Housing" means the total housing costs paid by a qualifying household, which shall not exceed the fraction of gross income specified, as follows, in accordance with Sections 50052.5 and 50053 of the Health & Safety Code: Very Low -Income Households. Thirty (30) percent of the income of a household earning fifty (50) percent of the Orange County median income adjusted for family size appropriate for the unit. Low -Income Households, Thirty (30) percent of the income of a household carning seventy (70) percent of the Orange County median income for for -sale units, and thirty (30) percent of the income of a household earning sixty (60) percent of the Orange F46111mo County median income for rental units, adjusted in either case for family size appropriate for the unit. In the event of a conflict between the fractions specified in this definition and those found in Sections 50052.5 and 50053 of the Health & Safety Code, the fractions specified by State law shall control. "Affordability Restrictions on Transfer of Property" means that certain document affecting real property benefiting the City, attached hereto and incorporated herein as Exhibit B. "Affordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Extremely Low, Very Low and Low Income households, as promulgated by the California Tax Credit Allocation Committee (TCAC), or by the State of California, as applicable. "Building Permit" means the building permit(s) issued by City and required for the construction. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs. "Calendar Year" means each consecutive twelve (12) month period from January I to December 3 1. corporation. "Certificate of Completion" has the meaning set forth in Article 17. "City" means the City of Santa Ana, California, a charter city and municipal "City Project Manager" shall mean the City Manager and/or his/her designee. "Close of Escrow" shall mean the date upon which the Inclusionary Loan Agreement and Inclusionary 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 of the Property pursuant to the purchase contract. "County" means the County of Orange, California. "Developer" means AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership. "Developer's Representative" shall mean an officer of the General Partner of Developer or his/her designee. 4 Foorlymul "Extremely Low Income" means an adjusted income which does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code. "Event of Default" has the meaning set forth in Section 20. 1. "General Partner" means AMCAL Multi -Housing Two LLC, a California limited liability company. "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 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 M., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction products, household cleaners and office materials of the type and quantity ordinarily used in the normal construction, operation and maintenance of properties similar to the Project or (ii) small amounts of household mold to the extent promptly remediated upon discovery. "Housing Opportunity Ordinance" means the Ordinance originally adopted by the City Council on November 28, 2011 (Ordinance No. NS -2825), and as amended by the City Council on September 1, 2015 (Ordinance No, NS -2881), and on October 6, 2015 (Ordinance No. NS -2885), which is codified in Article XV111.1, Section 41-1900, et seq. of the Santa Ana Municipal Code. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "HCD" means the California Department of Housing and Community 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, as required through the City of Santa Ana Planning and Building Agency entitlement process. "Inclusiouary Deed of Trust" means the deed of trust encumbering the Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant to Section 5.B. t in order to secure the Inclusionary Loan Note. 5 80A-1 1 "Inclusionary Housing Fund" means the fund created by the City of Santa Ana in which all fees collected in compliance with the Housing Opportunity Ordinance shall be deposited, as defined by Santa Ana Municipal Code section 41-1901 and applied by Santa Ana Municipal Code section 41-1909. "Inclusionary Promissory Note" means that certain promissory note for Inclusionary Funds in the original principal amount of $2,600,000 in the form attached hereto as Exhibit D, and to be executed by Developer in favor of City to evidence the obligation of Developer to repay the Inclusionary Loan through residual receipts as further described in the Inclusionary Promissory Note. "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (c) any obligation for the purchase of property or services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii) evidenced by a note or similar instrument, and (d) all recourse and all non-recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "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). "Inclusionary Loan Documents" or "Loan Documents" means, collectively, this Agreement, the hiclusionary Promissory Note, the Inclusionary Deed of Trust, and the Affordability Restrictions on Transfer of Property, and any other agreement, document, or instrument that the City reasonably 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 which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HCD. Also may be referred to interchangeably in the Inclusionary Loan Documents as "Area Median Income" or "AMP. 6 80A-1 2 "Partnership Agreement" means the Agreement of Limited Partnership of AMCAL 1440 SANTA ANA FUND, L.P., dated as of September 1, 2015 attached herein as Exhibit H. "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 City Project Manager in writing. "Permitted Encumbrances for the City Deed of Trust" means the Senior Loan Deed(s) of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Project" means the construction of the Improvements upon the Property by Developer pursuant to this Agreement. "Project Budget" means the line -item budget for the Project attached hereto as Exhibit E, 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 1440 East First Street in 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. "Scope of Work/Schedule of Performance" means the detailed statement of the work to be performed by Developer on and to the Property pursuant to this Agreement, along with the Schedule of Performance setting forth timeftames for certain tasks, which document is attached hereto as Exhibit F. "Senior Lender" means a commercial financial institution providing the Senior Loan or any other holder of the Senior Loan Note. "Senior Loan" means a loan from the Senior Lender concurrent to the Inclusionary Loan for payment of a portion of the acquisition and construction costs, and shall include any subsequent loan that refinances the initial Senior Loan. "Senior Loan Deed of Trust" means the first deed(s) of trust securing the Senior Loan by encumbering the Property. "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. "Senior Loan Note" means the promissory note evidencing the Senior Loan from the Senior Lender. FOODYMW "Term of Affordability" means the terms and conditions contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code. 1.2 Sin2ular and Plural Terms. Any defined term used in the plural in this Agreement shall refer to all members of the relevant class and any defined teral used in the singular shall refer to any number of the mernbers of the relevant class. 1.3 References and Other Terms. Any reference to this Agreement 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. 2. tRESERVED1 3. SCOPE OF WORK/PROJECT BUDGET A "Scope of Work" and "Schedule of Performance" for the Property is attached hereto as Exhibit F. Any material change to the Scope of Work/Schedule of Performance requested by the Developer shall be subject to the prior written approval of the City Project Manager. The Scope of Work/Schedule sets forth the construction work that shall be performed on the Property and timeframes for approvals and such work. A line -item budget for the Project, including a summary statement of sources and uses of funds, is incorporated into Exhibit E ("Project Budget"). Any material change to the Project Budget requested by Developer shall be subject to the prior written approval of the City Project Manager. 4. [RESERVED] 5. INCLUSIONARY LOAN: A A LF46TITME The Inclusionary Loan shall be evidenced by the Jnclusionary Promissory Note in the form attached hereto as Exhibit D. The Inclusionary Loan shall be secured by the Inclusionary Deed of Trust in the form attached hereto as Exhibit C. The terms and conditions of the Inclusionary Loan are as set forth in the Inclusionary Promissory Note. The term of affordability for the Project is fifty-five (55) years from the receipt of Certificate of Occupancy for the Project, or repayment of the Inclusionary Loan, whichever is longer. 5.1. Inclusionary Housing Funds: A. Amount and Purpose. Subject to the terms and conditions of this Agreement, City agrees to make a loan to Developer from Inclusionary Housing funds in the principal amount of up to $2,600,000.00 for the construction and other costs of the Project. The City shall notify the Developer within ten (10) days of the receipt of the In -Lieu Fee. 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS 6.1 Conditions Precedent. City's obligation to disburse the loan is subject to the satisfaction of the following conditions precedent: (a) Receipt by the City of the In -Lieu Fee. On October 6, 2015, the City received a letter indicating a market rate developer's preference that their In -Lieu Fees be applied towards the Project. The Developer agrees and acknowledges that while a preference has been stated and the City has agreed to honor the preference, the City shall have no obligation to fund the Inclusionary Loan unless the In -Lieu Fee has been received by the City. (b) City Council. Review and approval of the Inclusionary Loan Documents by the City Council. (c) Environmental Review. Compliance with and completion of environmental review of the Project pursuant to the California Environmental Quality Act ("CEQA") and approval thereof. (d) Affordability Restrictions. Sixty-eight (68) of the sixty-nine (69) "Housing Units" at the Project shall and will be restricted to "Affordable Rent" as defined by the California Tax Credit Allocation Committee (TCAC) Regulations for a period not less than fifty- five (55) years pursuant to conditions, covenants and restrictions recorded against the Project in the Official Records, County of Orange, California. Thirty-four (34) of the sixty-eight (68) Housing Units at the Project shall and will be restricted to households earning 30% or less of the AMI, unless the City and the Developer reasonably determine that it is necessary for a lesser number of Housing Units at the Project to be restricted to households earning 30% or less of AMI to cause the Project to be competitive for tax credit financing and/or to be financially viable. One (1) Housing Unit will be rented to an on-site property manager; the manager's unit will not be rent restricted. Foerlymw, (e) Loan Documents. Developer shall have delivered to the Escrow Holder, signed by the authorized officer or officers of Developer, with such signature(s) aclmowledged where necessary, each of the following documents: (i) this Inclusionary Loan Agreement; (ii) the Inclusionary Promissory Note ($2,600,000); (iii) the hiclusionary Deed of Trust; and, (iv) the Affordability Restrictions on Transfer of Property, (f) Title Insurance. City shall have received an American Land Title Association (ALTA) Extended (LP -10) Loan Policy (6-17-06), or evidence of a commitment therefore satisfactory to City, issued by Commonwealth Land 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 total Inclusionary Loan Amount, showing Developer as the fee owner of the Property and insuring the Inclusionary Deed of Trust to be a valid priority lien on the Property. This Agreement, the Inclusionary Promissory Note, and the Inclusionary Deed of Trust shall all be subordinate to the Senior Loan Note and Senior Loan Deed of Trust. (g) Affordability Restrictions on Transfer of Propert . Developer shall have delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the Affordability Restrictions on Transfer of Property pursuant to which, among other things, Developer agrees that the Property shall be used only for decent, safe, sanitary and affordable rental housing pursuant to the affordability requirements of California Health and Safety Code ("H&S") sections 50052.5 and 33334.3, as applicable. The City's Affordability Restrictions on Transfer of Property shall remain in first position on title and shall not be subordinated. (h) Documents Recorded. This Loan Agreement, the Inclusionary Deed of Trust, and the Affordability Restrictions on Transfer of Property shall have been recorded in the Official Records of the County. (i) 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"). 0) Insurance. City shall have received evidence satisfactory to the City Attorney that all of the policies of insurance required by Section 19 of this Agreement are in full force and effect. (k) 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 City Project Manager, City shall have received a certificate to that effect signed by Developer's Representative. 1-61MM (1) No Default. No Event of Default by Developer shall have occurred, 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 City Project Manager, City shall have received a certificate to that effect signed by Developer's Representative. (in) The City's obligation to provide the Inclusionary Loan is and shall remain subject to all covenants, conditions, and restrictions set forth in this Loan Agreement, 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. 6.2 Disbursement Procedures for Loan. The hiclusionary Loan proceeds shall be disbursed through Escrow to finance the acquisition, development and construction of the Project (as evidenced in Exhibit E). The Inclusionary Loan proceeds shall not be used for any purpose other than for acquisition and predevelopment and construction related costs, including Developer fee and soft costs related to the development of the Project (costs all subject to City's prior review). 6.3 First Disbursement. City's obligation to make the first disbursement of the Loan is subject to satisfaction of the following conditions precedent: (a) All grading permits shall have been issued or the City shall have issued a letter stating that building permits are ready to issue, subject only to payment of fees and the completion of grading of the Project site. (b) Developer shall have secured all necessary financing and funding for the construction and operation of the Project. Such financing and funding shall be sufficient to pay all Project development costs, through lease -up, as set forth in the final budget consistent with the approved Proforma (or as otherwise approved by the City). (c) Developer shall have provided evidence to the City that the Developer has obtained insurance policies and certificates or endorsements acceptable to the City, as described in this Loan Agreement. (d) Developer shall have provided construction security in favor of the City, which may include a completion guarantee from AMCAL Multi -Housing, hie. and/or a letter of credit and/or performance and payment bonds from the general contractor for the Project (or some combination of these), in an amount sufficient to ensure the Project will be completed and placed in service within the time set forth in the Project schedule approved by the City. (e) Developer shall submit and obtain the Executive Director of the Community Development Agency's approval of the construction contract, the identity and qualifications of the General Contractor, Developer's limited partnership agreement for the limited partnership entity to be formed to own and operate the Project, and management, marketing and tenant selection plans for the Project. I I 80A-1 7 6.4 Termination for Failure of Condition. If (a) any of the conditions set forth herein are not timely satisfied (subject to applicable notice and cure rights), 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 specified due date. 6.5 Any Disbursement. City's obligation to make any disbursement of the Loan, including the first and final disbursements, is subject to the satisfaction of the following conditions precedent: (a) Satisfactory Progress. The City Project Manager shall be satisfied that, based on his/her own inspections or other reliable information, the construction is progressing satisfactorily in conformance with all applicable laws and other requirements (including the City's Inclusionary Housing guidelines). (b) Condition of Title. Either (i) the City Project Manager reasonably believes that no event has occuff ed since the Close of Escrow that would give rise to a colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of City against the Property with respect to the subject disbursement, or if such claim is made, then City Project Manager shall receive satisfactory evidence that such claim has been bonded over until its resolution; or (ii) City must have received, at Developer's expense but payable out of the Loan proceeds from the title insurer who issued City's LP -10 Title Policy, all endorsements thereto then reasonably required by City (including, without limitation, CLTA Form 122 -- priority of advance endorsements). (c) Representations and Warranties. The representations and warranties of Developer contained in this Agreement and the other City Loan Documents shall be correct in all material respects as of the date of the disbursement as though made on and as of that date. (d) No Default. No Event of Default by Developer shall remain uncured (unless, to the extent permitted under diis Agreement, Developer is diligently taking action to cure such default) 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. 6.6 Final Disbursement. City's obligation to disburse that portion of the Loan fimds retained pursuant to Section 6.12 is subject to the satisfaction of the following additional conditions precedent: (a) Construction complete. The construction of the Project shall be complete. (b) Certificate of Occoancy Issue . Any portion of the construction work requiring inspection or certification by any Governmental Authority shall have been inspected and certified as complete. Developer shall request that the Building Department issue a Certificate of Occupancy, a copy of which shall be delivered to the City Project Manager, in order for final disbursement to occur. 12 80A-1 8 (c) Lien Free. At least one of the following shall have occurred: (i) Thirty-five (35) days shall have passed since the recording of a valid notice of completion for the construction, and no mechanic's or materialman's lien shall be outstanding; or (ii) Ninety-five (95) days shall have passed since actual completion of the construction, and no mechanic's or materialman's lien shall be outstanding, or Developer shall have bonded over any such lien to City's reasonable satisfaction. 6.7 Waiver of Conditions. The conditions set forth pertaining to City's obligation to make disbursements of the Loan proceeds are for City's benefit only and the City Project Manager may waive all or any part of such rights by written notice to Developer. 6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line -item by line -item basis in accordance with the Project Budget and subject to the conditions in this section. In. no event shall City have any obligation to disburse any amount for any item in excess of the amount allocated to such item in the Project Budget. Disbursements shall be made only upon Developer's written request in the form of a Disbursement Request showing all costs which Developer intends to fund with such disbursement, itemized in such detail as City may reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to City, including in any event partial lien releases executed by each contractor and subcontractor who has received any payment for work performed, and (b) all other documents and information reasonably required by City. Disbursement Requests shall be submitted no less than ten (10) Business Days prior to the date of the requested disbursement, and shall not be submitted more often than monthly. Prior to each disbursement by City of proceeds of the loan, Developer shall deliver to City a draw request ("Draw Request"), and all required supporting information as set forth in the Inclusionary Loan Documents or as otherwise reasonably required by City in order to provide information for evaluating the requested disbursement pursuant to customary construction lending practices of institutional lenders in Southern California. City shall notify the Developer of approval or disapproval of each Draw Request within five (5) Business Days after receipt of the Draw Request, using the City's "Disbursement/Change Order Approval Notice". City shall have the right, but not the obligation, to discontinue processing Draw Requests unless and until receipt of notification from the other of approval or disapproval of each outstanding Draw Request. 6.9 Manner of Disbursement. City may make any disbursement by check payable to Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or directly to any such claimant; or by any other means reasonably selected by City. 6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost reasonably estimated by City or Developer to be required to complete all matters included in 13 A LFOODIMPO any line item in the Project Budget exceeds the amount allocated to that line item in the Project Budget, (b) Project costs for any matters not covered by a specific line item have been or will be incurred, or (e) the undisbursed portion of the Loan proceeds and all other approved financing sources are or may be insufficient to pay all construction of the Project that may be payable under the hiclusionary Loan Documents or otherwise in connection with the construction, Developer shall, within ten (10) days after it receives written notice thereof from City of any of the foregoing matters, do one or more of the following: (a) provide satisfactory evidence to City that Developer has previously paid such excess or otherwise provided for such insufficiency (collectively, the "Excess Cost") with funds from a source other than the Inclusionary Loan; (b) reallocate sufficient funds to pay the Excess Cost from funds allocated to "Contingency" in the Project Budget; provided, however, that the City Project Manager's consent to any such reallocation shall be required; or (c) deposit an amount equal to the Excess Cost in a non-interest bearing account (the "Overrun Account") with City from which withdrawals may be made only with the consent of the City Project Manager but which will be exhausted prior to any farther disbursement for any line item, so that any resulting surplus in any line item of the Project Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be incurred. City shall have no obligation to make farther disbursements until Developer has paid or otherwise provided for the overrun as required above. Amounts deposited by Developer in the Overrun Account for any Excess Costs shall be disbursed by City prior to the disbursement of any remaining Loan proceeds in the manner described in subsection 9.3(c). 6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any line items in the Project Budget, any remaining undisharsed amounts allocated to that line item shall be reallocated to "Contingency" and thereafter be available for disbursement in accordance with the terms of this Agreement. 6.12 Retainage. City will withhold a Retainage of 10% from each Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof designated for withholding of retainage) until all conditions to the final Disbursement of Hard Costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written notice to City elect not to draw any overhead or profit as would otherwise be permitted under the Construction Contract until such time as Retainage would otherwise have been released. City shall not retain funds for building materials purchased by Developer for which Developer supplies documentation to City proving payment in full, land acquisition costs or for soft costs. 6.13 Holdback. The retainage otherwise available for disbursement shall be subject to a holdback of one hundred twenty-five percent (125%) of the estimated cost (as determined by 14 80A-20 the City Project Manager) for "punch -list" items. Such holdback will be released when all punch - list items have been completed to the satisfaction of City. 6.14 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the making by City of any disbursement with knowledge that any condition to such disbursement is not fulfilled shall constitute a waiver of such condition only with respect to the particular disbursement made, and such condition shall be conditioned to all further disbursements until fulfilled. 6.15 Modification of Disbursement Conditions and Procedures. The City Project Manager 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 contract for construction. 6.16 Other Terms and Conditions of Loan. A. The Note shall become immediately due and payable, in the event of any of the following: (1) Failure to be awarded tax credits within two (2) years of the recording date and failure to complete the Project within four (4) years of the recording date; (2) Violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; or, (3) 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. 6.17 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. 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROJECT 7.1 Use Covenants and Restrictions. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assign and every successor in interest to the Property that Developer will make all of the rental units on the Property available to extremely low, very low and low income households at rents affordable to such households for fifty-five (55) years (except for one (1) unit for the onsite manager). The Project shall consist of sixty-nine (69) residential units. Enforceability of restrictions on the sixty-eight (68) units shall be enforced until the date that is fifty-five (55) years after the date on which the Certificate of Occupancy is issued, 7.2 Affordabilitv Levels/Unit Mix: The proposed unit mix and levels of affordability are as follows: 15 80A-21 Bedroom Size 30% AMI 40% AMI 50% AMI 60% AMI Manager's Unit Total Two Bedroom 29 0 4 1 1 35 Three Bedroom 4 0 17 7 28 Four Bedroom 1 0 0 5 6 Totals 34 0 21 13 1 69 * The affordable rents charged at the Project must comply with the standards set forth by the California Tax Credit Allocation Committee (TCAC). * Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing Authority of the City of Santa Ana publishes a utility allowance schedule on an annual basis, provided, however, in lieu of the utility allowance published by the Housing Authority the Developer may elect to use the California Utility Allowance Calculator to the extent allowed by TCAC. 7.3 Rent Increases: On an annual basis, the City shall provide the Developer with the maximum allowable schedule of rents for the Property which shall correspond to the maximum rent increase allowed by TCAC. In no event can Developer charge any tenant more than such amount. 7.4 Maintenance of the Propertv. 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 perfortri 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 Section 17 of this Agreement. 7.5 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, disability, religion, sex, 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. 8. DEFAULTS AND REMEDIES 8.1 Event of Default. Failure or delay by either patty to perform any term or provision of this Agreement within the time periods provided herein for such performance constitutes a 16 80A-22 default under the Agreement. If any party defaults in performance of its obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure the default in accordance with this section. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. The defaulting party must, within thirty (30) days following service of said written notice, commence to cure, correct or remedy such failure or delay and shall complete such cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is not cured within thirty (30) days following service of said notice, unless such default cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure but no more than ninety (90) days, the City shall have the light to terminate this Agreement by delivery of written notice of terraination to Developer. 8.2 Institution of Legal Actions. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default to recover economic damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. 8.3 Rilzhts and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 8.4 Damages. In the event that the City is liable for damages to Developer, such liability shall not exceed costs incurred by the Developer in the performance of this Agreement and shall not extend to compensation for loss of future income, profits or assets. 8.5 Nonrecourse Liabilitv. Neither Developer, nor any partner of Developer, shall have any personal liability under this Agreement, or the attached Note and 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 loan evidenced by such documents shall be enforceable against Developer only to the extent of Developer's interest in the Property. 9. GENERAL PROVISIONS AND WARRANTIES As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows: 9.1 Formation, Oualification and Compliance. AMCAL 1440 Santa Ana Fund, L.P. is a California limited partnership. 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. 17 FOODYMW 9.2 Execution and Performance of Inclusionary Loan Documents. 9.2.1 Developer has all requisite authority to execute and perform its obligations under the Inclusionary Loan Documents. 9.2.2 The execution and delivery by Developer of, and the performance by Developer of its obligations tinder, each Loan Document that has been authorized by all necessary action and does not and will not: (a) require any consent or approval not heretofore obtained of any person having any interest in Developer; (b) 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; (c) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the Inclusionary Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; (d) to best of its knowledge, violate any provision of any law presently in effect; or (e) 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. 9.2.3 Developer is not in default, in any respect that is materially adverse to the interests of City under the Inclusionary 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 sub -paragraph (d) or (e) of the previous subsection. 9.2.4 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: (a) the execution by Developer of, and the performance by Developer of its obligations under, the Inclusionary Loan Documents; and (b) the creation of the liens described in the Inclusionary Loan Documents. 9.3 Financial and Other Information. To the best of Developer's knowledge, all financial information furnished to City by the Developer or any affiliate thereof with respect to Developer in connection with the 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 by the Developer or any affiliate thereof with respect to Developer, in comiection with the Loan, are correct and complete 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 Chan2e. 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 Reguirements. To best of its 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 Liti2ation. 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 Governinental 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. 19 FOODIMW 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 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 Cily 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 which may become due to Developer or on any obligations under the terms of this Agreement. 9.13 No Assignment. Developer expressly acknowledges and agrees that the City has only agreed to assist the Developer as a means by which to induce the construction/development of the Project. Accordingly, Developer further expressly acknowledges and agrees that this Agreement is a personal right of Developer that is neither negotiable, transferable, nor assignable except as set forth herein. Developer may assign some or all of its rights under the Agreement only with the prior written consent of the City Project Manager (such consent not to be unreasonably withheld), except that no prior consent is necessary for an assignment by a limited partner of Developer to an affiliate, for the inclusion of tax credit investors in the Agreement, or as otherwise provided in the Deed of Trust. 9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal and California state law with venue in Orange County, California. 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 famished in connection with the construction of the Property. 9.16 Control of ProperLK. The parties acknowledge that the City has not at anytime participated in any manner in the management or operation of the Property, and will not so participate at any time hereafter. 10. CONDITIONS FOR CONSTRUCTION 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 constraction and conversion of the Property. 20 Lq4617MW1 10.2 Commencement and Completion of Construction. The construction of the Project 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 (including required final certificates of occupancy) have been obtained. 10.3 Chan2e Orders. The contract for construction shall not be modified except pursuatitto change orders. All change orders in excess of $10,000: (a) Shall be in writing, numbered in sequence, signed by Developer and submitted to City prior to the proposed effectiveness thereof and accompanied by any working drawings and a written narrative of the proposed change; and, (b) Shall be subject to the City Project Manager's prior written approval. 10.4 Entry and Inspection. At all times prior to completion of the construction, upon reasonable notice and subject to reasonable job site safety rules, City and its 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 [RESERVED] 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' and engineers' fees, loan fees, interest during construction and contractors' overhead. 10.7 Protection Allainst 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 require to release City from any obligation or liability with respect to such stop notice or claim. 21 80A-27 11. COVENANTS ll,l [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 California Health and Safety Code section 50052.5 so as to qualify the housing on the Property as Affordable Housing with affordable rents. 11.3 [RESERVED] 11.4 [RESERVED] 11.5 Handicapped Accessibility. Developer shall comply with (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make the Project readily accessible to and usable by individuals with disabilities. 11.6 [RESERVED] 11.7 [RESERVED] 11.8 Lead -Based Paint. Developer shall comply with the requirements, as applicable of the Lead -Based Paint Poisoning Prevention Act. 11.9 Affirmative MarketilIg. Developer shall implement and perform such affirmative marketing procedures and requirements for the Property as required by the City of Santa Ana's adopted affirmative marketing procedures and minority outreach 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. Developer must also follow the requirements of California Health and Safety Code section 33435. 11. 11 Property Standards. Developer shall cause the Property to meet all applicable local, state and federal codes and ordinances, including zoning ordinances. Developer shall also cause the Property to meet the current edition of the Model Energy Code published by the Council of American Building Officials. 11.12 [RESERVED] 11,13 [RESERVED] 11.14 Reguest for Disbursements of Funds. Notwithstanding anything contained in this Agreement to the contrary, Developer may not request disbursements of funds under this 22 FOODYAW46 Agreement until the funds are needed for payment of eligible costs (such funds shall be used solely towards the rehabilitation and soft costs of the Project). The amount of each request shall be limited to the amount needed. 11.15 Eligible Costs. Developer shall use Inclusionary Housing Funds to pay costs within the Project Budget attached herewith as Exhibit E. 11.16 Records and Reports. Developer shall maintain and from time to time submit to City such records, reports and information as the City Project Manager may reasonably require in order to meet City record keeping and reporting requirements. 11.17 [RESERVED] 11.18 Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth in all applicable state regulations pertaining to conflict of interest. 11. 19 Monitorin2. Developer shall allow the City to conduct periodic inspections of each of the assisted units on the Property as required by the Housing Opportunity Ordinance after the date of construction completion, with reasonable notice. 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. 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, At a minimum, every fifth (5th) year, Developer shall require new original income documents to be submitted by tenants. (b) Developer shall allow the City to conduct periodic reviews of tenant files and files relating to affirmative marketing and outreach to insure the Project's compliance with applicable regulations and guidelines. (c) City 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 until the non-compliance is corrected. 11.21 Other Requirements. Developer shall comply with all other applicable requirements of the Housing Opportunity Ordinance, including the following: (a) Onsite Services: The Developer shall provide on-site services that are available to the residents and shall report to the City annually the services provided. 23 A LFOODYMWO (b) Coordination with the WORK Center: The Developer and the Property Manager shall coordinate with the City's WORK Center to provide services and outreach to tenants, as well as provide information on employment during the construction of the Project. (c) Tenant Satisfaction Survey: The Developer shall complete and submit to the City biennial tenant satisfaction surveys of tenants. (d) Rental Inclusionary Housing Manual: The Developer shall also maintain compliance with the City's Inclusionary Housing Manual for Rental Projects. 11.22 Controllina Covenants. If there is a discrepancy between any applicable Local, State and Federal law with regard to any of the aforementioned covenants, the more stringent shall apply. 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 business -like 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 Inclusionary 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: 12.1.1 Alterations and Repair. Developer shall not remove, demolish or materially alter any Improvement without City's prior consent, except to make non-structural repairs which 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. 12.2 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. 12.3 Taxes and Impositions. Subject to any property tax abatement available to the Developer, 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 24 80A-30 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), 12.3.1 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 the City's interests trader the Inclusionary 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). 12.3.2 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. 12.3.3 Books and Records. Developer shall maintain complete books of account and other records reflecting its operations (in connection with any other businesses as well as with respect to the Property), 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. 12.4 [RESERVED] 12.5 Project Operating Budget. Developer must promptly deposit all project income directly into a segregated depository account established exclusively for the Project ("Project Operating Account"). Withdrawals from this account may be made only in accordance with the provisions of this Agreement and the approved Operating Budget, as it may be revised from time to time with prior City approval. Developer may make withdrawals from this account solely for the payment of project expenses and project fees. Withdrawals from this account for other purposes may be made only with the prior written approval of the City. 12.6 Replacement Reserve Account. Developer must establish or cause to be established a segregated replacement reserve depository account ("Replacement Reserve Account") no later than the commencement of the permanent financing period for the Project. Developer must make monthly deposits from project income into the Replacement Reserve in accordance with Developer's Budget, as amended from time to time. Developer may withdraw funds from the Replacement Reserve Account solely to fund capital improvements for the Project, such as replacing or repairing structural elements, furniture, fixtures or equipment of the Project that are reasonably required to preserve the Project. Developer may not withdraw funds 25 80A-31 from the Replacement Reserve Account for any other purpose without the prior written approval of the City. 13. NONDISCRIMINATION COVENANTS 13.1 Obligation to Refrain from Discrimination. Developer covenants and agrees that (a) In Use of Properly. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, disability, religion, sex, 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 contract (for 55 years). (c) In Employment. In construction on the Property, Developer shall not discriminate against any employee or applicant because of race, color, creed, religion, sex, marital status, 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, disability, creed, religion, sex, marital status, disability, 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 for the benefit of City, provided that the foregoing covenant shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. 14. ENVIRONMENTAL MATTERS 14.1 Representation and Warranty. Except as disclosed in writing to the City, Developer has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials, 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 26 80A-32 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 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 its 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 resulting from the gross negligence or willful misconduct of any Indemnitee. 15. OTHER AFFIRMATIVE COVENANTS While any obligation of Developer under the Inclusionary Promissory Note or Inclusionary Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that City Project Manager otherwise consents in writing: 15.1 Existence. The sole member of 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 Inclusionary Deed of Trust as a valid third 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: 27 FOODYMN (a) any filed litigation or claim affecting or relating to the Property and involving an amount in excess of $5,000; and any litigation or claim that might subject Developer or any general partner to liability in excess of $5,000, whether covered by insurance or not; (b) any dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which might materially affect 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; (J) 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 Inclusionary Loan Documents; to protect and farther the validity, priority and enforceability of the hiclusionary 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 Inclusionary Deed of Trust or otherwise to carry out the purposes of the Inclusionary Loan Documents and the transactions contemplated thereunder. 15,5 Annual Financial Statements. Developer shall deliver to City, within one hundred fifty (150) days after the end of each Calendar Year, (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 chief financial officer 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 W. A A LFOOTITMU 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. Developer shall include in said reports, a document in the "Form of Residual Receipts Report" attached hereto as Exhibit G and incorporated herein. 15.6 Audits and Access to Records. Developer agrees that City or any of their authorized representatives shall have the right of access, upon reasonable notice and during normal business hours, to any books, documents, papers, or other records of Developer which 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 or recapture period ends. 15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the Property to the City every fifth (5"') year beginning January 2023. 16. OTHER COVENANTS While any obligation of Developer under the Inclusionary Note or Inclusionary Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that City Project Manager 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, Developer shall not sell, lease (other than to tenants meeting the requirements set forth in this Agreement), sublease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of the City Project Manager, which consent may be withheld in the City Project Manager's reasonable 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 a General Partner's interest in Developer when made in connection with the exercise by the Developer's limited partner (the "Limited Partner") of its rights upon a default by a General Partner under the Developer's Partnership Agreement (the "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 thirry 29 FORM& (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 pursuant to the right of first refusal or to one or more of the General Partners pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of the Limited Partner's interest in the Developer or of an interest in the Limited Partner. 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. Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction. If City declines to farnish a Certificate of Completion after written request from Developer, the City Project Manager 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 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 City Project Manager 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 Inclusionary 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 1093 of the California Civil Code. 18. INDEMNIFICATION 18.1 Nonliability of City. Developer acknowledges and agrees that: (a) The relationship between Developer and the City is and shall remain solely that of Developer 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 die 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 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 of[site 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 sarne, 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) this Agreement; (ii) the making of the Loan(s); (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 gross negligence or willful misconduct of City. Developer's obligations under this Section shall survive the cancellation of the City Promissory Note, release and reconveyance of the City Deed of Trust, issuance of the Certificate of Completion, and termination of this Agreement. 18.2.1 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 Loan. 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 31 80A-37 (20) days after City gives written demand to Developer and shall be secured by the City Deed of Frust. Such reimbursement obligations shall survive the cancellation of the Loan Note, release and reconveyance of the City Deed of Trust, issuance of a Certificate of Completion, and termination of this Agreement 19. INSURANCE, CASUALTY AND CONDEMNATION 19.1 Policies Required. While any obligation of Developer under the Loan Documents remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of "A" or above and reasonably approved by the City, the following policies of insurance in form and substance reasonably satisfactory to the City Attorney: (a) worker's compensation insurance and any other insurance required by law in connection with the construction; (b) prior to commencement and following completion of the construction, fire and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (c) upon commencement of the construction and at all times prior to completion of the construction, builder's risk -all risk insurance covering 100% of the replacement cost of all Improvements (including offsite materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (d) public liability insurance in amounts reasonably required by City from time to time, and in no event less than $1,000,000 for "single occurrence;" (e) property damage insurance in amounts reasonably required by the City from time to time, and in no event less than $1,000,000; and (0 any other insurance reasonably required by City which is available at commercially reasonable rates. All such insurance shall provide that it may not be canceled or materially modified without thirty (30) days prior written notice to City. The policies required under subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and substance satisfactory to City, showing the City as encumbrance. The City shall be named as an additional insured in the policies required under subparagraphs (d) and (e). Certificates of insurance for the above policies (and/or original policies, if required by City) shall be primary and delivered within ten (10) days after demand therefore, and prior to start of any construction work. All policies 32 80A-38 insuring against damage to the Improvements shall contain an agreed value clause sufficient to eliminate any risk of co-insurance, No less than thirty (30) days prior to the expiration of each policy, Developer shall deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to the City Attorney. 19.2 Citv Attorney May Modify. The City Attorney may modify the type and amounts of insurance required pursuant to this Section so long as such modifications are commercially reasonable for an affordable housing development such as the Project . 19.3 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. 19.4 Delivery of Proceeds to OLE. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior lights of the Senior Lender, deliver such proceeds to the City immediately upon receipt. 19.5 Application of Casualty Insurance Proceeds. 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 receipt of the Proceeds: (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b) and any undisbursed loan and tax credit proceeds available to the Developer) will be adequate to repair the Improvements and to restore the fair market value of the Property, within a 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 (together with all undisbursed Loan proceeds and any other financing proceeds available to the Developer) are insufficient to accomplish the restoration required above, Developer shall deliver to City funds (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. 33 A LFOOMM&O (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. 19.6 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. 19.7 Failure to Satisty Conditions. In the event that Developer fails to fulfill the Restoration Conditions within one hundred eighty (180) days (unless extended pursuant to Section 19.5) following the date Proceeds are received, 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 its sole and absolute discretion. 19.8 Restoration. Nothing in this Section 19 shall be construed to excuse Developer from repairing and restoring all damage to the Property in accordance with other Loan Document provisions, regardless of whether insurance proceeds are available or sufficient. 19.9 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 Note. If so applied, any award in excess of the unpaid balance of the 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. 19.9.1 Notwithstanding the foregoing, as long as the value of City's liens are not impaired, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. 34 A A LFOODIM11 19.9.2 Notwithstanding the foregoing, during the tax credit compliance period for the Project, as determined under Section 42 of the Internal Revenue Code, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. 19.10 Waiver of Subrogation. Developer hereby waives all rights to recover against the City (or any officer, employee, agent or representative of City) for any loss incurred by Developer from any cause insured against or required by any Loan Document, to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation. 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 Inclusionary Promissory Note when due, and such failure is not cured within fifteen (15) 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 fifteen (15) 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 ninety (90) 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) The Property is materially damaged or destroyed by fire or other casualty unless Developer fulfills the Restoration Conditions set forth in the insurance provisions of this Agreement within one hundred twenty (120) days (unless extended pursuant to Section 19.5) and thereafter diligently restores the Property in accordance with this Agreement; 35 A A LF46111M (0 Work on the construction ceases for thirty (30) consecutive days for any reason (other than governmental orders, decrees or regulations, acts of God or any other deity, strikes or other causes beyond Developer's reasonable control); (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 sixty (60) 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 City Project Manager's prior written consent; W 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, custodian, 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, construction 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; or (i) any of the Senior Loan documents is revoked or terminated, in whole or in part and for any reason (except due to repayment of such loans), without the City Project Manager's prior written consent, or (ii) Developer defaults or otherwise fails to perform any of its duties or obligations under or in connection with any of the Senior Loan documents, subject to all applicable notice and cure periods, or (iii) any of the Senior Loan documents is amended, supplemented or otherwise modified without City's prior written consent, which consent shall not be unreasonably withhold. Notwithstanding anything to the contrary contained herein, City hereby agrees that any cure of any default made or tendered by Developer's Limited Partner shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. 20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City may, at its option and in its absolute discretion, do any or all of the following: 36 80A-42 (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 (e) 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; (e) 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; and, (d) Suspend or terminate the award of Inclusionary funds if Developer fails to comply with any term of such award. 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 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. 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 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. 37 FOODYMP 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: AMCAL 1440 Santa Ana Fund, L.P. c/o AMCAL Multi -Housing, Inc. 2082 Michelson Drive, Suite 306 Irvine, CA 92612 Attention: Mario Turner Copy to: AMCAL Multi -Housing, hie. 3 0141 Agoura Road, Suite 100 Agoura Hills, CA 91301 Attention: General Counsel Copy to Limited Partner If to City: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, California 92702 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 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 Loan(s) described herein and have been or will be relied on by City notwithstanding any investigation made by either party. W. A A A LFOOTITMI 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 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and City and their respective successors and assigns. Other than as expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or obligations under any Loan Document without the prior written consent of City, which consent may be withheld in City's sole and absolute discretion. Any such assignment without such consent shall, at Citys option, be void. 21.6 Prior A2reements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement between the City and Developer with respect to the 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 iniless 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 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. 39 A A LFOODYMP 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 which 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. Where Developer does not proceed with the work and construction of the Project, and when this Agreement is terminated with respect thereto for any reason, Developer shall deliver to City any and all plans and data concerning the Property, and City or any person or entity designated by City shall have the right to use such plans and data without compensation to Developer. Such right of City shall be subject to any right of the preparer of the plans to their use. 21.16 Authority to Enter Allreement. Each undersigned represents and warrants that its signature herembelow 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. 21.17 Transfer of Developer Limited Partner's Interest. Notwithstanding anything to the contrary in this Agreement or the Loan Documents, no consent shall be required of the City (and it shall not be deemed a default or an Event of Default under any of the Loan Documents), in connection with the transfer and/or the assignment by the Developer's limited partner of its interest in the Developer to an entity controlled or managed by an entity which is related to or under common control with the Developer's limited partner. 21.18 Removal of Developer's General Partner. Notwithstanding anything to the contrary in this Agreement or the Loan Documents, the removal and/or replacement of a General Partner for cause in accordance with the Partnership Agreement shall not require the consent of the City and shall not shall not constitute a default or an Event of Default under this Agreement or the Loan Documents or accelerate the maturity of the Inclusionary Loan. If the Developer's limited partner exercises its right to remove a General Partner, City will not unreasonably withhold its consent to the substitute general partner; provided however, the consent of either the City shall not be required if the substitute general partner is an affiliate of the Developer's limited partner, The substitute general partner shall assume all of the rights and obligations of the removed general partner hereunder. IM11 A A LFOODYMN IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed on the date set forth at the beginning of this Agreement. ATTEST: Maria D. Huizar Clerk of the Council APPROVED AS TO FORM Sonia R. Carvalho By: 4�an 0. Attorney RECOMMENDED FOR APPROVAL Robert C. Cortez Deputy City Manager CITY OF SANTA ANA Gerardo Monet Acting City Manager (Signaturcs continue onfollowing page) 41 A A LFOODYMN DEVELOPER: ANICAL 1440 Santa Ana Fund, L.P., a California limited partnership IN EXHIBITS A, Legal Description B. Affordability Restrictions on Transfer of Property C. Inclusionary Deed of Trust D. Inelusionary Promissory Note E. Project Budget F. Scope of Work / Schedule of Performance G. Form of Residual Receipts Report H. Partnership Agreement 43 80A-49 Exhibit A: Legal Description FOODIMT1 EXHIBIT "A" Legal Description All that certain real property situated in the County of Orange, State of California, described as follows Parcel 1: The Easterly 112.51 feet of the Westerly 437.51 feet of that portion of land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the Final Decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the center lines of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centertme of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06'40" East 397.90 feet to the Southeast comer of said land of Croddy Corporation; Fience South 89' 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 00 06'48" West 398.34 feet to the point of beginning. Excepting therefrom, that portion of the North 71.00 feet as described in the Deed to the City of Santa Ana, recorded April 15, 1960 in Book 5196, Page 381 of Official Records. Parcel 2 A non-exclusive easement for ingress and egress over the South 25 feet of the Westerly 325 feet of that portion of the land allotted to N. 0. Stafford and C, Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 4 10 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 890 10' 10" East 812.56 feet along the centertme of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06'40" East 397,90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89' 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centertine of said Me Clay Street; Thence North 0' 06'48" West 398.34 feet to the point of beginning, Parcel 3: The Westerly 175.00 feet of the Easterly 375.00 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago Do Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the l7thJudicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West San Bernardino Base and Meridian; Thence North 89' 10' 10" East 8 12.56 feet along the centertine of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence Sonth 0' 06' 40" East 397.90 feet to the Southeast comer of said land of Croddy Corporation; Thence South 89' 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 0' 06'48" West 398.34 feet to the point of beginning. 80A-51 Excepting therefrom, the South 21 feet of the North 71 feet thereof Parcel 4: A non-exclusive easement for ingress and egress over the South 25 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago Do Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast comer of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 890 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 0' 06'48" West 399.34 feet to the point of beginning. Excepting therefrom, the Easterly 375.00 feet. Parcel 5: A non-exclusive easement for ingress and egress, for sewer lines, public utilities and drainage and the maintenance of these items over the South 25 feet of the following described land: The Westerly 437 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerfine of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast comer of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 00 06'40" East 397.90 feet to the Southeast comer of said land of Croddy Corporation; Thence South 89' 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerfine of said Me Clay Street; Thence North 0' 06'4811 West 398.34 feet to the point of beginning. Assessor's Parcel Number: 011154-43 80A-52 Exhibit Bo. Affordability Restrictions on Transfer of Property Fgerllilff FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: City of Santa Ana Community Development Agency 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, CA 92702-1988 Attention: Housing Division Manager AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Address: 1440 East First Street, Santa Ana, California) THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the "Restrictions") are entered into by and between AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership ("Developer") and the City of Santa Ana, a charter city and municipal corporation (the "City"). RECITALS: A. Developer is the owner of that certain real property located at 1440 East First Street, Santa Ana, California (the "Property"), more particularly described in Exhibit A, which is attached hereto and incorporated herein by this reference. B. The City's Housing Opportunity Ordinance ("Ordinance") was originally adopted by the City Council on November 28, 2011 (Ordinance No. NS -2825), and is codified in Article XVIII.1 of the Santa Ana Municipal Code ("SAMC"). The Ordinance was amended by the City Council on September 1, 2015 (Ordinance No. NS -288 1), and on October 6, 2015 (Ordinance No. NS -2885). The Ordinance established standards and procedures to encourage the development of housing that is affordable to a range of households with varying income levels. Pursuant to SAMC section 41-1904(c), developers may pay an in -lieu fee in certain instances to satisfy the inclusionary requirements. These ftmds are deposited into the Inclusionary Housing Fund, as defined by SAMC section 41-1901, and are to be used to increase and improve the supply of affordable housing per SAMC section 41-1909. C. For the purpose of providing sixty-nine (69) units of housing that will be affordable to Extremely -Low, Very -Low and Low Income households ("Assisted Units"), the Developer and the City have entered into that certain Loan Agreement, dated on or about the date hereof (the "Inclusionary Loan Agreement") to which these Restrictions are attached as Exhibit G, which, along with all of its attachments, is incorporated herein by this reference (any A A LF46TITAM capitalized term that is not otherwise defined in these Restrictions shall have the meaning ascribed to such term in the Inclusionary Loan Agreement). D. In furtherance of the Inclusionary Housing Program guidelines, Developer has applied to the City for a loan with which to: 1. provide deeper affordability and construct the improvements to the Property, and 2. thereafter to maintain, operate and professionally manage the Project as decent, safe, sanitary and affordable rental housing. E. The City, on certain terms and conditions, desires to make such loan ("Inclusionary Loan") to Developer in order to make possible the rehabilitation and construction of the Project, thereby expanding the supply of decent, safe, sanitary and affordable housing. F. The Inclusionary Loan Agreement, Inclusionary Deed of Trust, and Inclusionary Promissory Note, dated concurrently herewith (collectively the "Inclusionary Loan Agreements") are entered into for the purpose of providing for affordable very low income residential rental units in the City of Santa Ana pursuant to the Inclusionary Funds regulations and guidance. NOW, THEREFORE, CITY AND OWNER COVENANT AND AGREE AS FOLLOWS: 1. Definitions "Affordable Housing" means the total housing costs paid by a qualifying household, which shall not exceed the fraction of gross income specified, as follows, in accordance with Sections 50052.5 and 50053 of the Health & Safety Code: Very Low -Income Households. Thirty (30) percent of the income of a household earning fifty (50) percent of the Orange County median income adjusted for family size appropriate for the unit. Low -Income Households. Thirty (30) percent of the income of a household carning seventy (70) percent of the Orange County median income for for -sale units, and thirty (30) percent of the income of a household carning sixty (60) percent of the Orange County median income for rental units, adjusted in either case for family size appropriate for the unit. In the event of a conflict between the fractions specified in this definition and those found in Sections 50052.5 and 50053 of the Health & Safety Code, the fractions specified by State law shall control. "Affordability Period" also referred to as "Term of Affordability", shall be fifty-five (55) years from date of issuance of Certificate of Completion. FORMT, "Affordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Extremely Low, Very Low and Low Income households, as promulgated by the California Tax Credit Allocation Committee (TCAC). "Agreement" means this Affordability Restrictions on Transfer of Property between the City and the Owner affecting real property. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the Inclusionary Funds. "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 for the conduct of City affairs. "Calendar Year" means each consecutive twelve (12) month period from January I to December 3 1. "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 Project Manager" shall mean the City Manager and/or his/her designee. "Close of Escrow" shall mean the date upon which the Inclusionary Loan Agreement and Inclusionary Deed of Trust recorded in the Official Records of the County. "Closing Statement" means the final statement of Owner's Escrow account for the purchase of the Property pursuant to the purchase contract. "County" means the County of Orange, California. "Developer" or "Owner" means AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership. "Extremely Low Income" means an adjusted income which does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. "Event of Default" has the meaning set forth in Section 20. 1. "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. FORMT11 "Hazardous Materials" means 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 M., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction products, household cleaners and office materials of the type and quantity ordinarily used in the normal construction, operation and maintenance of properties similar to the Project or (ii) small amounts of household mold to the extent promptly remediated upon discovery. 1'HCD11 means the California Department of Housing and Community Development (HCD) 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). "Inclusionary Deed of Trust" means the deed of trust encumbering the Property, in the form attached as Exhibit C to the Inclusionary Loan Agreement, to be executed by Owner pursuant to Section 5.13.2 in order to secure the Inclusionmy Loan Note. "Inclusionary Loan" means the loan to be made by the City to Owner in the principal amount of Two -Million, Six Hundred Thousand Dollars ($2,600,000.00) in accordance with this Agreement. "Inclusionary Promissory Note" means that certain promissory note in the original principal amount of $2,600,000 in the form attached as Exhibit D to the Inclusionary Loan Agreement, and to be executed by Owner in favor of City to evidence the obligation of Owner to repay the Inclusionary Loan through residual receipts as further described in the Inclusionary Promissory Note. "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (c) any obligation for the purchase of property or services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, of (ii) evidenced by a note or similar instrument, and (d) all recourse and all non- recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "Indemnitees" has the meaning set forth in Section 18.2. "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. 4 80A-57 "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). "Inclusionary Loan Agreement" means the Loan Agreement regarding the loan of Inclusionary funds between the City and the Owner, and any attachments thereto. "Inclusionary Loan Documents" means, collectively, the Inclusionary Loan Agreement, Inclusionary Promissory Note, Inclusionary Deed of Trust and this Agreement, 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 which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by TCAC. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HCD. Also may be referred to interchangeably in the Loan Documents as "Area Median Income" or "AMP. "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 City Project Manager in writing. "Permitted Encumbrances for the City Deed of Trust" means the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Project" means the construction of the Improvements upon the Property by Owner pursuant to this Agreement. "Project Budget" means the line -item budget for the Project attached as Exhibit G to the Inclusionary Loan Agreement, as modified from time to time in accordance with the Inclusionary Loan 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 1440 East First Street in 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. "Restricted Units" means the units restricted as affordable by the City Documents. "Scope of Work" means the detailed statement of the work to be performed by Owner on and to the Property pursuant to this Agreement, which is attached as Exhibit H to the Inclusionary Loan Agreement. FORAM* "Schedule of Performance" means the detailed schedule setting forth timeframes for certain tasks, which document is attached as Exhibit I to the Inclusionary Loan Agreement. "Senior Lender" means a commercial financial institution providing the Senior Loan or any other holder of the Senior Loan Note. "Senior Loan" means a loan from the Senior Lender concurrent to the Inclusionary Loan for payment of a portion of the acquisition and rehabilitation costs, and shall include any subsequent loan that refinances the initial Senior Loan, "Senior Loan Deed of Trust" means the first deed of trust securing the Senior Loan by encumbering the Property. "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. "Senior Loan Note" means the promissory note evidencing the Senior Loan from the Senior Lender. "Term of Affordability" the terms and conditions contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area inedian income for the Orange County, California PMSA, adjusted for household size, as published by TCAC. 2. Use of the Property. Owner covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property of any part thereof) that Owner, such successors, and assigns shall use the Property to provide affordable rental housing, for Very Low Income households, as provided in the Inclusionary Loan Agreement and these Restrictions 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 assign and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely -low, very low and low income households at rents affordable to such households for fifty- five (55) years from the effective date of the issuance of the Certificate of Completion. b. The Project shall consist of approximately sixty-nine (69) units of which there will be six (6) four-bedroom units, twenty-eight (28) three-bedroom units, and thirty-five (35) two-bedroom units (one being a manager's unit). The affordability mix for the Project is as follows: A LFOODYAWO Bedroom Size 30% AMI 40% AMI 50% AMI 60% AMI Manager's Unit Total Two Bedroom 29 0 4 1 1 35 Three Bedroom 4 0 17 7 28 Four Bedroom 1 0 0 5 6 Totals 34 0 21 13 1 69 C. Affordable rents shall be calculated and governed as provided by the California Tax Credit Allocation Committee (TCAQ. Rental increases shall be in conformance with federal and state law. d. 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 tables published by TCAC. 3.2 Rent Increases: A. On an annual basis, the City shall provide the Developer with the maximurn allowable schedule of incomes and rents (less utility allowance appropriate for the Restricted Units for the Property) which shall correspond to the maximum rent increase allowed by TCAC. B. Developer, its successors and assigns shall not charge rents for the Restricted Units in excess of the amounts set forth in the tables as adjusted from time -to -time by TCAC. The City Manager, or designee, shall notify Owner in writing of the adjusted allowable maximum incomes and rents as allowed by TCAC. C. In no event shall the rent charged to the tenant of a Restricted Unit be more than that amount of the rent as published by TCAC, as amended from time to time (currently $604 for a two-bedroom unit, $700 for a three-bedroom unit, and $780 for a four-bedroom unit). D. Utility allowances must be deducted from the Maximum Gross Monthly Rent. Utility allowances are deducted from rents using the following amounts set annually by the Housing Authority of the City of Santa Ana, provided, however, in lieu of the utility allowance published by the Housing Authority the Developer may elect to use the California Utility Allowance Calculator to the extent allowed by TCAC. 4. Miscellaneous Provisions: A. Owner shall adopt and include as part of its Management Plan (described in subsection G below), written tenant selection policies and criteria for the Units that meet the following requirements: (a) Are consistent with the purpose of providing housing for Extremely -Low, Very -Low and Low Income households; (b) Are reasonably related to program eligibility and the applicants' ability to FOODYNIF perform the obligations of the lease; (c) Reserved; (d) Provide for: (i) The selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (ii) The prompt written notification to any rejected applicant of the grounds for any rejection; (e) Provide first priority in the selection of qualified eligible tenants to households that are referred by the City; and (1) 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. Owner, the City shall cooperate to effectuate this provision prior to the initial renting, or upon occurrence of a vacancy, and the re -renting of any Restricted Units. B. Owner, 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 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. C. Any lease of any of the Units must be for not less than one year, unless by mutual agreement between the tenant and the Owner. Should the tenant and Owner 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 Owner. The lease may not contain any of the following provisions (in which references to "Owner" shall mean the Owner, its successors or assigns): (a) 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; (b) 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; (c) 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; (d) Agreement of the tenant that the owner may institute a lawsuit without FOOTIME notice to the tenant; (e) 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; (f) Agreement by the tenant to waive any right to a trial by jury; (g) 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 (h) 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. D. Owner, its successors or assigns, must adhere to state law requirements with regard to termination of tenancy. E. Owner shall maintain the improvements on the Property in compliance with all applicable housing quality standards and state and local code requirements and shall keep the Property free from any unreasonable accumulation of debris or waste materials. Owner shall also maintain in a healthy condition any landscaping planted on the Property. F. Owner 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, disability, sex, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Owner 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. G. Not later than the closing for the construction loan for the Project, Owner shall submit to the City Project Manager a Management Plan in a form that is acceptable including, but not limited to, the components listed below. Approval of the Management Plan must be obtained from the City Project Manager not later than the time for the issuance of a certificate of occupancy for the Project. Owner 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 City Project Manager, for the term of the income and rent restrictions contained in these Restrictions. The components of the Management Plan shall include: (a) Management Agent. Owner shall submit the name and qualifications of the proposed Management Agent. The City Project Manager shall approve or disapprove the proposed Management Agent in writing based on the experience and qualifications of the Management Agent. FOODIXIIN N Management Agreement. Owner shall submit a copy of the proposed management agreement specifying the amount of the management fee, and the relationship and division of responsibilities between Owner and Management Agent. (c) Annual Budget and Projected Cash Flows. Prior to the issuance of a certificate of occupancy for the Project, and annually thereafter not later than one hundred fifty (150) days after the close of each calendar year thereafter, Owner shall submit a projected operating budget and cash flow to the City Project Manager. The budget and cash flow shall be in a form that is reasonably acceptable to the City Project Manager. (d) Tenant Selection Policies. Owner shall include in the Management Plan the tenant selection policies in accordance with Section 4, above. H. If at any time the City determines that the units are not being managed or maintained in accordance with the approved Management Plan, City shall provide Owner with notice thereof which notice shall include a reasonable cure period not less than thirty (30) days. If the deficiencies have not been cured within the cure period provided in the City notice Owner shall change the management agent or the practices complained of, upon receipt of written notice from the City Manager. The City Manager may require Owner 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 Owner without penalty, upon thirty (3 0) days prior written notice, at the direction of the City Manager. Within ten (10) days following a direction of the City Manager to replace the management agent, the Owner shall select another management agent or make other arrangements satisfactory to the City Manager or designee for continuing management of the units. 1. The covenants established in these Restrictions and any amendments hereto approved by the City, and Owner 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 fifty-five (55) years. In its discretion, the City may defer repayment of the 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. J. Reserved. K. Records and Audits. a. Owner shall maintain the following general program records, and make them available for inspection by the City, the State or HUD: (1) records which demonstrate compliance with the Equal Opportunity and Fair Housing requirements outlined in these Restrictions, including: (A) 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 NSP funds; Foerlyxilo� (B) 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); (C) documentation and data on the steps taken to implement Owner's outreach programs to minority-owned and women -owned businesses to meet the minority outreach requirements of 24 CFR 92.350; (2) 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 date on which Owner obtained ownership of the Property; (3) any other reports issued by other monitoring agencies. b. All records pertaining to each calendar year of Inclusionary funds must be retained for the most recent five year period, except that for rental housing projects, records may be retained for five years after the project completion date; 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. Owner 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 City, the State, 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. C. If so directed by the City or HUI) upon termination of the Loan Agreement, Owner shall cause all records, accounts, documentation and all other materials relevant to the work to be delivered to the City or HUD, as depository. d. All records, accounts, documentation and other materials relevant to the Project shall be accessible at any time to the authorized representatives of the City, or HUD, on reasonable prior notice, for the purpose of examination or audit. e. The City shall perform an annual audit at the close of each calendar year in which these Restrictions are in effect. Owner shall reasonably cooperate with City in performing such audit. f. Owner shall permit the City to perform an Annual Physical Inspection of the Property with at least seven (7) days notice. Owner shall cooperate with this Inspection and shall take all steps necessary to quickly correct any code deficiencies identified during the Inspection, L. The City is the beneficiary of the terms and provisions of these Restrictions and the covenants herein, both for and in its own right and for the purposes of protecting the interests of the A A LF46 Ulu "I community and other parties, public or private, for whose benefit these Restrictions and the covenants running with the land have been provided. The City shall have the right if the covenants are breached, 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. M. The covenants and agreements contained herein shall run with the land and not be personal obligations of Owner. Upon the sale, conveyance or other transfer of the Property (a "Transfer") and the assumption of the obligations hereunder by a transferee, Owner's liability for performance shall be terminated as to any obligation to be performed hereunder after the date of such Transfer, N, The Loan Agreement and all of its attachments shall be enforceable by the City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Property, the City Note and the City Deed of Trust provide a means of enforcement by the City if Owner is in breach of its obligations hereunder and thereunder, including liens on the Property, deed restrictions and covenants running with the land. FOOMMIlp IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed on the date set forth at the beginning of this Agreement. ATTEST: Maria D. Huizar Clerk of the Council APPROVED AS TO FORM Sonia R. Carvalho City Attorney By: Ryan 0. Hodge Assistant City Attorney RECOMMENDED FOR APPROVAL Robert C. Cortez Deputy City Manager CITY OF SANTA ANA Gerardo Monet Acting City Manager [Signatures continue onfollowing page] FOODINT", DEVELOPER: AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership IN Lq4oI7Mfi Exhibit Co. Ak Trust Fog rl I i I Woo FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: Community Development Agency City of Santa Ana 20 Civic Center Plaza P.O. Box 1988 (M-26) Santa Ana, California 92702 Attn: Housing Division Manager INCLUSIONARY DEED OF TRUST AND ASSIGNMENT OF RENTS THIS ll*�CLUSIONARY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of Trust") made this _ day of February, 2017, by between AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership (the "Trustor"), , a (the "Trustee"), and the City of Santa Ana, a charter city and municipal corporation (the "Beneficiary"). Trustor, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the property located in the City of Santa Ana, County of Orange, State of California, described in the attached Exhibit A and more commonly known as 1440 East First Street, Santa Ana, California (the "Property"); TOGETHER with all the improvements now or hereafter erected on the Property, and all easements, lights, appurtenances and all fixtures now or hereafter attached to the Property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Property covered by this Inclusionary Deed of Trust; provided that so long as Trustor is not in default hereunder, it shall be permitted to control the Property in accordance with the requirements of that certain Inclusionary Loan Agreement entered into between the Trustor and the Beneficiary, dated concurrently herewith, which Agreement is on file with the Beneficiary as a public record; TOGETHER with the right, power and authority during the continuance of this Trust, to collect the rents, issues, and profits of the Property, reserving unto the Trustor the tight, prior to any default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the performance of any agreement under this Deed of Trust, to collect and retain these rents, issues and profits as they become due and payable; and, TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected, or hereafter to be erected, on the Property which are necessary to the complete and comfortable use and occupancy of such building or A LFOODYN1101 buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or finnished. in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner; and 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; TO SECURE to the Beneficiary (a) the repayment of the sums evidenced by a Promissory Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of Two Million Six Hundred Thousand Dollars ($2,600,000. 00) (the "Inclusionary Promissory Note"); (b) the performance of the covenants and agreements of Borrower contained in a certain Agreement as hereinafter defined; and (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of Trustor contained herein. TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS: I , The Agreement. This Deed of Trust is executed and delivered, along with the friclusionary Promissory Note and the Inclusionary Loan Agreement, to benefit the Property. A copy of said hiclusionary Loan Agreement is on file as a public record with the Beneficiary and is incorporated herein by reference (the "Agreement"). Trustor acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into the Agreement or Inclusionary Promissory Note secured by this Deed of Trust. 2. Truster's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security; that other than this Deed of Trust, the Security is not encumbered except for obligations secured by deeds of trust, or any other security agreement, to secure financing or refinancing for the purchase and rehabilitation of the Property. 3. Repayment of the Loan. Truster will promptly repay, when due, the principal loan amount, as required by the City Promissory Note secured by this Deed of Trust. 4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to the Senior Loan, but the City's Affordability Restrictions on Transfer of Property shall remain in first place except that the City's Affordability Restrictions on Transfer of Property shall be subordinated to Trustor's Senior Loan for acquisition, 5. Prior Mortgages and Deeds of Trust� Charges; Lien . Truster shall perform all of Truster's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Instrument, including Trustor's covenants to make payments when due (subject to all applicable notice and cure provisions). Trustor will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by Trustor making any payment, when due, directly to the payee thereof. Truster will promptly faraish to the Beneficiary all notices of amounts due under this paragraph, and in the event Trustor makes payment directly, Truster will promptly discharge any lien which has priority FOODIM11 over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof. 6. Hazard Insurance. Trustor will keep the Security insured by such insurance policies in such amounts and for such periods as called for in the Agreement. All insurance policies and renewals thereof will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lender and the Beneficiary as their interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums subject to the rights of any senior lender. In the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive 30 days advance notice of cancellation of any insurance policies required under this Section. Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds, subject to the rights of any senior lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance proceeds will be used to repay the loan secured by this Deed of Trust, with the excess, if any, paid to Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent within 30 days from the date notice is mailed by either of them to Truster that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Security or to repay the loan. If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of any senior lender. 7. Preservation and Maintenance of See . Trustor will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. Protection of the Beneficiary's Securit . If Trustor fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the Beneficiatys interest in the Security, including, but not limited to, default under the Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Beneficiary, at the Beneficiary's option, upon notice to Trustor, may make such appearances, disburse such sums and take such action as it determines necessary to protect the Beneficiary's interest, including, but not limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs. 80A-71 Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon, will become an indebtedness of Truster secured by this Deed of Trust. Unless Tiustor and the Beneficiary agree to other terms of payment, such amount will be payable upon notice from the Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of disbursement at the rate payable from time to time on outstanding principal under the Inclusionary Promissory Note unless payment of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate permissible under applicable law. Nothing contained in this paragraph will require the Beneficiary to insure any expense or take any action hereunder. 9. Inspectio . The Beneficiary may make, or cause to be made, reasonable entries upon and inspections of the Security upon reasonable prior notice during normal business hours; provided that the Beneficiary will give Truster reasonable notice of inspection. 10. Forbearance by the BeneficiM Not a Waiver. Any forbearance by the Beneficiary in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary will not be a waiver of the Berieficiary's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 12. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Beneficiary and Trustor subject to the provisions of this Deed of Trust. 13. Joint and Several Liability. All covenants and agreements of Truster shall be joint and several. 14� Notice. Except for any notice required under applicable law to be given in another marmer, (a) any notice to Trustor provided for in this City Deed of Trust will be given by certified mail, return receipt requested, addressed to Truster at 2082 Michelson Drive, Suite 306, Irvine, CA 92612, (b) any notice to the Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Housing Division Manager, or at such other address as the Beneficiary may designate by notice to Trustor as provided above, and (c) to Trustee at Notice shall be effective as of the date received as shown on the return receipt. 15. Governing Law. This Deed of Trust shall be governed by the laws of the State of California with venue in Orange County, 16. Severability. In the event that any provision or clause of this Deed of Trust or the City Loan Note conflicts with applicable law, such conflict will not affect other provisions of this Deed of Trust or the hiclusionary Promissory Note which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and the City Loan Note are declared to be severable. 80A-72 17, Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof 18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust or the Inclusionary Promissory Note secured by this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustor notice thereof specifying: (1) The breach; (2) the action required to cure such breach; (3) a date not less than 30 days from the date the notice is received by Trustor as shown on the return receipt, by which such breach is to be cured provided, however, that if such default is not reasonable susceptible to being cured within 30 days, Truster shall have a reasonable period to cure the defect so long as Trustor is diligently prosecuting the cure to completion; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also inform Trustor of Trustor's right to reinstate after acceleration and the right to bring a court action to assert the non-existence of default or any other defense of Truster to acceleration and sale. Notwithstanding anything to the contrary contained herein, a "default" shall not include any transaction not considered a "transfer' under Section 16.2 of the Loan Agreement. If the breach is not cured on or before the date specified in the notice or such longer period as provided above or in the Inclusionary Promissory Note or the Agreement, the Beneficiary, at the Berieficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; (b) 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 the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof-, (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which 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. Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of any default made or tendered by Trustor's limited partner shall be deemed to be a cure by Trustor and shall be accepted or rejected on the smile basis as if made or tendered by Trustor. FOODYAW The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. 19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the sums secured by this Deed of Trust, Truster will have the right to have any proceedings begun by the Beneficiary to enforce this Deed of Trust discontinued at any time prior to 5 days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of ajudgment enforcing this Deed of Trust if. (a) Trustor pays the Beneficiary all sums which would be then due under this Deed of Trust and no acceleration under the Inclusionary Promissory Note has occurred; (b) Truster cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by the Beneficiary and the Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attorneys' fees; and (d) Trastor takes such action as the Beneficiary may reasonably require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Security and Truster's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 21. Reconveyance. Upon payment of all stuns secured by this Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the Inclusionary Promissory Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. Request for Notic . Trustor requests that copies of the notice of default and notice of sale be sent to Trustee at the address set fortli in Section 14 above. 24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall have any personal liability under the Agreement, Inclusionary Promissory Note, and this Deed of Trust and any judgment, decree or order for payment of money obtained in any action to enforce the obligation of Trustor to repay the loan evidenced by such documents shall be enforceable against Trustor only to the extent of Trustor's interest in the Property. A A LFOO U1 0 M (Signatures on Following Page) Foerfym� IN WITNESS WHEREOF, Truster has executed this Deed of Trust as of the date first written above. AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership In r -M Lq461MM Exhibit Do. Inclusionary Promissory Note 80A-77 INCLUSIONARY HOUSING FUNDS PROMISSORY NOTE SECURED BY SUBORDINATED DEED OF TRUST TO THE CITY OF SANTA ANA, CALIFORNIA (1440 East First Street, Santa Ana, California) $2,600,000.00 February_, 2017 Santa Ana, California Principal Amount of Loan FOR VALUE RECEIVED, AMCAL 1440 Santa Ana Fund, L.P., a limited partnership ("Borrower"), hereby promises to pay to the CITY OF SANTA ANA, a charter city and municipal corporation ("City"), or order, a principal amount not to exceed TWO -MILLION, SIX HUNDRED THOUSAND DOLLARS ($2,600,000.00) or so much thereof as may be advanced by the City to the Borrower, due and payable with 3% simple interest by residual receipts over the fifty-five (55) year term, pursuant to the Inclusionary Loan Agreement (said "Agreement") between Borrower and the City dated concurrently herewith, which is incorporated herein by this reference. The Note Amount shall bear simple interest at the rate of 3% simple interest per annum, from the date of issuance of the Certificate of Occupancy. This loan is made pursuant to the "Housing Opportunity Ordinance In -Lieu Fee Program" or "In -Lieu Fees" with money funded through the Program as "Inclusionary Housing Funds". Any capitalized term not otherwise defined in this Note shall have the meaning ascribed to such term in the Agreement. The obligation of Borrower to City hereunder is subject to the terms of said Agreement, the Affordability Restrictions on Transfer of Property, Inclusionary Deed of Trust and this Note. Said documents are public records on file in the offices of the City, and the provisions of said documents are incorporated herein by this reference. This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and the Inclusionary Deed of Trust are sometimes collectively referred to herein as the "Loan Documents." The Loan Documents and the rights and responsibilities inure to the benefit of the City, Any capitalized term which is not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. This Note evidences the obligation of Borrower to the City for the repayment of the Inclusionary Loan of Inclusionary Funds attributable to the acquisition, development, adaptive reuse and construction of the Property, and related soft costs. This Note is payable at the principal office of City of Santa Ana — Community Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Attn: Housing Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful money of the United States. FOODYAW46 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: "Agreeme " means the Inclusionary Loan Agreement between the City and the Developer, and any attachments or amendments thereto. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the Inclusionary Housing Program, and the Inclusionary Funds. "Area Median Income" means the median income figures for Orange County as published by the California Department of Housing and Community Development (HCD). Also may be referred to as "AMI" herein. "Borrower" means AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership. "Calendar Year" means each consecutive twelve (12) month period from January I to December 3 1. "Inclusionary Loa ' shall mean the loan evidenced by this Note repayable to the City in accordance with the terms of this Note and secured by the Inclusionary Deed of Trust. "City's Percentage" with reference to the Residual Receipts, shall mean fifty percent (50%) of the total Residual Receipts from the Property as further described in Section 5 hereof. "Closing Costs" shall mean: G) 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 market place, 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 consumating such Refinancing, including, without limitation, loan fees, loan repayment charges, costs of title insurance premiums, escrow fees, recording fees and attorneys' fees. "Inclusionary Housing Prow " has the meaning set forth in the Recitals above. "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 from leased and/or subleased spaces and parking A LFOODYAWO 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 also includes any casualty insurance proceeds in excess of those used to restore the Property and any rental interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at the time cash proceeds (principal 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. "Housing Successor Agency Loan" means the loan made by the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency to the Developer in the original principal amount of $6,195,000. "Operating Expense " shall mean the sum of the following: (i) payments of principal and interest and all other charges relating to the Senior Loan(s); (ii) a property management fee not to exceed 8% of gross rents; (iii) Owner Administration Fee not to exceed 5% of gross rents; (iv) deposits into required reserves; (v) any deferred developer fee; (vi) all other actual, reasonable cash operating costs and expenses, calculated on an annual basis, that are directly attributable to managing and operating the Property, 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: (a) Depf eciation and amortization expenses shall not be considered Operating Expenses, except as otherwise provided herein. (b) 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 Orange County, California area. 3 FOODIMT461 (vii) 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 Agreement of Limited Partnership (the "Partnership Agreement"). "Inclusionary Deed of Trust" shall mean the Inclusionary Deed of Trust in favor of the City, securing the Inclusiotuary Loan, substantially in the form attached to the Agreement as Exhibit D, which is incorporated herein by this reference. "Extremely Low Income" means an adjusted income which does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adi . usted for household size, as published by HCD. "Low Income" means an adjusted income which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. "Inclusionary Assisted Units" shall mean those rental units purchased and rehabilitated on Eligible Properties which are subject to the term of affordability. "Inclusionary Funds" shall mean the money provided under the Inclusionary Housing Program for the construction of the rental units hereunder. "Propert ' shall mean that property located at 1440 East First Street, Santa Ana, California. "Refinancing" shall mean changing the then existing financing on the Property by, without limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or reducing the amount of the existing Senior Loan, paying off the existing Senior Loan and obtaining new Senior Loan, except for the payoff of the conventional lender's acquisition loan for the Property.. "Refinancing Proceeds" shall be disbursed as set forth in Section 6 hereof. "Residual Receipts" shall mean the Gross Revenues from the Property for each year, less deductions for Operating Expenses from the same building, applicable to each such year to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, or conveyance or lease of 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 or limited partner in the Borrower, or any interest by any individual or entity which holds an interest in any such general or limited partner in the Borrower, which brings the cumulative total of all such direct and indirect transfers, assignments and sales during the term of this Note to more than thirty-five percent (35%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a direct or indirect partnership interest thereafter. Sale includes a F4611IM461 sale in condemnation or under threat thereof. Sale does not include dedications and grants of casements to public and private utility companies of the kind customary in real estate development. Notwithstanding anything to the contrary contained herein, a "Sale" shall not include any transaction not considered a "transfer' under Section 13. "Senior Loan" shall mean any senior loan made to Borrower, for payment of Acquisition and/or Rehabilitation Costs, and shall include any subsequent loan that refinances said Senior Loan. "Term" the term for repayment of this Note shall mean fifty-five (55) years from the date of recording of the Deed of Trust securing the Note. "Tenn of Affordabilit " the term of affordability shall be fifty-five (55) years. "Very Low Incom " means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. 3. Loan Repayment. Borrower shall make payments to the City as provided in Sections 5 (Residual Receipts), 6 (Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment) of the Agreement. 4. Ooeratin2 Capital Improvement Loan. If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and the General Partner makes a loan to the Partnership, the reserves must be fully funded prior to payment of said loan. The outstanding loan balance will be reflected in the annual report. 5. Annual Loan Repayment/ Residual Receipts. a. Commencing on the date one hundred fifty (150) days after the close of the initial Calendar Year following the issuance of the Certificate of Completion and on or before the 150th day of each Calendar Year thereafter 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 or the City's Percentage of the Residual Receipts, as provided in this Section 5. b. Within one hundred fifty (150) days after the close of the initial Calendar Year following the Issuance of the Certificate of Completion and on or before the 150th day of each Calendar Year thereafter, the Borrower shall submit to the City an audited financial 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 an Inclusionary Loan payment then due. FOODIX46y c. Except as otherwise provided, the Borrower shall pay to the City the City's Percentage of the Residual Receipts as payment of principal. At least fifty percent (50%) of the Residual Receipts shall remain with the Borrower, with all Residual Receipts remaining with Borrower to the extent the Inclusionary Loan has been fully repaid. d. Borrower shall retain fifty percent of the Residual Receipts. The other percent (50%), the City's Percentage of the Residual Receipts, shall be divided with thirty percent (30%) to be applied to the Inclusionary Loan, and seventy percent (70%) to be applied to the payment of the Housing Successor Agency Loan. As Borrower repays its loans, the payment percentage applied to the remaining loans shall increase. c. The Residual Receipts payment shall be made not later than one hundred fifty (15 0) days after the close of the Calendar Year. Such payment shall be applied first to any late fees, then to reduce the principal balance of the loan. 6. Loan Repayment from Refinancin2 Proceeds. The Borrower shall make a loan payment to the City from every Refinancing that occurs during the term of this Note (other than refinancing of the conventional lender acquisition and/or construction loan) not to exceed the outstanding balance of principal on this Note, to the extent of the City's Percentage of the Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining on the Senior Loan; next, the amount necessary to pay any deferred developer fee in full; and next, the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds of which City Percentage shall be used thirty percent (30%) to repay the Inclusionary Loan, and seventy percent (70%) to repay the Housing Successor Agency Loan to the extent of the outstanding balance on this Note. At least fifty percent (50%) of the Refinancing proceeds shall remain with Borrower, with all remaining Refinancing proceeds remaining with the Developer to the extent the outstanding balance of the Note has been fully paid. Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Refinancing Proceeds are insufficient to repay the Loan in full. Loan Repavment from Sale Proceeds. The Borrower shall make a loan payment, not to exceed the outstanding balance of principal on this Note subject to Section 14 herein, to the City from any Sale that occurs during the term of the Inclusionary Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in full the balance remaining on the Senior Loan; next, the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds of which City Percentage shall be used thirty percent (30%) to repay the Inclusionary Loan, and seventy percent (70%) to repay the Housing Successor Agency Loan, and the amount necessary to pay any deferred developer fee in full, not to exceed the outstanding amount of principal due on this Note. At least fifty percent (50%) of the Sale Proceeds shall remain with Borrower, with all remaining Refinancing proceeds remaining with the Developer to FOOMMOOF the extent the outstanding balance of the Note has been fully paid. Such payment shall be due on the date of such Sale, and shall be applied to reduce the principal balance of the Loan. The City shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full, S. Accelerated Loan Pavinent. The full principal amount outstanding 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 13 hereof, unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in fillt the Inclusionary Loan, the City approves such sale and the purchaser assumes the balance of the Inclusionary Loan in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in full the hiclusionary Loan, the City approves such Refinancing and the Borrower remains obligated pursuant to the terms of this Note. b. In event of default (subject to any applicable notice and cure provisions) pursuant to any of the Loan Documents or the Senior Loan Documents. c. Any default (subject to any applicable notice and cure provisions by Borrower as to any other loan or loans by City to Borrower with respect to the Property; or d. The date that is fifty five (55) years after the date of execution of this Note. On that date, the City agrees to review the performance of the Property and consider in good faith any reasonable request by Borrower to modify the terms or extend the Tenn of this Inclusionary Note. 9. Prepavinen Borrower may prepay the outstanding principal balance under this Note, in whole or in part� at any time without penalty, however the Affordability Covenants and Restrictions still remain for the entire Affordability Period of fifty-five (55) years. 10. Lawful Money. Principal is payable in lawful money of the United States of America. 11. 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, due the City pursuant to this Note, and the balance, if any, to the payment of principal. FIJI �A-.. A L b. If any payment is not received by the City within fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; 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 the highest annual rate which may lawfully be charged and collected under applicable law on the obligation evidenced by this Note, 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 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 immediately corrected by Borrower notice to City. 12. Securit This Note is secured by the recorded Deed of Trust. 13. Acceleration by Reason of Transfer or Financing. a. In order to induce City to make the loan evidenced hereby, Borrower agrees that in the event of any transfer of 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, without prior demand or notice, to declare all surns 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 discretion and, if consent should be given, any such transfer shall be subject to this Section 13, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall not, however, release Borrower from any liability thereunder without the prior written consent of City. b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of 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 BorTower complies with the provisions of the Loan Agreement and the Affordability Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which Borrower is a general partner, or to a corporation or limited liability company that is wholly owned by the Borrower or its affiliates 8 FOOMMOOP 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 Inclusionary Loan shall be repaid to the City at the time of each Refinancing or partial Refinancing. Additionally, a "Transfer" shall not include any transaction not considered a "transfer' under Section 16.2 of the Loan Agreement, 14. Event of Default. Subject to the provisions of Sections 23 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 fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust, the Agreement, or the Affordability Covenants and Restrictions 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 Bon -ower fail to promptly commence such cure, and diligently and continuously prosecute same to completion); or (c) a default under the Senior Loan Deed of Trust that remains uncured after any applicable notice has been provided and the expiration of any applicable cure period therefore, if any, provided therein. 15. Remedies. Upon the occurrence 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 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 Deed of Trust. City shall also deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal shall bear interest at the Bank of America reference rate on the due date of the delinquent payment plus four percent (4%). 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. 16. Attorney Fees. If this Inclusionary Promissory 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. FOOMMOR 17. 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. 18. 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. 19. Non-recourse. The firclusionary Loan is a nornecourse obligation of the Borrower. Neither Borrower, nor its partners nor any other party shall have any personal liability for repayment of the Inclusionary Loan or for any other amounts under any of the documentation evidencing, securing or describing the Inclusionary Loan. The sole recourse of City under this Note and the Deed of Trust for repayment of the Inclusionary Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 20. Subordination. It is hereby expressly agreed and acknowledged by Borrower and City that the Deed of Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior Deed of Trust. 21. Notice of Default. a. Subject to the applicable cure periods set forth in Section 14 and subject to the further provisions of this Section 21, failure or delay by the Borrower to perform any term or provision of this Note constitutes a default under this Note. The Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. b. The City shall give written notice of default to the Borrower specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Except in the case of a monetary event of default, the Borrower shall not be in default so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be deemed by the City to be reasonably necessary to correct the default). 10 FOOMM46h d. Any failures or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. e. If a monetary event of default occurs under the terms of this Note or the Deed of Trust, prior to exercising any remedies thereunder City shall give Borrower written notice of such default. Borrower shall have a period of fifteen (15 Business Days after such notice is received within which to cure the default prior to exercise of remedies by City under this Note and the Deed of Trust. f If a non -monetary event of default occurs under the terms of this Note or the Deed of Trust, prior to exercising any remedies thereunder, City shall give Borrower notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall have such period to effect a cure prior to exercise of remedies by the City under this Note and the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (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 borrower shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by City. In no event shall City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within one hundred eighty (18 0) days after the first notice of default is given. 22. Insurance and Condemnation. In the event of any fire or other casualty to the Property or eminent domain proceedings resulting in condemnation of the Property or any part thereof, Borrower shall have the right to rebuild the Property, and to use all available insurance or condemnation proceeds therefor, provided that (a) such proceeds are sufficient to keep the Inclusionary Loan in balance and rebuild the Property in a manner that provides adequate security to City for repayment of the Inclusionary Loan or if such proceeds are insufficient then Borrower shall have funded any deficiency, (b) City shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or conderrmation proceeds for rebuilding under a construction escrow or similar arrangement, and (c) no material default then exists under this Note or the Deed of Trust. If the casualty or condemnation affects only part of the Property and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Inclusionary Loan in a manner that provides adequate security for repayment of the remaining balance of the Inclusionary Loan. 23. Force Maieure. 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; 11 FOODIX40FOO 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. 24. Assignments. The City, and the assignee of the City, shall have the right to assign this Note and the 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. 12 FIJI �A-' L This Inclusionary Promissory Note is hereby agreed to and executed on the date first set forth above. "BORROWER" AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership 0 UM 13 A LFOODIMOTI Exhibit Ee. Project =041M F46111MOT A LFOODYMN I -MAL PRO). LANOCCIMACOOI� Land Cost of Value 4,500,C.� Deconditlen 375,000 Site Reauddlation 175,000 Total 5,050,ODO Acculdthan Loan Faq 38,430 Acquisition Legal 19,375 Off -Site improvements lRd'aga Total AArpolattion Cost 251,19P Total Land Cost/ Acquisition Cost 5,301,198 Site Work 1,874,PCC Structures 1,RC0,677 Gd,e,al .,.I,Add,tS 759,49C Contractor Overhead 5��,707 Contractor hall, 526,707 Other General Liability In ... ance Olin, P,q,fO Total Ne. Construction I.e. 13,583,461 C,s'. Sup-M.a Total Architectural Cents 520,SSg Tonal Sursey & Engineering Cdnetruction Loan Interest 87g,689 Cleland.. Fee 1R.,879 Credit Enhancemen Read P,e.l,. 15,000 TcAos 157,188 171,148 Told & Recording S7,gC. Other: (Cl.sq, �.stc) 20,000 .,her Taal Chostructon Interest Fees 1,493,904 Leon Oragul.11.1 Fcd Credit unhancerrent/Appication Fee Tille & Rd.rd,h, 10,000 Tanned Insensate 15,000 Other: (Closing Costs) 2.,OC. other: SpeorM Total Permanent Financing Cost, Substotals Forward ��Jag�08 LEGA,fAdl `,, Lender Legal Pa[d by Applicant 75,000 Other: (Partnershe Legal) 150,C.0 Total Attanue, Costs 225,000 Real Relelet, C.,Itsli,ed Part Reserves (Spedurne Reserve 203,015 Other: (Transition kaserW) Total Reserve, Costs 203,015 Total Apposin.1 Costs 15,000 Total Contingent, Cost OMER Prgbjr0cXT§ TCAC/CDLAC ApplAllocatIon/sIonoterring Fees RL,542 Ensucamental Audit Ld,q2. Lose D.0.1,ron, rull't To. 1,322,457 Permit Processing Fees 786,398 Ca,it.1 Fee, MarkatIng 115,000 Furnishings 75,899 Matkat Study 23,150 .-flog/R.I.b.rrables 60,000 Set Cast Cnllnllnl 2Sq,4.. Other: Relocation 955,161 Other: lHard Costs CantfingancV) 71G,593 Other: Prearvelopment Interest/HoldIng Costs) 715,804 Other: other: Other: Other: Total Other Costs 5,180,724 SORTOTAL PROJECTOOST 27,1.$C47 .Wel ... I Overhead/Profit IRRSRCR Non Profit Partner Proflt 100,000 lProlect AdmInIstratic Book 122 A d 1, a1,1sd Isul, tT g. Other (Specify) T.tsl NedI.I., Costs 1,999,999 ITOTAL PROJECT COSTS 29,766,046 A LFOODYMN Exhibit Fee Scope of Work / Schedule of I a Im FOODTMOIO� SCOPE OF DEVELOPMENT The development is a 69 -unit affordable rental apartment community that will serve family households. The property address of the subject site is 1440 East First Street in the City of Santa Ana. The development site consists of approximately 2.16 acres. The project will contribute to improving the neighborhood and will provide much needed affordable family housing to the community. The units are affordable to households earning between 30% and 60% Area Median Income (AMI). The unit mix includes thirty-four (34) 2 -bedroom, twenty-eight (28) 3 -bedroom, and six (6) 4-bedroorn units. Of the 69 total units, 68 will be reserved for affordable households and 1 unit will be an unrestricted Manager's Unit. The two, three, and four-bedroom unit offer contemporary living for residents including balconies/patios, personal storage space, modern kitchens and bathrooms. To provide the most convenient living environment for families, all kitchens have garbage disposals, dishwashers and other amenities. The appliances will be energy efficient models to further reduce costs for residents. The project will achieve a Leadership in Energy and Environmental Design (LEED) Silver designation. The building design is contemporary and will utilize high standards of construction and sustainable design. The buildings are three stories in height and oriented towards First Street with the primary building lobby located at the ground level. The residential units will be located within six buildings, each constructed as a Type V three story tuck -under design. A community laundry building is also provided at the ground level. The resident parking includes garages and surface parking spaces. On-site amenities include a community room, outdoor gardens and amenity space including tot lots/play areas for children; outdoor seating, BBQ, and planters. The community room will be incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. The convenient location of the development will provide resident access to public transportation, parks, markets, a public school, medical clinic and retail outlets. FOOTITMOM Proposed Development Schedule: EVENT DATE Community Redevelopment and Housing Commission 3/28/2016 City Council 4/19/16 Site Acquired 8/30/2015 Begin Entitlements 8/3/2015 City Staff Approval of Entitlements 3/28/2016 9% Tax Credit Application 3/1/2017 9% Tax Credit Award 6/30/2017 Begin Construction Documents 7/1/2017 Construction Financing Secured 8/1/2017 Tax Credit Investor Secured 8/1/2017 Begin Construction/Building Permit Issued 11/1/2017 Construction Complete 5/1/2019 Leasing Process Begins 5/1/2019 Project Fully Leased 8/1/2019 FOOMM0.1; Exhibit G: Form of Residual Receipts =1 FOODYMOTI, EXHIBIT G FORM OF RESIDUAL RECEIPTS REPORT Community Redevelopment Agency of the City of Santa Ana Residual Receipts Report for the Year Ending Date Prepared Please complete the following information and execute the certification at the bottom of this form. Annual Project Revenu Please report Annual Project Revenue for the year ending on the following lines: Rent Payments (including Section 8 tenant assistance payments, if any) Interest Income (do not include interest income from replacement and operating reserves nor interest income on tenant security deposits) Additional Income (for example, vending machine income, tenant forfeited deposits, laundry income not paid to the residents' association) Total Annual Project Revenue (Add lines 1, 2, and 3) Operating Expenses' Please report Operating Expenses incurred for the year ending on the following lines: Operating and Maintenance Expenses Utilities Property Management Expenses and On -Site Staff Payroll Administrative Expenses Property Taxes Insurance A LFOODIME (5) (6) (7) $_ (8) S (9) $ (10) $_ Other Expenses Please list these expenses: Total Annual Operating Expenses for the Housing Project (12) (Add lines 5, 6, 7, 8, 9, 10, and 11) Net Operating Income (Subtract Line 12 from Line 4) (13) Do not include expense unrelated to the operation of the Rental Portion of the Proi . ect, such as depreciation, amortization, accrued principal and interest expense on deferred payment debt, or capital expenditures. Additional Cash Flow Payments Obligated First Mortgage Debt Service Payments (as approved by the Agency and (14) other parties that may have such approval rights) and Obligated Secondary Subordinate Debt Service Payments (as approved by the Agency and other parties that may have such approval rights) Scheduled Deposits to Reserves (as approved by the Agency) (15) Additional Payment Obligations (such as partnership management fees, deferred (16) developer fees, or repayments on loans to partners, as approved by the Agency to have priority over Residual Receipt Payment to the Agency) Total Additional Cash Flow Payments (Add lines 14, 15, and 16) (17) Residual Receipts for Year Ending $ (Subtract Line 17 from Line 13) Percentage of Residual Receipts to be Paid to the Agency (as shown in the (19) % Promissory Note by and between the Agency and Borrower dated Amount Payable to the Agency (Multiply Line 18 by Line 19) (20) The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the Promissory Note by and between the Agency and Borrower dated . If Line 20 is $0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check payable to and attach to this report. A 0 LFOOMMOT46 Exhibit He. Partnership Agreement FOODTMT� NO PARTNERSHIP INTEREi ST RE PRE SENTED BY THIS AGRE EMENT HAS BEEN REGISTERE D UNDER THE SECUICITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED, IN RE, LIANCE UPON EXEMPTIONS FOR SALES NOT INVOLVING ANY PUBIC OFFERING AND UPON THE REPRESENTATION THAT SUCH PARTNERSHIP INTERE STS WILL NOT BE TRANSFERRED UNLESS AN OPINION OF COUNSEL IS GIVEN, SATISFACTORY TO THE GENERAL PARTNER AND ITS COUNSEL, THAT REGISTRATION IS NOT RE, QUIRE, D. LIMITED PARTNERSHIP AGREEMENT OF AMCAL 1440 Santa Ana Fund, L.P. This Limited Partnership Agreement of AMCAL 1440 SANTA ANA FUND, L.P. ("Agreement") is entered into as of September 1, 2015 between AMCAL Multi -Housing Two LLC, a California limited liability company, as general partner ("Administrative General Partner"), and the parties signing at the end of this Agreement, as limited partners ("Limited Partner" or "Limited Partners"). The Partners agree as follows: 1. Formation. The Limited Partners and the General Partner hereby enter into a Limited Partnership ("Partnership") pursuant to the Uniform Limited Partnership Act of 2008, Corporations Code Section 15900 and following, ("the Act") and the rights and liabilities of the Partners shall be as provided under California Law, except as set forth below. 2. �Laine. The name of the Partnership is AMCAL 1440 SANTA ANA FUND, L.P., a California Limited Partnership. 3. Principal Place of Business, The principal place of business of the Partnership is 30141 Agoura Rd., Suite 100, Agoura Hills, CA 91301, 4. Purpos . The purpose of the Partnership shall be to purchase, hold, develop, manage, improve, lease, sell that certain real property, described on Exhibit "B" ("Partnership Property") and all related activities. 5, jerin, The Partnership shall begin when the Certificate of Limited Partnership is filed with the Secretary of State as required by the Act and shall continue until the first to occur of'. (a) December 31, 2045 (b) dissolution by mutual agreement of the General and Limited Partners (c) termination as hereinafter provided, or (d) by operation of law, Xnitlal LP Agveeinnt � 6�.ta A.. 0. 1. 1$�. 1. 15 80A-1 00 6. Capital Contributions. 6.1. initial capital. The Administrative General Partner shall contribute administrative services and not money or other property to the Partnership, The initial capital contribution of the Limited Partners shall be the total amount shown on Exhibit "A" lander the heading "Initial Contribution". The Administrative General Partner shall also hold Limited Partners' interests to the extent shown on Exhibit "A" hereto. 6.2. Additional Limited Partners, If all the Limited Partners do not respond to a call for additional funds when due or for additional funds pursuant to paragraph 6.8, the Administrative General Partner shall be authorized to admit additional Limited Partners. Such Limited Partners shall become parties hereto by executing such documents as the Administrative General Partner may require pursuant to which they agree to be bound by this Agreement, The admission of additional Limited Partners shall not cause a dissolution of the Partnership. 6.3. Capital Accounts, A "Capital Account" shall be maintained for each Partner. The Capital Account for each Partner shall be equal to such Partner's initial capital contribution increased by: (i) cash and the fair market value of any property subsequently contributed to the Partnership by such Partner (net of liabilities assumed or taken subject to by the Partnership, pursuant to the provisions of Section 752 of the Internal Revenue Code of 1986 "[IRC"]) and (ii) such Partner's allocable share of Partnership income and gains, including any tax-exempt income; and decreased by: (a) cash and the fair market value of property distributed to such Partner (net of liabilities assumed or taken subject to by such Partner pursuant to the provisions of IRC Section 752), (b) such Partner's allocable share of Partnership losses and (c) such Partner's allocable share of expenditures of the Partnership described in IRC Section 705(a)(2)(B); and, notwithstanding the above, further adjusted as required to comply with Treasur/ Regulations Sections 1.704-1(b)(2)(iv), including without limitation the provisions of subparagraphs (d), (c), (g), 0), (in), (n) and (r) thereof, All allocations for purposes of this Paragraph 63 shall be determined in accordance with the provisions of Article 7 (entitled "Profits, Losses and Distributions"). Each Partner shall have a single Capital Account which shall reflect all interests that Partner. 6.4. Limited Liability. Although a Limited Partner is personally liable to the Partnership for payment of his capital contribution, no Limited Partner will be bound by, or personally liable for the expenses, liabilities, or obligations of the Partnership, except to the extent of the Limited Partner's contribution to the capital of the Partnership and his share of the Partnership's undistributed profits; however, to the extent required by law, any Limited Partner receiving a distribution in return of all or a portion of his capital contribution shall be liable to the Partnership for any sum returned, plus interest, necessary to discharge Partnership liabilities to creditors whose claims arose before such return and before an amended certificate of limited partnership was filed reflecting such return of capital. 6.5. Role of Limited Partner. Except as otherwise provided in this Agreement or by law no Limited Partner shall take part in or interfere in any manner with the conduct or InitiAl 1,P Agr,�OMNlt , SI�ta M� 2 80A-101 control of the business of the Pannership or have any right or authority to act for or on behalf of the Partnership. 6.6. Interest. Interest earned on Partnership funds shall inure to the benefit of the Partnership, and Limited Partners shall not receive interest on funds contributed by them. 6.7. Right to Withdraw Contribution. No partner shall have the right to withdraw or reduce his contribution to the capital of the Partnership except as a result of the dissolution of the Partnership or as otherwise permitted by the Act, and no partner shall have the right to demand or receive property other than cash in return for his contributions to the Partnership, 6X Failure to Make Additional Capital Contributions. If the Partnership has insufflcient funds to pay the Partnership's obligations, the Administrative General Partner shall have the option of either advancing the necessary sums and thereafter being reimbursed from Partnership funds as they become available or levy a capital contribution assessment on all Partners in proportion to their respective partnership interests, If any such additional contributions are not received within 15 days after the Partners are notified of the election to assess, the additional capital would be raised by first giving the remaining partners the first right of refusal to buy the incremental funding of the partners who do not come up with the required surn. If this fail$ the, Administrative General Partner would attempt to get now partners to buy the incremental funding required. The now money contributed (hereinafter "New Money") will receive a 30% annual return and the New Money will be returned to the investor before previously contributed capital receives a return or is returned to partners. 6.9. Loans. Any sums in excess of the total capital contributions required by this Agreement, required to meet the costs of owning and operating the Partnership Property may be loaned to the Partnership by the Partners, either General or Limited, and may be repaid with interest not to exceed the legal maximum when the Partnership has funds available not required in the operation of the Partnership business. Any such loans shall not increase the lending Partner's interest in the Partnership. Profits, Losses and Distributions, 7.1. Definitions. For purposes of this Agreement, the following capitalized terms are defined as follows: 7.1.1. "Distributable Cash" is all cash of the Partnership (including without limitation cash from the sale of any or all of the Partnership property) less (i) the amount necessary for payment of all costs, expenses, obligations and liabilities of the Partnership then due (including any then due advances to the Partnership by the Partners), and (ii) the amount deemed necessary by the Administrative General Partner, in the exercise of its reasonable discretion, to establish a reserve for the payment of foreseen or unforeseen costs, expenses, obligations or liabilities of the Partnership. initial bV AgreeMeaL - Santa Ana 9.a 159.1 15 80A-1 02 The Partnership shall not make, or receive and retain, any distribution of assets or any income of any kind of the project except surplus cash and except on the following conditions: (1) All distributions shall be made only as of and after the end of a semiannual or annual fiscal period; (2) No distribution shall be made from borrowed funds, prior to the completion of the project or when there is any default under this Agreement or under the note or mortgage; (3) Any distribution of any funds of the, project, which the party receiving such funds is not entitled to retain hereunder, shall be held in trust separate and apart from any other funds;and (4) There shall have been compliance with all outstanding notices of requirements for proper maintenance of the project, 7.1.2. "Income", "gains", "losses", "deductions", and "credits" are the Partnership's income, gains, losses, deductions and credits, respectively, as finally determined for federal income tax purposes; provided, however, that in making the allocations of such items for purposes of capital account adjustments, the adjustments required byTreasury Regulations Section 1,704-1(b)(2)(iv)(g) shall be taken into account. 7.1.3. The "Accounting Period" of the Partnership will be each period commencing on the first day following the last day of the immediately preceding Accounting Period (which for the Partnership's first fiscal year shall be deemed to be the date of the commencement of the Partnership) and ending on December 31 (which shall also be the Partnership's fiscal year end). 7.1.4 "Mininium Gain" shall mean the taxable gain (whether taxable as capital gain or as ordinary income), which would be recognized by the Partnership if the nonrecourse debt of the Partnership were foreclosed upon and the Partnership's property securing such debt were transferred to the creditor in satisfaction thereof, but only to the extent of the excess of (a) the outstanding principal balance of such nonrecourse debt plus any accrued but unpaid interest thereon (whether or not added to principal) to the extent permitted by law, over (b) the adjusted basis of such property. 7.1.5. "Invested Capital" shall be the amount of capital contributed or deemed contributed to the Partnership by the Limited Partners pursuant to Paragraph 6.1 (entitled "Initial Capital). "itial LP Agreement - Santa Me 9.1,159.1,15 80A-1 03 7.1.6. "Invested Capital Balance" shall be the amount of a Partner's Invested Capital, plus the amount of any additional capital contributed by such Partner and reduced by the amount of cash distributed to such Partner pursuant to any provision of Paragraph 7.10 (entitled "Distributions of Cash from Operations"), Paragraph 7.11 (entitled Distribution of Cash from Capital Event) and subparagraph 113.3. 7.2. Allocation of Losses. For all Accounting Periods on a cumulative basis, except as otherwise specifically provided in this Agreement (including without limitation the provisions of Paragraphs 7.5 [entitled "Minimum Gain"], 7.6 [entitled "Recourse Debt Loss Allocation"]), 7.8 [entitled "Qualified Income Offset"], 7.12 [entitled "Allocations for Contributed Property; IRC Section 754 Adjustments") and 7.15 [entitled "Revaluation Adjustment"]) (collectively such Paragraphs 7,5, 7.6, 7.8, 7.12 and 7.15 allocations shall be referred to as the "Required Allocations"), all losses (including all expense items separately stated on the Partnership's tax return) of the Partnership shall be allocated to the Partners in proportion to their then Partnership's Interests as set forth on Exhibit "A". 7.3. Allocation of Profits, ror each Accounting Period, except as otherwise specifically provided in this Agreement (including without limitation the provisions of Paragraphs T5 [entitled "Minimum Gain"], 7.7 [entitled "Allocation of Ordinary Income"], 7.8 [entitled "Qualified Income Offset"], 7.12 [entitled "Allocations for Contributed Property; IRC Section 754 Adjustments"] and 7,15 [entitled "Revaluation Adjustment"]), all profits and gains (collectively "profits") (including all income items separately stated on the Partnership's tax return) of the Partnership shall be allocated to the Partners as follows: 7.3. 1. First, if profits arise from the sale or other disposition of property with respect to which an investment tax credit was previously claimed, profits equal to the amount by which the basis of such property was reduced as a result of such claimed investment tax credit shall be allocated among the Partners in the same manner as such investment tax credit was previously allocated; 7.3.2. Second, to the same Partners, in the same amounts and in the same order of allocation as losses were theretofore allocated pursuant to Paragraph 7.2 (entitled "Allocation of Losses") and the Required Allocations, less the amount, if any, of profits previously allocated under this subparagraph 73.2 and/or the Required Allocations; and 7.3.3, Thereafter, to the Partners in proportion to their then Partnership Interests as set forth on Exhibit "A". 7.3.4, Notwithstanding anything to the contrary contained in this Agreement and except as provided in subparagraph 7.5.2 and T8.1, in the event any profits from the sale or other disposition of all or any portion of the Partnership's assets constitute interest income (including "imputed interest"), such interest income, for each year, shall be allocated among the Partners pro rata based upon the amount of deferred principal proceeds (exclusive of "imputed interest") received by each of the Partners pursuant to Paragraph 7. 10 (entitled "Distributions of Xn�tial LP Agteement - Santa Ana 9.1.159.1.15 5 80A-1 04 Cash from Operations"), Paragraph 7.11 (entitled Distribution of Cash from Capital Events) and subparagraph 11. 3.3. during each such year, 7.4. Allocation of Credits. All income tax credits of the Partnership shall be allocated in accordance with the ratio in which the profits of the Partnership are allocated (or would be allocated) among the Partners pursuant to Paragraph 73 (entitled "Allocation of Profits"), for the Partnership's taxable year during which the property which gives rise to the income tax credit is placed in service, regardless of whether the Partnership has a profit or a loss for such taxable year, However, if the ratio in which the Partners divide the profits of the Partnership changes during the taxable year of the Partnership in which such property is placed in service, the ratio effective for the date on which the property is placed in service shall apply. To the extent that any income tax credits allocated to the Partners ate subject to recapture, such recapture income shall be allocated to the Partners to whom such tax credits were previously allocated. 7.5. Minimum Gain. Notwithstanding any other provision of this Agreement to the contrary and with a priority allocation pursuant to Treasury Regulations Section 1.704-1 [b][4]fiv] [e]: 7.5.1. The Limited Partners shall not be allocated loss or deduction (or items thereot) attributable to nonrecourse debt which is secured by Partnership Property if such allocation would cause the sum of the deficit capital account balances of the Partner receiving such allocation (increased by the additional capital contributions such Partner is obligated to make pursuant to Paragraph 6.1 [entitled "Initial Capital"]) to exceed the Minimum Gain (determined at the end of the Partnership's taxable year to which such allocation relates) a Limited Partner's allocable share of the minimum gain shall be equal to the product of (a) the Minimum Gain, times (b) such Partner's then Partnership Interest. 7.5.2. The Partners with deficit Capital Account balances resulting in whole or in part from allocations of loss or deduction (or item thereof) attributable to nonrecourse debt which is secured by Partnership property shall, to the extent possible, be allocated income or gain (or item thereol) until the sum of such deficit Capital Account balances equals the Minimum Gain, 7.5.3. For purposes of computing the sum of the Partners' deficit Capital Account balances, if any property (including cash) is held by the Partnership at the end of the Partnership taxable year and there is a reasonable expectation that such property will be distributed to a Partner (other than in liquidation of the Partnership) prior to a corresponding increase in Stich Parincr's Capital Account, such property shall be treated as having been distributed to such Partner on the last day of such taxable year, 7,5A, The Minimum Gain shall be reduced by the cost of any capital improvements to be made to the subject property and the amount of any principal payments to be made with respect to the non recourse debts secured by such property to the extent there is a Initial LP Agreement , Santa Me 9.1.159 1.15 80A-1 05 reasonable expectation that such improvements or payments would reduce the Minimum Gain below the sum of the deficit Capital Account balances. 7.6. Recourse Debt Loss Allocation. The allocation of loss or deduction (or items thereof) not attributable to nonrecourse debt which is secured by Partnership property shall not be made to a Partner if such Partner has a deficit Capital Account balance. Any such loss shall be. allocated first among the Partners with positive Capital Account balances (and among them in proportion to their then positive Capital Account Balances) and then to the Administrative General Partner (and among them in proportion to their then respective Partnership Interests). Furthermore, losses attributable to nonrecourse liabilities of the Partnership where a Partner has economic risk of loss shall be allocated as required pursuant to Treasury Regulations Section 1.704-1(b)(4) (iv)(g). 7.7. Allocation of Ordinary Income. Notwithstanding anything to the contrary contained herein, any gain which is taxable as ordinary income as a result of depreciation or cost recovery taken by the Partnership shall be allocated among the Partners in the proportion that depreciation or cost recovery deductions were previously allocated among the Partners. 7.8. Qualified Income Offset. Notwithstanding anything to the contrary contained herein, allocations of profits, gain and losses to the Partners shall be made in a manner to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d). It is the Partners' intent that the following provisions, to the extent permitted by Treasury Regulations Section 1.704-1(b)(2)(ii)(d), shall not affect (a) losses or deductions (or items thereof) attributable to nonrecourse debt which is secured by Partnership property and/or (b) the priority allocation, if any, pursuant to subparagraph 7,5.2, In furtherance thereof, the following provisions shall apply to the extent required pursuant to the provisions of Treasury Regulations Section 1.704-1 (b)(2)(ii#)� 7XI. Losses shall not be allocated to any Partner if such allocation would, together with any decrease (and increase) of such Partner's Capital Account pursuant to the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6), cause or increase a deficit balance (in excess of any limited dollar amount of such deficit that such Partner is obligated to restore which shall include the amount of any Partner's share of minimum gain as provided by the provisions of Treasury Regulations Section 1,704-1[b][4][iv](fl) in such Partner's Capital Account as of the end of the Partnership's taxable year to which such allocation relates, A Partner's Capital Account adjusted as provided by this subparagraph 7.8.1 (including any obligation to restore any deficit) shall be referred to as the "Adjusted Capital Account". 7.8.2. Any losses not allocable to a Partner pursuant to the foregoing subparagraph shall be allocated to such Partners who have positive Adjusted Capital Accounts in proportion to their respective positive Adjusted Capital Accounts, with any losses in excess of such positive Adjusted Capital Accounts, being allocated to the Administrative General Partner (and among them in proportion to their then respective Partnership Interests. 7.8,3. If a Partner unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulations Section 1,704-1(b)(2)(ii)(d)(4), (5) and/or (6), Initial in Ag�aement Santa �a 9.1.159,1.15 7 80A-1 06 then such Partner will be allocated items of income and gain in an amount and manner sufficient to eliminate any deficit balance in such Partner's Adjusted Capital Account as quickly as possible. 7.9. IRC Section 704 Modifications. If the General Partner receives the written opinion of tax counsel to the Partnership that the allocations of income, gain, loss, deduction or credit (or items thercoo would not fully conform to IRC Section 704(b), the Administrative General Partner is dirccted to make such allocations and/or amendment to this Agreement as advised by such tax counsel but only so long as none of the Partners would be materially adversely affected thereby, A Partner shall be deemed to be "materially adversely affected thereby" only if the effect of such allocation or amendment would be to cause such Partner to receive Distributable Cash in a manner inconsistent with the Partners' intentions as evidenced by this Agreement. It is the further intent of the Partners that the Administrative General Partner shall cause, to the extent permitted pursuant to the provisions of Treasury Regulations Section 1,704-1(b), items of income, gain, loss and deductions not required to be allocated in accordance with the Required Allocations to be allocated among the Partners to minimize the differences between the allocations provided by Paragraphs 7.2 (entitled "Allocation of Losses") and 7.3 (entitled "Allocation of Profits") and the allocations pursuant to the Required Allocations. Any allocation made pursuant to this Paragraph shall supersede any allocation otherwise provided in this Agreement and no approval of any Partner shall be required. 'rho Partners agree to promptly execute any amendment to this Agreement pursuant to the provisions of this Paragraph and upon failure to do so, the Administrative General Partner, as the Limited Partners' attorney-in-fact, is authorized to execute any such amendment on behalf of the Limited Partners. 7,10. Distribution of Cash from Sales/Refinance. Except as required under paragraph 7.10.9 and pursuant to subparagraph 113.3, for each Accounting Period, Distributable Cash shall be distributed to the Partners as follows: 7.10,1. First, to payment of interest on partner's loans (if any); 7.10.2, Second, to payment of the principal of partner's loans (if any); 7.103. Third, to the return of "New Money" contributed pursuant to paragraph 6.8 (if any); 7.10.4. Next to payment of a 30% return on the New Money calculated from the date contributed until the date returned; 7.10.5. Next, to the Original Partners (and annong them in proportion to their then respective Invested Capital Balances) until each Partner has received an amount of cash equal to the amount of his then Invested Capital Balance; 7.10.6. Next, to the Limited Partners until the Limited Partners have received an overall annualized return of 18% (including previous distributions from operations); TaIiLi.l LP Ag"��t , $..ta . 9.1.159.1.15 W 80A-1 07 7.10.7 Next, to the Administrative General Partner until the Administrative General Partner receives a distribution of 10% of the sum of 7,10,6 and 7.10.7, 7.10.8 Thereafter, to the Limited and Administrative General Partner simultaneously in the ratio of 90/10 respectively, 7,10,9, Notwithstanding anything to the contrary contained in this Agreement, if any Distributable Cash constitutes interest income received in connection with the sale or other disposition of all or any portion of the Partnership's assets (including "imputed interest"), cash equal to such interest received by the Partnership shall be distributed, during each year, among the Partners in the same ratio as the principal amount of such installment sale is distributed to the Partners during such year and such distribution shall not be treated as a distribution of Distributable Cash pursuant to subparagraphs 7.10.3 and 7.10,4; 7.10.1 O� Distribution of Cash from -0 0-Woerations. All periodic Distributions from Operations will be made in accordance with the partners interests in the partnership per Exhibit A, Column I until the Limited Partners have received a 9% cash on cash return. The Partnership is authorized to execute a Note and Mortgage in order to secure a loan to be insured by the Secretary of Housing and Urban DevQlopment and to execute a Regulatory Agreement and other documents required by the Secretary in connection with such loan. Any incoming general partner shall, as a condition of receiving an interest in the Partnership, agree to be bound by the Note, Mortgage, and Regulatory Agreement and other documents required in connection with the FHA insured loan to the same extent and on the same terms as the other general partners. Upon any dissolution, no title or right to possession and control of the Project, and no right to collect the rents therefrom, shall pass to any person who is not bound by the Regulatory Agreement in a manner satisfactory to the Secretary, 7.10.11 Next, the Administrative General Partner will receive a distribution of 10% of the sum of 7. 10.10 and 7. 10.11. 7.10.12Thereafter, in the ratio of Exhibit A, Column 2. 7,11, Allocations for Contributed Property; IRC Section 754 Adjustments, If any Partner contributes any property to the Partnership, gain or loss with respect to such property on the sale or other taxable disposition of such property and the depreciation or cost recovery deductions for such property shall be allocated to the Partners as required in IRC Section 704 (c). To the extent required pursuant to Treasury Regulations Section 1.704-1 (b) (2) (iv) (m), the Partnership gain or loss, with respect to a Partner for whom the provisions of IRC Section 734 (b) or Section 743 (b) are applicable, shall be allocated in accordance with such provisions. Initial LP AgrOamant - SanLk Ana 9.2.159,1.15 Lq4617X M146 7.12. Identity of Distributees. Distributions shall be made only to persons who, according to the books and records of the Partnership, are the owners of record of partnership interest on a date to be determined by the Administrative General Partner. Neither the General Partners nor the Partnership shall incur any liability for making distributions in accordance with the preceding sentence, whether or not the General Partners has knowledge of notice of any transfer of ownership of any partnership interests, 7.13. Sharing Between Transferor and Transferee. If an interest in the Partnership is nunsferred, the income, gains, losses and deductions allocable to the interest transferred for the Accounting Period during which the transfer occurred will be allocated between the transferor and transferee of the interest in proportion to the time during the Accounting Period that the interest was owned by the transferor and transferee, Credits shall be allocated to the party who owned the interest at the time that the property giving rise to the credit was placed in service, Each transferee will be credited with the capital account of the transferee's transferor. If a transferor transfers less than all of the transferor's interest in the Partnership, the capital account will be allocated in proportion to the fraction of the interest respectively transferred and retained. 7.14. Revaluation Adjustment. 7.14.1. The Administrative General Partner, upon advice of the Partnership's tax counsel that the Partnership is authorized pursuant to the provisions of Treasury Regulations Section 1.704-1(b) (2)(iv)(f) and that it is in the Partners' interest to do so, shall cause an increase or decrease in the Partners' Capital Accounts to reflect a revaluation of Partnership property (including intangible assets such as goodwill) on the Partnership books. Any such revaluation shall be made strictly in compliance with the provisions of Treasury Regulations Section 1,704-1(b)(2) (iv)ft including without limitation: (a) such adjustments shall (i) be based on the fair market value of Partnership property (as agreed to by the Partners (as hereinafter provided) and taking IRC Section 7701 [g] into account) on the date of adjustment and (ii) reflect the manner in which the unrealized income, gain, loss or deduction inherent in such property (that has not been previously reflected in the Capital Accounts) would be allocated among the Partners if there were a taxable disposition of such property for its fair market value at the date of adjustment; (b) the Capital Accounts shall be adjusted in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization gain or loss (all as computed for book purposes) with respect to such property following the date of adjustment; and (c) the Partners' shares of depreciation, depletion, amortization, gain or loss (all as computed for tax purposes), with respect to such property, shall be determined so as to take account of the variation between the adjusted tax basis and book value of such property in the same manner as under IRC Section 704(c) following the date of adjustment, 7.14.2. In accordance with the provisions of Treasury Regulations Section 1,704-1 (b)(2)(iv)(g), the arnount of book depreciation, depletion or amortization, for a period, with respect to any Partnership Property, is the amount that bears the same relationship to the book value XnitA81 W AgtOeMent - S&nta AnA 9.1.159.1,15 3.0 80A-1 09 of such property as the depreciation (or cost recovery deduction), depletion or amortization computed for tax purposes for such property, for such period, bears to the adjusted tax basis of such property. 7.14.3. For purposes of the foregoing, except as herein- after provided, the fair market value of any such Partnership Property shall be equal to the amount determined by the General Partner as set forth in a written notice delivered by the Administrative General Partner to the Limited Partners (the "Notice"), Notwithstanding the foregoing, if those Limited Partners ("Dissenting Limited Partners") owning a majority of the Pailnership Interests owned by all the Limited Partners object in writing to such fair market value within 10 days of delivery of the Notice, then the fair market value of such property shall be determined by the mutual agreement of the Dissenting Limited Partners and the Administrative General Partner. If they cannot so agree, then the fair market value shall be determined by a qualified appraiser selected by the mutual agreement of the Administrative General Partner and the dissenting Limited Partners (and if they are unable to agree on such selection, the appraiser shall be selected by the American Arbitration Association or any successor organization thereto), All appraisal costs shall be paid by the Partnership. 8. Management. 8.1. Authority of General Partners. The Administrative General Partner and the Managing General Partner, if so named at this time, shall each have complete power of management of the Partnership and shall have authority to act on behalf of the Partnership in all Partnership matters including without limitation the power to execute notes, deeds of trust, contracts and leases; to assume direction of business operations and the Administrative General Partner and the Managing General Partner, if so named at this time, shall each have all rights, powers and authority generally conferred by law or necessary, advisable or consistent with accomplishing the purpose of the Partnership as set forth in Article 4 of this Agreement, During the operation phase the Managing General Partner shall be primarily responsible for the Partnership's operations. The Managing General Partner when entered into the Agreement shall perform other tasks and duties as may be required for non-profit general partners in order to maintain property tax abatement under the welfare exemption of the California Revenue and Tax Code and will perform all duties to qualify as a Managing General Partner under rule 140.1 adopted by the Board of Eqiialization each ye:ar. 8.2. Restrictions. The Administrative General Partner shall have no authority to (a) do any act which would make it impossible to carry on the ordinary business of the Partnership; (b) do any act in contravention of this Agreement; (c) possess Partnership Property or assign the right of the Partnership in any Partnership Property for other than a Partnership purpose; (d) obligate the Partnership as a surety or guarantor, endorser, or accommodation endorser for any other person or firm; or (c) make an assignment of the Partnership assets for the benefit of creditors. Initial IX Agreement � Santa "a 9.1.159.1,15 80A-1 10 8.3. Approval Rights. The Limited Partners shall have the right, by vote of more than 50% of the Limited Partners' Interests, as shown on Exhibit "A", to approve the following matters affecting the basic structure of the Partnership: 8.3.1. The dissolution and winding up of the limited partnership, 83.2. The merger of the limited partnership or sale, exchange, lease, mortgage, pledge, or other transfer of, all or a substantial pail of the assets of the limited partnership other than in the ordinary course of its business, 8.3.3. Incur indebtedness by the limited partnership other than in the ordinary course of business. 8.3.4. A change in the nature of the business. 8.3.5. Transactions in which the General Partners has an actual or potential conflict of interest with the limited partners or the partnership. 8.3,6. The removal of a general partner, 8.3.7. An election to continue the business of the Limited Partnership other than under the circumstances described in subparagraph 83.9 or 8.3.10, 8.3.8. The admission of a general partner other than under the circumstances described in subparagraph 83.9 or 83. 10, subject to the unanimous vote requirement of paragraph 11.6. 83.9. The admission of a general partner or an election to continue the business of the limited partnership after a general partner ceases to be a general partner other than pursuant to subdivision (b), (c) or (d) of Section 15642 of the Act whore there is no remaining or surviving general partner, subject to the unanimous vote requirement of paragraph 11.6 8.3.10,The admission of a general partner or an election to continue the business of the limited partnership after the general partner ceases to be a General Partner pursuant to subdivision (b), (c) or (d) of Section 15642 of the Act where there is no remaining or surviving general partner, subject to the unanimous vote requirement of paragraph 11.6 All other matters are within the discretion of the Administrative General Partner and the Limited Partners shall have no right to vote on those matters, 8A. Meetings of Partners. Meetings of Partners shall be held at the principal place of business of the Partnership. Meetings shall be held only when called by either the Administrative General Partner or by Limited Partners representing more than 10% of the Limited 1zlitial LP Agreeme�t - Sa�ta M& 9�1 159.1.15 12 80A-1 11 Partners' Interests, as shown on Exhibit A. Meeting notices and procedures shall be in conformity with California Corporations Code Section 15637, 8.5 Power of Attorney. The Limited Partners hereby irrevocably constitute and appoint the Administrative General Partner as his attorney to make, execute, acknowledge, and record any instrument which may be required by law to be filed by the Partnership, and any and all deeds, leases, deeds of trust, loan applications, promissory notes, loan agreements, assignments of lease, or other instruments or documents which the Administrative General Partner deems appropriate or necessary to carry out the purposes of this Agreement. The foregoing power of attorney shall survive the delivery of any assignment by a Limited Partner of the whole or any portion of his limited partner's interest, and any assignee of a Limited Partner hereby constitutes and appoints the Administrative General Partner as his attorney in the same manner and with the same force as if such assignee had executed this Agrecirient, 8�6. Other Activities. The Administrative General Partner shall devote so much of its time and attention to the Partnership business as it deems necessary or advisable under the circumstances. Any partner, General or Limited, may engage in or possess an interest in other partnerships and other business ventures of every nature and description and neither the Partnership nor the Partners shall have any right in such independent ventures or to the income or profits derived therefrom. Neither the General Partners or any Limited Partner shall be obligated to present any particular investment opportunity to the Partnership, even if the opportunity is of a character which, if presented to the Partnership, could be taken by the Partnership and the Partner receiving the opportunity shall have the right to take it for his or her own account or to recommend it to others. The fact that a Partner is employed, or is directly or indirectly interested in or connected with any firm or corporation employed by the. Partnership to perform a service, shall not prohibit the General Partners from employing such person, firm or corporation, or from otherwise dealing with him or it, Neither the Partnership nor the Partners shall have any rights in or to any income or profits derived from such employment, nor shall such employment change the status of the partner as a Limited Partner hereunder, 8.7. Scope of Authority. Except as herein set forth, the Administrative General Partner shall have the right to cause the Partnership to enter into transactions with other persons, firms or entities with which the Administrative General Partner is affiliated, and to receive compensation, directly or indirectly through such affiliated corporation or other persons, for services rendered in connection with the Partnership from any source or transaction. 8.8. Limitation on Liability. The Partners acknowledge and agree that it is their intent that the General Partners shall not be liable, responsible or accountable in damages or otherwise, to any third person nor to the Partnership, nor to the other Partners for any loss, liability, obligations, penalties, actions, judgments, proceedings, damages, costs or expenses of any kind or nature whatsoever, including without limitation, all costs and expenses of defense, appeal and settlement, in any way relating to or arising out of or alleged to relate or arise out of any action or inaction on the pail of the Partnership or the General Partners, except for the willful misconduct, gross negligence or reckless disregard by the General Partners of its duties, The Partnership shall J�ieial L15 Agreement - 8dntU Ma 9.1-189.1�15 13 80A-1 12 indemnify the General Partners and hold it harmless from any of the foregoing, The General Partners is hereby authorized to withhold distributions if they determine in their sole discretion that such funds should be held as a reserve for indemnification, 8.9. Reimbursement of Expenses. The Administrative General Partner shall be entitled to reimbursement for all legal and auditing fees and expenses of agents and advisors, costs of insurance, and the cost of preparing the Partnership's tax returns, The Administrative General Partner shall also be entitled to reimbursement from the Partnership for direct and specific project expenses, overhead and administration costs, which shall include expenses connected with the distribution to and communication with Partners. The Administrative General Partner shall be entitled to a fee equal to 5% of the gross annual revenues as an asset/property management fee. In addition an affiliated company of the Administrative General Partner will act as a real estate broker and will receive a commission not to exceed I% of the price on the purchase and on the sale of the property, No Limited Partner shall be entitled to any share of any such sums paid to the Administrative General Partner or its affiliate. 8.10. Administrative and Development Fees. The General Partners shall not be entitled to any compensation for time, labor or overhead, except as specifically provided for in this Agreement. 9. Transferability of Partners' Interest. 9.1, Permitted Transfers. The interest of a Partner may be sold or transferred only: (a) to an entity in which the transferring Partner owns a 5 1 % or greater interest; (b) to the Partnership or to any Partner; (c) by testamentary disposition or by gift to a Partner's spouse or issue or to a trust fur such spouse or issue; (d) upon the sale of a Limited Partnership interest to a non partner, subject to the provisions of Paragraph 9.2. 9.2. Sale of Limited Partnersbip Interest. Except as set forth in Section 9.1.1, 9,2.2 or 9.2.3, the interest of a Partner in the Partnership only in its entirety, and on the following conditions. Any attempted transfer to any other person, including a transfer by operation of law, shall be void. 9.2.1, If any Partner ("Selling Partner") receives a bona fide offer to purchase all or any part of his Partnership interest, which offer the Selling Partner wishes to accept, the Selling Partner shall immediately notify the other Partners ("Remaining Partners") of the offer. The offer shall be communicated as provided in Paragraph 13 and shall include, the terms and conditions of the offer, the name of the person making the offer, the date on which the offer expires, and all other relevant information concerning the offer. Each Remaining Partner shall have 20 days after receipt of the offer, to inatch the price in the offcr by giving notice in writing to the Administrative General Partner specifying how much of the Selling Partner's interest he wishes to purchase, 1�itial 1,11 Aqrci�e�t � SI�t� An� 9. 1. 15�. I . 1� 1.4 80A-1 13 9.2.2. If the total of the offers of the Remaining Partners offering to purchase ("Accepting Partners") equals or exceeds the interest the Selling Partner offered to sell, the Accepting Partners shall become bound to purchase, and Selling Partner shall become bound to sell his interest to the Accepting Partners on the terms of the offer. 'rho portion of the price payable by each of the Accepting Partners shall be the several, and not joint, obligation of each of the Accepting Partners, and shall be paid to the Selling Partner. If the total of the offers of the Accepting Partners equals the interest the Selling Partner offered to sell, each Accepting Partner shall purchase the proportion of the Selling Partner's interest specified in his notice. If the aggregate of the offers of the Accepting Partners exceeds the interest the Selling Partner offered to sell, each Accepting Partner shall purchase that proportion of the offered interest equal to such Accepting Partner's interest in the Partnership. No later than 7 days after expiration of the period for the Remaining Partners to exercise their rights under this article, the Administrative General Partner shall advise the Partners of the amount payable by each Accepting Partner, and the Administrative General Partner shall cause the interest of the Selling Partner to be eliminated and the interest of each of the Accepting Partners to be increased by the respective portion of the Selling Partner's interest purchased. 9.2.3. If the Remaining Partners do not offer to purchase all of the offered interest of Selling Partner within 20 days after receipt of the Proposed Offer, the Selling Partner may disregard all offers received from the Remaining Partners and may, within 30 days after the 20 -day period, dispose of his interest on the terms of the offer, provided that such sale shall not be at a lower price or upon terms more favorable to the buyer than those specified in the offer, If the Selling Partner can not sell his interest within said 30 day period, he may then only sell his interest after re -offering it to the other Partners as set forth above. 9.3. Substituted Limited Partner. No Limited Partner shall have the right to substitute an assignee for his capital contribution, and no transferee pursuant to paragraphs 9.1 and 9.2 of the whole or any portion of the Limited Partner's interest in the Partnership shall become a substituted Limited Partner unless: (a) such assignee delivers to the Administrative General Partner an agreement in writing to assume all of the obligations of Selling Partner under this Agreement; and (b) the Administrative General Partner consents in writing to such substitution; the Administrative General Partner may grant or withhold its consent in its sole and absolute discretion. 9.4. Election of General Partner. The Administrative General Partner may elect to treat and assignee who has not become a substituted limited partner as a substituted limited partner in the place of his assignor should the Administrative General Partner deem, in its sole discretion, that such treatment is in the best interests of the Partnership. 9.5. Non -Termination, The Partnership shall not be torminated by the death, insanity, bankruptry, insolvency, dissolution, withdrawal, or expulsion of any Limited Partner, nor Initial LP AgreeMent � Santa M� 9.1.159.1.15 15 80A-1 14 by the assignment by any Limited Partner of his interest or by the admission of new Limited Partners. 9.6. Death or Incompetency of Limited Partner. Upon the death or legal incompetency of a Limited Partner his personal representative shall have all the rights of a limited partner for the purpose of settling or managing his estate. 9.7. Other Limited Partners, Upon the bankruptcy, insolvency, dissolution or other cessation of a corporate limited partner, the authorized representative of such entity shall have the rights of a limited partner to effect the orderly disposition of said Limited Partner's interest, 10. Financial Information. 10.1. Books of Account. The Administrative General Partner shall keep accurate books of account in which all matters relating to the Partnership, including all income, expenses, assets, and liabilities shall be entered, Said books shall be kept on a cash basis and shall be opened to examination by any partner at any time. 10.2. Accounting. A financial statement describing The condition of the partnership, as of the close of business on the last day of the calendar year and such additional information as may be needed by the partners to file their tax returns, shall be rendered to each partner within 90 days thereafter, Except for substantial errors brought to the attention of the Administrative General Partner within 30 days of its rendition, such accounting shall be final and conclusive as to all partners. 10.3. 'Fax Matters Partner, AMCAL Multi -Housing Two, LLC, shall be the "Tax Matters Partner" pursuant to IRC Section 6231 (a) (7). The Tax Matters Partner shall keep the other partners apprised of all proceedings regarding Partnership tax items. The Tax Matters Partner shall not enter into a settlement agreement with the Internal Revenue Service on behalf of any partner without that partner's consent, 10.4. Accounting Decisions. All decisions as to accounting matters, except as specifically provided to the contrary in this Agreement, will be made by the Partnership's accountants subject to the approval of the Administrative General Partner, 10.5. Federal Income 'fax Elections. The Administrative General Partner shall cause the Partnership to make an election (or consent) to any such election by a Partner) pursuant to any of IRC Sections 732(d) and/or 754 (or corresponding provisions of succeeding law or state law), as may be determined by the Administrative General Partner in the Administrative General Partner's reasonable discretion, except to the extent otherwise determined by this Agreement, 11, Dissolution, initial T& Agre.,a�at I S.aia Ann 9, 1, ls�. X, 15 .16 80A-1 15 I I.I. Mutual Agreement. The Partnership shall be dissolved upon: (a) the vote of the Limited Partners as provided in paragraph 8.3, or (b) upon sale of the Partnership Property� provided, however, if the Partnership receives a promissory note as pail of the consideration for the Partnership Property, the Partnership shall continue for the sole purpose of collecting and enforcing such obligation. The Partnership shall engage in no forther business thereafter other than that which is necessary to wind up the business and distribute the assets. 11,2. Proceedings Upon Dissolution. Upon the dissolution of the Partnership, the Administrative General Partner shall notify partners of such dissolution, wind up the affairs of the Partnership, liquidate the assets of the Partnership, pay or provide for the payment of all the debts, and divide the surplus, if any, among the partners according to the provisions of paragraph 113 hereof, subject to such adjustment as may be required by the Partnership's accountant in accordance with generally accepted accounting principles. If after the liquidation and distribution, any Partner or Partners would have a negative Capital Account, net income, if any, resulting from the liquidation shall first be allocated to that Partner or those Partners on a pro rata basis in the arnount of the deficit and the remaining net income to the Partners in proportion to their receipt, or entitlement to receipt of the proceeds of liquidation. If after that allocation a Partner has a negative Capital Account, that Partner shall contribute to the Partnership cash in the amount of the remaining deficit. 113, Distributions on Dissolution. The assets of the Partnership shall be applied in the following order of priority: 113. 1, To the payment of debts and liabilities of the Partnership (other than any loans and advances that may have been made by any of the Partners, or amounts owing to any of the Partners) and the. expenses of liquidation; 11,12, To the setting up of any reserves that the Administrative General Partner may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Partnership, and, at the expiration of such period as the Administrative General Partner shall deem advisable, to distribute the balance thereafter remaining in the manner hereinafter provided; 11.3.3. Any balance then remaining will be distributed to the Partners in accordance with their respective Capital Accounts, provided that profits shall first be allocated in accordance with the provisions of Paragraph 7.3 (entitled "Allocation of Profits"), in the manner as if all the Distributable Cash were then distributed in accordance with the provisions of Paragraph 7.11 (entitled "Distributions of Cash from Capital Event"). 11.4. Assets Other Than Cash. Assets of the Partnership may be distributed in kind on the basis of the then fair market value of such assets as determined by agreement of the Partners, and if no such agreement of value is reached within 10 days, then such value shall be determined by an independent appraiser appointed by the American Arbitration Association upon application of the Administrative General Partner (the cost and expense of said appraisal to be borne by the Partnership). If agreed to by all the Partners, distributions in-kind will be made to the Initial IR Ag�t.�nL � Santa Ana 9,1,159.1.15 17 80A-1 16 Partners as tenants-in-common. For purposes of making such distribution only, the unrealized profit or loss on any such asset (based on its fair market value) shall be first allocated among the Partners and the distribution of the asset shall be treated as a distribution of cash equal to the fair market value of such asset. 11.5. Liquidation of Partner's Interest. Upon liquidation of any Partner's interest in the Partnership, the liquidation distributions shall be made in accordance with the positive Capital Account balances of the Partners adjusted as otherwise required by the provisions of this Agreement. A liquidation of a Partner's interest shall occur as required pursuant to Treasury Regulations Section 1.704-1 (b)(2)(ii)(Ly), 11,6. Reconstitution of Partnership. The Limited Partners may, upon the occurrence of any of the events described in paragraphs 8.3.6 or 11. 1, reconstitute the business of the Partnership in a new limited partnership on the terms as this Agreement provided that if all of the General Partner cease to be a General Partner other than pursuant to subdivision (b), (c) or (d) of Section 15642 of the Act, and there is no remaining or surviving General Partner, admission of a new General Partner or a decision to continue the Partnership business by reconstituting the Partnership must be approved by the affirmative vote of all of the Limited Partners. Expenses incurred in the reformation, or attempted reformation, of the Partnership shall be deemed expenses of the Partnership. 11.7. Partnership Assets. Each partner shall look solely to the assets of the Partnership for the return of his investment, and if the assets of the Partnership remaining after the discharge of all debts and liabilities of the Partnership are insufficient to return the investment of each Limited Partner, such Limited Partner shall have no recourse against the Administrative General Partners or any other Limited Partner, 12. Books and Records. The Administrative General Partner shall keep at the partnership's office the following Partnership documents: 12.1. A current list of the full name, and last known business or residence address of each Partner, together with the contribution and share in profits and losses of each partner. 12.2. A copy of the Certificate of Limited Partnership and all Certificates of Amendment, and executed copies of any powers of attorney pursuant to which any certificate has been executed. 12.3. Copies of the Partnership's federal, state and local income tax or information returns and reports, if any, for the 6 most recent taxable years, 12.4. Copies of the original Agreement and all Amendments to the Agreement. 12.5. Financial statements of the Partnership for the 6 most recent fiscal years. IniLial LP A��VeemO�L - S�IltA �,l 9.1,159,1.15 Is 80A-1 17 12.6. The Partnership's books and records for at least the current and past 3 fiscal years. Upon the request of a Limited Partner, the Administrative General Partner shall promptly deliver to the requesting Limited Partner, at the expense of the Partnership, copies of the documents described in items 12,1, 12.2, or 12A above. All other documents may be inspected and copied by a Limited Partner during normal business hours upon reasonable, prior request. Copies of any amendments to this Agreement signed pursuant to the Administrative General Ilartner'powor of attorney shall be promptly delivered to all Partners. 13. Notices. Any notices required to be given under this Agreement shall be in writing and signed by or on behalf of the party giving the notice sent by prepaid certified or registered mail, return receipt requested, to each partner at the address set forth after his signature or such other address as may be designated by notice given as aforesaid. Service of notice shall be deemed to be effective as of the date shown on the receipt issued by the post office for such registered mail, and if such receipt is not returned, 48 hours after deposit in the United States mail. 14. Attorneys' Fees. If any party hereto files an action or proceeding concerning any provision of this Agreement or the rights and duties of any person in relation thereto, the patty or parties in whose favor final judgment shall be entered shall be entitled to recover from the other party or parties his court costs and reasonable attorneys' fees. 15. Miscellaneous Provisions. 15.1, Entire Agreement. All of the agreements heretofore and contemporaneously made by the parties are contained in this Agreement and, except as provided in Paragraph 8.3 this Agreement cannot be modified in any respect except in writing executed by parties holding an aggregate majority of the Partnership interests. 15,2. Validity, If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement, or the application or interpretation of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby and shall remain in full force and effect. 15.3. Waiver of Action for Partition. Each of the parties hereto irrevocably waives his right to maintain any actions for partition with respect to the Partnership Property and other investments of the Partnexship. 15.4, Governing Instruments. In the event of any conflict between the provisions of this Agreement and any document executed or filed by the Administrative General Partner pursuant to the power of attorney granted to him this Agreement shall govern, 15.5. Headings. The headings used herein are for convenience only and shall have no effect upon the interpretation of this Agreement. Whenever the context so requires, the , nitial LP Agreement � gAnta Are 9.1,159.1.15 W, 80A-1 18 singular number shall include the plural, the plural shall include the singular, the neuter gender shall include the masculine and feminine genders and vice versa, 15.6, Counterparts, This Agreement may be executed in counterparts, each of which so executed shall be deemed an original, and said counterparts together shall constitute one. and the same document, 15-7. Binding Effect. This Agreement shall be binding on, and shall inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of each party. 16. Limited Partners Representations. Each Limited Partner by signing below represents and warrants to the Partnership and to the Administrative General Partner that: 16.1. The Limited Partner has received such information about the partnership, as the Limited Partner deemed necessary to evaluate this investment, and a copy of this Limited Partnership Agreement, 16.2. That the Limited Partner is taking all of the Limited Partnership Interest (the "Units") listed after his name on Exhibit "A" for his own account and not as an agent, trustee, custodian or the like for any other person or with a view to or for sale in connection with a distribution thereof. Each Partner understands that the interest being purchased and sold hereunder has not been registered under the Securities Act of 1933, as amended, nor qualified under the California Corporate Securities Law of 1968, as amended, because the contemplated transaction constitutes a private offering within the meaning of Section 4(2) of die Securities Act of 1933 and Regulation D promulgated there Linder, and is exempt from qualification pursuant to Section 25102 (f) of the California Corporate Securities Law of 1968, as amended, 16.3. That the Limited Partner is taking the Units for investment purposes only and has no present intention to dispose of them to any other person. 16.4. That the Limited Partner has such knowledge and experience in financial and business matters that he is capable of evaluating the risks of the prospective investment, 16.5, That the Limited Partner is a person who is able to bear the economic risk of the investment. 16.6. That the Limited Partner has an adjusted gross income of at least $30,000 in the year he is subscribing and a net worth of at least $60,000; or a not worth of $100,000 or three times the initial cash investment for the Units subscribed, whichever is greater; and 16.7. That the Administrative General Partner has trade available to the Limited Partner the opportunity to obtain any additional information, to the extent the Administrative General Partner possesses such information or can acquire without unreasonable effort or expense, necessary to verify the accuracy of any information contained herein; and 1.iti.] LP S�.t� An� a,1,159,1,15 20 80A-1 19 16.8. Each Partner has been fully advised of the facts respecting the formation of the Partnership and has been given the opportunity to consult his attomey with respect to the Partnership, Each Partner hereby agrees that the offer and sale of the. interest to it does not involve any public offering of such interest; and 16.9. The Limited Partner understands that there is no public market for the Units and none is expected to develop and he must continue to bear the economic risk of this investment for an indefinite period, Initial LP ASVOeMent - "nta Ana 9.1.159.1.15 21 80A-1 20 Dated: September 1, 2015 General Partners: AMCAL Multi ing Two LLC, a C; Zmability comi)any By:— Percival Limited Partners: For: AMCAL Enterprises, Inc., a California corporation By: Arjun Nagarkattr, President 10itial W AqreeM�jt � Saj�ta �na 22 80A-1 21 EXHIBIT "A" AMCAL 1440 SANTA ANA FUND, L.P. CAPITAL CONTIUBUTION AND PARTNERSHM JN,rERE4 ST Column I Column 2 CAPITAL NAME OF PARTNER CONTIUBUTIONS % OF INTEREST % OF PROFIT AMCAL Multi -Housing Two LLC $ 1,00 1.00 1.00 an Administrative General Partner AMCAL Enterprises, Inc. 99.00 99.00 99.00 Limited Partner 'rOTAL: 100.00 100.00 100.00 initial 1'r Aqlaa ... $alit, Ana 9.1.159.1.15 23 80A-1 22 EXHIBIT "B" AMCAL 1440 SANTA ANA FUND, L.P. LEGAL DESCIZIPTION All that certain real property situated in the County of Orange, State of California, described as follows: Parcel 1: The Easterly 112.51 feet of the Westerly 437 51 feet of that portion of land allotted to N.O. Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the Final Decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the center lines of First Street and Mc Clay Street, as shown on a Map filed in Book 47 Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West. San Bernardino Base and Meridian; Thence North 89* 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860 Page 4 of Official Records; Thence South 0' 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 890 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Mc Clay Street; Thence North 00 06'40" West 398,34 feet to the point of beginning. Excepting therefrom, that portion of the North 71,00 feet as described in the Deed to the City of 1440 Santa Ana, recorded April 15, 1960 in Book 5196, Page 381 of Official Records. Parcel 2: A non-exclusive easement for ingress and egress over the South 25 feet of the Westerly 325 feet of that portion of the land allotted to N.O. Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, descfted as follows: I.Adal �p - saa. m. 24 80A-1 23 Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 890 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0* 06' 40" East 397,90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 890 08' 20" West 812.64 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 00 06' 48" West 398.34 feet to the point of beginning. Parcel 3: The Westerly 175.00 feet of the Easterly 375.00 feet of that portion of the land allotted to NO. Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerflne of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812,56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 00 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 890 08'20" West 812,54 feet along the Southerly line of said land of Croddy Corporation to the centeriine of said Me Clay Street; Thence North 0' 06'48" West 398.34 feet to the point of beginning. Excepting therefrom, the South 21 feet of the North 71 feet thereof. Parcel 4: A non-exclusive easement for ingress and egress over the South 25 feet of that portion of the land allotted to N,O, Stafford and C, Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, Initial L,V Agr.0MOnt � Santa Ana 9 1-159 1-15 25 80A-1 24 California, described as follows Beginning at the intersection of the centerline of First Street and Mc Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17. Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812,56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 890 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Mc Clay Street; Thence North 0' 0648" West 398.34 feet to the point of beginning, Excepting therefrom, the Easterly 375.00 feet Assessor's Parcel Number: 011-154-43 lnl�ial I& Ag�eeMeU - 8�nta �a 9.1.159.1.15 26 80A-1 25 80A-1 26 EXHIBIT 3 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana Community Development Agency 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Division Manager SPACE ABOVE THIS LINE FOR RECORDING USE FREE RECORDING REQUESTED [Govennnent Code Section 6103] LOAN AGREEMENT by and between the HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE HOUSING SUCCESSOR AGENCY and AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership (1440 East First Street, Santa Ana, California) Dated: February 2017 80A-1 27 LOAN AGREEMENT HOUSING SUCCESSOR AGENCY FUNDS THIS LOAN AGREEMENT (the "Agreemenf') dated, for identification purposes only, as of February _, 2017, is made and entered into by and between the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a public body, corporate and politic ("Agency"), and AMCAL 144 0 Santa Ana Fund, L.P., a California limited partnership ("Developer") with reference to the following: RECITALS: A. The Agency is authorized by the Community Redevelopment Law of the State of California (Health and Safety Code section 33000, et seq.) ("CRL") to expend funds to increase the supply of very low and low income housing available at affordable housing costs. In part to further this goal, the Agency has created the Merged Project Areas, within the City (the "Project Area"), and adopted a Redevelopment Plan for the redevelopment of the Project Area. In accordance with Section 33334.2, et seq., of the CRL, the Agency sets aside a portion of the tax increment revenues it receives from the Merged Project Area in a separate low and moderate housing fund, which the Agency uses for the construction, preservation, and rehabilitation of affordable housing for low income households. B. Developer requested financial assistance in connection with the proposed development of a sixty-nine (69) unit affordable workforce housing complex ("Project") to be located at 1440 East First Street, Santa Ana, California, and legally described within Exhibit A attached hereto and incorporated herein ("Property"). The residential units will be located within six (6) buildings. The rental units (less one manager's unit) are 100% affordableto family households earning between 30% and 60% of the Area Median Income ("AMI"). The unit mix currently consists of six (6) four-bedroom units, twenty-eight (28) three-bedroom units, and thirty-five (35) two-bedroom units (one being a manager's unit). Eight (8) of the units will be assisted by the Santa Ana Housing Authority's Project -Based Voucher Program. On-site amenities will include a cominumity room and amenity space including tot lots/play areas for children, outdoor seating, BBQ's, a flex play space and planters. The community room will be incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. Developer will engage a qualified non- profit organization approved by the City (of which LifeSTEPS is hereby approved by the City) to provide free on-site social services to Project tenants. Services will be provided in the form of classes and workshops with the subject matter tailored by a social service coordinator to the specific needs of the community. C. The City of Santa Ana ("City") and the Housing Authority of the City of Santa Ana ("Housing Authority") reviewed Developer's request for assistance and at the City Council/Housing Authority meeting on December 20, 2016, the Housing Authority Board authorized and approved issuance of a conditional, pre -commitment letter evidencing the preliminary award of $6,195,000 of funds to the Project ("Agency Loan"), 80A-1 28 to be funded exclusively from the Low and Moderate Income Housing Asset Fund (the "LMIHAF") held by the Agency. D. The amount of the Agency Loan was determined based upon the City and Agency's review of the Developer's request for the receipt of the Agency Loan and the development proforma andprojected cash flows for the Project submitted by the Developer to the City/Agency as of March 18, 2016 ("Proforma"). The Housing Authority's Executive Director has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the Agency Loan is not materially increased or extended. E. hi furtherance of the CRL and the Redevelopment Plan, Developer has applied to the Agency for a loan with which to: Provide deeper affordability and construct the improvements to the Property, and 2. Thereafter to maintain, operate and professionally manage the Project as decent, safe, sanitary and affordable rental housing. F. The Agency, on certain terms and conditions, desires to make such Agency Loan to Developer in order to make possible the construction of the Project, thereby expanding the supply of decent, safe, sanitary and affordable housing. G. If there is any inconsistency between Federal, State, and local guidelines with regard to any of the terms and conditions contained herein, the more stringent shall apply. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, Agency and Developer agree as follows: DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above and in all other Project Documents, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Article 1. "Affordable Housing" means the total housing costs paid by a qualifying household, which shall not exceed the fraction of gross income specified, as follows, in accordance with Sections 50052.5 and 50053 of the Health & Safety Code: Very Low -Income Households. Thirty (30) percent of the income of a household caming fifty (50) percent of the Orange County median income adjusted for family size appropriate for the unit. Low -Income Households. Thirty (30) percent of the income of a household earning seventy (70) percent of the Orange County median income for for -sale units, and 80A-1 29 thirty (30) percent of the income of a household earning sixty (60) percent of the Orange County median income for rental units, adjusted in either case for family size appropriate for the unit. In the event of a conflict between the fractions specified in this definition and those found in Sections 50052.5 and 50053 of the Health & Safety Code, the fractions specified by State law shall control, "Affordability Restrictions on Transfer of Property" means that certain document affecting real property benefiting the Agency, attached hereto and incorporated herein as Exhibit B. "Affordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Extremely Low, Very Low and Low Income households, as promulgated by the California Tax Credit Allocation Cormnittee (TCAC), orby the State of California, as applicable. "Agency" means 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 CRL. The principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702. "Agency" shall also refer to the City where the context dictates, to the effect that City shall have all rights granted to the Agency hereunder. "Agency Deed of Trust" means the deed of trust encumbering the Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant to Section 5.13. 1 in order to secure the Agency Loan Note. "Agency Loan" means a loan in the original principal amount of up to six - million, one -hundred and ninety-five thousand dollars ($6,195,000) to be made to Developer by the Agency to be funded exclusively from the Low and Moderate Income Housing Asset Fund held by the Agency. "Agency Promissory Note" means that certain promissory note for Agency Loan funds in the original principal amount of $6,195,000 in the form attached hereto as Exhibit D, and to be executed by Developer in favor of Agency to evidence the obligation of Developer to repay the Agency Loan through residual receipts as further described in the Agency Promissory Note. "Building Permit" means the building permit(s) issued by City and required for the construction. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs. " Calendar Year" means each consecutive twelve (12) month period from January I to December 3 1. 80A-1 30 "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" 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 Project Manager" shall mean the City Manager and/or his/her designee. "Close of Escrow" shall mean the date upon which the Agency Loan Agreement and Agency 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 of the Property pursuant to the purchase contract. "County" means the County of Orange, California. "Developer" means AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership. "Developer's Representative" shall mean an officer of the General Partner of Developer or his/her designee. "Extremely Low Income" means an adjusted income which does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code. "Event of Default" has the meaning set forth in Section 20. 1. "General Partner" means AMCAL Multi -Housing Two LLC, a California limited liability company. "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 flaminable 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 sal., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U. S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction products, household cleaners and office materials of the type and quantity ordinarily used in the normal construction, operation and maintenance of properties similar to the Project or (ii) small amounts of household mold to the extent promptly remediated upon discovery. 80A-1 31 "Housing Authority" means the Housing Authority of the City of Santa Ana, a public body, corporate and politic. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "HCD" means the California Department of Housing and Community 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, as required through the City of Santa Ana Planning and Building Agency entitlement process. "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (c) any obligation for the purchase of property or services in excess of $ 10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii) evidenced by a note or similar instrument, and (d) all recourse and all non-recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "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). "Loan Documents" or "Agency Loan Documents" means, collectively, this Agreement, the Agency Promissory Note, the Agency Deed of Trust, and the Affordability Restrictions on Transfer of Property, and any other agreement, document, or instrument that the Agency reasonably 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 which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HCD, Also may be referred to interchangeably in the Agency Loan Documents as "Area Median Income" or "AMI". 80A-1 32 "Partnership Agreement" means the Agreement of Limited Partnership of AMCAL 1440 SANTA ANA FUND, L.P., dated as of September 1, 2015 attached herein as Exhibit H. "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 City Project Manager in writing. "Permitted Encumbrances for the Agency Deed of Trust" means the Senior Loan Deed(s) of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Project" means the construction of the Improvements upon the Property by Developer pursuant to this Agreement. "Project Budget" means the line -item budget for the Project attached hereto as Exhibit E, 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 1440 East First Street in 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, "Scope of Work/Schedule of Performance" means the detailed statement of the work to be performed by Developer on and to the Property pursuant to this Agreement, along with the Schedule of Performance setting forth timeframes for certain tasks, which document is attached hereto as Exhibit F. "Senior Lender" means a cormnercial financial institution providing the Senior Loan or any other holder of the Senior Loan Note. "Senior Loan" means a loan from the Senior Lender concurrent to the Agency Loan for payment of a portion of the acquisition and construction costs, and shall include any subsequent loan that refinances the initial Senior Loan. "Senior Loan Deed of Trust" means the first deed(s) of trust securing the Senior Loan by encumbering the Property. "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. "Senior Loan Note" means the promissory note evidencing the Senior Loan from the Senior Lender. 80A-1 33 "Term of Affordability" means the terms and conditions contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD in accordance with Sections 50052.5 and 50053 of the Health & Safety Code. 1.2 Sin2ular and Plural Terms. Any defined term used in the plural in this Agreement 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 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 docurnent 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. 2. [RESERVED] 3. SCOPE OF WORIQPROJECT BUDGET A "Scope of Work" and "Schedule of Performance" for the Property is attached hereto as Exhibit F. Any material change to the Scope of Work/Schedule of Performance requested by the Developer shall be subject to the prior written approval of the City Project Manager. The Scope of Work/Schedule sets forth the construction work that shall be performed on the Property and timeframes for approvals and such work. A line -item budget for the Project, including a summary statement of sources and uses of funds, is incorporated into Exhibit E ("Project Budget"). Any material change to the Project Budget requested by Developer shall be subject to the prior written approval of the City Project Manager. 4. [RESERVED] 5. AGENCY LOAN: The Agency Loan shall be evidenced by the Agency Promissory Note in the form attached hereto as Exhibit D. The Agency Loan shall be secured by the Agency Deed of 80A-1 34 Trust in the form attached hereto as Exhibit C. The terms and conditions of the Agency Loan are as set forth in the Agency Promissory Note. The tenn of affordability for the Project is fifty-five (55) years from the receipt of Certificate of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer. 5.1. Agency Funds: A. Amount and Purpose. Subject to the terms and conditions of this Agreement, Agency agrees to make a loan to Developer from the Low and Moderate Income Housing Asset Fund ("LMIHAF") in the principal amount of up to $6,195,000.00 for the construction and other costs of the Project. 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS 6.1 Conditions Precedent. Agency's obligation to disburse the loan is subject to the satisfaction of the following conditions precedent: (a) Housing Authori . Review and approval of the documents evidencing the Agency Loan by the Housing Authority of the City of Santa Ana acting as the Housing Successor Agency. (b) Code CoLupliance. Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176. (c) Environmental Review. Compliance with and completion of environmental review of the Project pursuant to the California Environmental Quality Act ("CEQA") and approval thereof. (d) Affordability Restrictions. The funding of $6,195,000 is from the Low and Moderate Income Housing Asset Fund, which requires legal restrictions that the Agency cannot amend or repeal. Sixty-eight (68) of the sixty-nine (69) "Housing Units" at the Project shall and will be restricted to "Affordable Rent" as defined by the California Tax Credit Allocation Committee (TCAC) Regulations for a period not less than fifty-five (55) years pursuant to conditions, covenants and restrictions recorded against the Project in the Official Records, County of Orange, California. Thirty-four (34) of the sixty-eight (68) Housing Units at the Project shall and will be restricted to households earning 30% or less of the ANIL unless the City and the Developer reasonably determine that it is necessary for a lesser number of Housing Units at the Project to be restricted to households earning 30% or less of AMI to cause the Project to be competitive for tax credit financing and/or to be financially viable. One (1) Housing Unit will be rented to an on-site property manager; the manager's unit will not be rent restricted. (e) Loan Documents. Developer shall have delivered to the Escrow Holder, signed by the authorized officer or officers of Developer, with such signatme(s) acknowledged where necessary, each of the following documents: (i) this Agency Loan Agreement; 80A-1 35 (ii) the Agency Promissory Note ($6,195,000); (iii) the Agency Deed of Trust; and, (iv) the Affordability Restrictions on Transfer of Property (f) Title Insurance. Agency shall have received an American Land Title Association (ALTA) Extended (LP -10) Loan Policy (6-17-06), or evidence of a commitment therefore satisfactory to Agency, issued by Commonwealth Land Title Insurance Company and in form and substance satisfactory to Agency, together with all endorsements and binders required, naming Agency as the insured, in a policy amount of not less than the total Agency Loan Amount, showing Developer as the fee owner of the Property and insuring the Agency Deed of Trust to be a valid priority lien on the Property. This Agreement, the Agency Promissory Note, and the Agency Deed of Trust shall all be subordinate to the Senior Loan Note and Senior Loan Deed of Trust. (g) Affordability Restrictions on Transfer of Propert . Developer shall have delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the Affordability Restrictions on Transfer of Property pursuant to which, among other things, Developer agrees that the Property shall be used only for decent, safe, sanitary and affordable rental housing pursuant to the affordability requirements of California Health and Safety Code ("H&S") sections 50052.5 and 33334.3, as applicable. The Agency's Affordability Restrictions on Transfer of Property shall remain in first position on title and shall not be subordinated. (h) Documents Recorded. This Loan Agreement, the Agency Deed of Trust, and the Affordability Restrictions on Transfer of Property shall have been recorded in the Official Records of the County. (i) Request for Notice. For the benefit of Agency, Escrow Holder shall have recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default"). 0) Insurance. Agency shall have received evidence satisfactory to the City Attorney that all of the policies of insurance required by Section 19 of this Agreement are in full force and effect. (k) 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 City Project Manager, Agency shall have received a certificate to that effect signed by Developer's Representative. (1) No Defaul . No Event of Default by Developer shall have occurred, 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 City Project Manager, Agency shall have received a certificate to that effect signed by Developer's Representative. 80A-1 36 (m) The Agency's obligation to provide the Agency Loan is and shall remain subject to all covenants, conditions, and restrictions set forth in this Loan Agreement, and in particular Agency's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. 6.2 Disbursement Procedures for Loan. The Agency Loan proceeds shall be disbursed through Escrow to finance the acquisition, development and construction of the Project (as evidenced in Exhibit E). The Agency Loan proceeds shall not be used for any purpose other than for acquisition and predevelopment and construction related costs, including Developer fee and soft costs related to the development of the Project (costs all subject to Agency's prior review). 6.3 First Disbursement. Agency's obligation to make the first disbursement of the Loan is subject to satisfaction of the following conditions precedent: (a) All grading permits shall have been issued or the City shall have issued a letter stating that building permits are ready to issue, subject only to payment of fees and the completion of grading of the Project site. (b) Developer shall have secured all necessary financing and funding for the construction and operation of the Project. Such financing and funding shall be sufficient to pay all Project development costs, through lease -up, as set forth in the final budget consistent with the approved Proforma (or as otherwise approved by the Agency). (c) Developer shall have provided evidence to the Agency that the Developer has obtained insurance policies and certificates or endorsements acceptable to the Agency, as described in this Loan Agreement. (d) Developer shall have provided construction security in favor of the Agency, which may include a completion guarantee from ANICAL Multi -Housing, Inc. and/or a letter of credit and/or performance and payment bonds from the general contractor for the Project (or some combination of these), in an amount sufficient to ensure the Project will be completed and placed in service within the time set forth in the Project schedule approved by the Agency. (e) Developer shall submit and obtain the Executive Director of the Housing Authority's approval of the construction contract, the identity and qualifications of the General Contractor, Developer's limited partnership agreement for the limited partnership entity to be formed to own and operate the Project, and management, marketing and tenant selection plans for the Project. 6.4 Termination for Failure of Condition. If (a) any of the conditions set forth herein are not timely satisfied (subject to applicable notice and cure rights), and (b) Agency is not in default under this Agreement, Agency may terminate this Agreement without any further liability on its part by giving written notice of termination to Developer. 80A-1 37 Upon the giving of such notice, all principal, interest and other amounts owing under the specified due date. 6.5 Any Disbursement. Agency's obligation to make any disbursement of the Loan, including the first and final disbursements, is subject to the satisfaction of the following conditions precedent: (a) Satisfactory Progress. The City Project Manager shall be satisfied that, based on his/her own inspections or other reliable information, the construction is progressing satisfactorily in conformance with all applicable laws and other requirements (including the City's Inclusionary Housing guidelines). (b) Condition of Title. Either (i) the City Project Manager reasonably believes that no event has occurred since the Close of Escrow that would give rise to a colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of Agency against the Property with respect to the subject disbursement, or if such claim is made, then City Project Manager shall receive satisfactory evidence that such claim has been bonded over until its resolution; or (ii) Agency must have received, at Developer's expense but payable out of the Loan proceeds from the title insurer who issued Cit)A LP - 10 Title Policy, all endorsements thereto then reasonably required by Agency (including, without limitation, CLTA Form 122 -- priority of advance endorsements). (c) Representations and Warranties. The representations and warranties of Developer contained in this Agreement and the other Agency Loan Documents shall be correct in all material respects as of the date of the disbursement as though made on and as of that date. (d) No Default. No Event of Default by Developer shall remain uncured (unless, to the extent permitted under this Agreement, Developer is diligently taking action to cure such default) 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. 6,6 Final Disbursement. Agency's obligation to disburse that portion of the Loan funds retained pursuant to Section 6.12 is subject to the satisfaction of the following additional conditions precedent: (a) Construction complete. The construction of the Project shall be complete. (b) Certificate of Occoancy Issue . Any portion of the construction work requiring inspection or certification by any Governmental Authority shall have been inspected and certified as complete. Developer shall request that the Building Department issue a Certificate of Occupancy, a copy of which shall be delivered to the City Project Manager, in order for final disbursement to occur. (c) Lien Free. At least one of the following shall have occurred: 80A-1 38 (i) Thirty-five (35) days shall have passed since the recording of a valid notice of completion for the construction, and no mechanic's or materialman's lien shall be outstanding; or (ii) Ninety-five (95) days shall have passed since actual completion of the construction, and no mechanic's or materialman's lien shall be outstanding, or Developer shall have bonded over any such lien to Agency's reasonable satisfaction. 6.7 Waiver of Conditions. The conditions set forth pertaining to Agency's obligation to make disbursements of the Loan proceeds are for Agency's benefit only and the City Project Manager may waive all or any part of such rights by written notice to Developer. 6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line - item by line -item basis in accordance with the Project Budget and subject to the conditions in this section. In no event shall Agency have any obligation to disburse any amount for any item in excess of the amount allocated to such item in the Project Budget. Disbursements shall be made only upon Developer's written request in the form of a Disbursement Request showing all costs which Developer intends to fund with such disbursement, itemized in such detail as Agency may reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to Agency, including in any event partial lien releases executed by each contractor and subcontractor who has received any payment for work performed, and (b) all other documents and information reasonably required by Agency. Disbursement Requests shall be submitted no less than ten (10) Business Days prior to the date of the requested disbursement, and shall not be submitted more often than monthly. Prior to each disbursement by Agency of proceeds of the loan, Developer shall deliver to Agency a draw request ("Draw Request"), and all required supporting information as set forth in the Agency Loan Documents or as otherwise reasonably required by Agency in order to provide information for evaluating the requested disbursement pursuant to customary construction lending practices of institutional lenders in Southern California. Agency shall notify the Developer of approval or disapproval of each Draw Request within five (5) Business Days after receipt of the Draw Request, using the Agency's "Disbursetnent/Change Order Approval Notice". Agency shall have the right, but not the obligation, to discontinue processing Draw Requests unless and until receipt of notification from the other of approval or disapproval of each outstanding Draw Request. 6.9 Manner of Disbursement. Agency may make any disbursement by check payable to Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or directly to any such claimant; or by any other means reasonably selected by Agency. 6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost reasonably estimated by Agency or Developer to be required to complete all matters included in any line item in the Project Budget exceeds the amount allocated to 80A-1 39 that line item in the Project Budget, (b) Project costs for any matters not covered by a specific line item have been or will be incurred, or (c) the undisbursed portion of the Loan proceeds and all other approved financing sources are or may be insufficient to pay all construction of the Project that may be payable under the Agency Loan Documents or otherwise in connection with the construction, Developer shall, within ten (10) days after it receives written notice thereof from Agency of any of the foregoing matters, do one or more of the following: (a) provide satisfactory evidence to Agency that Developer has previously paid such excess or otherwise provided for such insufficiency (collectively, the "Excess Cost") with funds from a source other than the Agency Loan; (b) reallocate sufficient funds to pay the Excess Cost from funds allocated to "Contingency" in the Project Budget; provided, however, that the City Project Manager's consent to any such reallocation shall be required; or (c) deposit an amount equal to the Excess Cost in a non-interest bearing account (the "Overrun Account") with Agency from which withdrawals may be made only with the consent of the City Project Manager but which will be exhausted prior to any further disbursement for any line item, so that any resulting surplus in any line item of the Project Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be incurred. Agency shall have no obligation to make further disbursements until Developer has paid or otherwise provided for the overrun as required above. Amounts deposited by Developer in the Overrun Account for any Excess Costs shall be disbursed by Agency prior to the disbursement of any remaining Loan proceeds in the manner described in subsection 93(c). 6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any line items in the Project Budget, any remaining undisbursed amounts allocated to that line item shall be reallocated to "Contingency" and thereafter be available for disbursement in accordance with the terms of this Agreement. 6.12 Retainage. Agency will withhold a Retainage of 10% from each Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof designated for withholding of retainage) until all conditions to the final Disbursement of Hard Costs have been satisfied. In lieu of Agency's withholding Retainage, Developer can by written notice to Agency elect not to draw any overhead or profit as would otherwise be permitted under the Construction Contract until such time as Retainage would otherwise have been released. Agency shall not retain funds for building materials purchased by Developer for which Developer supplies documentation to Agency proving payment in full, land acquisition costs, or for soft costs. 6.13 Holdback. The retainage otherwise available for disbursement shall be subject to aholdback of one hundred twenty-five percent (125%) of the estimated cost (as 80A-140 determined by the City Project Manager) for "punch -list" items. Such holdback will be released when all punch -list items have been completed to the satisfaction of Agency. 6.14 Waiver of Disbursement Conditions. Unless Agency otherwise agrees in writing, the making by Agency of any disbursement with knowledge that any condition to such disbursement is not fulfilled shall constitute a waiver of such condition only with respect to the particular disbursement made, and such condition shall be conditioned to all further disbursements until fulfilled. 6.15 Modification of Disbursement Conditions and Procedures. The City Project Manager 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 contract for construction. 6.16 Other Terms and Conditions of Loan. A. The Note shall become immediately due and payable, in the event of any of the following: (1) Failure to be awarded tax credits within two (2) years of the recording date and failure to complete the Project within four (4) years of the recording date; (2) Violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cirre periods; or, (3) 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 .17 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. 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROJECT 7.1 Use Covenants and Restrictions. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assign and every successor in interest to the Property that Developer will make all of the rental units on the Property available to extremely low, very low and low income households at rents affordable to such households for fifty-five (55) years (except for one (1) unit for the onsite manager). The Project shall consist of sixty-nine (69) residential units. Enforceability of restrictions on the sixty-eight (68) units shall be enforced until the date that is fifty-five (55) years after the date on which the Certificate of Occupancy is issued. 7.2 Affordability Levels/Unit Mix: The proposed unit mix and levels of affordability are as follows: 80A-141 Bedroom Size 30% AMI 40% AMI 50% AMI 60% AMI Manager's Unit Total Two Bedroom 29 0 4 1 1 Three Bedroom 4 0 17 7 28 Four Bedroom 1 0 0 5 6 Totals 34 0 21 13 1 69 * The affordable rents charged at the Project must comply with the standards set forth by the California Tax Credit Allocation Committee (TCAC). * Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Housing Authority of the City of Santa Ana publishes a utility allowance schedule on an annual basis, provided, however, in lieu of the utility allowance published by the Housing Authority the Developer may elect to use the California Utility Allowance Calculator to the extent allowed by TCAC. 7.3 Rent Increases: On an annual basis, the Agency shall provide the Developer with the maximum allowable schedule of rents for the Property which shall correspond to the maximum rent increase allowed by TCAC. In no event can Developer charge any tenant more than such amount. 7.4 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 firee 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 Agency, 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 Agency may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for such maintenance. The Agency shall inspect the Property annually after the date of issuance of the Certificate of Completion as described in Section 17 of this Agreement. 7.5 Obli2ation 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, disability, religion, sex, 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. 80A-142 8. DEFAULTS AND REMEDIES 8.1 Event of Default. Failure or delay by either party to perform any term or provision of this Agreement within the time periods provided herein for such performance constitutes a default under the Agreement. If any party defaults in performance of its obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure the default in accordance with this section. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. The defaulting party must, within thirty (3 0) days following service of said written notice, commence to cure, correct or remedy such failure or delay and shall complete such cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is not cured within thirty (30) days following service of said notice, unless such default cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure but no more than ninety (90) days, the Agency shall have the tight to tentlinate this Agreement by delivery of written notice of tennination to Developer. 8.2 Institution of Le2al Actions. In addition to any other lights or remedies, either party may institute legal action to cure, correct or remedy any default to recover economic damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. 8.3 Rights and Remedies are Cumulative.. Except with respect to rights and remedies expressly declared to be exclusive in Us Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 8.4 Damaizes. In the event that the Agency is liable for damages to Developer, such liability shall not exceed costs incurred by the Developer in the performance of this Agreement and shall not extend to compensation for loss of future income, profits or assets. 8.5 Nonrecourse Liabilitv- Neither Developer, nor any partner of Developer, z shall have any personal liability under this Agreement, or the attached Note and Deed of Trust, and anyjudgment, decree or order for the payment of money obtained in any action to enforce the obligation of Developer to repay the loan evidenced by such documents shall be enforceable against Developer only to the extent of Developer's interest in the Property. 9. GENERAL PROVISIONS AND WARRANTIES As a material inducement to Agency to enter into this Agreement, Developer represents and warrants as follows: 9.1 Formation, Qualification and Compliance. ANICAL 1440 Santa Ana Fund, L.P. is a California limited partnership. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other 80A-143 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 A2ency Loan Documents. 9.2.1 Developer has all requisite authority to execute and perform its obligations under the Agency Loan Documents. 9.2.2 The execution and delivery by Developer of, and the performance by Developer of its obligations under, each Loan Document that has been authorized by all necessary action and does not and will not: (a) require any consent or approval not heretofore obtained of any person having any interest in Developer; (b) 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; (C) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the Agency Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; (d) to best of its knowledge, violate any provision of any law presently in effect; or (e) 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. 9.2.3 Developer is not in default, in any respect that is materially adverse to the interests of Agency under the Agency 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 sub- paragraph (d) or (e) of the previous subsection. 9.2.4 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: (a) the execution by Developer of, and the performance by Developer of its obligations under, the Agency Loan Documents; and Documents. (b) the creation of the liens described in the Agency Loan 80A-144 9.3 Financial and Other Information. To the best of Developer's knowledge, all financial information furnished to Agencyby the Developer or any affiliate thereof with respect to Developer in connection with the 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 Agency. To the best of Developer's knowledge, all other documents and information furnished to Agency by the Developer or any affiliate thereof with respect to Developer, in connection with the Loan, are correct and complete insofar as completeness is necessary to give the Agency accurate knowledge of the subject matter. To the best of Developer's knowledge Developer has no material liability or contingent liability not disclosed to Agency 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 Agency 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 Agency. Since those dates, Developer has not entered into any material transaction not disclosed in such financial statements or otherwise disclosed to Agency 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 Agency 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 Agency. 9.6 Governmental Requirements. To best of its 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 Agency in writing prior to the execution of this Agreement. 80A-145 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 Agency, by whatever means, is accurate, correct and sufficiently complete to give Agency true and accurate knowledge of its subject matter, and does not contain any misrepresentation or omission. 9.11 Conflicts of Interest. No member, official or employee of the Agency 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 A2ency Officials and Employees. No member, official or employee of the Agency shall be personally liable to the Developer in the event of any default or breach by the Agency or for any amount which may become due to Developer or on any obligations under the terms of this Agreement. 9.13 No Assignment. Developer expressly acknowledges and agrees that the Agency has only agreed to assist the Developer as a means by which to induce the construction/development of the Project. Accordingly, Developer further expressly ackriowledges and agrees that this Agreement is a personal right of Developer that is neither negotiable, transferable, nor assignable except as set forth herein. Developer may assign some or all of its rights under the Agreement only with the prior written consent of the Agency Project Manager (such consent not to be unreasonably withheld), except that no prior consent is necessary for an assignment by a limited partner of Developer to an affiliate, for the inclusion of tax credit investors in the Agreement, or as otherwise provided in the Deed of Trust. 9.14 Applicable Law, This Agreement shall be interpreted, governed and enforced under federal and California state law with venue in Orange County, California. 9.15 Third Parties. This Agreement is made for the sole benefit of Developer and the Agency 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 Agency hereunder or arising from any default by Developer, nor shall the Agency owe any duty whatsoever to any claimant for labor performed or materials famished in connection with the construction of the Property. 9.16 Control of Propertv. The parties achnowledge that the Agency has not at anytime participated in any manner in the management or operation of the Property, and will not so participate at any time hereafter. 80A-146 10. CONDITIONS FOR CONSTRUCTION 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 and conversion of the Property. 10.2 Commencement and Completion of Construction. The constniction of the Project 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 (including required final certificates of occupancy) have been obtained. 10.3 Chan2e Orders. The contract for construction shall not be modified except pursuant to change orders. All change orders in excess of $10,000: (a) Shall be in writing, numbered in sequence, signed by Developer and submitted to Agency prior to the proposed effectiveness thereof and accompanied by any working drawings and a written narrative of the proposed change; and, (b) Shall be subject to the City Project Manager's prior written approval. 10.4 Entry and Inspection. At all times prior to completion of the construction, upon reasonable notice and subject to reasonable job site safety rules, Agency and its 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 famished for the construction, and (c) the right to inspect and copy all documents pertaining to the construction. 10.5 [RESERVED] 10.6 Construction Information. From time to time during the course of the construction, within ten (10) Business Days following Agency'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' and 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 Agency by any person furnishing labor or materials 80A-147 to the Property, Developer shall immediately give written notice of the same to Agency 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 Agency a surety bond complying with the requirement of applicable laws for such release, or (c) take such other action as Agency may require to release Agency from any obligation or liability with respect to such stop notice or claim. 11. COVENANTS 11.1 [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 California Health and Safety Code section 50052.5 so as to qualify the housing on the Property as Affordable Housing with affordable rents. 11.3 [RESERVED] 11.4 [RESERVED] 11.5 Handicapped Accessibility. Developer shall comply with (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make the Project readily accessible to and usable by individuals with disabilities. 11.6 [RESERVED] 11.7 [RE' SERVED] 11.8 Lead -Based Paint. Developer shall comply with the requirements, as applicable of the Lead -Based Paint Poisoning Prevention Act. 11.9 Affirmative Marketing. Developer shall implement and perform such affirmative marketing procedures and requirements for the Property as required by and the City of Santa Ana's adopted affirmative marketing procedures and minority outreach 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. Developer must also follow the requirements of California Health and Safety Code section 33435. 11. 11 Property Standards, Developer shall cause the Property to meet, as well as all applicable local, state and federal codes and ordinances, including zoning ordinances. Developer shall also cause the Property to meet the current edition of the Model Energy Code published by the Council of American Building Officials. A A 0 LFOOTITMEMOO 11. 12 [RESERVED] 11.13 [RESERVED] 11.14 Request for Disbursements of Funds. Notwithstanding anything contained in this Agreement to the contrary, Developer may not request disbursements of funds tinder this Agreement until the funds are needed for payment of eligible costs (such funds shall be used solely towards the rehabilitation and soft costs of the Project). The amount of each request shall be limited to the amount needed. 11.15 Elfilible Costs. Developer shall use Agency Low and Moderate Income Housing Asset Fund Funds to pay costs within the Project Budget attached herewith as Exhibit E. 11.16 Records and Revorts. Developer shall maintain and from time to time submit to Agency such records, reports and information as the City Project Manager may reasonably require in order to meet Agency record keeping and reporting requirements. 11.17 [RESERVED] 11.18 Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth in all applicable state regulations pertaining to conflict of interest. 11.19 Monitorin2. Developer shall allow the Agency to conduct periodic inspections of each of the assisted units on the Property as required by the Housing Opportunity Ordinance after the date of construction completion, with reasonable notice. Developer shall cure any defects or deficiencies found by the Agency while conducting such inspections within two weeks of written notice thereof, or such longer period as is reasonable within the sole discretion of the Agency. 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. At a minimum, every fifth (5th) year, Developer shall require new original income documents to be submitted by tenants. (b) Developer shall allow the Agency to conduct periodic reviews of tenant files and files relating to affirmative marketing and outreach to insure the Project's compliance with applicable regulations and guidelines. (c) Agency 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 until the non-compliance is corrected. 80A-149 11.21 Other Requirements. Developer shall comply with all other applicable requirements of the Housing Opportunity Ordinance, including the following: (a) Onsite Services: The Developer shall provide on-site services that are available to the residents and shall report to the Agency annually the services provided. (b) Coordination with the WORK Center: The Developer and the Property Manager shall coordinate with the City's WORK Center to provide services and outreach to tenants, as well as provide information on employment during the construction of the Project. (c) Tenant Satisfaction Survey: The Developer shall complete and submit to the Agency biennial tenant satisfaction surveys of tenants. (d) Rental Inclusionary Housing Manual: The Developer shall also maintain compliance with the City's Inclusionary Housing Manual for Rental Projects. 11.22 Controlling Covenants. If there is a discrepancy between Local, State and Federal law with regard to any of the aforementioned covenants, the more stringent shall apply - 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 business- like manner; shall prudently preserve and protect its own as well as the Agency's interests in connection with the Property; shall not conmrit 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 Agency's interests under the Agency Loan Documents. Without limiting the generality of the foregoing, and except as otherwise agreed by Agency in writing from time to time, Developer shall promptly and faithfully perform and observe each of the following provisions: 12.1.1 Alterations and Repair. Developer shall not remove, demolish or materially alter any Improvement without Agency's prior consent, except to make non- structural repairs which 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. 12.2 Compliance. Developer shall comply with all laws and requirements of Governmental Authority (including, without limitation, all requirements relating to the 80A-1 50 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. 12.3 Taxes and Impositions. Subject to any property tax abatement available to the 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 Agency (other than Agency'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 linposition in installments (together with any accrued interest). 12.3.1 Right to Contest. Developer shall not be required to pay any linposition so long as (a) its validity is being actively contested in good faith and by appropriate proceedings, (b) Developer has demonstrated to Agency's reasonable satisfaction that leaving such linposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair the Agency's interests under the Agency Loan Documents, and (c) Developer has furnished Agency with a bond or other security satisfactory in an amount not less than 100% of the applicable claim (including interest and penalties). 12.3.2 Evidence of Payment. Upon demand by Agency from time to time, Developer shall deliver to Agency, within thirty (30) days following the due date of any Imposition, evidence of payment reasonably satisfactory to Agency. 12.33 Books and Reeords. Developer shall maintain complete books of account and other records reflecting its operations (in connection with any other businesses as well as with respect to the Property), 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 Agency. 12.4 [RESERVED] 12.5 Project Operatiniz Budize . Developer must promptly deposit all project income directly into a segregated depository account established exclusively for the Project ("Project Operating Account"). Withdrawals from this account may be made only in accordance with the provisions of this Agreement and the approved Operating Budget, as it may be revised from time to time with prior Agency approval. Developer may make withdrawals from this account solely for the payment of project expenses and project fees. Withdrawals from this account for other purposes may be made only with the prior written approval of the Agency. 80A-1 51 12.6 Replacement Reserve Account. Developer must establish or cause to be established a segregated replacement reserve depository account ("Replacement Reserve Account") no later than the commencement of the permanent financing period for the Project. Developer must make monthly deposits from project income into the Replacement Reserve in accordance with Developer's Budget, as amended from time to time. Developer may withdraw funds from the Replacement Reserve Account solely to fund capital improvements for the Project, such as replacing or repairing structural elements, furniture, fixtures or equipment of the Project that are reasonably required to preserve the Project. Developer may not withdraw funds from the Replacement Reserve Account for any other purpose without the prior written approval of the Agency. 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, disability, religion, sex, 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 contract (for 55 years). (c) In Employment. In construction on the Property, Developer shall not discriminate against any employee or applicant because of race, color, creed, religion, sex, marital status, 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, disability, creed, religion, sex, marital status, disability, 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 for the benefit of Agency, provided that the foregoing covenant shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. 14. ENVIRONMENTAL MATTERS 14.1 Representation and Warranty. Except as disclosed in writing to the Agency, Developer has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials, or of the transportation to or from the Property of any Hazardous Materials, (b) that asbestos or polychlorinated biphenyls 80A-1 52 (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 pennit 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 operation and maintenance of the Property. 14.4 Notice of Environmental Matters. Developer shall immediately advise Agency 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 bv the Developer. Developer agrees to defend, indemnify and hold harmless the Agency and its 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 resulting from the gross negligence or willful misconduct of any Indemnitee.. 15. OTHER AFFIRMATIVE COVENANTS While any obligation of Developer under the Agency Promissory Note or Agency Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that City Project Manager otherwise consents in writing: 15.1 Existence. The sole member of 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 Agency. 15.2 Protection of Lien. Developer shall maintain the lien of the Agency Deed of Trust as a valid second priority deed of trust on the Property and take all actions, and 80A-1 53 execute and deliver to Agency all documents, reasonably required by Agency from time to time in connection therewith. 15.3 Notice of Certain Matters. Developer shall give notice to Agency, 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 $5,000; and any litigation or claim that inight subject Developer or any general partner to liability in excess of $5,000, whether covered by insurance or not; (b) any dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which might materially affect 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; (c) 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 Agency all documents, and take all actions, reasonably required by Agency from time to time to confirm the rights created or now or hereafter intended to be created under the Agency Loan Documents; to protect and further the validity, priority and enforceability of the Agency 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 Agency Deed of Trust or otherwise to carry out the purposes of the Agency Loan Documents and the transactions contemplated thereunder. 15.5 Annual Financial Statements. Developer shall deliver to Agency, witl�iin one hundred fifty (150) days after the end of each Calendar Year, (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 80A-1 54 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 chief financial officer 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 Agency, (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 Agency with any other annual audit reports issued by other monitoring agencies. Developer shall include in said reports, a document in the "Form of Residual Receipts Report" attached hereto as Exhibit G and incorporated herein. 15.6 Audits and Access to Records. Developer agrees that Agency or any of their authorized representatives shall have the right of access, upon reasonable notice and during normal business hours, to any books, documents, papers, or other records of Developer which 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 or recapture period ends. 15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the Property to the Agency every fifth (5h) year beginning January 2023. 16. OTHER COVENANTS While any obligation of Developer under the AgencyNote or Agency Deed of Trust remain outstanding, the following provisions shall apply, except to the extent that City Project Manager 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 Agency, Developer shall not sell, lease (other than to tenants meeting the requirements set forth in this Agreement), sublease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of the City Project Manager, which consent may be withheld in the City Project Manager's reasonable discretion. In connection with the foregoing consent requirements, Developer acknowledges that Agency 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. 80A-1 55 Notwithstanding anything to the contrary contained herein, a "transfer" shall not include (i) a transfer of a General Partner's interest in Developer when made in connection with the exercise by the Developer's limited partner (the "Limited Partner") of its rights upon a default by a General Partner under the Developer's Partnership Agreement (the "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 pursuant to the right of first refusal or to one or more of the General Partners pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with a default by the Limited Partner under and in accordance with the Partnership Agreement; and (iv) any sale, transfer or other disposition of the Limited Partner's interest in the Developer or of an interest in the Limited Partner. 17. CERTIFICATE OF COMPLETION Upon satisfactory completion of the construction and upon the request of Developer, or at its own election, the Agency shall issue a Certificate of Completion. Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction. If Agency declines to furnish a Certificate of Completion after written request from Developer, the City Project Manager 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 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, Agency may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with Agency of a bond or other form of security acceptable to the City Project Manager 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 Agency 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. 18. INDEMNIFICATION 18.1 Nonliability of Agency. Developer acknowledges and agrees that: (a) The relationship between Developer and the Agency is and shall remain solely that of Developer and lender. Agency 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 80A-1 56 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 Agency in connection with such matters is solely for the protection of Agency 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 Agency is not a partner, joint venture, alter -ego, manager, controlling person or other business associate or participant of any kind of Developer and Agency does not intend to ever assume any such status; (ii) Agency's activities in connection with the 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 Agency does not intend to ever assume any responsibility to any person for the quality or safety of the Property; and (iii) Agency shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) Agency 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 Agency tinder the Loan Documents, including any certificate, financial statement, survey, appraisal or insurance policy, Agency 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 Agency to anyone. 18.2 Indemnitv. Developer shall defend (by counsel reasonably satisfactory to Agency), 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) this Agreement; (ii) the making of the Loan(s); (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 Agency with respect to the consequences of any act of gross negligence or willful misconduct of Agency. Developer's obligations under this Section shall survive the cancellation of the Agency Promissory Note, release and reconveyance of the Agency Deed of Trust, issuance of the Certificate of Completion, and termination of this Agreement. 18.2.1 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 Loan. 80A-1 57 18.3 Reimbursement of Agency. Developer shall reimburse Agency immediately upon written demand for all costs reasonably incurred by Agency (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or ernployees of Agency) 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 Agency is indemnified under the Loan Documents. Such reimbursement obligations shall bear interest from the date occurring twenty (20) days after Agency gives written demand to Developer and shall be secured by the Agency Deed of Trust. Such reimbursement obligations shall survive the cancellation of the Loan Note, release and reconveyance of the Agency Deed of Trust, issuance of a Certificate of Completion, and termination of this Agreement 19. INSURANCE, CASUALTY AND CONDEMNATION 19.1 Policies Required. While any obligation of Developer under the Loan Documents remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of "A" or above and reasonably approved by the Agency, the following policies of insurance in form and substance reasonably satisfactory to the City Attorney: (a) worker's compensation insurance and any other insurance required by law in connection with the construction; (b) prior to cominencement and following completion of the construction, fire and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief arid all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (c) upon commencement of the construction and at all times prior to completion of the construction, builder's risk -all risk insurance covering 100% of the replacement cost of all Improvements (including offsite materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (d) public liability insurance in amounts reasonably required by Agency from time to time, and in no event less than $ 1,000,000 for "single occurrence;" (e) property damage insurance in amounts reasonably required by the Agency from time to time, and in no event less than $1,000,000; and any other insurance reasonably required by Agency which is available at commercially reasonable rates. 80A-1 58 All such insurance shall provide that it may not be canceled or materially modified without thirty (30) days prior written notice to Agency. The policies required under subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and substance satisfactory to Agency, showing the Agency as encumbrance. The Agency shall be named as an additional insured in the policies required under subparagraphs (d) and (e). Certificates of insurance for the above policies (and/or original policies, if required by Agency) shall be primary and delivered within ten (10) days after demand therefore, and prior to start of any construction work. All policies insuring against damage to the Improvements shall contain an agreed value clause sufficient to eliminate any risk of co- insurance. No less than thirty (30) days prior to the expiration of each policy, Developer shall deliver to Agency evidence of renewal or replacement of such policy reasonably satisfactory to the City Attorney. 19.2 City Attorney May Modify. The City Attorney may modify the type and amounts of insurance required pursuant to this Section so long as such modifications are commercially reasonable for an affordable housing development such as the Project. 19.3 Claims and Proceedings. Developer shall give Agency 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 Agency with copies of all documents which peitain to any such casualty or Condemnation. Developer shall take all action reasonably required by Agency in connection therewith to protect the interests of Developer and/or Agency, and Agency 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. 19.4 Delivery of Proceeds to Agency. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the Agency immediately upon receipt. 19.5 Application of Casualty Insurance Proceeds. 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 (tmless extended by mutual agreement of Developer and Agency) following the occurrence of the receipt of the Proceeds: (a) Developer shall demonstrate to Agency's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b) and any undisbursed loan and tax credit proceeds available to the Developer) will be adequate to repair the Improvements and to restore the fair market value 80A-1 59 of the Property, within a time period reasonably determined by Agency, to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to Agency of (i) plans and specifications reasonably satisfactory to Agency, and (ii) a construction contract in form and content, and with a contractor, reasonably satisfactory to Agency. (b) To the extent that the Proceeds (together with all undisbursed Loan proceeds and any other financing proceeds available to the Developer) are insufficient to accomplish the restoration required above, Developer shall deliver to Agency funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to Agency as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. M Developer shall execute such documents as Agency 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. 19.6 Method of Disbursement and Undishursed Funds. Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by Agency 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 Agency against any obligations to Agency that are secured by a lien on the Property, as they elect in their sole and absolute discretion. 19.7 Failure to Satisfy Conditions. In the event that Developer fails to fulfill the Restoration Conditions within one hundred eighty (180) days (unless extended pursuant to Section 19.5) following the date Proceeds are received, the Proceeds shall be applied by Agency against any obligations to Agency 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 Agency in its sole and absolute discretion. 19.8 Restoration. Nothing in this Section 19 shall be construed to excuse Developer from repairing and restoring all damage to the Property in accordance with other Loan Document provisions, regardless of whether insurance proceeds are available or sufficient. 19.9 Condemnation; Treatment of Compensation. Subject to any superior rights of Senior Lender, Developer hereby assigns to the Agency, as security for all obligations to Agency 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 Agency immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of Agency, renders or is likely to render the Property not economically viable or 80A-1 60 if, in Agency's reasonable judgment Developer's security is otherwise impaired, Agency 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 Agency may determine, and without any adjustment in the amount or due dates of payments due under the Note. If so applied, any award in excess of the unpaid balance of the Note and other sums due to Agency shall be paid to Developer or Developer's assignee. Agency shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. 19.9.1 Notwithstanding the foregoing, as long as the value of Agency's liens are not impaired, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. 19.9.2 Notwithstanding the foregoing, during the tax credit compliance period for the Project, as determined under Section 42 of the Internal Revenue Code, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project. 19.10 Waiver of Subrogation. Developer hereby waives all rights to recover against the Agency (or any officer, employee, agent or representative of Agency) for any loss incurred by Developer from any cause insured against or required by any Loan Document, to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation. 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 Agency Promissory Note when due, and such failure is not cured within fifteen (15) 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 fifteen (15) 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 80A-1 61 cure, and thereafter diligently (in any event within ninety (90) 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) The Property is materially damaged or destroyed by fire or other casualty unless Developer fulfills the Restoration Conditions set forth in the insurance provisions of this Agreement within one hundred twenty (120) days (unless extended pursuant to Section 19.5) and thereafter diligently restores the Property in accordance with this Agreement; (f) Work on the construction ceases for thirty (30) consecutive days for any reason (other than governmental orders, decrees or regulations, acts of God or any other deity, strikes or other causes beyond Developer's reasonable control); (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 sixty (60) days or more for any reason; (11) Developer is dissolved, liquidated or terminated, or all or substantially all of the assets of Developer are sold or otherwise transferred without the City Project Manager'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 of 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, custodian, 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, construction 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; or 0) (i) any of the Senior Loan documents is revoked or terminated, in whole or in part and for any reason (except due to repayment of such loans), without the City Project Manager's prior written consent, or (ii) Developer defaults or otherwise fails to perform any of its duties or obligations under or in connection with any of the Senior Loan documents, subject to all applicable notice and cure periods, or (iii) any of the Senior Loan documents is amended, supplemented or otherwise modified without Agenc)�s prior written consent, which consent shall not be unreasonably withheld. Notwithstanding anything to the contrary contained herein, Agency hereby agrees that any 80A-1 62 cure of any default made or tendered by Developer's Limited Partner shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. 20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, Agency 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 (e) shall automatically, without notice or other action on Agency'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 Agency elects in its sole and absolute discretion; and, (d) Suspend or terminate the award of Agency funds if Developer fails to comply with any term of such award. 20.3 Cumulative Remedies: No Waiver. Agency's rights and remedies under the Loan Documents are cumulative and in addition to all rights and remedies provided by law. The exercise by Agency 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 Agency in the exercise of any other right or remedy. No waiver of any default shall be implied from any omission by Agency 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. Ageney's consent to or approval of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary Agency's consent to or approval of any subsequent act. The Agency's acceptance of the late performance of any obligation shall not constitute a waiver by Agency of the right to require prompt performance of all further obligations; Agency's acceptance of any performance following the sending or filing of any notice of default shall not constitute a waiver of either partys right to proceed with the exercise of its remedies for any unfulfilled obligations; and Agency's acceptance of any partial performance shall not constitute a waiver by Agency of any rights. 80A-1 63 21. MISCELLANEOUS 21.1 Obligations Unconditional and Ind2pendent. Notwithstanding the existence at any time of any obligation or liability of Agency to Developer, or any other claim by developer against Agency, in connection with the 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: AMCAL 1440 Santa Ana Fund, L.P. c/o AMCAL Multi -Housing, hie. 2082 Michelson Drive, Suite 306 Irvine, CA 92612 Attention: Mario Turner Copy to: AMCAL Multi -Housing, hie. 3 0141 Agoura Road, Suite 100 Agoura Hills, CA 91301 Attention: General Counsel Copy to Limited Partner If to Agency: Housing Authority of the City of Santa Ana Executive Director 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, California 92702 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 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 80A-1 64 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 Loan(s) described herein and have been or will be relied on by Agency 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 Agency, and no other person shall have any rights hereunder or by reason hereof. 21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and Agency and their respective successors and assigns. Other than as expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or obligations under any Loan Document without the prior written consent of Agency, which consent may be withheld in Agency's sole and absolute discretion. Any such assignment without such consent shall, at Agency's option, be void. 21.6 Prior Agreements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement between the Agency and Developer with respect to the 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 Governin2 Law. All of the Loan Documents shall be governed by, and construed and rced 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 Agency 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 80A-1 65 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 Agency shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement which is prohibited by law. 21.13 Warranty Amainst 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 PlansandData. Where Developer does not proceed with the work and construction of the Project, and when this Agreement is terminated with respect thereto for any reason, Developer shall deliver to Agency any and all plans and data concerning the Property, and Agency or any person or entity designated by Agency shall have the right to use such plans and data without compensation to Developer. Such right of Agency 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 Agency fully, including reasonable costs and attorney's fees, for any injuries or damages to Agency in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. 21.17 Transfer of Developer Limited Partner's Interest. Notwithstanding anything to the contrary in this Agreement or the Loan Documents, no consent shall be required of the Agency (and it shall not be deemed a default or an Event of Default under any of the Loan Documents), in connection with the transfer and/or the assignment by the Developer's limited partner of its interest in the Developer to an entity controlled or managed by an entity which is related to or under common control with the Developer's limited partner. 21.18 Removal of Developer's General Partner. Notwithstanding anything to the contrary in this Agreement or the Loan Documents, the removal and/or replacement of a General Partner for cause in accordance with the Partnership Agreement shall not require the consent of the Agency and shall not shall not constitute a default or an Event of Default under this Agreement or the Loan Documents or accelerate the maturity of the Agency Loan. If the Developer's limited partner exercises its right to remove a General Partner, Agency will not unreasonably withhold its consent to the substitute general partner; provided however, the consent of either the Agency shall not be required if the substitute general partner is an affiliate of the Developer's limited partner. The substitute general 80A-1 66 partner shall assume all of the rights and obligations of the removed general partner hereunder. 80A-1 67 IN WITNESS WHEREOF, the patties hereto have caused this Loan Agreement to be executed on the date set forth at the beginning of this Agreement. ATTEST: HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE HOUSING SUCCESSOR AGENCY Maria D. Huizar Gerardo Mouct Clerk of the Council Acting City Manager APPROVED AS TO FORM Sonia R. Carvalho City Affo)ney A 10 RECOMMENDED FOR APPROVAL Robert C. Cortez Deputy City Manager ISignaturew continue onfb11oMngpage) FORM Moo DEVELOPER: ANICAL 1440 Santa Ana Fund, L.P., a California limited partnership By: AMCAL 1440 Santa Ana Fund, LP, a California limited partnership in 80A-1 69 EXHIBITS A. Legal Description B. Affordability Restrictions on Transfer of Property C. Agency Deed of Trust D. Agency Promissory Note E. Project Budget F. Scope of Work / Schedule of Performance G. Form of Residual Receipts Report H. Partnership Agreement 80A-1 70 Exhibit Ae. Legal Description 80A-1 71 EXHIBIT "A" Legal Description All that certain real property situated in the County of Orange, State of California, described as follows Parcel 1: The Easterly 112.51 feet of the Westerly 437,51 feet of that portion of land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the Final Decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the center lines of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centertine of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0* 06'40" East 397.90 feet to the Southeast corner of said land of Crackly Corporation; Thence South 89' 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 00 06'48" West 398.34 feet to the point of beginning. Excepting therefrom, that portion of the North 71.00 feet as described in the Deed to the City of Santa Ana, recorded April 15, 1960 in Book 5196. PaRe 381 of Official Records. Parcel 2 A non-exclusive easement for ingress and egress over the South 25 feet of the Westerly 325 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 8 12.56 feet along the centerfine of said First Street to the Northeast comer of land described in a Deed to Crockly Corporation and others, recorded August 28, 1959 in Book 4860. Page 4 of Official Records; Thence South 00 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 890 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the center line of said Me Clay Street; Thence North 00 06'48" West 398.34 feet to the point of beginning. Parcel 3: The Westerly 175.00 feet of the Easterly 375,00 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West San Bernardino Base and Meridian; Thence North 89' 10' 10" East 8 12.56 feet along the centertine of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06'40" East 397.90 feet to the Southeast comer of said land of Croddy Corporation; Thence South 89' 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 0' 06'48" West 398.34 feet to the point of beginning, 80A-1 72 Excepting therefrom, the South 21 feet of the North 71 feet thereof Parcel 4: A non-exclusive easement for ingress and egress over the South 25 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago Do Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Pa2e 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast comer of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 00 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89' 08' 20" West 812,54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 0' 06'48" West 398.34 feet to the point of beginning, Excepting therefrom, the Easterly 375.00 feet. Parcel 5: A non-exclusive easement for ingress and egress, for sewer lines, public utilities and drainage and the maintenance of these items over the South 25 feet of the following described land: The Westerly 437 feet of that portion of the land allotted to N. 0. Stafford and C. Tustin, in the City of Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the l7th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the center line of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County Recorder of said County, California, said point being the Northwest comer of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812,56 feet along the centerline of said First Street to the Northeast comer of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89' 08'20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 00 06'48" West 398,34 feet to the point of beginning. Assessor's Parcel Number: 011154-43 80A-1 73 Exhibit Be. Affordability Restrictions on iii��ir I 80A-1 74 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: City of Santa Ana Community Development Agency 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, CA 92702-1988 Attention: Housing Division Manager AFFORDABILITY RE, STRICTIONS ON TRANSFER OF PROPERTY JAddress: 1440 East First Street, Santa Ana, California) THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the "Restrictions") are entered into by and between AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership ("Developer") and the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a public body, corporate and politic ("Agency"). RECITALS: A. The Agency is authorized by the Community Redevelopment Law of the State of California (Health and Safety Code section 33000, et seq.) ("CRL") to expend funds to increase the supply of very low and low income housing available at affordable housing costs. In part to further this goal, the Agency has created the Merged Project Areas, within the City (the "Project Area"), and adopted a Redevelopment Plan for the redevelopment of the Project Area. In accordance with Section 33334.2, et seq., of the CRL, the Agency sets aside a portion of the tax increment revenues it receives from the Merged Project Area in a separate low and moderate housing fund, which the Agency uses for the construction, preservation, and rehabilitation of affordable housing for low income households. B. Developer requested financial assistance in connection with the proposed development of a sixty-nine (69) unit affordable workforce housing complex ("Project") to be located at 1440 East First Street, Santa Ana, California, and legally described within Exhibit A attached hereto and incorporated herein ("Property"). The residential units will be located within six (6) buildings. The rental units (less one manager's unit) are 100% affordable to family households earning between 30% and 60% of the Area Median Income ("AMI"). The unit mix currently consists of six (6) four-bedroom units, twenty-eight (28) three-bedroom units, and thirty-five (35) two-bedroom units (one being a manager's unit). Eight (8) of the units will be assisted by the Santa Ana Housing Authority's Project -Based Voucher Program. On-site amenities will include a community room and amenity space including tot lots/play areas for children, outdoor seating, BBQ's, a flex play space and planters. The community room will be 80A-1 75 incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. Developer will engage a qualified non-profit organization approved by the City (of which LifeSTEPS is hereby approved by the City) to provide free on-site social services to Project tenants. Services will be provided in the form of classes and workshops with the subject matter tailored by a social service coordinator to the specific needs of the community. C. The City of Santa Ana ("City") and the Housing Authority of the City of Santa Ana ("Housing Authority") reviewed Developer's request for assistance and at the City Council/Housing Authority meeting on December 20, 2016, the Housing Authority Board authorized and approved issuance of a conditional, pre -commitment letter evidencing the preliminary award of $6,195,000 of funds to the Project ("Agency Loan"), to be funded exclusively from the Low and Moderate Income Housing Asset Fund (the "LMIHAF") held by the Agency. D. The amount of the Agency Loan was determined based upon the City and Agency's review of the Developer's request for the receipt of the Agency Loan and the development proforma and projected cash flows for the Project submitted by the Developer to the City/Agency as of March 18, 2016 ("Proforma"). The Housing Authority's Executive Director has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the Agency Loan is not materially increased or extended. E. hi furtherance of the CRL and the Redevelopment Plan, Developer has applied to the Agency for a loan with which to: 1. Provide deeper affordability and construct the improvements to the Property, and 2. Thereafter to maintain, operate and professionally manage the Project as decent, safe, sanitary and affordable rental housing. F. The Agency, on certain terms and conditions, desires to make such Agency Loan to Developer in order to make possible the construction of the Project, thereby expanding the supply of decent, safe, sanitary and affordable housing. G. If there is any inconsistency between Federal, State, and local guidelines with regard to any of the terms and conditions contained herein, the more stringent shall apply. H. The Agency Loan Agreement, Agency Deed of Trust, and Agency Promissory Note, dated concurrently herewith (collectively the "Agency Loan Agreements") are entered into for the purpose of providing for affordable very low income residential rental units in the City of Santa Ana pursuant to the Agency Funds regulations and guidance. NOW, THEREFORE, AGENCY AND OWNER COVENANT AND AGREE AS FOLLOWS: 1. Definitions 80A-1 76 "Affordable Housing" means the total housing costs paid by a qualifying household, which shall not exceed the fraction of gross income specified, as follows, in accordance with Sections 50052.5 and 50053 of the Health & Safety Code: Very Low -Income Households. Thirty (30) percent of the income of a household earning fifty (50) percent of the Orange County median income adjusted for family size appropriate for the unit. Low -Income Households. Thirty (30) percent of the income of a household earning seventy (70) percent of the Orange County median income for for -sale units, and thirty (30) percent of the income of a household earning sixty (60) percent of the Orange County median income for rental units, adjusted in either case for family size appropriate for the unit. In the event of a conflict between the fractions specified in this definition and those found in Sections 50052.5 and 50053 of the Health & Safety Code, the fractions specified by State law shall control. "Affordability Period" also referred to as "Term of Affordability", shall be fifty-five (55) years from date of issuance of Certificate of Completion. "Affordable Rent" means the monthly rents which do not exceed the maximum amount applicable to Extremely Low, Very Low and Low Income households, as promulgated by the California Tax Credit Allocation Committee (TCAC). "Agency" means 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 CRL. The principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702. "Agency" shall also refer to the City where the context dictates, to the effect that City shall have all rights granted to the Agency hereunder. "Agency Deed of Trust" means the deed of trust encumbering the Property to be executed by Developer in order to secure the Agency Loan Note. "Agency Loan" means a loan in the original principal amount of tip to six -million, one - hundred and ninety-five thousand dollars ($6,195,000) to be made to Developer by the Agency to be funded exclusively from the Low and Moderate Income Housing Asset Fund held by the Agency. "Agency Promissory Note" means that certain promissory note for Agency Loan funds in the original principal amount of $6,195,000 to be executed by Developer in favor of Agency to evidence the obligation of Developer to repay the Agency Loan through residual receipts as further described in the Agency Promissory Note. "Agreement" means this Affordability Restrictions on Transfer of Property between the Agency and the Owner affecting real property. 80A-1 77 "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the Agency Funds. "Building Permit" means the building permit(s) issued by the City of Santa Ana 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 for the conduct of City affairs. "Calendar Year" means each consecutive twelve (12) month period from January I to December 3 1. "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" shall also refer to the Agency where the context dictates, to the effect that the Agency shall have all the tights granted to the City hereunder. "City Project Manager" shall mean the City Manager and/or his/her designee. "Close of Escrow" shall mean the date upon which the Agency Loan Agreement and Agency Deed of Trust recorded in the Official Records of the County. "Closing Statement" means the final statement of Owner's Escrow account for the purchase of the Property pursuant to the purchase contract, "County" means the County of Orange, California. "Developer" or "Owner" means AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership. "Extremely Low Income" means an adjusted income which does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. "Event of Default" has the meaning set forth in Section 20. 1. "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 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 §gq., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction products, household cleaners and office materials 80A-1 78 of the type and quantity ordinarily used in the normal construction, operation and maintenance of properties similar to the Project or (ii) small amounts of household mold to the extent promptly remediated upon discovery. "HCD" means the California Department of Housing and Community Development (HCD) and any successors or assigns thereof. "Housing Authority" means the Housing Authority of the City of Santa Ana, a public body, corporate and politic. "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). "Indebtedness" of a person means (a) all indebtedness for borrowed money, (b) notes payable and drafts accepted representing extensions of credit, whether or not representing obligations for borrowed money, (c) any obligation for the purchase of property or services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or (ii) evidenced by a note or similar instrument, and (d) all recourse and all non- recourse indebtedness secured by any Lien on any property or asset of such person (whether or not assumed by such person). "Indemnitees" has the meaning set forth in Section 18.2. "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). "Loan Documents" or "Agency Loan Documents" means, collectively, this Agreement, the Agency Promissory Note, the Agency Deed of Trust, and the Affordability Restrictions on Transfer of Property, and any other agreement, docinnent, or instrument that the Agency reasonably 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 which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by TCAC. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HCD. Also may be referred to interchangeably in the Agency Loan Documents as "Area Median Income" or "AMI". 80A-1 79 "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 City Project Manager in writing. "Permitted Encumbrances for the Agency Deed of Trust" means the Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the Property hereafter approved by the City Project Manager in writing. "Project" means the construction of the Improvements upon the Property by Owner pursuant to this Agreement. "Project Budget" means the line -item budget for the Project attached as Exhibit G to the Agency Loan Agreement, as modified from time to time in accordance with the Agency Loan 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 1440 East First Street in 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. "Restricted Units" means the units restricted as affordable by the City Documents. "Scope of Work" means the detailed statement of the work to be performed by Owner on and to the Property pursuant to this Agreement, which is attached as Exhibit H to the Agency Loan Agreement. "Schedule of Performance" means the detailed schedule setting forth timeframes for certain tasks, which document is attached as Exhibit I to the Agency Loan Agreement. "Senior Lender" means a commercial financial institution providing the Senior Loan or any other holder of the Senior Loan Note. "Senior Loan" means a loan from the Senior Lender concurrent to the Agency Loan for payment of a portion of the acquisition and rehabilitation costs, and shall include any subsequent loan that refinances the initial Senior Loan. "Senior Loan Deed of Trust" means the first deed of trust securing the Senior Loan by encumbering the Property. "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, "Senior Loan Note" means the promissory note evidencing the Senior Loan from the Senior Lender. Foerlyfflffoerl "Term of Affordability" the terms and conditions contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion. "Very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by TCAC. 2. Use of the Property. Owner covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property of any part thereof) that Owner, such successors, and assigns shall use the Property to provide affordable rental housing, for Very Low Income households, as provided in the Agency Loan Agreement and these Restrictions 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 assign and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely -low, very low and low income households at rents affordable to such households for fifty- five (55) years from the effective date of the issuance of the Certificate of Completion. b. The Project shall consist of approximately sixty-nine (69) units of which there will be six (6) four-bedroom units, twenty-eight (28) three-bedroom units, and thirty-five (35) two-bedroom units (one being a manager's unit). The affordability mix for the Project is as follows: Bedroom Size 30% AMI 40% AMI 50% AMI 60% AMI Manager's Unit Total Two Bedroom 29 0 4 1 1 35 Three Bedroom 4 0 17 7 28 Four Bedroom 1 0 0 5 6 Totals 34 -0 21 13 1 69 C. Affordable rents shall be calculated and governed as provided by the California Tax Credit Allocation Committee (TCAC), Rental increases shall be in conformance with federal and state law. d. 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 tables published by TCAC. 80A-1 81 3.2 Rent Increases: A. On an annual basis, the Agency shall provide the Developer with the maximum allowable schedule of incomes and rents (less utility allowance appropriate for the Restricted Units for the Property) which shall correspond to the maximum rent increase allowed by TCAC. B. Developer, its successors and assigns shall not charge rents for the Restricted Units in excess of the amounts set forth in the tables as adjusted from time -to -time by TCAC. The City Manager, or designee, shall notify Owner in writing of the adjusted allowable maximum incomes and rents as allowed by TCAC. C. in no event shall the rent charged to the tenant of a Restricted Unit be more than that amount of the rent as published by TCAC, as amended from time to time (currently $604 for a two-bedroom unit, $700 for a thiec-bedroom unit, and $780 for a four-bedroom unit). D. Utility allowances must be deducted from the Maximum Gross Monthly Rent. Utility allowances are deducted from rents using the following amounts set annually by the Housing Authority of the City of Santa Ana, provided, however, in lieu of the utility allowance published by the Housing Authority the Developer may elect to use the California Utility Allowance Calculator to the extent allowed by TCAC. 4. Miscellaneous Provisions: A. Owner shall adopt and include as part of its Management Plan (described in subsection G below), written tenant selection policies and criteria for the Units that meet the following requirements: (a) Are consistent with the purpose of providing housing for Extremely -Low, Very -Low and Low Income households; (b) Are reasonably related to program eligibility and the applicants' ability to perform the obligations of the lease; (c) Reserved; (d) Provide for: (i) The selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (ii) The prompt written notification to any rejected applicant of the grounds for any rejection; (e) Provide first priority in the selection of qualified eligible tenants to households that are referred by the Agency; and (1) 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, 80A-1 82 ethnic and gender groups in the housing market area to the units. Owner, the Agency shall cooperate to effectuate this provision prior to the initial renting, or upon occurrence of a vacancy, and the re -renting of any Restricted Units. B. Owner, 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 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. C. Any lease of any of the Units must be for not less than one year, unless by mutual agreement between the tenant and the Owner. Should the tenant and Owner 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 Owner. The lease may not contain any of the following provisions (in which references to "Owner" shall mean the Owner, its successors or assigns): (a) 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; (b) 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; (c) 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; (d) Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant; (e) 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; (l) Agreement by the tenant to waive any right to a ti ial by jury; (g) 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 (h) 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. D. Owner, its successors or assigns, must adhere to state law requirements with regard to termination of tenancy, 80A-1 83 E. Owner shall maintain the improvements on the Property in compliance with all applicable housing quality standards and state and local code requirements and shall keep the Property free from any unreasonable accumulation of debris or waste materials. Owner shall also maintain in a healthy condition any landscaping planted on the Property. F. Owner 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, disability, sex, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Owner 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, subtenams, 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. 0. Not later than the closing for the construction loan for the Project, Owner shall submit to the City Project Manager a Management Plan in a form that is acceptable including, but not limited to, the components listed below. Approval of the Management Plan must be obtained from the City Project Manager not later than the time for the issuance of a certificate of occupancy for the Project. Owner 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 City Project Manager, for the term of the income and rent restrictions contained in these Restrictions. The components of the Management Plan shall include: (a) Management Agent. Owner shall submit the name and qualifications of the proposed Management Agent. The City Project Manager shall approve or disapprove the proposed Management Agent in writing based on the experience and qualifications of the Management Agent. (b) Management Agreement. Owner shall submit a copy of the proposed management agreement specifying the amount of the management fee, and the relationship and division of responsibilities between Owner and Management Agent. (c) Annual Budget and Projected Cash Flows. Prior to the issuance of a certificate of occupancy for the Project, and annually thereafter not later than one hundred fifty (150) days after the close of each calendar year thereafter, Owner shall submit a projected operating budget and cash flow to the City Project Manager. The budget and cash flow shall be in a form that is reasonably acceptable to the City Project Manager. (d) Tenant Selection Policies. Owner shall include in the Management Plan the tenant selection policies in accordance with Section 4, above. H. If at any time the Agency determines that the units are not being managed or maintained in accordance with the approved Management Plan, Agency shall provide Owner with notice thereof which notice shall include a reasonable cure period not less than thirty (30) days. If the deficiencies have not been cured within the cure period provided in the Agency notice Owner F-.rJJ �A--. A L shall change the management agent or the practices complained of, upon receipt of written notice from the City Manager. The City Manager may require Owner 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 Owner without penalty, upon thirty (30) days prior written notice, at the direction of the City Manager. Within ten (10) days following a direction of the City Manager to replace the management agent, the Owner shall select another management agent or make other arrangements satisfactory to the City Manager or designee for continuing management of the units. 1. The covenants established in these Restrictions and any amendments hereto approved by the Agency, and Owner shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and their respective successors and assigns. These Restrictions shall remain in effect for fifty-five (55) years. In its discretion, the Agency may defer repayment of the Loan or the Agency 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. J. Reserved. K. Records and Audits. a. Owner shall maintain the following general program records, and make them available for inspection by the Agency, the State or HUD: (1) records which demonstrate compliance with the Equal Opportunity and Fair Housing requirements outlined in these Restrictions, including: (A) 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 NSP funds; (B) 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); (C) documentation and data on the steps taken to implement Owner's outreach programs to minority-owned and women -owned businesses to meet the minority outreach requirements of 24 CFR 92.350; (2) 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 date on which Owner obtained ownership of the Property; (3) any other reports issued by other monitoring agencies. 80A-1 85 b. All records pertaining to each calendar year of Agency funds must be retained for the most recent five year period, except that for rental housing projects, records maybe retained for five years after the project completion date; 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. Owner shall cooperate with the Agency 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 Agency, the State, 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. C. If so directed by the Agency upon termination of the Loan Agreement, Owner shall cause all records, accounts, documentation and all other materials relevant to the work to be delivered to the Agency, as depository. d. All records, accounts, documentation and other materials relevant to the Project shall be accessible at any time to the authorized representatives of the Agency on reasonable prior notice, for the purpose of examination or audit. e. The Agency shall perform an annual audit at the close of each calendar year in which these Restrictions are in effect. Owner shall reasonably cooperate with Agency in performing such audit. f. Owner shall permit the Agency to perform an Annual Physical Inspection of the Property with at least seven (7) days notice. Owner shall cooperate with this Inspection and shall take all steps necessary to quickly correct any code deficiencies identified during the Inspection. L. The Agency is the beneficiary of the terms and provisions of these Restrictions and the covenants herein, both for and in its 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. The Agency shall have the right if the covenants are breached, 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. M. The covenants and agreements contained herein shall run with the land and not be personal obligations of Owner. Upon the sale, conveyance or other transfer of the Property (a "Transfer") and the assumption of the obligations hereunder by a transferee, Owner's liability for performance shall be terminated as to any obligation to be performed hereunder after the date of such Transfer. N. The Loan Agreement and all of its attachments shall be enforceable by the Agency in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions on Transfer of Property, the Agency Note and the Agency Deed of Trust provide a means of enforcement by the Agency if Owner is in breach of its obligations hereunder and thereunder, including liens on the Property, deed restrictions and covenants running with the land. FOOTITMOOT19 IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed on the date set forth at the beginning of this Agreement. ATTEST: Maria D. Huizar Clerk of the Council APPROVED AS TO FORM Sonia R. Carvalho City Attorney By: Ryan 0. Hodge Assistant City Attorney RECOMMENDED FOR APPROVAL Robert C. Cortez Deputy City Manager HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE HOUSING SUCCESSOR AGENCY Gerardo Monet Acting City Manager (Signatures continue onfollowing page) 80A-1 87 DEVELOPER: AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership 0 FoorlyfflMougo Exhibit Co. Agency Deed of Trust FOODIMM'Pol FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: Community Development Agency City of Santa Ana 20 Civic Center Plaza P.O. Box 1988 (M-26) Santa Ana, California 92702 Attn: Housing Division Manager AGENCY DEED OF TRUST AND ASSIGNMENT OF RENTS THIS AGENCY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of Trust") made this _ day of February, 20t7, by between AMCAL 1440 Santa Ana Fund, L.P., a Califortria limited partnership (the "Trustor"), , a (the "Trustee"), and the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a public body, corporate and politic (the "Beneficiary"). Trustor, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the property located in the City of Santa Ana, County of Orange, State of California, described in the attached Exhibit A and more commonly known as 1440 East First Street, Santa Ana, California (the "Property"); TOGETHER with all the improvements now or hereafter erected on the Property, and all easements, rights, appurtenances and all fixtures now or hereafter attached to the Property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Property covered by this Agency Deed of Trust; provided that so long as Trustor is not in default hereunder, it shall be permitted to control the Property in accordance with the requirements of that certain Agency Loan Agreement entered into between the Trustor and the Beneficiary, dated concurrently herewith, which Agreement is on file with the Beneficiary as a public record; TOGETHER with the right, power and authority during the continuance of this Trust, to collect the rents, issues, and profits of the Property, reserving unto the Truster the right, prior to any default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the performance of any agreement under this Deed of Trust, to collect and retain these rents, issues and profits as they become due and payable; and, TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected, or hereafter to be erected, on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and 80A-1 90 chattels and personal property as are ever used or famished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner; and 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; TO SECURE to the Beneficiary (a) the repayment of the sums evidenced by a Promissory Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of six - million, one -hundred and ninety-five thousand dollars ($6,195,000) (the "Agency Promissory Note"); (b) the performance of the covenants and agreements of Borrower contained in a certain Agreement as hereinafter defined; and (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of Trustor contained herein. TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS: I . The Agreem . This Deed of Trust is executed and delivered, along with the Agency Promissory Note and the Agency Loan Agreement, to benefit the Property. A copy of said Agency Loan Agreement is on file as a public record with the Beneficiary and is incorporated herein by reference (the "Agreement"). Trustor ackriowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into the Agreement or Agency Promissory Note secured by this Deed of Trust. 2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security; that other than this Deed of Trust, the Security is not encumbered except for obligations secured by deeds of trust, or any other security agreement, to secure financing or refinancing for the purchase and rehabilitation of the Property. 3. Repayment of the Loan. Trustor will promptly repay, when due, the principal loan amount, as required by the Agency Promissory Note secured by this Deed of Trust. 4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to the Senior Loan, but the Agency's Affordability Restrictions on Transfer of Property shall remain in first place except that the Agency's Affordability Restrictions on Transfer of Property shall be subordinated to Trustor's Senior Loan for acquisition. 5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Instrument, including Truster's covenants to make payments when due (subject to all applicable notice and cure provisions). Trustor will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by Trustor making any payment, when due, directly to the payee thereof. Trustor will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the event Trustor makes payment directly, Trustor will promptly discharge any lien which has priority over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed 80A-1 91 of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof. 6. Hazard Insurance. Truster will keep the Security insured by such insurance policies in such amounts and for such periods as called for in the Agreement. All insurance policies and renewals thereof will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lender and the Beneficiary as their interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, of cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly famish to the Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums subject to the rights of any senior lender. hi the event of loss, Truster will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive 30 days advance notice of cancellation of any insurance policies required under this Section. Unless the Beneficiary and Truster otherwise agree in writing, insurance proceeds, subject to the fights of any senior lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance proceeds will be used to repay the loan secured by this Deed of Trust, with the excess, if any, paid to Trustor. If the Security is abandoned by Trustor, or if Truster fails to respond to the Beneficiary, or its designated agent within 30 days from the date notice is mailed by either of them to Truster that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Security or to repay the loan. If the Security is acquired by the Beneficiary, all right, title and interest of Truster in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the fights of any senior lender. 7. Preservation and Maintenance of Securit . Trustor will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. Protection of the Beneficiary's Securi . If Trustor fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the Beneficiary's interest in the Security, including, but not limited to, default under the Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Beneficiary, at the Beneficiarys option, upon notice to Truster, may make such appearances, disburse such sums and take such action as it determines necessary to protect the Beireficiary's interest, including, but not limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs. 80A-1 92 Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon, will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the Beneficiary agree to other terms of payment, such amount will be payable upon notice from the Beneficiary to Truster requesting payment thereof, and will bear interest from the date of disbursement at the rate payable from time to time on outstanding principal under the Agency Promissory Note unless payment of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate permissible under applicable law. Nothing contained in this paragraph will require the Beneficiary to insure any expense or take any action hereunder. 9. hispectio . The Beneficiary may make, or cause to be made, reasonable entries upon and inspections of the Security upon reasonable prior notice during normal business hours; provided that the Beneficiary will give Truster reasonable notice of inspection. 10. Forbearance by the Beneficiary Not a Waive . Any forbearance by the Beneficiary in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary will not be a waiver of the Beneficiar�s right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 12. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Beneficiary and Trustor subject to the provisions of this Deed of Trust. 13. Joint and Several Liability. All covenants and agreements of Trustor shall bejoint and several. 14. Notice. Except for any notice required tinder applicable law to be given in another manner, (a) any notice to Trustor provided for in this Agency Deed of Trust will be given by certified mail, return receipt requested, addressed to Trustor at 2082 Michelson Drive, Suite 306, Irvine, CA 92612, (b) any notice to the Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Housing Division Manager, or at such other address as the Beneficiary may designate by notice to Trustor as provided above, and (c) to Trustee at Notice shall be effective as of the date received as shown on the return receipt. 15. Govemin2 Law. This Deed of Trust shall be governed by the laws of the State of California with venue in Orange County. 16. Severability. In the event that any provision or clause of this Deed of Trust or the Agency Loan Note conflicts with applicable law, such conflict will not affect other provisions of this Deed of Trust or the Agency Promissory Note which can be given effect without the conflicting provision, and to fis end the provisions of the Deed of Trust and the Agency Loan Note are declared to be severable. 80A-1 93 17. Captio . The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust or the Agency Promissory Note secured by this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Truster notice thereof specifying: (1) The breach; (2) the action required to cure such breach; (3) a date not less than 30 days from the date the notice is received by Truster as shown on the return receipt, by which such breach is to be cured provided, however, that if such default is not reasonable susceptible to being cured within 30 days, Trustor shall have a reasonable period to cure the defect so long as Truster is diligently prosecuting the cure to completion; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also inform Trustor of Trustor's tight to reinstate after acceleration and the right to bring a court action to assert the non-existence of default or any other defense of Truster to acceleration and sale. Notwithstanding anything to the contrary contained herein, a "default" shall not include any transaction not considered a "transfer' under Section 16.2 of the Loan Agreement. If the breach is not cured on or before the date specified in the notice or such longer period as provided above or in the Agency Promissory Note or the Agreement, the Beneficiary, at the Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies pennitted by California law; (b) 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 thercol) and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be entitled to exercise every tight provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) continence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which 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. Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of any default made or tendered by Truster's limited partner shall be deemed to be a cure by Trustor and shall be accepted or rejected on the same basis as if made or tendered by Trustor. 80A-1 94 The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. 19. Trustors Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by the Beneficiary to enforce this Deed of Trust discontinued at any time prior to 5 days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of ajudgment enforcing this Deed of Trust if: (a) Truster pays the Beneficiary all sums w1rich would be then due under this Deed of Trust and no acceleration under the Agency Promissory Note has occurred; (b) Trustor cures all breaches of any other covenants or agreements of Trastor contained in this Deed of Trust; (c) Truster pays all reasonable expenses incurred by the Beneficiary and the Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attomeys'fees; and (d) Trustor takes such action as the Beneficiary may reasonably require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Security and Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 21. Reconveyance. Upon payment of all sums secured by Us Deed of Trust, the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the Agency Promissory Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time tc time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. Request for Notic . Trustor requests that copies of the notice of default and notice of sale be sent to Trustee at the address set forth in Section 14 above. 24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor shall have any personal liability under the Agreement, Agency Promissory Note, and this Deed of Trust and any judgment, decree or order for payment of money obtained in any action to enforce the obligation of Truster to repay the loan evidenced by such documents shall be enforceable against Trustor only to the extent of Trustor's interest in the Property. 80A-1 95 (Signatures on Following Page) 7 80A-1 96 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above. AMCAL 1440 Santa Ana Fund, LP., a California limited partnership 0 In 80A-1 97 Exhibit Do. Agency Promissory Note FOOMMUOT461 HOUSING FUNDS PROMISSORY NOTE SECURED BY SUBORDINATED DEED OF TRUST TO THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA (1440 East First Street, Santa Ana, California) $6,195,000.00 Principal Amount of Loan February_, 2017 Santa Ana, California FOR VALUE RECEIVED, ANICAL 1440 Santa Ana Fund, L.P., a limited partnership ("Borrower"), hereby promises to pay to the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a public body, corporate and politic ("Agency"), or order, a principal amount not to exceed SIX-NULLION, ONE -HUNDRED AND NINETY-FIVE THOUSAND DOLLARS ($6,195,000) or so much thereof as may be advanced by the Agency to the Borrower, due and payable with 3% simple interest by residual receipts over the fifty-five (55) year term, pursuant to the Agency Loan Agreement (said "Agreement") between Borrower and the Agency dated concurrently herewith, which is incorporated herein by this reference. The Note Amount shall bear simple interest at the rate of 3% simple interest per annum, from the date of issuance of the Certificate of Occupancy. This loan is made pursuant to the "Housing Opportunity Ordinance In -Lieu Fee Program" or "In -Lieu Fees" with money funded through the Program as "Agency Housing Funds". Any capitalized term not otherwise defined in this Note shall have the meaning ascribed to such term in the Agreement. The obligation of Borrower to Agency hereunder is subject to the terms of said Agreement, the Affordability Restrictions on Transfer of Property, Agency Deed of Trust and this Note. Said documents are public records on file in the offices of the Agency, and the provisions of said documents are incorporated herein by this reference. This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and the Agency Deed of Trust are sometimes collectively referred to herein as the "Loan Docurnents." The Loan Documents and the rights and responsibilities inure to the benefit of the Agency. Any capitalized term which is not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. This Note evidences the obligation of Borrower to the Agency for the repayment of the Agency Loan of Agency Funds attributable to the acquisition, development, adaptive reuse and construction of the Property, and related soft costs. This Note is payable at the principal office of the City of Santa Ana — Community Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Attn: Housing Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful money of the United States. 80A-1 99 2. Definitions. For the purpose of calculating the payments to be made by Borrower to Agency pursuant to this Note, the following terms shall have the following respective meanings: "Agency Assisted Units" shall mean those rental units purchased and rehabilitated on Eligible Properties which are subject to the term of affordability. "Agency Funds" shall mean the money provided by the Housing Successor Agency for the construction of the rental units hereunder. "Agency Deed of Trust" shall mean the Agency Deed of Trust in favor of the Agency, securing the Agency Loan, substantially in the form attached to the Agreement as Exhibit D, which is incorporated herein by this reference. "Agency Lo " shall mean the loan evidenced by this Note repayable to the Agency in accordance with the terms of this Note and secured by the Agency Deed of Trust. "Agency's Percentage" with reference to the Residual Receipts, shall mean fifty percent (50%) of the total Residual Receipts from the Property as further described in Section 5 hereof. "Agreeme " means the Agency Loan Agreement between the Agency and the Developer, and any attachments or amendments thereto. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the Agency Housing Program, and the Agency Funds. "Area Median Income" means the median income figures for Orange County as published by the California Department of Housing and Community Development (HCD). Also may be referred to as "AMI" herein. "Borrower" means AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership. "Calendar Year" means each consecutive twelve (12) month period from January I to December 3 1. "Closing Cost " shall mean: G) 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 market place, 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. 80A-200 (ii) In the case of a Refinancing, the reasonable and necessary costs of consumating such Refinancing, including, without limitation, loan fees, loan repayment charges, costs of title insurance premiums, escrow fees, recording fees and attorneys' fees, "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 from leased and/or subleased spaces 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 also includes any casualty insurance proceeds in excess of those used to restore the Property and any rental interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at the time cash proceeds (principal 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. "Housing Successor Agency Loan" means the loan made by the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency to the Developer in the original principal amount of $6,195,000. "Operating EMenses" shall mean the sum of the following: (i) payments of principal and interest and all other charges relating to the Senior Loan(s); (ii) a property management fee not to exceed 8% of gross rents; (iii) Owner Administration Fee not to exceed 5% of gross rents; Gv) deposits into required reserves; (v) any deferred developer fee; (vi) all other actual, reasonable cash operating costs and expenses, calculated on an annual basis, that are directly attributable to managing and operating the Property, 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 Agency; and other such items constituting operation, maintenance and repair costs actually paid by the Borrower, subject to the following conditions: (a) Depreciation and amortization expenses shall not be considered Operating Expenses, except as otherwise provided herein. 3 80A-201 (b) 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 arnis-length transactions for similar services in Orange County, California area. (vii) 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 Agreement of Limited Partnership (the "Partnership Agreement"). "Extremely Low Income" means an adjusted income which does not exceed thirty percent (30%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. "Low Income" means an adjusted income which does not exceed eighty percent (80%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. "Propert ' shall mean that property located at 1440 East First Street, Santa Ana, California. "Refinancing" shall mean changing the then existing financing on the Property by, without limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or reducing the amount of the existing Senior Loan, paying off the existing Senior Loan and obtaining new Senior Loan, except for the payoff of the conventional lender's acquisition loan for the Property.. "Refinancing Proceeds" shall be disbursed as set forth in Section 6 hereof. "Residual Receipts" shall mean the Gross Revenues from the Property for each year, less deductions for Operating Expenses from the same building, applicable to each such year to the extent not already deducted as an Operating Expense. "Sale" shall mean any transfer, assignment, or conveyance or lease of 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 or limited partner in the Borrower, or any interest by any individual or entity which holds an interest in any such general or limited partner in the Borrower, which brings the cumulative total of all such direct and indirect transfers, assignments and sales during the term of this Note to more than thirty-five percent (35%) of the ownership interests in the Borrower, and any such transfer, assignment or sale of a direct or indirect 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. Notwithstanding anything to the contrary contained herein, a "Sale" shall not include any transaction not considered a "transfer' under Section 13. 4 80A-202 "Senior Loan7 shall mean any senior loan made to Borrower, for payment of Acquisition and/or Rehabilitation Costs, and shall include any subsequent loan that refinances said Senior Loan. "Term" the term for repayment of this Note shall mean fifty-five (55) years from the date of recording of the Deed of Trust securing the Note. "Term of Affordabilit " the term of affordability shall be fifty-five (55) years. ,'very Low Income" means an adjusted income which does not exceed fifty percent (50%) of the area median income for the Orange County, California PMSA, adjusted for household size, as published by HCD. 3. Loan Repayment. Borrower shall make payments to the Agency as provided in Sections 5 (Residual Receipts), 6 (Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment) of the Agreement. 4. ODerafin2 CaDital IMDrovement Loan. If the replacement reserve account ("reserves") is depleted due to unforeseen repairs and the General Partner makes a loan to the Partnership, the reserves must be fully funded prior to payment of said loan. The outstanding loan balance will be reflected in the annual report. 5. Annual Loan Repayment/ Residual Receipts. a. Commencing on the date one hundred fifty (150) days after the close of the initial Calendar Year following the issuance of the Certificate of Completion and on or before the 150' day of each Calendar Year thereafter the Borrower shall thereafter make a loan payment to the Agency annually, in the amount of the lesser of the outstanding balance due under this Note or the Agency's Percentage of the Residual Receipts, as provided in this Section 5. b. Within one hundred fifty (150) days after the close of the initial Calendar Year following the Issuance of the Certificate of Completion and on or before the 150th day of each Calendar Year thereafter, the Borrower shall submit to the Agency an audited financial 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 an Agency Loan payment then due. c. Except as otherwise provided, the Borrower shall pay to the Agency the Agency's Percentage of the Residual Receipts as payment of principal. At least fifty percent (50%) of the Residual Receipts shall remain with the Borrower, with all Residual Receipts remaining with Borrower to the extent the Agency Loan has been fully repaid. 80A-203 d. Borrower shall retain fifty percent of the Residual Receipts. The other percent (50%), the Agency's Percentage of the Residual Receipts, shall be divided with thirty percent (30%) to be applied to the Agency Loan, and seventy percent (70%) to be applied to the payment of the Housing Successor Agency Loan. As Borrower repays its loans, the payment percentage applied to the remaining loans shall increase. e. 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 any late fees, then to reduce the principal balance of the loan. 6. Loan Repayment from Reflnancing Proceeds. The Borrower shall make a loan payment to the Agency from every Refinancing that occurs during the term of this Note (other than refinancing of the conventional lender acquisition and/or construction loan) not to exceed the outstanding balance of principal on this Note, to the extent of the Agency's Percentage of the Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining on the Senior Loan; next, the amount necessary to pay any deferred developer fee in full; and next, the Borrower shall pay to the Agency the Agency's Percentage of the Refinancing Proceeds of which Agency Percentage shall be used thirty percent (30%) to repay the Agency Loan, and seventy percent (70%) to repay the Housing Successor Agency Loan to the extent of the outstanding balance on this Note. At least fifty percent (50%) of the Refinancing proceeds shall remain with Borrower, with all remaining Refinancing proceeds remaining with the Developer to the extent the outstanding balance of the Note has been fully paid. Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance of the Loan. The Agency shall not be required to reconvey the lien of the Deed of Trust if Refinancing Proceeds are insufficient to repay the Loan in full. 7. Loan Repayment from Sale Proceeds. The Borrower shall make a loan payment, not to exceed the outstanding balance of principal on this Note subject to Section 14 herein, to the Agency from any Sale that occurs during the term of the Agency Loan, to the extent of the Agency's Percentage of the Sale Proceeds, as follows: gross sale proceeds are applied first to pay Closing Costs, next to pay in fall the balance remaining on the Senior Loan; next, the Borrower shall pay to the Agency the Agency's Percentage of the Refinancing Proceeds of which Agency Percentage shall be used thirty percent (30%) to repay the Agency Loan, and seventy percent (70%) to repay the Housing Successor Agency Loan, and the amount necessary to pay any deferred developer fee in full, not to exceed the outstanding amount of principal due on this Note. At least fifty percent (50%) of the Sale Proceeds shall remain with Borrower, with all remaining Refinancing proceeds remaining with the Developer to the extent the outstanding balance of the Note has been fully paid. Such payment shall be due on the date of such Sale, and shall be applied to reduce the principal balance of the Loan. The Agency shall not be required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full. 6 80A-204 8. Accelerated Loan Payment. The full principal amount outstanding 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 13 hereof; unless: (i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the Agency Loan, the Agency approves such sale and the purchaser assumes the balance of the Agency Loan in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to repay in full the Agency Loan, the Agency approves such Refinancing and the Borrower remains obligated pursuant to the terms of this Note. b. In event of default (subject to any applicable notice and cure provisions) pursuant to any of the Loan Documents or the Senior Loan Documents. c. Any default (subject to any applicable notice and cure provisions by Borrower as to any other loan or loans by Agency to Borrower with respect to the Property; or d. The date that is fifty five (55) years after the date of execution of this Note. On that date, the Agency agrees to review the performance of the Property and consider in good faith any reasonable request by Borrower to modify the terms or extend the Term of this Agency Note. 9. Prepaymen Borrower may prepay the outstanding principal balance under this Note, in whole or in part, at any time without penalty, however the Affordability Covenants and Restrictions still remain for the entire Affordability Period of fifty-five (55) years. 10. Lawful Monev. Principal is payable in lawful money of the United States of America. 11. Application of Payments; Late Charges. a. Any payments received by the Agency pursuant to the terms hereof shall be applied first to sums, other than principal, due the Agency pursuant to this Note, and the balance, if any, to the payment of principal. b. If any payment is not received by the Agency within fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; then in addition to the remedies conferred upon the Agency 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 arnount to compensate the Agency for the expense of handling the delinquency 80A-205 and (ii) the amount due and unpaid, excluding the late charge, shall bear interest at the highest annual rate which may lawfully be charged and collected under applicable law on the obligation evidenced by this Note, computed from the date on which the amount was due and payable until paid. Without prejudice to the rights of the Agency hereunder or under any of the other Loan Documents, Borrower shall indemnify the Agency against, and shall pay the Agency on demand, any expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when due my installment of principal, fees, or other amounts payable to the Agency 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 Agency setting forth the basis for the determination of the amounts necessary to indemnify the Agency in respect of such expenses or direct loss, submitted to Borrower by the Agency, shall be conclusive and binding for all purposes except as immediately coffected by Borrower notice to Agency. 12. Seeurity This Note is secured by the recorded Deed of Trust. 13. Acceleration by Reason of Transfer or Financing. a. In order to induce Agency to make the loan evidenced hereby, Borrower agrees that in the event of any transfer of the Property without the prior written consent of Agency (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder of the Semor Loan Deed of Trust), Agency shall have the absolute right at its option, without prior demand or notice, 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. Agency may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this Section 13, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall not, however, release Borrower from any liability thereunder without the prior written consent of Agency. b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or conveyance of 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 Affordability Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of the Property to a limited partnership in which Borrower is a general partner, or to a corporation or limited liability company that is wholly owned by the Borrower or its affiliates 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 Agency (which consent Agency may grant or deny in its sole discretion), then the entire outstanding balance of the Agency Loan shall be repaid to the Agency at the time of each Refinancing or partial 8 80A-206 Refinancing. Additionally, a "Transfer" shall not include any transaction not considered a "transfer' tinder Section 16.2 of the Loan Agreement. 14. Event of Default. Subject to the provisions of Sections 23 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 fifteen (15) Business Days after Developer's receipt of written notice that such payment was not received when due; (b) failure by Borrower to perform any covenant or agreement in the Deed of Trust, the Agreement, or the Affordability Covenants and Restrictions within thirty (30) days after written demand therefor by Agency (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); or (c) a default under the Senior Loan Deed of Trust that remains uncured after any applicable notice has been provided and the expiration of any applicable cure period therefore, if any, provided therein. 15. Remedies. Upon the occurrence of an Event of Default, after any applicable notice has been provided and the expiration of any applicable cure period therefore, Agency may declare all sums evidenced hereby immediately due and payable by delivery to the Trustee named in the 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 duty filed for record and Agency may foreclose on the Deed of Trust. Agency shall also deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal shall bear interest at the Bank of America reference rate on the due date of the delinquent payment plus four percent (4%). No delay or omission on the part of the Agency in exercising any right under this Note or under any of the other Loan Documents shall operate as a waiver of such right. 16. Attorney Fees. If this Agency Promissory 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. 9 80A-207 V. 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. 18. 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. 19. Non-recourse. The Agency Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor its partners nor any other party shall have any personal liability for repayment of the Agency Loan or for any other amounts under any of the documentation evidencing, securing or describing the Agency Loan. The sole recourse of Agency under this Note and the Deed of Trust for repayment of the Agency Loan and for such other amounts arising therefrom shall be the exercise of its rights against the Property and related security thereunder. 20. Subordination. It is hereby expressly agreed and acknowledged by Borrower and Agency that the Deed of Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior Deed of Trust. 21. Notice of Default. a. Subject to the applicable cure periods set forth in Section 14 and subject to the further provisions of this Section 21, failure or delay by the Borrower to perform any term or provision of this Note constitutes a default under this Note. The Borrower must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. b. The Agency shall give written notice of default to the Borrower specifying the default complained of by the Agency. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. C. Except in the case of a monetary event of default, the Borrower shall not be in default so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be deemed by the Agency to be reasonably necessary to correct the default). 10 FOOMMKIFOO d. Any failures or delays by the Agency in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the Agency in asserting any of its rights and remedies shall not deprive the Agency of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. e. If a monetary event of default occurs under the terms of this Note or the Deed of Trust, prior to exercising any remedies thereunder Agency shall give Borrower written notice of such default. Borrower shall have a period of fifteen (15 Business Days after such notice is received within which to cure the default prior to exercise of remedies by Agency under this Note and the Deed of Trust. f. If a non -monetary event of default occurs under the terms of this Note or the Deed of Trust, prior to exercising any remedies thereunder, Agency shall give Borrower notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall have such period to effect a cure prior to exercise of remedies by the Agency under this Note and the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (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 borrower shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Agency. In no event shall Agency be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within one hundred eighty (18 0) days after the first notice of default is given. 22. Insurance and Condemnation. In the event of any fire or other casualty to the Property or eminent domain proceedings resulting in condemnation of the Property or any part thereof, Borrower shall have the right to rebuild the Property, and to use all available insurance or condemnation proceeds therefor, provided that (a) such proceeds are sufficient to keep the Agency Loan in balance and rebuild the Property in a manner that provides adequate security to Agency for repayment of the Agency Loan or if such proceeds are insufficient then Borrower shall have funded any deficiency, (b) Agency shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or similar arrangement, and (c) no material default then exists under this Note or the Deed of Trust. If the casualty or condemnation affects only part of the Property and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Agency Loan in a mariner that provides adequate security for repayment of the remaining balance of the Agency Loan. 23. Force Maieure. 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; I I 80A-209 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 Agency or any other public or governmental Agency or entity (except that any act or failure to act of Agency shall not excuse performance by Agency); 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 comnience 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 Agency and the Borrower. 24. Assi2nments. The Agency, and the assignee of the Agency, shall have the right to assign this Note and the 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. 12 80A-21 0 This Agency Promissory Note is hereby agreed to and executed on the date first set forth above. AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership In 0 13 80A-211 Exhibit Ee. Project Mrs, 1, 80A-212 80A-213 Exhibit Fee Scope of Work / Schedule of is 80A-214 SCOPE OF DEVELOPMENT The development is a 69 -unit affordable rental apartment community that will serve family households. The property address of the subject site is 1440 East First Street in the City of Santa Ana. The development site consists of approximately 2.16 acres. The project will contribute to improving the neighborhood and will provide much needed affordable family housing to the community. The units are affordable to households earning between 30% and 60% Area Median Income (AMI). The unit mix includes thirty-four (34) 2 -bedroom, twenty-eight (28) 3 -bedroom, and six (6) 4 -bedroom units. Of the 69 total units, 68 will be reserved for affordable households and 1 unit will be an unrestricted Manager's Unit. The two, three, and four-bedroom unit offer contemporary living for residents including balconies/patios, personal storage space, modern kitchens and bathrooms. To provide the most convenient living environment for families, all kitchens have garbage disposals, dishwashers and other amenities. The appliances will be energy efficient models to further reduce costs for residents. The project will achieve a Leadership in Energy and Environmental Design (LEED) Silver designation. The building design is contemporary and will utilize high standards of construction and sustainable design. The buildings are three stories in height and oriented towards First Street with the primary building lobby located at the ground level. The residential units will be located within six buildings, each constructed as a Type V three story tuck -under design. A community laundry building is also provided at the ground level. The resident parking includes garages and surface parking spaces. On-site amenities include a community room, outdoor gardens and amenity space including tot lots/play areas for children; outdoor seating, BBQ, and planters. The community room will be incorporated into the development, providing a computer laboratory, kitchen, activity room for resident activities, and office space for property management and social services staff. The convenient location of the development will provide resident access to public transportation, parks, markets, a public school, medical clinic and retail outlets. 80A-215 Proposed Development Schedule: EVENT DATE Community Redevelopment and Housing Commission 3/28/2016 City Council 4/19/16 Site Acquired 8/30/2015 Begin Entitlements 8/3/2015 City Staff Approval of Entitlements 3/28/2016 9% Tax Credit Application 3/11/2017 9% Tax Credit Award 6/30/2017 Begin Construction Documents 7/11/2017 Construction Financing Secured 8/11/2017 Tax Credit Investor Secured 8/11/2017 Begin Construction/Building Permit Issued 11/1/2017 Construction Complete 5/1/2019 Leasing Process Begins 5/11/2019 Project Fully Leased 8/1/2019 80A-216 Exhibit Go. Form of Residual Receipts I Mr, =I 80A-217 EXHIBIT G FORM OF RESIDUAL RECEIPTS REPORT Community Redevelopment Agency of the City of Santa Ana Residual Receipts Report for the Year Ending_ Date Prepared Please complete the following information and execute the certification at the bottom of this form. Annual Project Revenu Please report Annual Project Revenue for the year ending _ on the following lines: Rent Payments (including Section 8 tenant assistance payments, if any) (1) $— Interest Income (do not include interest income from replacement and operating reserves nor interest income on tenant security deposits) Additional Income (for example, vending machine income, tenant forfeited deposits, laundry income not paid to the residents' association) Total Annual Project Revenue (Add lines 1, 2, and 3) operating Expensesi Please report Operating Expenses incurred for the year ending on the following lines: Operating and Maintenance Expenses Utilities Property Management Expenses and On -Site Staff Payroll Administrative Expenses Property Taxes Insurance 80A-218 (2) (3) $ (4) (5) (6) (7) $ (8) $ (9) $ (10) $ Other Expenses Please list these expenses: Total Annual Operating Expenses for the Housing Project (12) (Add lines 5, 6, 7, 8, 9, 10, and 11) Net Operating Income (Subtract Line 12 from Line 4) (13) Do not include expense unrelated to the operation of the Rental Portion of the Project, such as depreciation, amortization, accrued principal and interest expense on deferred payment debt, or capital expenditures. Additional Cash Flow Pavments Obligated First Mortgage Debt Service Payments (as approved by the Agency and (14) other parties that may have such approval rights) and Obligated Secondary Subordinate Debt Service Payments (as approved by the Agency and other parties that may have such approval rights) Scheduled Deposits to Reserves (as approved by the Agency) (15) Additional Payment Obligations (such as partnership management fees, deferred (16) developer fees, or repayments on loans to partners, as approved by the Agency to have priority over Residual Receipt Payment to the Agency) Total Additional Cash Flow Payments (Add lines 14, 15, and 16) (17) Residual Receipts for Year Ending (Subtract Line 17 from Line 13) (18) Percentage of Residual Receipts to be Paid to the Agency (as shown in the (19) Promissory Note by and between the Agency and Borrower dated Amount Payable to the Agency (Multiply Line 18 by Line 19) (20) The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the Promissory Note by and between the Agency and Borrower dated . If Line 20 is $0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check payable to and attach to this report. 80A-219 Exhibit Ho. Partnership Agreement 80A-220 NO PARTNERSHIP INTERE ST REi PI;LE SENTED BY THIS AGRE EMENT HAS BEEN REGISTERE D UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED, IN RE, LIANCE UPON EXEMPTIONS FOR SALES NOT INVOLVING ANY PUBIC OFFERING AND UPON THE REPRESENTATION THAT SUCH PARTNERSHIP INTERE STS WILL NOT HE TRANSFERRED UNLESS AN OPINION OF COUNSEL IS GIVEN, SATISFACTORY TO THE GENERAL PARTNER AND ITS COUNSEL� THAT REGISTRATION IS NOT RE QUIRE, D. LIMITED PARTNERSHIP AGRE EMENT OF AMCAL 1440 Santa Ana Fund, L,P. This Limited Partnership Agreement of AMCAL 1440 SANTA ANA FUND, L.P. ("Agreement") is entered into as of September 1, 2015 between AMCAL Multi -Housing Two LLC, a California limited liability company, as general partner ("Administrative General Partner"), and the parties signing at the end of this Agreement, as limited partners ("Limited Partner" or "Limited Partners"), The Partners agree as follows: 1. Formation. The Limited Partners and the General Partner hereby enter into a Limited Partnership ("Partnership") pursuant to the Uniform Limited Partnership Act of 2008, Corporations Code Section 15900 and following, ("the Act") and the rights and liabilities of the Pailners shall be as provided under California Law, except as set forth below. 2. Name. The name of the Parmership is ANICAL 1440 SANTA ANA FUND, L.P., a California Limited Partnership. 3. Principal Place of Business, The principal place of business of the Partnership is 30141 Agoura Rd., Suite 100, Agoura Hills, CA 91301. 4. Purpos . The purpose of the Partnership shall be to purchase, hold, develop, manage, improve, lease, sell that certain real property, described on Exhibit "B" ("Partnership Property") and all related activities. 5, Term, The Partnership shall begin when the Certificate of Limited Partnership is filed with the Secretary of State as required by the Act and shall continue until the first to occur of-, (a) December 31, 2045 (b) dissolution by mutual agreement of the General and Limited Partners (c) termination as hereinafter provided, or (d) by operation of law, Ynitial LP Agreement - $a"a Ana 80A-221 6. Capital Contributions. 6.1. Initial Capital. 'rhe Administrative General Partner shall contribute administrative services and not money or other property to the Partnership, The initial capital contribution of the Limited Partners shall be the total amount shown on Exhibit "A" tinder the heading "Initial Contribution". The Administrative General Partner shall also hold Limited Partners' interests to the extent shown on Exhibit "A" hereto. 6.2. Additional Limited Partners. If all the Limited Partners do not respond to a call for additional funds when due or for additional funds pursuant to paragraph 6.8, the Administrative General Partner shall be authorized to admit additional Limited Partners. Such Limited Partners shall become parties hereto by executing such documents as the Administrative General Partner may require pursuant to which they agree to be bound by this Agreement. The admission of additional Limited Partners shall not cause a dissolution of the Partnership. 63. Capital Accounts. A "Capital Account" shall be maintained for each Partner. The Capital Account for each Partner shall be equal to such Partner's initial capital contribution increased by: (i) cash and the fair market value of any property subsequently contributed to the Partnership by such Partner (net of liabilities assumed or taken subject to by the Partnership, pursuant to the provisions of Section 752 of the Intornal Revenue Code of 1986 "[lRC"]) and (ii) such Partner's allocable share of Partnership income and gains, including any tax-exempt income; and decreased by: (a) cash and the fair market value of property distributed to such Partner (net of liabilities assumed or taken subject to by such Partner pursuant to the provisions of IRC Section 752), (b) such Partner's allocable, share of Partnership losses and (c) such Partner's allocable share of expenditures of the Partnership described in IRC Section 705(a)(2)(B); and, notwithstanding the above, further adjusted as required to comply with Treasury Regulations Sections 1.704-1 (b)(2)(N), including without limitation the provisions of subparagraphs (d), (e), (g), 0), (m), (n) and (r) thereof. All allocations for purposes of this Paragraph 6.3 shall be determined in accordance with the provisions of Article 7 (entitled "Profits, Losses and Distributions"). Each Partner shall have a single Capital Account which shall reflect all interests that Partner. 6.4. Limited Liability. Although a Limited Partner is personally liable to the Partnership for payment of his capiml contribution, no Limited Partner will be bound by, or personally liable for the expenses, liabilities, or obligations of the Partnership, except to the extent of the Limited Partner's contribution to the capital of the Partnership and his share of the Partnership's undistributed profits; however, to the extent required by law, any Limited Partner receiving a distribution in return of all or a portion of his capital contribution shall be liable to the Partnership for any sum returned, plus interest, necessary to discharge Partnership liabilities to creditors whose claims arose before such return and before an amended certificate of limited partnership was filed reflecting such return of capital. 6.5. Role of Limited Partner. Except as otherwise provided in this Agreement or by law no Limited Partner shall take pail in or interfere in any manner with the conduct or Initial 1,P AG�.,AMOftt - Wt. Ann 80A-222 control of the business of the Partnership or have any right or authority to act for or on behalf of the Partnership. 6.6, Interest. Interest earned on Partnership funds shall inure to the benefit of the Partnership, and Limited Partners shall not receive interest on funds contributed by thern, 6.7. Right to Withdraw Contribution. No partner shall have the right to withdraw or reduce his contribution to the capital of the Partnership except as a result of the dissolution of the Partnership or as otherwise permitted by the Act, and no partner shall have the right to demand or receive property other than cash in return for his contributions to the Partnership. 6,8, Failure to Make Additional Capital Contributions. If the Partnership has insufficient funds to pay the Partnership's obligations, the Administrative General Partner shall have the option of either advancing the necessary sums and thereafter being reimbursed from Partnership funds as they become available or levy a capital contribution assessment on all Partners in proportion to their respective partnership interests, If any such additional contributions are not received within 15 days after the Partners axe notified of the election to assess, the additional capital would be raised by first giving the remaining partners the first right of refusal to buy the incremental funding of the partners who do not come up with the required sum. If this fails the, Administrative General Partner would attempt to get new partners to buy the incremental funding required. The new money contributed (hereinafter "New Money") will receive a 30% annual return and the New Money will be returned to the investor before previously contributed capital receives a return or is returned to partners. 6.9. Loans. Any sums in excess of the total capital contributions required by this Agreement, required to meet the costs of owning and operating the Partnership Property may be loaned to the Partnership by the Partners, either General or Limited, and may be repaid with interest not to exceed the legal maximum when the Partnership has funds available not required in the operation of the Partnership business. Any such loans shall not increase the lending Partner's interest in the Partnership. 7, Profits, Losses and Distributions, 7.1. Definitions. For purposes of this Agreement, the following capitalized terms are defined as follows: 7.1.1. "Distributable Cash" is all cash of the Partnership (including without limitation cash from the sale of any or all of the Partnership property) less (i) the amount necessary for payment of all costs, expenses, obligations and liabilities of the Partnership then due (including any then due advances to the Partnership by the Partners), and (h) the amount deemed necessary by the Administrative General Partner, in the exercise of its reasonable discretion, to establish a reserve for the payment of foreseen or unforeseen costs, expenses, obligations or liabilities of the Partnership, Initial LP Agreennent , Santa Ma 9.1 159.1,15 3 80A-223 The Partnership shall not make, or receive and retain, any distribution of assets or any income of any kind of the project except surplus cash and except on the following conditions: (1) All distributions shall be made only as of and after the end of a semiannual or annual fiscal period; (2) No distribution shall be made from borrowed funds, prior to the completion of the project or when there is any default under this Agreement or tinder the note or mortgage; (3) Any distribution of any funds of the project, which the party receiving such funds is not entitled to retain hereunder, shall be held in trust separate and apart from any other funds; and (4) There shall have been compliance with all outstanding notices of requirements for proper maintenance of the project, 7.1.2. "Income", "gains", "losses", "deductions", and "credits" are the Partnership's income, gains, losses, deductions and credits, respectively, as finally determined for federal income tax purposes; provided, however, that in making the allocations of such items for purposes of capital account adjustments, the adjustments required byTreasury Regulations Section 1304-1(b)(2)(iv)(S) shall be taken into account. 7.1.3. The "Accounting Period" of the Partnership will be each period commencing on the first day following the last day of the immediately preceding Accounting Period (which for the Partnership's first fiscal year shall be deemed to be the date of the commencement of the Partnership) and ending on December 31 (which shall also be the Partnership's fiscal year end). 7.1.4 "Minimum Gain" shall mean the taxable gain (whether taxable as capital gain or as ordinary income), which would be recognized by the Partnership if the nonrecourse debt of the Partnership were foreclosed upon and the Partnership's property securing such debt were transferred to the creditor in satisfaction thereof, but only to the extent of the excess of (a) the outstanding principal balance of such nonrecourse debt plus any accrued but unpaid interest thereon (whether or not added to principal) to the extent permitted by law, over (b) the adjusted basis of such property, 7.1.5. "Invested Capital" shall be the amount of capital contributed or deemed contributed to the Partnership by the Limited Partners pursuant to Paragraph 6,1 (entitled "Initial Capital). t,iti.1 Lp Agr*.��nt - B�u. Ma 9.1 � 159, 1. IS 4 80A-224 7.1.6. "Invested Capital Balance" shall be the amount of a Partner's Invested Capital, plus the amount of any additional capital contributed by such Partner and reduced by the amount of cash distributed to such Partner pursuant to any provision of Paragraph 7,10 (entitled "Distributions of Cash Itom Operations"), Paragraph 7.11 (entitled Distribution of Cash from Capital Event) and subparagraph 11.3.3. 7.2. Allocation of Losses. For all Accounting Periods on a cumulative basis, except as otherwise specifically provided in this Agreement (including without limitation the provisions of Paragraphs 7.5 [entitled "Minimum Gain"], 7.6 [entitled "Recourse Debt Loss Allocation"]), 7.8 [entitled "Qualified Income Offset"], 7.12 [entitled "Allocations for Contributed Property; IRC Section 754 Adjustments"] and 7.15 [entitled "Revaluation Adjustment"]) (collectively such Paragraphs 7,5, 7,6, 7.8, 7.12 and 7.15 allocations shall be referred to as the "Required Allocations"), all losses (including all expense items separately stated on the Partnership's tax return) of the Partnership shall be allocated to the Partners in proportion to their then Partnership's Interests as set forth on Exhibit "A". 7.3. Allocation of Profits. For each Accounting Period, except as otherwise specifically provided in this Agreement (including without limitation the provisions of Paragraphs 7.5 [entitled "Minimum Gain"], 7.7 [entitled "Allocation of Ordinary Income"], 7.8 (entitled "Qualified Income Offset"], 7.12 [entitled "Allocations for Contributed Property; IRC Section 754 Adjustments"] and 7,15 [entitled "Revaluation Adjustment"]), all profits and gains (collectively "profits") (including all income items separately stated on the Partnership's tax return) of the Partnership shall be allocated to the Partners as follows: 7.3.1. First, if profits arise from the sale or other disposition of property with respect to which an investment tax credit was previously claimed, profits equal to the amount by which the basis of such property was reduced as a result of such claimed investment tax credit shall be allocated among the Partners in the same manner as such investment tax credit was previously allocated; 7.3.2. Second, to the same Partners, in the same amounts and in the same order of allocation as losses were theretofore allocated pursuant to Paragraph 7.2 (entitled "Allocation of Losses") and the Required Allocations, less the amount, if any, of profits previously allocated under this subparagraph 7.3.2 and/or the Required Allocations; and 73.3, Thereafter, to the Partners in proportion to their then Partnership Interests as set forth on Exhibit "A". 73.4. Notwithstanding anytWng to the contrary contained in this Agreement and except as provided in subparagraph 7.5.2 and 7,8. 1, in the event any profits from the sale or other disposition of all or any portion of the Partnership's assets constitute interest income (including "imputed interest"), such interest income., for each year, shall be allocated among the Partners pro rats based upon the amount of deferred principal proceeds (exclusive of "imputed interest") received by each of the Partners pursuant to Paragraph 7. 10 (entitled "Distributions of X�it,ial bP AgteMOnt � SaMA MU 80A-225 Cash from Operations"), Paragraph 7.11 (entitled Distribution of Cash ftom Capital Events) and subparagraph 11.3.3. during each suchyear. 7A. Allocation of Credits. All income tax credits of the Partnership shall be allocated in accordance with the ratio in which the profits of the Partnership are allocated (or would be allocated) among the Partners pursuant to Paragraph 73 (entitled "Allocation of Profits"), for the Partnership's taxable year during which the property which gives rise to the income tax credit is placed in service, regardless of whether the Partnership has a profit or a loss for such taxable year, However, if the ratio in which the Partners divide the profits of the Partnership changes during the taxable year of the Partnership in which such property is placed in service, the ratio effective for the date on which the property is placed in service shall apply. To the extent that ally income tax credits allocated to the Partners are subject to recapture, such recapture income shall be allocated to the partners to whom such tax credits were previously allocated. 7.5. Minimum Gain. Notwithstanding any other provision of this Agreement to the contrary and with a priority allocation pursuant to Treasury Regulations Section 1.704-1 [b][4]fiv] [e]: 7.5.1. The Limited Partners shall not be allocated loss or deduction (or items thereol) attributable to nonrecourse debt which is secured by Partnership Property if such allocation would cause the sum of the deficit capital account balances of the Partner receiving such allocation (increased by the additional capital contributions such Partner is obligated to make pursuant to Paragraph 6.1 [entitled "initial Capital"]) to exceed the Minimum Gain (determined at the end of the Partnership's taxable year to which such allocation relates) a Limited Partner's allocable share of the minimum gain shall be equal to the product of (a) the Minimum Gain, times (b) such Partner's then Partnership Interest. 7.5.2. The Partners with deficit Capital Account balances resulting in whole or in part from allocations of loss or deduction (or item thereof) attributable to nonrecourse debt which is secured by Partnership property shall, to the extent possible, be allocated income or gain (or item thereod) until the sum of such deficit Capital Account balances equals the Minimum Gain. 7.53. For purposes of computing the sum of the Partners' deficit Capital Account balances, if any property (including cash) is held by the Partnership at the end of the Partnership taxable year and there is a reasonable expectation that such property will be distributed to a Partner (other than in liquidation of the Partnership) prior to a corresponding increase in such Partner's Capital Account, such property shall be treated as having been distributed to such Partner on the last day of such taxable year, 7,54. The Minimum Gain shall be reduced by the cost of any capital improvements to be made to the subject property and the amount of any principal payments to be made with respect to the non recourse debts secured by such property to the extent there is a initial LP Aveement , Santa MA 9 1 159 1 15 80A-226 reasonable expectation that such improvements or payments would reduce the Minimum Gain below the sum of the deficit Capital Account balances. 7.6. Recourse Debt Loss Allocation. The allocation of loss or deduction (or items thereof) not attributable to nonrecourse debt which is secured by Partnership property shall not be made to a Partner if such Partner has a deficit Capital Account balance. Any such loss shall be allocated first among the Partners with positive Capital Account balances (and among them in proportion to their then positive Capital Account Balances) and then to the Administrative General Partner (and among them in proportion to their then respective Partnership Interests). Furthermore, losses attributable to nonrecourse liabilities of the Partnership where a Partner has economic risk of loss shall be allocated as required pursuant to Treasury Regulations Section 1.704- 1 (b)(4) (iv)(g). 7.7. Allocation of Ordinary Income. Notwithstanding anything to the contrary contained herein, any gain which is taxable as ordinary income as a result of depreciation or cost recovery taken by the Partnership shall be allocated among the Partners in the proportion that depreciation or cost recovery deductions were previously allocated among the Partners. 7.8. Qualified Income Offset Notwithstanding anything to the contrary contained herein, allocations of profits, gain and losses to the Partners shall be made in a manner to comply with the provisions of Treasury Regulations Section 1,704-1 (b)(2)(ii)(d), It is the Partners' intent that the following provisions, to the extent permitted by Treasury Regulations Section 1.704-1(b)(2)(ii)(d), shall not affect (a) losses or deductions (or items thercoo attributable to nonrecourse debt which is secured by Partnership property and/or (b) the priority allocation, if any, pursuant to subparagraph 7.5.2. In furtherance thereof, the following provisions shall apply to the extent required pursuant to the provisions of Treasury Regulations Section 1.704-1 (b)(2)(ii)(d). 7.8,1. Losses shall not be allocated to any Partner if such allocation would, together with any decrease (and increase) of such Partner's Capital Account pursuant to the provisions of Treasury Regulations Section 1.704-1 (b)(2)(il)(d)(4), (5) and (6), cause or increase a deficit balance (in excess of any limited dollar amount of such deficit that such Partner is obligated to restore which shall include the amount of any Partner's share of minimum gain as provided by the provisions of Treasury Regulations Section 1,704-1[b][4][iv][fl) in such Partner's Capital Account as of the end of the Partnership's taxable year to which such allocation relates, A Partner's Capital Account adjusted as provided by this subparagraph 7.8.1 (including any obligation to restore any deficit) shall be referred to as the "Adjusted Capital Account". 7,82, Any losses not allocable to a Partner pursuant to the foregoing subparagraph shall be allocated to such Partners who have positive Adjusted Capital Accounts in proportion to their respective positive Adjusted Capital Accounts, with any losses in excess of such positive Adjusted Capital Accounts, being allocated to the Administrative General Partner (and among them in proportion to their then respective Partnership Interests, 7,83, If a Partner unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and/or (6), 1'� �,nl;a ."a 9,1.159,1.15 80A-227 then such Partner will be allocated items of income and gain in an amount and manner sufficient to eliminate any deficit balance in such Partner's Adjusted Capital Account as quickly as possible. 7.9. IRC Section 704 Modifications. If the General Partner receives the written opinion of tax counsel to the Partnership that the allocations of income, gain, loss, deduction or credit (or items thorcoo would not fully conform to IRC Section 704(b), the Administrative General Partner is directed to make such allocations and/or amendment to this Agreement as advised by such tax counsel but only so long as none of the Partners would be materially adversely affected thereby, A Partner shall be deemed to be "materially adversely affected thereby" only if the effect of such allocation or amendment would be to cause such Partner to receive Distributable Cash in a manner inconsistent with the Partners' intentions as evidenced by this Agreement. It is the further intent of the Partners that the Administrative General Partner shall cause, to the extent permitted pursuant to the provisions of Treasury Regulations Section 1,704-1(b), items of income, gain, loss and deductions not required to be allocated in accordance with the Required Allocations to be allocated among the Partners to minimize the differences between the allocations provided by Paragraphs 7.2 (entitled "Allocation of Losses") and 7.3 (entitled "Allocation of Profits") and the allocations pursuant to the Required Allocations. Any allocation made pursuant to this Paragraph shall supersede any allocation otherwise provided in this Agreement and no approval of any Partner shall be required. The Partners agree to promptly execute any amendment to this Agreement pursuant to the provisions of this Paragraph and upon failure to do so, the Administrative General Partner, as the Limited Partners' attorney-in-fact, is authorized to execute any such amendment on behalf of the Limited Partners. 7,10. Distribution of Cash from Sales/Refinance. Except as required tinder paragraph 7.10.9 and pursuant to subparagraph 11,33, fo� each Accounting Period, Distributable Cash shall be distributed to the Partners as follows: 7.103, First, to payment of interest on partner's loans (if any); 7.10,2, Second, to payment of the principal of partner's loans (if any); 7,103. Third, to the return of "New Money" contributed pursuant to paragraph 6.8 (if any); 7.104. Next to payment of a 3 0% return on the New Money calculated from the date contributed until the date returned; 7,10.5. Next, to the Original Partners (and airiong them in proportion to their then respective Invested Capital Balances) until each Partner has received an amount of cash equal to the amount of his then Invested Capital Balance; 7,10.6. Next, to the Limited Partners until the Limited Partners have received an overall annualized return of 18% (including previous distributions from operations); Initial LP Agreenlent - Santa ana 9,1,159.1.15 80A-228 7.10.7 Next, to the Administrative General Partner until the Administrative General Partner receives a distribution of 10% of the sum of 7.10.6 and 7.103. 7.10.8 Thereafter, to the Limited and Administrative General Partner simultaneously in the ratio of 90/10 respectively, 7.10,9. Notwithstanding anything to the contrary contained in this Agreement, if any Distributable Cash constitutes interest income received in connection with the sale or other disposition of all or any portion of the Partnership's assets (including "imputed interest"), cash equal to such interest received by the Partnership shall be distributed, during each year, among the Partners in the same ratio as the principal amount of such installment sale is distributed to the Partners during such year and such distribution shall not be treated as a distribution of Distributable Cash pursuant to subparagraphs 7.103 and 7.10,4,; 7.10.10, Distribution of Cash from Operations. All periodic Distributions from Operations will be made in accordance with the partners interests in the partnership per Exhibit A, Column I until the Limited Partners have received a 9% cash on cash return. The Partnership is authorized to execute a Note and Mortgage in order to secure a loan to be insured by the Secretary of Housing and Urban Development and to execute a Regulatory Agreement and other documents required by the Secretary in cormection with such loan. Any incoming general partner shall, as a condition of receiving an interest in the Partnership, agree to be bound by the Note, Mortgage, and Regulatory Agreement and other documents required in connection with the FHA insured loan to the same extent and on the same terms as the other general partners. Upon any dissolution, no title or fight to possession and control of the Project., and no right to collect the rents therefrom, shall pass to any person who is not bound by the Regulatory Agreement in a manner satisfactory to the Secretary. 7.10.11 Next, the Administrative General Partner will receive a distribution of 10% of the sum of 7. 1 O� 10 and 7. 10.11. 7.10,121'hereafter, in the ratio of Exhibit A, Column 2. 7,11. Allocations for Contributed Property; IRC Section 754 Adjustments. If any Partner contributes any property to the Partnership, gain or loss with respect to such property on the sale or other taxable disposition of such property and the depreciation or cost recovery deductions for such property shall be allocated to the Partners as required in IRC Section 704 (c). To the extent required pursuant toTreasury Regulations Section 1.704-1 (b) (2) (iv) (m), the Partnership gain or loss, with respect to a Partner for whom the provisions of IRC Section 734 (b) or Section 743 (b) are applicable, shall be allocated in accordance with such provisions, Initial LP Ag�ee�nt � S�nta Ana 9.1.15D.I.15 80A-229 7.11 Identity of Distributees. Distributions shall be made only to persons who, according to the books and records of the Partnership, are the owners of record of partnership interest on a date to be determined by the Administrative General Partner, Neither the General Partners nor the Partnership shall incur any liability for making distributions in accordance with the preceding sentence, whether or not the General Partners has knowledge or notice of any transfer of ownership of any partnership interests. 7.13. Sharing Between Transferor and Transferee. If an interest in the Partnership is transferred, the income, gains, losses and deductions allocable to the interest transferred for the Accounting Period during which the transfer occurred will be allocated between the transferor and transferee of the interest in proportion to the time during the Accounting Period that the interest was owned by the transferor and transferee. Credits shall be allocated to the party who owned the interest at the time that the property giving rise to the credit was placed in service, Lach transferee will be credited with the capital account of the transferee's transferor, If a transferor transfers less than all of the transferor's interest in the, Partnership, the capital account will be allocated in proportion to the fraction of the interest rcspectively transferred and retained. 7.14, Revaluation Adjustment, 7.14.1. The Administrative General Partner, upon advice of the Partnership's tax counsel that the Partnership is authorized pursuant to the provisions of Treasury Regulations Section 1.704-1(b) (2)(iv)(f) and that it is in the Partners' interest to do so, shall cause an increase or decrease in the Partners' Capital Accounts to reflect a revaluation of Partnership property (including intangible assets such as goodwill) on the Partnership books, Any such revaluation shall be made strictly in compliance with the provisions of Treasury Regulations Section 1,704-1(b)(2) (iv)(f), including without limitation: (a) such adjustments shall (i) be based on the fair market value of Partnership property (as agreed to by the Partners (as hereinafter provided) and taking IRC Section 7701 [g] into account) on the date of adjustment and (ii) reflect the manner in which the unrealized income, gain, loss or deduction inherent in such property (that has not been previously reflected in the Capital Accounts) would be allocated among the Partners if there were a taxable disposition of such property for its fair market value at the date of adjustment; (b) the Capital Accounts shall be adjusted in accordance with the provisions of Treasury Regulations Section t.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization gain or loss (all as computed for book purposes) with respect to such property following the date of adjustment; and (c) the Partners' shares of depreciation, depletion, amortization, gain or loss (all as computed for tax purposes), with respect to such property, shall be determined so as to take account of the variation between the adjusted tax basis and book value of such property in the same manner as under IRC Section 704(c) following the date of adjustment, 7.14.2. In accordance with the provisions of Treasury Regulations Section 1,704-1 (b)(2)(iv)(g), the amount of book depreciation, depletion or amortization, for a period, with respect to any Partnership Property, is the amount that bears the same relationship to the book value �niti�l �P AgtOOMGnt - S�M� An� 9, 1. 159. 1 . 15 10 80A-230 of such property as the depreciation (or cost recovery deduction), depletion or amortization computed for tax purposes for such property, for such period, bears to the adjusted tax basis of such property, 7.14.3. For purposes of the foregoing, except as herein- after provided, the fair market value of any such Partnership Property shall be equal to the amount determined by the General Partner as set forth in a written notice delivered by the Administrative General Partner to the Limited Partners (the "Notice"). Notwithstanding the foregoing, if those Limited Partners ("Dissenting Limited Partners") owning a majority of the Partnership Interests owned by all the Limited Partners object in writing to such fair market value within 10 days of delivery of the Notice, then the fair market value of such property shall be determined by the mutual agreement of the Dissenting Limited Partners and the Administrative General Partner, If they cannot so agree, then the fair market value shall be determined by a qualified appraiser selected by the mutual agreement of the Administrative General Paxtncr and the dissenting Limited Partners (and if they are unable to agree on such selection, the appraiser shall be selected by the American Arbitration Association or any successor organization thereto), All appraisal costs shall be paid by the Partnership. 8. Management. 8.1. Authority of General Partners. The Administrative General Partner and the Managing General Partner, if so named at this time, shall each have complete power of management of the Partnership and shall have authority to act on behalf of the Partnership in all Partnership matters including without limitation the power to execute notes, deeds of trust, contracts and leases; to assume direction of business operations and the Administrative General Partner and the Managing General Partner, if so named at this time, shall each have all rights, powers and authority generally conferred by law or necessary, advisable or consistent with accomplishing the purpose of the Partnership as set forth in Article 4 of this Agreement, During the operation phase the Managing General Partner shall be primarily responsible for the Partnership's operations, The Managing General Partner when entered into the Agreement shall perform other tasks and duties as may be required for non-profit general partners in order to maintain property tax abatement under the welfare exemption of the California Revenue and Tax Code and will perform all duties to qualify as a Managing General Partner under rule 140.1 adopted by the Board of Equalization each year. 82 Restrictions. The Administrative General Partner shall have no authority to (a) do any act which would make it impossible to carry on the ordinary business of the Partnership; (b) do any act in contravention of this Agreement; (c) possess Partnership Property or assign the right of the Partnership in any Partnership Property for other than a Partnership purpose; (d) obligate the Partnership as a surety or guarantor, endorser, or accommodation endorser for ally other person or firm; or (e) make an assignment of the Partnership assets for the benefit of creditors. Initial U? Agreement � Santa Ma 9 1�159.i.i5 80A-231 8.3, Approval Rights, The Limited Partners shall have the right, by vote of more than 50% of the Limited Partners' Interests, as shown on Exhibit "A", to approve the following matters affecting the basic structure of the Partnership: 8.3.1. The dissolution and winding up of the limited partnership, 8.3,2. The merger of the limited partnership or sale, exchange, lease, mortgage, pledge, or other transfer of, all or a substantial part of the assets of the limited partnership other than in the ordinary course of its business. 8.33. Incur indebtedness by the limited partnership other than in the ordinary course of business, 8.3.4, A change in the nature of the business. 8.3.5. Transactions in which the General Partners has an actual or potential conflict of interest with the limited partners or the partnership. 8.3.6. The removal of a general partner, 8.3.7. An election to continue the business of the Limited Partnership other than under the circumstances described in subparagraph 8.3.9 or 8.3. 10. 8.3,8. The admission of a general partner other than under the circumstances described in subparagraph 83,9 or 83. 10, subject to the unanimous vote requirement of paragraph 11.6. 8.3.9. The admission of a general partner or an election to continue the business of the limited partnership after a general partner ceases to be a general partner other than pursuant to subdivision (b), (c) or (d) of Section 15642 of the Act where there is no remaining or surviving general partner, subject to the unanimous vote requirement of paragraph 11.6 83,10.The admission of a general partner or an election to continue the business of the limited partnership after the general partner ceases to be a General Partner pursuant to subdivision (b), (c) or (d) of Section 15642 of the Act where there is no remaining or surviving general partner, subject to the unanimous vote requirement of paragraph 11.6 All other matters are within the discretion of the Administrative General Partner and the Limited Partners shall have no right to vote on those matters, 8.4. Meetings of Partners. Meetings of Partners shall be hold at the principal place of business of the Partnership. Meetings shall be held only when called by either the Administrative General Partner or by Limited Partners representing more than 10% of the Limited lniLinl LP Agreenent - Santa Ana 9.1.159�1.15 12 80A-232 Partners' Interests, as shown on Exhibit A, Meeting notices and procedures shall be in conformity with California Corporations Code Section 15637. 8.5 Power of Attorney, The Limited Partners hereby irrevocably constitute and appoint the Administrative General Partner as his attorney to make, execute, acknowledge, and record any instrument which may be required by law to be filed by the Partnership, and any and all deeds, leases, deeds of trust, loan applications, promissory notes, loan agreements, assignments of lease, or other instruments or documents which the Administrative General Partner deems appropriate or necessary to carry out the purposes of this Agreement, The foregoing power of attorney shall survive the delivery of any assignment by a Limited Partner of the whole or any portion of his limited partner's interest, and any assignee of a Limited Partner hereby constitute$ and appoints the Administrative General Partner as his attorney in the same manner and with the same force as if such assignee had executed this Agreement. 8.6. Other Activities. The Administrative General Partner shall devote so much of its time and attention to the Partnership business as it deems necessary or advisable under the circumstances. Any partner, General or Limited, may engage in or possess an interest in other partnerships and other business ventures of every nature and description and neither the Partnership nor the Partners shall have any right in such independent ventures or to the income or profits derived therefrom. Neither the General Partners or any Limited Partner shall be obligated to present any particular investment opportunity to the Partnership, even if the opportunity is of a character which, if presented to the Partnership, could be taken by the Partnership and the Partner receiving the opportunity shall have the right to take it for his or her own account or to recommend it to others, The fact that a Partner is ornployed, or is directly or indirectly interested in or connected with any firm or corporation employed by the Partnership to perform a service, shall not prohibit the General Partners from employing such person, firm or corporation, or from otherwise dealing with him or it. Neither the Partnership nor the Partners shall have any rights in or to any income or profits derived from such employment, nor shall such employment change the status of the partner as a Limited Partner hereunder. 8,7. Scope of Authority. Except as herein set forth, the Administrative General Partner shall have the right to cause the Partnership to enter into transactions with other persons, firms or entities with which the Administrative General Partner is affiliated, and to receive compensation, directly or indirectly through such affiliated corporation or other persons, for services rendered in connection with the Partnership from any source or transaction. 8.8, Limitation on Liability. The Partners acknowledge and agree that it is their intent that the General Partners shall not be liable, responsible or accountable it) damages or otherwise, to any third person nor to the Patinership, nor to the other Partners for any loss, liability, obligations, penalties, actions, judgments, proceedings, damages, costs or expenses of any kind or nature whatsoever, including without limitation, all costs and expenses of defense, appeal and settlement, in any way relating to or arising out of or alleged to relate or arise out of any action or inaction on the pail of the Partnership or the General Partners, except for the willful misconduct, gross negligence or reckless disregard by the General partners of its duties. The Partnership shall Wtial LP Agreement - Santa Ana 9,1-159,1.15 13 80A-233 indemnify the General Partners and hold it harmless from any of the foregoing, The General Partners is hereby authorized to withhold distributions if they determine in their sole discretion that such funds should be held as a reserve for indemnification, 8.9. Reimbursement of Expenses, 'The Administrative General Partner shall be entitled to reimbursement for all legal and auditing fees and expenses of agents and advisors, costs of insurance, and the cost of preparing the Partnership's tax retums. The Administrative General Partner shall also be entitled to reimbursement from the Partnership for direct and specific project expenses, overhead and administration costs, which shall include expenses connected with the distribution to and communication with Partners. The Administrative General Partner shall be entitled to a fee equal to 5% of the gross annual revenues as an asset/property management fee. In addition an affiliated company of the Administrative General Partner will act as a real estate broker and will receive a commission not to exceed 1% of the price on the purchase and on the sale of the property, No Limited Partner shall be entitled to any share of any such sums paid to the Administrative General Partner or its affiliate. 8. 10. Administrative and Development Fees. The General Partners shall not be entitled to any compensation for time, labor or overhead, except as specifically provided for in this Agreement. Transferability of Partners' Interest. 9A, Permitted Transfers. The interest of a Partner may be sold or transferred only: (a) to an entity in which the transferring Partner owns a 5 1 % or greater interest; (b) to the Partnership or to any Partner; (c) by testamentary disposition or by gift to a Partner's spouse or issue or to a trust far such spouse or issue; (d) upon the sale of a Limited Partnership interest to a non partner, subject to the provisions of Paragraph 9,2, 9.2, Sale of Limited Partnership Interest. Except as set forth in Section 9.1.1, 9,2.2 or 9.23, the interest of a Partner in the Partnership only in its entirety, and on the following conditions. Any attempted transfer to any other person, including a transfer by operation of law, shall be void. 9.2.1, If any Partner ("Selling Partner") receives a bona fide offer to purchase all or any part of his Partnership interest, which offer the Selling Partner wishes to accept, the Selling Partner shall immediately notily the other Partners ("Remaining Partners") of the offer. The offer shall be communicated as provided in Paragraph 13 and shall include, the terms and conditions of the offer, the name of the person making the offer, the date on which the offer expires, and all other relevant information concerning the offer, Each Remaining Partner shall have 20 days after receipt of the offer, to match the price in the offer by giving notice in writing to the Administrative General Partner specifying how much of the Selling Partner's interest he wishes to purchase. Inftial LP Aqr�eM�nt - SanLa An� 14 80A-234 9.2.2. If the total of the offers of the Remaining Partners offering to purchase ("Accepting Partners") equals or exceeds the interest the Selling Partner offered to sell, the Accepting Partners shall become bound to purchase, and Selling Partner shall become bound to sell his interest to the Accepting Partners on the terms of the offer. The portion of the price payable by each of the Accepting Partners shall be the several, and not joint, obligation of each of the Accepting Partners, and shall be paid to the Selling Partner, If the total of the offers of the Accepting Partners equals the interest the Selling Partner offered to sell, each Accepting Partner shall purchase the proportion of the Selling Partner's interest specified in his notice. If the aggregate of the offers of the Accepting Partners exceeds the interest the Selling Partner offered to sell, each Accepting Partner shall purchase that proportion of the offered interest equal to such Accepting Partner's interest in the Partnership. No later than 7 days after expiration of the period for the Remaining Partners to exercise their rights under this article, the Administrative General Partner shall advise the Partners of the amount payable by each Accepting Partner, and the Administrative General Partner shall cause the interest of the Selling Partner to be eliminated and the interest of each of the Accepting Partners to be increased by the respective portion of the Selling Partner's interest purchased. 9.2.3. If the Remaining Partners do not offer to purchase all of the offered interest of Selling Partner within 20 days after receipt of the Proposed Offer, the Selling Partner may disregard all offers received from the Remaining Partners and may, within 30 days after the 20 -day period, dispose of his interest on the terms of the offer, provided that such sale shall not be at a lower price or upon terms more favorable to the buyer than those specified in the offer, If the Selling Partner can not sell his interest within said 30 day period, he may then only sell his interest after re -offering it to the other Partners as set forth above. 9.3. Substituted Limited Partner, No Limited Partner shall have the right to substitute an assignee for his capital contribution, and no transferee pursuant to paragraphs 9.1 and 9.2 of the whole or any portion of the Limited Partner's interest in the Partnership shall become a substituted Limited Partner unless: (a) such assignee delivers to the Administrative General Partner an agreement in writing to assume all of the obligations of Selling Partner under this Agreement; and (b) the Administrative General Partner consents in writing to such substitution; the Administrative General Partner may grant or withhold its consent in its sole and absolute discretion. 9.4, Election of General Partner. The Administrative General Partner may elect to treat and assignee who has not become a substituted limited partner as a substituted limited partner in the place of his assignor should the Administrative General Partner deem, in its sole discretion, that such treatment is in the best interests of the Partnership. 9.5, Non -Termination. The Partnership shall not be telminated by the death, insanity, bankruptcy, insolvency, dissolution, withdrawal, or expulsion of any Limited Partner, nor Initial LP AgreeMeat - Santa "a 9 � I 15q. I . 15 is 80A-235 by the assignment by any Limited Partner of his interest or by the admission of new Limited Partners. 9.6. Death or Incompetency of Limited Partner. Upon the death or legal incompetency of a Limited Partner his personal representative shall have all the rights of a limited partner for the purpose of settling or managing his estate. 9.7. Other Limited Partners. Upon the bankruptcy, insolvency, dissolution or other cessation of a corporate limited partner, the authorized representative of such entity shall have the rights of a limited partner to effect the orderly disposition of said Limited Partner's interest. 10. Financial Information. 10.1. Books of Account. The Administrative General Partner shall keep accurate books of account in which all matters relating to the Partnership, including all income, expenses, assets, and liabilities shall be entered, Said books shall be kept on a cash basis and shall be opened to examination by any partner at any time. 10.2. Accounting, A financial statement describing the condition of the partnership, as of the close of business on the last day of the calendar year and such additional information as may be needed by the partners to file their tax returns, shall be rendered to each partner within 90 days thereafter. Except for substantial errors brought to the attention of the Administrative General Partner within 30 days of its rendition, such accounting shall be final and conclusive as to all partners. 10.3. Tax Matters Partner, AMCAL Multi -Housing Two, LLC, shall be the "Tax Matters Partner" pursuant to IRC Section 6231 (a) (7). The Tax Matters Partner shall keep the other partners apprised of all proceedings regarding Partnership tax items. The Tax Matters Partner shall not enter into a settlement agreement with the Internal Revenue Service on behalf of any partner without that partner's consent, 10.4. Accounting Decisions. All decisions as to accounting matters, except as specifically provided to the contrary in this Agreement, will be made by the Partnership's accountants subject to the approval of the Administrative General Partner. 10.5. Federal Income Tax Elections. The Administrative General Partner shall cause the Partnership to make an election (or consent) to any such election by a Partner) pursuant to any of IRC Sections 732(d) and/or 754 (or corresponding provisions of succeeding law or state law), as may be determined by the Administrative General Partner in the Administrative General Partner's reasonable discretion, except to the extent otherwise determined by this Agreement. 11. Dissolution. InAial np AgreemenL - sana Ma 80A-236 I I � 1, Mutual Agreement. The Partnership shall be dissolved upon: (a) the vote of the Limited Partners as provided in paragraph 8.3, or (b) upon sale of the Partnership Property; provided, however, if the Partnership receives a promissory note as pail of the consideration for the Partnership Property, the Partnership shall continue for the sole purpose of collecting and enforcing such obligation. The Partnership shall engage in no further business thereafter other than that which is necessary to wind up the business and distribute the assets. 11,2. Proceedings Upon Dissolution. Upon the dissolution of the Partnership, the Administrative General Partner shall notify partners of such dissolution, wind up the affairs of the Partnership, liquidate the assets of the Partnership, pay or provide for the payment of all the debts, and divide the surplus, if any, among the partners according to the provisions of paragraph 11.3 hereof, subject to such adjustment as may be required by the Partnership's accountant in accordance with generally accepted accounting principles. If after the liquidation and distribution, any Partner or Partners would have a negative Capital Account, net income, if any, resulting from the liquidation shall first be allocated to that Partner or those Partners on a pro rata basis in the amount of the deficit and the remaining net income to the Partners in proportion to their receipt, or entitlement to receipt of the proceeds of liquidation. If after that allocation a Partner has a negative Capital Account, that Partner shall contribute to the Partnership cash in the amount of the remaining deficit, 11.3. Distributions on Dissolution. The assets of the Partnership shall be applied in the following order of priority: 11.3. 1. To the payment of debts and liabilities of the Partnership (other than any loans and advances that may have been made by any of the Partners, or amounts owing to any of the Partners) and the expenses of liquidation; 113.2. To the setting up of any reserves that the Administrative General Partner may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Partnership, and, at the expiration of such period as the Administrative General Partner shall deem advisable, to distribute the balance thereafter remaining in die manner hereinafter provided; 113.3. Any balance then remaining will be distributed to the Partners in accordance with their respective Capital Accounts, provided that profits shall first be allocated in accordance with the provisions of Paragraph 7.3 (entitled "Allocation of Profits"), in the manner as if all the Distributable Cash were then distributed in accordance with the provisions of Paragraph 7.11 (entitled "Distributions of Cash from Capital Event"). 11.4. Assets Other Than Cash. Assets of the Partnership may be distributed in kind on the basis of the then fair market value of such assets as determined by agreement of the Partners, and if no such agreement of value is reached within 10 days, then such value shall be determined by an independent appraiser appointed by the American Arbitration Association upon application of the Administrative General Partner (the cost and expense of said appraisal to be borne by the Partnership). If agreed to by all the Partners, distributions in-kind will be made to the Initi.1 1,P 80A-237 Partners as tenal'its-in-oommon. For purposes of making such distribution only, the unrealized profit or loss on any such asset (based on its fair market value) shall be first allocated among the Partners and the distribution of the asset shall be treated as a distribution of cash equal to the fair market value of such asset. 11.5. Liquidation of Partner's Interest. Upon liquidation of any Partner's interest in the Partnership, the liquidation distributions shall be made in accordance with the positive Capital Account balances of the Partners adjusted as otherwise required by the provisions of this Agreement. A liquidation of a Partner's interest shall occur as required pursuant to Treasury Regulations Section 1.704-1 (b)(2)(ii)(Ly). 11,6. Reconstitution of Partnership. The Limited Partners may, upon the occurrence of any of the events described in paragraphs 8.3.6 or 11. 1, reconstitute the business of the Partnership in a new limited partnership on the terms as this Agreement provided that if all of the General Partner cease to be a General Partner other than pursuant to subdivision (b), (c) or (d) of Section 15642 of the Act, and there is no remaining or surviving General Partner, admission of a new General Partner or a decision to continue the Partnership business by reconstituting the Partnership must be approved by the affirmative vote of all of the Limited Partners, Expenses incurred in the reformation, or attempted reformation, of the Partnership shall be deemed expenses of the Partnership. 11.7. Partnership Assets. Each partner shall look solely to the assets of the Partnership for the return of his investment, and if the assets of the Partnership remaining after the discharge. of all debts and liabilities of the Partnership are insufficient to return the investment of each Limited Partner, such Limited Partner shall have no recourse against the Administrative General Partners or any other Limited Partner, 12, Books and Records. The Administrative General Partner shall keep at the partnership's office the following Partnership documents: 12.1. A Current list of the fall name, and last known business or residence address of each Partner, together with the contribution and share in profits and losses of each partner. 122 A copy of the Certificate of Limited Partnership and all Certificates of Amendment, and executed copies of any powers of attorney pursuant to which any certificate has been executed. 12.3. Copies of the Partnership's federal, state and local income tax or information returns and reports, if any, for the 6 most recent taxable years. 12.4. Copies of the original Agreement and all Amendments to the Agreement. 12.5. Financial statements of the Partnership for the 6 most recent fiscal years. InitiAl LP A<,�eGment - SMA M� 9.1.159.1,15 Is 80A-238 12.6. The Partnership's books and records for at least the current and past 3 fiscal years. Upon the request of a Limited Partner, the Administrative General Partner shall promptly deliver to the requesting Limited Partner, at the expense of the Partnership, copies of the documents described in items 12,1, 12,2, or 12A above. All other documents may be inspected and copied by a Limited Partner during normal business hours upon reasonable, prior request. Copies of any amendments to this Agreement signed pursuant to the Administrative General Parmer'power of attorney shall be promptly delivered to all Partners. 13, Notices. Any notices required to be given under this Agreement shall be in writing and signed by or on behalf of the party giving the notice sent by prepaid certified or registered mail, return receipt requested, to each partner at the address set forth after his signature or such other address as may be designated by notice given as aforesaid. Servioe of notice shall be deemed to be effective as of the date shown on the receipt issued by the post office for such registered mail, and if such receipt is not returned, 48 hours after deposit in the United States mail. 14. Attorneys' Fees. If any party hereto files an action or proceeding concerning any provision of this Agreement or the rights and duties of any person in relation thereto, the party or parties in whose favor final judgment shall be entered shall be entitled to recover from the other party or parties his court costs and reasonable attorneys' fees. 15. Miscellaneous Provisions. 15.1. Entire Agreement. All of the agreements heretofore and contemporaneously made by the parties are contained in this Agreement and, except as provided in Paragraph 8.3 this Agreement cannot be modified in any respect except in writing executed by parties holding an aggregate majority of the Partnership interests. 15.2. Validity, If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be hold invalid, the remainder of this Agreement, or the application or interpretation of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby and shall remain in full force and effect. 15.3. Waiver of Action for Partition. Each of the parties hereto irrevocably waives his right to maintain any actions for partition with respect to the Partnership Property and other investments of the Partnership. 15.4. Governing Instruments. In the event of any conflict between the provisions of this Agreement and any document executed or filed by the Administrative General Partner pursuant to the power of attorney granted to him this Agreement shall govern, 15.5. Headings. The headings used herein are for convenience only and shall have no effect upon the interpretation of this Agreement. Whenever the context so requires, the Initial LP Aq ....at - S.nt� M. 9.1,159.1.15 19 80A-239 singular number shall include the plural, the plural shall include the singular, the neuter gender shall include the masculine and feminine genders and vice versa, 15.6. Counterparts. This Agreement may be executed in counteri)arts, each of which so executed shall be deemed an original, and said counterparts together shall constitute one and the same document, 15.7. Binding Effect, This Agreement shall be binding on, and shall inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of each party. 16, Limited Partners Rel2resentations. Each Limited Partner by signing below represents and warrants to the Partnership and to the Administrative General Partner that: 16.1. The Limited Partner has received such information about the partnership, as the Limited Partner deemed necessary to evaluate this investment, and a copy of this Limited Partnership Agreement, 16.2. That the Limited Partner is taking all of the Limited Partnership Interest (the "Units") listed after his name on Exhibit "A" for his own account and not as an agent, trustee, custodian or the like for any other person or with a view to or for sale in connection with a distribution thereof. Each Partner understands that the interest being purchased and sold hereunder has not been registered under the Securities Act of 1933, as amended, nor qualified under the California Corporate Securities Law of 1968, as amended, because the contemplated transaction constitutes a private offering within the meaning of Section 4(2) of the Securities Act of 1933 and Regulation D promulgated there under, and is exempt from qualification pursuant to Section 25102 (f) of the California Corporate Securities Law of 1968, as amended. 16.3. That the Limited Partner is taking the Units for investment purposes only and has no present intention to dispose of them to any other person, 16.4. That the Limited Partner has such knowledge and experience in financial and business matters that he is capable of evaluating the risks of the prospective investment, 16.5, That the Limited Partner is a person who is able to bear the economic risk of the investment. 16,6. That the Limited Partner has an adjusted gross income of at least $30,000 in the year he is subscribing and a net worth of at least $60,000; or a net worth of $ 100,000 or three times the initial cash investment for the Units subscribed, whichever is greater; and 16.7, That the Administrative General Partner has made available to the Limited Partner the opportunity to obtain any additional information, to the extent the Administrative General Partner possesses such information or can acquire without unreasonable effort or expense, necessary to verify the accuracy of any information contained herein; and Xnit�al LP Agr.�niant - Santa Ana 9,1,159,1.lb 20 80A-240 16.8. Each Partner has been fully advised of the facts respecting the formation of the Partnership and has been given the opportunity to consult his attorney with respect to the Partnership. Each Partner hereby agrees that the offer and sale of the interest to it does not involve any public offering of such interest; and 16.9. The Limited Partner understands that there is no public market for the Units and none is expected to develop and he must continue to bear the economic risk of this investment for an indefinite period, Initial TP AgrenMent , Santa Ana 9,1.159 1.15 21 80A-241 Dated: September 1, 2015 General Partners: ANICAL Multi-ljo�lsffigrwo LLC, a California limite/diability comi)any BY:— Percival Limited Partners: For: AMCAL Enterprises, Inc., a California corporation jun N�agarkatti, I Inati" LP Agreement - Santa Ann 9.1.159.1.15 22 80A-242 EXHIBIT "A" AMCAL 1440 SANTA ANA FUND, L.P CAPITAL CONTRIBUTION AND PARTNERSHIP INTERE ST Column I Column 2 CAPITAL NAME OF PARTNER CONTRIBUTIONS % OF INTEREST OF PROFIT AMCAL Multi -Housing Two LLC $ 1.00 1.00 1.00 an Administrative General Partner AMCAL Enterprises, Inc. 99.00 99.00 99.00 Limited Partnei TOTAL: 100.00 100.00 100.00 111itiAl 1,P AgrOOMnL , $ant* Afta �A.Ij9,1.15 23 80A-243 EXHIBIT "B" AMCAL 1440 SAN'rA ANA FUND, L.P. LEGAL DESCIZIPTION All that certain real property situated in the County of Orange, State of California, described as follows: Parcel 1 The Easterly 112.51 feet of the Westerly 437,51 feet of that portion of land allotted to N.O. Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the Final Decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the center lines of First Street and Mc Clay Street, as shown on a Map filed in Book 47 Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89* 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860 Page 4 of Official Records; Thence South 00 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89G 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Mc Clay Street; Thence North 0* 06'40" West 398,34 feet to the point of beginning. Excepting therefrom, that portion of the North 71,00 feet as described in the Deed to the City of 1440 Santa Ana, recorded April 15, 1960 in Book 5196, Page 381 of Official Records. Parcel 2 A non-exclusive easement for ingress and egress over the South 25 feet of the Westerly 325 feet of that portion of the land allotted to N,O, Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: initial LP hVeement � Santa Ana 9. 1. 159. L. 15 24 80A-244 Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records� Thence South 0' 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89' 08' 20" West 812.64 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North On 06' 48" West 398,34 feet to the point of beginning, Parcel 3: The Westerly 175.00 feet of the Easterly 375.00 feet of that portion of the land allotted to N.C. Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, California, described as follows: Beginning at the intersection of the centerline of First Street and Me Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West San Bernardino Base and Meridian; Thence North 89' 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 0' 06' 40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89' 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Me Clay Street; Thence North 00 06'48" West 398.34 feet to the point of beginning. Excepting therefrom, the South 21 feet of the North 71 feet thereof. Parcel 4: A non-exclusive easement for ingress and egress over the South 25 feet of that portion of the land allotted to N,O, Stafford and C. Tustin, in the City of 1440 Santa Ana, County of Orange, State of California, as described in the final decree of partition of the Rancho Santiago De 1440 Santa Ana, which was entered September 12, 1868 in Book "B", Page 410 of Judgments of the District Court of the 17th Judicial District, in and for Los Angeles County, Initial LP Agreement - San" Me 9,1.119.1.15 25 80A-245 California, described as follows Beginning at the intersection of the centerline of First Street and Mo Clay Street, as shown on a Map filed in Book 47, Page 32 of Record of Surveys, in the Office of the County recorder of said County, California, said point being the Northwest corner of Section 17, Township 5 South, Range 9 West, San Bernardino Base and Meridian; Thence North 890 10' 10" East 812.56 feet along the centerline of said First Street to the Northeast corner of land described in a Deed to Croddy Corporation and others, recorded August 28, 1959 in Book 4860, Page 4 of Official Records; Thence South 00 06'40" East 397.90 feet to the Southeast corner of said land of Croddy Corporation; Thence South 89' 08' 20" West 812.54 feet along the Southerly line of said land of Croddy Corporation to the centerline of said Mc Clay Street; Thence North 00 06' 48" West 398.34 feet to the point of beginning. Excepting therefrom, the Easterly 375.00 feet Assessor's Parcel Number; 011-154-43 Jnj�ial 1,P Ag�UO��Ot - $a�L� �� 9.1.1$9.1.15 26 80A-246