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HomeMy WebLinkAbout2011 CON CDC Paradise Creek Housing Partners - DDA 2020 /2200 Hoover AveDisposition and Development Agreement and Grant Deed for the Transit -Oriented Infill Affordable Housing and Paradise Creek Enhancement Project I' MO :1111111111.1. rear • Community Development Commission of the City of National City and Paradise Creek Housing Partners, LP Council Adopted June 21, 2011 DISPOSITION AND DEVELOPMENT AGREEMENT [Transit -Oriented Infill Affordable Housing and Paradise Creek Enhancement Project] By and Between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY and PARADISE CREEK HOUSING PARTNERS, L.P. Dated as of June 21, 2011 C ,Data\LEG\NC-372.TOD Project\DD.A v 6.6.1 I.s x.doc DISPOSITION AND DEVELOPMENT AGREEMENT (Transit Oriented Infill Affordable Housing and Paradise Creek Enhancement Project THIS DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") dated, for identification purposes only, as of June 21, 20 I I (the "Effective Date"), is made and entered into by and between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY ("Commission"), a public body, corporate and politic (the "Commission"), and PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership (the "Developer"), with reference to the following: RECITALS A. WHEREAS, the administrative and managing general partners of Developer are experienced developers, owners and operators of affordable housing in California; R. WHEREAS, City owns approximately 12.75 acres of land located on either side of Paradise Creek and near the 24t1' Street Metropolitan Transit System Trolley Station, between Harding Avenue, 19th Street, Hoover Avenue, and West 22"d Street (the "Site") as shown on the Site Map attached hereto as Exhibit ["A"] (the "Site Map"). For purposes of reference, the Site includes the "Public Works Yard" and the "Illes Trust Property." The Public Works Yard contains an area of approximately 11.33 acres and is more particularly described on Exhibit "A- 1" attached hereto. The flies Trust Property contains an area of approximately 1.42 acres and is more particularly described in Exhibit ["A-2;"] C. WHEREAS, a stretch of Paradise Creek and adjoining land area on each side thereof [the precise dimensions of which area will be determined during the Land Use Entitlement process] is not part of the Site (the "Paradise Creek Parcel"), but will be owned by the City of National City (the "City"), improved as open space by Developer as an off -site improvement in accordance with this Agreement, and thereafter maintained by City; D. WHEREAS, pursuant to the terms and conditions of this Agreement and as more particularly provided herein, the parties hereto desire: l . for Developer, pursuant to a parcel map to be prepared by Developer and approved by City, to create out of the Site two (2) development parcels (the "Phase I Parcel," the "Phase II Parcel" and/or a "Parcel" or the "Parcels") and the Paradise Creek Parcel, which Parcels shall be generally consistent with the "Conceptual Development Program" attached hereto as Exhibit ["B,"j as such Conceptual Development Program may be modified in the course of the Land Use Entitlement process for the Site; 2. for Commission and Developer to enter into a ground lease for the Phase 1 Parcel for the development thereon of three (3) buildings containing a 109-unit affordable rental housing project for persons and families of very low and low-income ("Phase I"); 3. for Commission and Developer, subsequently, to enter into a ground lease for the Phase If Parcel for the development thereon of two (2) buildings containing an additional 92-unit affordable rental housing project for persons and families of very low and low-income ("Phase II"); 1 C\DataALEG\NC-372.TOD Project \DDA.v.6.6.I I.s.x.doc 4. for Developer to make, concurrent with the development of Phase I and without limitation, the following off -site improvements: (a) improvement of the Paradise Creek Parcel, and (b) improvement and expansion, for the benefit of the entire community, of Paradise Creek Educational Park and the recreational area designated on Exhibit ["Al;" 5. for Phase I to include certain community facilities for the use of the residents of both Phase 1 and Phase II; and 6. for Developer to provide certain social services for the benefit of all of the residents of the Project. E. WHEREAS, in order to defray a portion of the Project Cost, Developer, as more particularly provided in Exhibit ["C"] attached hereto, has been awarded approximately $8,600,000 in certain financial assistance by the California Department of Housing and Community Development ("IICD") under its Multifamily Housing Program, with such funding coming from the Housing and Emergency Shelter Trust Fund Act of 2006 (Proposition IC) (the "Proposition 1C Financial Assistance"); and F. WHEREAS, in order to make the Project financially feasible, Commission will also make a subordinate loan to Developer for each Phase. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, Commission and Developer hereto agree as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. As used in this Agreement (including in the Recitals above), capitalized terms are defined where first used or as set forth in this Section [1.1]. Capitalized terms used in an exhibit attached hereto and not defined therein shall also have the meanings set forth in this Section [ 1.1 ]. "AR 389" means the California Land Reuse and Revitalization Act of 2004. "Building Permit" means, for each Phase, all permits issued by City and required for commencement of construction of the Improvements for the subject Phase. "Business Days" means days on which City Hall of City is open to the public for business. "CDLAC" means the California Debt Limit Advisory Committee. "Certificate of Completion" has the meaning set forth in Article [19]. "CHW" means Community IIousingWorks, a California nonprofit, public benefit corporation, or an affiliate thereof approved by the Executive Director. C:AData\LEG \NC-372.TOD Project\DDA.v.6.6.1 I.s.xdoc "CHW Fourth Trust Deed Loan Documents for Phase I" means the documents and instruments required by CHW to evidence and secure the CHW Fourth Trust Deed Loan for Phase I. "CHW Fourth Trust Deed Loan for Phase I" has the meaning set forth in Section [9.2(e)]. "CHW Fourth Trust Deed Loan Security Documents for Phase I" means the documents and instruments required by the CHW to secure the CHW Fourth Trust Deed Loan for Phase II. "CHW/Commission Grant Agreement" means that certain Grant Agreement, dated as of even date with this Agreement, by and between CHW and Commission. "CHW Third Trust Deed Loan Documents for Phase I" means the documents and instruments required by CHW to evidence and secure the CHW Third Trust Deed Loan for Phase I. "CHW Third Trust Deed Loan Documents for Phase II" means the documents and instruments required by CHW to evidence and secure the CHW Third Trust Deed Loan for Phase II. "CHW Third Trust Deed Loan for Phase I" has the meaning set forth in Section [9.2(d)]. "CHW Third Trust Deed Loan for Phase II" has the meaning set forth in Section [10.2(d)]. "CHW Third Trust Deed Loan Security Documents for Phase I" means the documents and instruments required by the CI IW to secure the CHW Third Trust Deed I,oan for Phase I. "CHW Third Trust Deed Loan Security Documents for Phase II" means the documents and instruments required by the CHW to secure the CHW Third Trust Deed Loan for Phase II. "City" means the City of National City, California. "Close of Escrow" means, for each Phase, recordation of the Memorandum of Ground Lease, Senior Loan Security Documents, Commission Subordinate Loan Deed of Trust, Reciprocal Rights Documents, and Notice of Affordable Units, in the Official Records. "Commission Counsel" means Commission general or special counsel. "Commission Subordinate Loan" means, for Phase I, the loan to be made to Developer pursuant to Section [9.3] and, for Phase II, the loan to be made to Developer pursuant to Section [10.3]. 3 C:\Data\LEG\NC-372.TOD Project\DDA.v.6.6.1 l.s.x_doc "Commission Subordinate Loan Closing" means, for each Phase, recordation of the Commission Subordinate Loan Deed of Trust for that Phase in the Official Records. "Commission Subordinate Loan Deed of Trust" means, for each Phase, the deed of trust encumbering Developer's leasehold interest in the Parcel for that Phase, in the form attached hereto as Exhibit ["K"], to be executed by Developer to secure the Commission Subordinate Loan Note for the subject Phase. "Commission Subordinate Loan Documents" means, collectively for each Phase, this Agreement, the Commission Subordinate Loan Note, the Commission Subordinate Loan Deed of Trust and any other agreement, document or instrument that Commission requires in connection with the Commission Subordinate Loan for the subject Phase. "Commission Subordinate Loan Note" means, for each Phase, that certain promissory note in the form attached hereto as Exhibit ["J"], to be executed by Developer in favor of Commission to evidence the obligation of Developer to repay the Commission Subordinate Loan for the subject Phase. "Commission Title Policy" has, for Phase I, the meaning set forth in Section [9.3.4(f)] and, for Phase II, the meaning set forth in Section [10.3.4(f)]. "Conceptual Development Program" has the meaning set forth in Recital ["D(1),"] above, and is attached hereto as Exhibit ["B"]. "Construction" means, for each Phase, construction, pursuant to this Agreement, of the Improvements for the subject Phase. "Construction Lender" means, for each Phase, the first trust deed lender that provides construction financing for the subject Phase. "Construction Lender/Commission Disbursement Agreement" has, for Phase I, the meaning set forth in Section [9.3.3(a)], and, for Phase 11, the meaning set forth in Section [10.3.3(a)]. "Construction Loan" means, for each Phase, the construction loan secured by the Senior Loan Security Documents for the subject Phase. "Construction Loan Closing" means, for each Phase, recordation of the Senior Loan Security Documents and the Commission Subordinate Loan Deed of Trust for the subject Phase in the Official Records. "County" means the County of San Diego, California. "Developer" has the meaning set forth in the opening paragraph of this Agreement. "Developer Fee" has, for Phase I, the meaning set forth in Section [9.9], and, for Phase II, the meaning set forth in Section [10.9]. C:AData\LEG \NC-372.TOD Projcct\DDA.v.6.6.1 l.s.x.doc "Developer's Predevelopment Expense" has the meaning set forth in Section [7.9]. "Developer Title Policy" has, for Phase I. the meaning set forth in Section [11.6(c)] and, for Phase II, the meaning set forth in Section [12.6(c)]. "Draft PMP" means the form of the Preliminary PMP agreed upon by Commission and Developer to be submitted to DTSC for approval. "DTSC" means the California Department of Toxic Substance Control. "DTSC Partial Certificate" has the meaning set forth in Section [14.1(c)]. "Due Diligence" has the meaning set forth in Section [4.1]. "Due Diligence Period" has the meaning set forth in Section [4.1]. "Effective Date" has the meaning set forth in the opening paragraph of this Agreement. "Escrow" means, for each Phase, the escrow through which (a) the subject Parcel is ground leased to Developer, (b) the Construction Loan Closing for the subject Phase is conducted, (c) the Commission Subordinate Loan Closing for the subject Phase is conducted, and (d) the Proposition 1 C Financial Assistance be fully and finally committed to construction of the Improvements by HCD (via the CIIW Fourth Trust Deed Loan for Phase I and via the CHW Third Trust Deed Loan for Phase II). subject Phase. "Escrow Holder" means, for each Phase, the firm that holds the Escrow for the "Event of Default" has the meaning set forth in Section [22.1]. "Evidence of Financing" has, for Phase I, the meaning set forth in Section [11.4(c)] and, for Phase II. the meaning set forth in Section ( 12.4(c) J. designee. "Executive Director" means the Executive Director of the Commission or his "Federal 4% Tax Credits" has the meaning set forth in Section [9.2(a)]. "Federal 9% Tax Credits" has the meaning set forth in Section [10.2(a)]. "Final Construction Documents" means, for each Phase, plans, drawings and specifications in sufficient detail to support issuance of a Building Permit for the Improvements of the subject Phase. "Final PMP" means the Property Mitigation Plan for the Site approved by the DTSC. 5 C_ADataALEG\NC-372.TOD ProjectADDA.v.6.6.1 I.s.x.doc "Final Project Budget" has, for Phase I, the meaning set forth in Section [11.4(b)] and, for Phase II, the meaning set forth in Section [12.4(b)], as such Final Project Budgets may be amended from time -to -time by Agreement of the parties. "Final SPP" means the Site Preparation Plan entered into between Commission and Developer for each Parcel. "General Contractor" has, for Phase I, the meaning set forth in Section [11.4(d)] and, for Phase II, the meaning set forth in Section [12.4(d)]. "Ground Lease" means, for each Phase, the Ground Lease attached hereto in the form of Exhibit ["I,"] as customized for the terms and conditions of the subject Phase. "HCD" means the California Department of Housing and Community Development. "HUD" means the U.S. Department of I Iousing and Community Development. "Isles Trust Property" has the meaning set forth in Recital ["B,"] above "Improvements" means, for each Phase, the improvements to be made to the subject Parcel in accordance with this Agreement, including, without limitation, in accordance with the Scope of Development and the Final Construction Documents. "Indemnitees" means the Commission, City, and their officers, employees, representatives, agents and volunteers. [14.1(c)]. "Land Ilse Entitlements" has the meaning set forth in Section [5.1]. "No Further Action Letter" shall have the meaning ascribed in Section "Notices" has the meaning set forth in Article [23]. "Official Records" means the Official Records of the County. "Paradise Creek Educational Park" is the public park located at Coolidge Avenue and West 19th Street, in the City of National City. "Paradise Creek Parcel" has the meaning set forth in Recital ["B,"] above "Parcel" means the Phase I Parcel or the Phase II Parcel as the context requires. "Parcel Map" means the parcel map approved by City or Commission pursuant to Section [6.1]. "Permitted Encumbrances" means, for each Phase, the Senior Loan Security Documents and such other exceptions to title approved by the Executive Director. 6 C:AData\LEG'NC-372.TOD Project\DDA.v.6.6.1 I.s.x.doc "Phase" means either or both Phase I and Phase II as the context requires. "Phase I" means transfer and development of the Phase I Parcel in accordance with the terms and conditions of this Agreement. Phase I may also mean the housing project resulting from completion of Phase I. "Phase II" means transfer and development of the Phase II Parcel in accordance with the terms and conditions of this Agreement. Phase II may also mean the housing project resulting from completion of Phase II. "Phase I Escrow" means the Escrow for Phase I. "Phase I Improvements" means the improvements to be made to the Phase I Parcel pursuant to this Agreement. "Phase II Escrow" means the Escrow for Phase II. "Phase II Improvements" means the improvements to he made to the Phase II Parcel pursuant to this Agreement. "Phase I Parcel" has the meaning set forth in Recital ["D(1),"] above. "Phase II Parcel" has the meaning set forth in Recital ["D(1),"] above. "Phase I Predevelopment Work Loan" has the meaning set forth in Section [7.3]. "Phase I Project" means development of the Phase I Parcel in accordance with the terms and conditions of this Agreement. "Phase II Project" means development of the Phase II Parcel in accordance with the terms and conditions of this Agreement. "Polanco Act" means the Polanco Redevelopment Act (Health & Safety Code §§ 33459.1, et seq.), "Predevelopment Documents" means, for each Phase, any and all plans, studies, drawings, models, reports, permits and Land Use Entitlements for the subject Phase. "Predevelopment Work Loan" means the Phase I Predevelopment Work Loan, the Phase II Predevelopment Work Loan, or both, as the context requires. "Preliminary PMP" has the meaning set forth in Section [4.4(a)]. "Preliminary Project Budget" has, for Phase I, the meaning set forth in Section [9.1] and, for Phase II, the meaning set forth in Section [10.1]. "Preliminary SPP" has the meaning set forth in Section [4.4(h)]. 7 C:\Data\LEGWC-372.TOD Project\DDA.v.6.6.11.s.x.doc "Prime Rate" means the reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time. "Project" means the Phase I Project, the Phase II Project, or both, as the context reasonably requires. "Project Architect" means Pyatok Architects Inc or Studio E Architects, or such other architect as may be approved by the Executive Director. "Project Budget" means the final budget approved by Developer and the Executive Director for each Phase of the Project. "Project Costs" means, for each Phase, all costs of any nature incurred in connection with development of the subject Phase, including, without limitation, the cost of the Commercial PLL required pursuant to Sections [11.4(f) and 12.4(f)]. "Project Documents" means, collectively for each Phase, this Agreement, the Commission Subordinate Loan Note, the Commission Subordinate Loan Deed of Trust, the Reciprocal Rights Documents, and any other agreement, document or instrument that Developer and Commission enter into for the subject Phase pursuant to this Agreement or in order to effectuate the purposes of this Agreement. ["E,"] above. "Property" means either or both Parcels as the context may reasonably require. "Proposed Map" has the meaning set forth in Section [6.1]. "Proposition IC Financial Assistance" has the meaning set forth in Recital "Public Works Yard" has the meaning set forth in Recital ["B,"] above "Reciprocal Rights Documents" has the meaning set forth in Section 111.4(y)]. "Redevelopment Plan Amendment" means an amendment to the Redevelopment Plan for the National City Redevelopment Project Area substantially in the form of the draft document attached hereto as Exhibit ["Q"]. "Request for Notice" has, for Phase I, the meaning set forth in Section [9.3.4(d)] and, for Phase II, the meaning set forth in Section 10.3.4(d)]. "Schedule of Performance" means the Schedule of Performance attached hereto as Exhibit ["D"J. "Schematic Design Documents" means the initial architectural design documents for the Improvements, including: refinement, if any, of the Conceptual Development Program; floor plans; exterior elevations; building sections of critical areas; and preliminary landscape plans. R C:\Data\LEG\NC-372.TOD Project \DDA.v.6.6. I I .s.x.doc "Scope of Development" means the Scope of Development attached hereto as Exhibit ["F"J, as such Scope of Development shall be amended from time -to -time by Commission and Developer. "Senior Lender" means, for each Phase, the Construction Lender or the Take - Out Lender for the subject Phase, as the context requires, and their successors and assigns. "Senior Loan" means, for each Phase, the respective Construction Loan or Take - Out Loan as the context requires. "Senior Loan Documents" means, for each Phase, the documents and instruments required by the Senior Lender to evidence and secure the Senior Loan for the subject Phase. "Senior Loan Security Documents" means, for each Phase, the documents and instruments required by the Senior Lender to secure the Senior Loan for the subject Phase. "Set -Aside Funds" means funds in Commission's Low and Moderate -Income Housing Fund maintained pursuant to the California Community Redevelopment Law. "Site" has the meaning set forth in Recital ["A,"] above. "Site Map" means the Site Map attached hereto as Exhibit ["A"]. "Site Plan" has the meaning set forth in Section [5.1]. "Take -Out Lender" means, for each Phase, the lending institution that makes the Take -Out Loan for the subject Phase and its successors and assigns. "Take -Out Loan" means, for each Phase, the long-term loan made by the Take - Out Lender to Developer in order to take out the Construction Loan for the subject Phase. "Tax Credits" means, for Phase I, the Federal 4% Tax Credits required to finance Phase I in the manner contemplated in the Preliminary Project Budget for Phase 1 and Article [9]; and, for Phase II, the Federal 4% Tax Credits required to finance Phase If in the manner contemplated in the Preliminary Project Budget for Phase II and Article [10]; "Tax Credit Funds" has, for Phase I, the meaning set forth in Subdivision [11.4(c)(ii)] and, for Phase II, the meaning set forth in Subdivision [ 12.4(c)(ii)] "Tax Credit Partner" means, for each Phase, the limited partner in Developer (or assignee) that supplies the Tax Credit Funds for the subject Phase. "TCAC" means the California Tax Credit Allocation Committee. "Title Company" means First American Title Insurance Company or such other title insurance company agreed to by Developer and the Executive Director. 9 C:AData\LPG\NC372.TOD Project\DDA.v.6.6.I I.sx_doc 1 2 Singular 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 Accounting Principles. Any accounting term used and not specifically defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted under this Agreement shall be prepared in conformity with, generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to Commission. 1.4 References and Other Terms. 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 terms "including" and "include" mean "including (include) without limitation". 1.5 Exhibits Incorporated. All attachments to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference. 2. PARTIES 2.1 Commission. Commission is the Community Development Commission of the City of National City and any successor to its rights, powers and responsibilities. The principal offices of Commission are located at 1243 National City Boulevard, National City, California 91950. 2.2 Developer. Developer is Paradise Creek Housing Partners, L.P., a California limited partnership. The principal offices of Developer are located at (a) c/o The Related Companies of California, 18201 Von Karman Avenue, Suite 900, Irvine, California, 92612, and (b) Community HousingWorks, 4305 University Avenue, Suite 550, San Diego, California, 92105. 3. SCHEDULE OF PERFORMANCE A Schedule of Performance for each Phase of the Project is attached hereto as Exhibit ["D"]. The Schedule of Performance sets forth the times by which the parties are to perform certain obligations under this Agreement. The Schedule of Performance may be modified from time to time by written agreement of Developer and Executive Director. 4. DEVELOPER DUE DILIGENCE, TITLE REVIEW & APPROVAL, & PRELIMINARY PROPERTY MITIGATION & SITE PREPARATION PLANS 4.1 Due Diligence. Developer's obligation to perform its obligations under this Agreement is conditioned on its reasonable determination of its ability to perform this Agreement after an examination of the physical and environmental condition of the Site ("Due Diligence"). Developer shall have until one hundred twenty (120) days after the Effective Date 10 C.'vDataALEG \NC-372."COD Project ADDA.v.6.6.11.s.x.doc (the "Due Diligence Period") to conduct such investigations as Developer may choose to determine if this contingency is met. On or before expiration of the Due Diligence Period, Developer shall deliver written notice to Commission of removal of this contingency or termination of this Agreement. Any such notice of termination shall include a reasonably detailed statement by Developer of those findings of Developer that caused it to determine that it could not perform its obligations under this Agreement based on the terms, conditions and assumptions hereof, including, most importantly, the assumptions contained in the Preliminary Project Budget attached hereto. Failure by Developer to notify Commission of termination of this Agreement in a timely manner shall be deemed removal of this contingency. 4.2 Access to Site. As part of its Due Diligence, Developer may conduct such inspections, tests and studies as it determines reasonably necessary. Developer and Developer's consultants, agents, engineers, inspectors, contractors and employees ("Developer's Representatives") shall be given reasonable access to the Site during regular business hours for the purpose of performing such Due Diligence. Except as expressly provided herein to the contrary, Developer shall undertake the Due Diligence at its sole cost and expense. Developer shall indemnify, defend with counsel reasonably satisfactory to the Executive Director, and hold Commission and City harmless from all claims (including claims of lien for work or labor performed or materials or supplies furnished), demands, liabilities, losses, damages, costs, fees, and expenses, including Commission's and/or City's reasonable attorney fees, costs and expenses, arising from the acts and/or activities of Developer and/or Developer's Representatives in, on, or about the Site during and/or arising in connection with Developer's inspections of the Site, other than diminution in value due to any condition at, on or under the Site prior to the Effective Date and discovered during such investigation. 4.3 Title and Survey. Developer's obligation to perform its obligations under this Agreement is conditioned on its approval of title to the Site and an ALTA survey (the "Survey") of the Site. On or prior to the expiration of the Due Diligence Period, Developer shall deliver to Commission written notice of Developer's objections, if any (the "Title Objections"), to any (a) monetary liens and/or encumbrances, and/or (b) other title exceptions revealed by a preliminary title report, underlying documents thereto or the Survey, if such title exception would either (i) materially increase the cost to develop the Project based on the Preliminary Project Budget attached hereto, or (b) be reasonably unacceptable to a Senior Lender and/or Tax Credit Partner. If Developer does not deliver any such objection notice on or prior to the expiration of the Due Diligence Period, Developer shall be deemed to have agreed to accept title to the Site in the condition. In addition, Developer shall have the right to object by delivery of written notice to Commission, on or prior to the earlier of (i) ten (10) Business Days after receipt of notice of a new exception or encumbrance (which was not revealed by the initial preliminary title report), and (ii) one (1) day prior to Close of Escrow for a particular Phase (but in all events no earlier than five (5) Business Days after receipt of notice thereof), to any new items of record; provided, however, if Developer does not deliver any such objection notice, Developer shall he deemed to have accepted such new exception or encumbrance. Within fifteen (15) Business Days of receipt of Developer's Title Objections, Commission shall notify Developer in writing (the "Response Notice") if it is willing to remove any such Title Objections. If (a) Commission fails to send the Response Notice within such fifteen (15)-Business Day period, and (b) Developer's Title Objection included notice that failure to respond within fifteen (1.5) Business Days will be deemed Commission's agreement to remove certain Title Objections, Commission 11 C:AData\ LEG \NC-372.TOD Project\DDA.v.6.6.I I.s.x.doc shall be deemed to have agreed to remove each of the Title Objections from the Site prior to the Close of Escrow for the Phase(s) to which such Title Objections relate. If Commission declines to remove any of the Title Objections, Developer may, within ten (10) Business Days and provided that it is not then in default under this Agreement, terminate this Agreement by notice to Commission; otherwise Developer shall proceed to the Close of Escrow for the applicable Phase and accept title to such Phase subject to such Title Objections remaining uncured by Commission. 4.4 Preliminary Property Mitigation & Site Preparation Plans. Commission, not later than July 21, 2011, shall prepare and submit to Developer for review and approval the following: (a) A preliminary "Property Mitigation Plan" for the Site, the final and completed form of which (following approval by Developer) will be submitted by Commission to the DTSC for approval as soon as reasonably possible (the "Preliminary PMP"); and (b) A preliminary "Site Preparation Plan," final and completed forms of which will be entered into by Commission and Developer for each Phase (the "Preliminary SPP"). The purpose of the Site Preparation Plan for each Phase is to govern the rights and obligations of Commission and Developer as to implementation of the Final PMP for the Project. The Site Preparation Plan for each Phase will acknowledge and/or recognize the following: (c) For purposes of implementation of the Final PMP, neither Developer nor Commission shall be deemed, construed or interpreted as the generator of the hazardous waste to be remediated. Developer and Commission are informed and believe that such designation will be borne by City. Accordingly, City would sign all manifests or other documents required under state or federal law to track such wastes removed from the Property, whether such removal is performed by a contractor under contract to City, Commission, or to Developer. That notwithstanding, Developer acknowledges and agrees that at such time as DTSC acknowledges in writing satisfactory completion of the mitigation measures described in the Final PMP, the obligation of City to sign such manifests or other documents as generator of the waste from the Property shall expire and be of no further force or effect. (d) All ground water monitoring and remediation required by the Final PMP, if any, will be the responsibility of Commission and be performed without cost or expense to Developer. (c) In no case shall Developer be required to perform any in situ remediation of hazardous waste for the Project. (f) The Final PMP may require measures such as installation of vapor harriers on building pads and/or paving over residual hazardous materials to prevent exposure. The reasonable cost of any such required work that would not 12 C:AData\LEG \NC-372.TOD Project\DDA.v.6.6.I I.s.x.doc otherwise independently be required in the ordinary course of construction of the Project (e.g., vapor barriers if required) shall be the obligation of Commission. Any such required work that would otherwise independently be required in the ordinary course of construction of the Project (e.g., paving over residual hazardous materials to prevent exposure if required) shall be the obligation of Developer to be paid for as a Project Cost. As of the date of this Agreement, it is the intention of the parties that the Site Preparation Plans will include, among other things: (g) That Commission, prior to the Close of Escrow for the subject Parcel and without cost or expense to Developer, first will perform certain of the remediation of all surficial expressions of hazardous waste to the extent necessary to achieve regulatory compliance, but not to a depth greater than ten (10) feet, except to the extent necessary to remediate groundwater contamination. (h) That Developer will, upon completion by Commission of the work described in (g) immediately above and by notice from the Executive Director, be given access to the subject Parcel for the purpose of performing, at the cost and expense of Commission but in conjunction with certain Developer regular site preparation work independently required for the Phase (to be paid for by Developer as a Project Cost and funded out of the Predevelopment Work Loan for the subject Phase), that portion of the remediation work (should any be required) most logically and cost-effectively performed with that site preparation work. Such work may include (a) removal of hazardous wastes exposed by Commission in performance of its obligation under (g) immediately above but residing at a depth greater than ten (10) feet, and (b) removal of hazardous wastes encountered in the course of the grading performed as part of the site preparation work independently required for the Phase. That notwithstanding, Developer's obligation to perform any such remediation work shall be subject to the following conditions: (i) City shall sign all transportation manifests required under state or federal law to track such wastes removed from the Property; (ii) City shall designate the proper offsite disposal site for such waste; (iii) If the cumulative sum for remediation under this subsection (h) reaches $50,000, Developer, by notice to Commission, may relinquish the Parcel to Commission which then shall promptly remediate the remaining waste in accordance with the Final PMP, after which Developer shall promptly be readmitted to the Parcel for the purpose of completing its regular site preparation work; (iv) Commission shall indemnify, defend and hold harmless Developer from all costs, losses, liabilities, claims, actions or expenses arising 13 C \Data\LEG \NC-372.TOD Pro jectADDA.v.6.6.I Is.x.doe from or related to the pre-existing, historical hazardous wastes on the Site requiring remediation or removal from the Site pursuant to this subsection (h), any other provision of this Agreement, the Site Preparation Plan, or the Final PMP. The access necessary hereunder will be provided to Developer on a schedule designed to permit Developer to complete its portion of the work not less than sixty (60) days prior to the Close of Escrow for the subject Phase, so as to give DISC time within which to issue the DTSC Partial Certificate prior to Close of Escrow. (i) That Developer, during the course of construction of the subject Phase, will complete certain of the remediation work required under the Final PMP but not part of the site preparation work, such as installation of vapor barriers on building pads and paving over residual hazardous materials to prevent exposure. (j) The method or methods by which the cost to be borne by Commission for remediation of the subject Parcel will be separated from Project Costs to he borne by Developer. The Site Preparation Plan will also provide for prompt payment by Commission to Developer of the cost to be borne by Commission and reimbursed to Developer. (k) The Site Preparation Plan for Phase I will provide that a default thereunder shall constitute an Event of Default under this Agreement. (I) The Site Preparation Plan for Phase II, if any, will provide that a default thereunder shall constitute an Event of Default under this Agreement. If, however, such default occurs after Close of Escrow for Phase 1, then such Event of Default under this Agreement would be as to Phase II only. Developer, not later than twenty (20) Business Days after receipt from Commission of the Preliminary PMP and SPP, shall approve, conditionally approve or disapprove each document, which approval shall not be unreasonably withheld. If Developer reasonably disapproves either document, either Commission or Developer, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [221(c)]), shall have the right to terminate this Agreement by notice to the other party. If Developer conditionally approves either or both documents, Commission, within ten (10) Business Days, shall notify Developer either that (a) it accepts Developer's conditions in full, or (b) it desires to meet and confer with Developer about one or more conditions. If Commission selects option (b), the parties shall meet and confer for up to ten (10) Business Days to resolve their differences. If, at the end of such period, material differences remain between the parties, either party, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by notice to the other party. Further discussion of the Final PMP and the Final SPP for each Phase is set forth in Article [14,] below. 14 C:\Data\I FGANC-372_TOD IIProject I.s x.doc 5. SITE PLAN/LAND USE ENTITLEMENTS 5.1 Application. Developer, by the time provided in the Schedule of Performance, shall submit to City an application, including a site plan consistent with the Conceptual Development Program, for any and all land use entitlements necessary to allow Developer to develop the Project (the "Land Use Entitlements"). Developer shall pay all of the costs and expenses connected with said application and the processing thereof including, without limitation, the application fee charged by City. Developer agrees that it shall be principally responsible for processing said application through City provided, however, Commission staff, without any out-of-pocket cost or expense to Commission, agrees to provide Developer with all appropriate assistance and cooperation in securing said Land Use Entitlements. The site plan approved for the Project in connection with the Land Use Entitlements shall hereinafter be referred to as the "Site Plan" for the Project. 5.2 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Commission if, despite having made all commercially reasonable efforts, Developer is unable, by the time provided in the Schedule of Performance, to secure the Land Use Entitlements. That notwithstanding, if Developer gives notice to Commission pursuant hereto, and if the Land Use Entitlements are secured during the thirty (30)-day notice period, Developer's notice of termination shall be deemed nullified thereby. 5.3 Commission Right to Terminate. Prior to the Close of Escrow for Phase I, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Developer if the Land Use Entitlements have not, by the time provided in the Schedule of Performance, been secured. That notwithstanding, if Developer is diligently and continuously pursing the Land Use Entitlements, then Commission may not give such notice unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal a denial of such Land Use Entitlements and/or the time to file any such appeal has expired. 6. PARCEL MAP/RIGHT-OF-WAY VACATION 6.1 Parcel Map. Commission and Developer acknowledge that, as of the Effective Date, the Phase I, Phase II, and Paradise Creek Parcels do not exist as separate legal parcels in compliance with the Subdivision Map Act (the "Map Act"). Accordingly, a parcel map must be prepared and processed through the City in order to create such parcels. Developer, (a) in accordance with the National City Municipal Code and the Subdivision Map Act, and (b) as soon as the Land Use Entitlement process permits, shall prepare and submit to City for approval such a parcel map consistent with the Site Plan (the "Proposed Map"). Developer, as part of Project Cost, shall pay all fees and costs payable to third parties (including City) to file and process the Proposed Map. Developer shall diligently process such parcel map to completion. Commission staff, without any out -of pocket cost or expense to Commission, shall provide Developer with all appropriate assistance with the processing of the Proposed Map. As an alternative and by agreement of Developer and Executive Director, the Proposed Map 15 C_\Data \ LEG \NC-372.TOD Project Project\DDAv.66. l l.s.x.duc shall be submitted for approval to Commission by virtue of its exemption from the Map Act. In such event, Commission shall apply to the Proposed Map the same standards as would have been applied by City under the Map Act and the Municipal Code, with such deviations therefrom as Commission determines in the exercise of its sole and absolute discretion. 6.1.1 Termination by Developer. If Developer, by the time provided in the Schedule of Performance and despite its best efforts, fails to obtain a parcel map for the Project reasonably acceptable to Developer, then Developer, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)1), may, prior to the Close of Escrow for Phase 1, terminate this Agreement by notice to Commission. 6.1.2 Termination by Commission. If Developer, by the time provided in the Schedule of Performance, has not obtained a parcel map for the Project reasonably acceptable to Developer, then Commission, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may, prior to the Close of Escrow for Phase I, terminate this Agreement by notice to Developer. That notwithstanding, if Developer is diligently and continuously pursing approval of said parcel map, then Commission may not give such notice unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal any condition or conditions to approval or denial of such parcel map by the Planning Commission of City. 6.2 Street Vacations. If, in order to record a final parcel map, it is necessary that public right-of-way be vacated, Commission shall request City to conduct, in a timely manner, such hearings and legal proceedings as may be required by law. Developer acknowledges and agrees that any or all of such street vacations may not occur. Accordingly, if any such street vacation necessary for development of Phase I fails to occur by the time provided in the Schedule of Performance for Phase I Close of Escrow, then the parties shall meet and confer on revising the Site Plan for Phase I to account for the inability to vacate such public right-of-way. If, in the course of such meeting and conference, either party proposes such a revision that both (a) is reasonably feasible, and (b) will substantially allow the other party still to receive, at a not materially greater cost or expense, the benefits that it expected to obtain from this Agreement as to Phase 1, the parties shall promptly negotiate in good faith an amendment to this Agreement. If, however, after so meeting and conferring for a reasonable period of time not to exceed sixty (60) days, the parties are unable to agree on such a revised Site Plan, then either party, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by notice to the other party. Additionally, if any such street vacation necessary for development of Phase II fails to occur by the time provided in the Schedule of Performance for Phase II Close of Escrow, then the parties shall meet and confer on revising the Site Plan for Phase II to account for the inability to vacate such public right-of-way. If, in the course of such meeting and conference, either party proposes such a revision that both (a) is reasonably feasible, and (b) will substantially allow the other party still to receive, at a not materially greater cost or expense, the benefits that it expected to obtain from this Agreement as to Phase II, the parties shall promptly negotiate in good faith an amendment to this Agreement. If, however, after so meeting and conferring for a reasonable period of time not to exceed sixty (60) days, the parties are unable to agree on such a revised Site 16 C:1Data\LEG \NC-372.TOD Project\DDA.v.6.6.11.s.x.doc Plan, then either party, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)1), may terminate this Agreement as to Phase II only by notice to the other party. 7. PREDEVELOPMENT WORK / PREDEVELOPMENT WORK LOANS 7.1 Predevelopment Work for Phase I. Attached hereto as Exhibit ["E"] is a scope of work, schedule and line -item budget for certain work (the "Phase I Predevelopment Work") to be performed by Developer prior to Close of Escrow for Phase I (the "Phase I Predevelopment Plan and Budget"). As set forth on Exhibit ["E,"] the Phase I Predevelopment Plan and Budget is divided into two (2) parts: (a) the "Pre -Land Use Entitlements Work" and (b) the "Post -Land Use Entitlements Work." Funds in the Phase I Predevelopment Plan and Budget may be shifted among the line -items by Developer with the prior written consent of the Executive Director, which consent shall not be unreasonably withheld. 7.2 [Intentionally Omitted] 7.3 Developer Performance of Phase I Predevelopment Work. Subject to the conditions set forth below, Developer shall perform the Phase I Predevelopment Work in accordance with the Phase I Predevelopment Plan and Budget. 7.3.1 Onsite Work. Developer's obligation to perform onsite Post -Land Use Entitlements Work shall be subject to the following conditions precedent: (a) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (b) Final SPP. Commission and Developer have entered into the Final SPP for Phase I and such agreement is in full force and effect. The Final SPP for each Phase will include, among other things, permission, on reasonable and customary terms and conditions (e.g., indemnification by Developer of the Indemnitees consistent with Section [21.2] and the provision of insurance by Developer consistent with Article [9] of the Ground Lease), for Developer and its contractors and agents to enter the subject Parcel for the purpose of performing the work required thereunder. (c) Access to the Site. Developer, pursuant to the Final SPP for the Phase I Parcel, shall have been given access to the Site (or so much thereof as provided in such Final SPP) by notice in writing from the Executive Director. 7.4 Competitive Bidding. Developer acknowledges and agrees that, as noted on the Phase I Predevelopment Plan and Budget, certain of the Phase I Predevelopment Work is to be competitively bid. For such work, Developer shall make a good faith effort to obtain at least two (2) competitive bids for such work and to award the contract to the lowest responsible bidder. Upon request of the Executive Director, Developer shall deliver to Commission true and complete copies of any and all bids received for such work by Developer. 7.5 Indemnification and Insurance. If a contract entered into by Developer after May 10, 2011 for. Phase I Predevelopment Work includes provision for (a) Developer to be 17 C:\Data\1.RG\NC-372.TOD Project\DDAv.6.6.11.s.x.doc defended, indemnified, and/or held harmless by the contractor, then Developer shall use (or have used) commercially reasonable efforts to cause such contract to also require that Commission, the City of National City, California and their officers, employees, agents and representatives similarly be defended, indemnified and/or held harmless, and/or (b) Developer to be named as an additional insured under any policy of insurance required to be supplied by the contractor, then Developer shall use (or have used) commercially reasonable efforts to cause such contract to also require that Commission and the City of National City, California be similarly named. 7.6 Predevelopment Work Loan. Subject to the terms and conditions of this Agreement, Commission agrees to make a loan to Developer (the "Phase I Predevelopment Work Loan") in the principal amount of up to Three Million Seven Hundred Forty -One Thousand and Six Hundred Dollars ($3,741,600) (which sum is subject to change by mutual agreement of the parties) to be used to finance the Phase I Predevelopment Work pursuant to the Phase I Predevelopment Plan and Budget. As more particularly provided in Section [7.7(c)], the Phase I Predevelopment Work Loan is subject to merger with the Commission Subordinate Loan for Phase I. 7.6.1 Schedule for Disbursement. Commission shall not be obligated to, but may at the sole and absolute discretion of the Executive Director, disburse the Phase I Predevelopment Work Loan for any line -item earlier than set forth in the Phase I Predevelopment Plan and Budget. 7.7 Predevelopment Work Loan Terms. The Predevelopment Work Loan shall be evidenced by a promissory note (the "Phase I Predevelopment Work Loan Note") in form and substance reasonably satisfactory to the Executive Director. The essential terms of the Phase I Predevelopment Work Loan shall be as follows: (a) Interest. Until a default, if any, thereunder, the Phase 1 Predevelopment Work Loan Note shall not bear interest. From and after a default thereunder, the Phase I Predevelopment Work Loan Note shall bear simple interest at the lesser of (i) the then Prime Rate plus three hundred (300) basis points, or (ii) the highest rate permitted by law. (b) Periodic Payment. There shall be no periodic payments required under the Phase I Predevelopment Work Loan Note. (c) Maturity. The Phase I Predevelopment Work Loan Note shall be all due and payable upon the earlier of (i) termination of this Agreement by Developer or Commission, (ii) an Event of Default by Developer under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), or (iii) December 31, 2014. If the Phase I Predevelopment Work Loan Note does not sooner become due and payable, it shall, at the Close of Escrow for Phase I, merge with the Commission Subordinate Loan Note for Phase I and, by such merger, be subject to extension of its maturity and modification of its other terms and conditions. (d) Payment. If the Phase I Predevelopment Work Loan Note becomes due and payable for other than an Event of Default by Developer (subject to the notice and cure provisions of Section [22.1(c)1), Developer may satisfy it in full by either (i) making 18 C:A Data \ LEG \NC-372.'fOD Project\DDA.v.6.6.11.s.x-doc payment in full or (ii) delivering to Commission all of the following: (x) any and all plans, studies, drawings, reports, permits and Land Use Entitlements for the Project (collectively, the "Predevelopment. Documents"), (y) an absolute and unconditional assignment to Commission of all of Developer's right, title and interest in and to said Predevelopment Documents (substantially in the form attached hereto as Exhibit ["M"j), and (z) the written consent, in form reasonably satisfactory to the Executive Director, to such assignment of any architect, engineer or other person or firm that has any right, title or interest in or to said Predevelopment Documents; provided, however, Developer shall not be obligated to supply such consent with respect to a contract entered into prior to May 10, 2011 where the person or firm from whom such consent is sought is not obligated to provide such consent and so declines to do so, with an exception therefrom for work performed by such person or firm after such date at the voluntary election of Developer. 7.8 Conditions Precedent to First Disbursement for Pre -Land Use Entitlements Work. Commission's obligation to make the first disbursement of the Phase 1 Predevelopment Work Loan for Pre -Land Use Entitlements Work shall he subject to satisfaction of the following condition precedents: (a) Phase 1 Predevelopment Work Loan Note. Developer shall have duly executed and delivered to Commission the Phase I Predevelopment Work Loan Note. (b) Guaranty. Commission shall have received a duly executed guaranty (the "Predevelopment Loan Guaranty"), in form and content reasonably satisfactory to the Executive Director, of the Phase 1 Predevelopment Work Loan Note from The Related Companies, L.P., or another entity with the same or better creditworthiness ("Guarantor"), guarantying payment of the Phase I Predevelopment Work Loan Note upon termination of this Agreement by Commission as a result of an Event of Default by Developer (subject to the notice and cure provisions of Section 22.1(c)) under any of the following provisions of this Agreement: Sections 4.1, 4.4, 5.1, 6.1, 6.2, 7.5, 8.3, 8.5. 9.1, 9.6 or 1 1.5 (the "Guaranteed Provisions"); provided, however, that, at the election of Commission, in lieu of seeking payment under the Predevelopment Loan Guaranty, Commission may demand that Developer deliver to Commission, within thirty (30) days after written demand by Commission following Commission termination of this Agreement as a result of an Event of Default by Developer under one of the Guaranteed Provisions, (x) any and all Predevelopment Documents, (y) an absolute and unconditional assignment to Commission of all of Developer's right, title and interest in and to said Predevelopment Documents (substantially in the form attached hereto as Exhibit ["M" j), and (z) the written consent, in form reasonably satisfactory to the Executive Director, to such assignment of any architect, engineer or other person or firm that has any right, title or interest in or to said Predevelopment Documents; provided, however, Developer shall not be obligated to supply such consent with respect to a contract entered into prior to May 10, 2011 where the person or firm from whom such consent is sought is not obligated to provide such consent and so declines to do so, with an exception therefrom for work performed by such person or firm after such date at the voluntary election of Developer. To clarify the foregoing, upon termination of this Agreement by Commission as a result of an Event of Default by Developer under one of the Guaranteed Provisions, Commission may elect to either (A) seek performance under the Predevelopment Loan Guaranty, or (B) obtain the Predevelopment Documents in the manner described herein. 19 C.AData\LEGWC-372.TOD Projec'DDA.v.6.6.11..x.doe 7.9 Conditions Precedent to First Disbursement for Post -Land Use Entitlements Work. Commission's obligation to make the first disbursement of the Phase I Predevelopment Work Loan for Post -Land Use Entitlements Work shall be subject to satisfaction of the condition precedent that the Developer have secured the Land Use Entitlements. 7.10 Conditions Precedent to Any Disbursement. Commission's obligation to make any disbursement of the Phase I Predevelopment Work Loan (including the first disbursement) is subject to satisfaction of the following conditions: (a) Proposition 1C Financial Assistance. The Proposition IC Financial Assistance remains committed to the Project by HCD. (b) No Liti>;ation/Developer Right to Terminate. If and when any litigation is pending against Commission, Developer and/or the Project the adverse outcome of which, in the reasonable judgment of Commission general counsel, threatens the Close of Escrow for Phase 1, (i) Commission, by notice to Developer, may suspend disbursement of the Phase 1 Predevelopment Work Loan except for Phase I Predevelopment Work (x) already completed by Developer as of the date of suspension and/or (y) to be performed by third -parties under contract to Developer, which work may not be suspended indefinitely by Developer without liability to Developer, or (z) expressly authorized by the Executive Director to continue notwithstanding the suspension, and (ii) in the event of such suspension, Developer shall be excused from any performance of the Phase I Predevelopment Work (except for such work expressly authorized by the Executive Director to continue) for the duration of such suspension. Developer, in any third -party contract for the performance of Phase I Predevelopment Work entered into on or after May 10, 2011, shall make all commercially reasonable efforts to obtain the right to suspend work without liability to Developer in the event funding of the Phase I Predevelopment Work Loan is suspended pursuant to this Agreement. In addition. if litigation of the type described in the paragraph above is pending and, notwithstanding such litigation, Commission elects to continue funding the Phase Predevelopment Work Loan, Developer may, by written notice to the Commission not earlier than 45 days after the commencement of such litigation (the "Suspension Request"), request suspension of funding of the Phase I Predevelopment Work Loan and Developer's obligation to perform the Phase I Predevelopment Work. Upon receipt of the Suspension Request, Commission shall either (i) suspend the Phase I Predevelopment Work Loan in accordance with the provisions above, or (ii) schedule a meeting to confer with Developer regarding Developer's concerns with respect to the pending litigation. If Commission elects to meet pursuant to (ii), Developer and Commission shall meet within thirty (30) days of Commission's receipt of the Suspension Request and shall each use mutual good faith efforts to reasonably agree on the necessity for a suspension, taking into account the cost (including overhead) and potential risk of continuing the Phase I Predevelopment Work to both Commission and Developer." If, pursuant to this Subdivision (b), Commission suspends disbursement of the Phase I Predevelopment Work Loan, and if such suspension persists for a period sufficient to make it practically impossible to Close the Escrow for Phase I by the time provided in the Schedule of Performance, then Developer, by thirty (30) days' notice to Commission, shall have the right to terminate this Agreement. If, however, Commission resumes disbursement of the Phase I 20 C:ADataALEG\NC-372.TOD Project\DDA.v.6,6.11.s.x.doc Predevelopment Work Loan during said thirty (30)-day period, such notice of termination shall be deemed rescinded and of no further force and effect. (c) Competitive Bidding. If. pursuant to Section [7.4] and the Phase I Predevelopment Plan and Budget, the subject Phase I Predevelopment Work requires that Developer subject such work to competitive bidding, Developer shall have complied with such requirement. (d) Satisfactory Progress. The Executive Director shall be reasonably satisfied, based on his own inspections or other reliable information, that the Phase I Predevelopment Work is progressing satisfactorily. (e) Sufficient Funds. Sufficient funds remain available in the Phase I Predevelopment Work Loan to complete the Predevelopment Work for Phase I in accordance with the Phase I Predevelopment Plan and Budget. (g) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the date of the subject disbursement as though made on and as of that date and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. (h) No Default. No Event of Default by Developer (subject to the notice and cure provisions of Section [22.1(c)]) shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer and, if requested by Executive Director, Commission shall have received a certificate to that effect signed by Developer. 7.11 Waiver of Conditions. The conditions set forth in Sections [7.8, 7.9 and 7.10] are for Commission's benefit only and Executive Director may waive all or any part of such rights by notice to Developer. 7.12 Disbursement Requests. The Phase I Predevelopment Work Loan proceeds shall be disbursed on a line -item by line -item basis in accordance with the Phase I Predevelopment Plan and Budget and subject to the terms and conditions of this Article [7]. Subject to Developer's conditional right to shift funds among line -items as set forth in Section [7.1], in no event shall Commission have any obligation to disburse any amount for any item in excess of the amount allocated to such item in the Phase I Predevelopment Plan and Budget, unless approved by the Executive Director. Disbursement shall be made only upon Developer's written request in the form attached hereto as Exhibit ["0"] (a "Disbursement Request") showing all costs that Developer intends to fund with such disbursement, itemized in such detail as the Executive Director may reasonably require, provided that all such costs for which a disbursement is requested either (a) shall have theretofore been paid in full, and such payment by Developer shall be evidenced by cancelled checks and paid bills or invoices, or (b) shall have been incurred and be due and payable, and payment thereof by Developer shall be made prior to the next submission of a Disbursement Request, which payment shall be evidenced by cancelled checks, paid bills or invoices, or such other evidence reasonably satisfactory to the Executive Director, 21 C:\Data\LEO\NC-372.TOD Project \DDA.v.6.6.11 s.x.doc and (c) conditional lien releases executed by each contractor and subcontractor who has received any payment for work performed if the work is of the type for which a lien is available pursuant to the California Civil Code, and (d) all other documents and information reasonably required by the Executive Director, including, without limitation, a true and complete copy of the third party contract, if any, for the payment of which such disbursement is sought. Commission agrees to fund each Disbursement Request within thirty (30) days after receipt of the Disbursement Request in completed form with all required supporting documentation. Notwithstanding the foregoing, Commission may, at the discretion of the Executive Director, make disbursements from time to time, in the absence of a Disbursement Request, to make payments reasonably deemed advisable by the Executive Director to protect Commission's interest. 7.12 Manner of Disbursement. Unless and until an Event of Default by Developer, Commission shall make each disbursement to Developer or as reasonably directed by Developer. From and after any Event of Default by Developer, Commission may make any disbursement by check payable to Developer; on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or by any other means reasonably selected by the Executive Director. 7.13 Commission Right to Offset Against Phase I Predevelopment Work Loan. Notwithstanding anything to the contrary set forth in this Agreement, Commission shall have the right to require Developer to fund the Phase I Predevelopment Work in whole or in part with monies loaned or granted to CHW or an affiliate thereof by City or Commission for the purpose of such entity loaning such funds to Developer; provided that: (a) such funds will not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed on Developer pursuant to this Agreement; (b) the Executive Director has reasonably determined that such funds may not be used by Commission to fund directly the Commission Subordinate Loan for Phase I; and (c) any single source of such funds shall be in the amount of not less $25,000. • 7.14 Sources of Funds for Phase I Predevelopment Work Loan. Commission shall have the right to fund the Phase I Predevelopment Work Loan with Set -Aside Funds and/or with any other funds (an "Alternate Source of Funds for the Phase I Predevelopment Work Loan") that do not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed upon Developer pursuant to this Agreement for Phase I. That notwithstanding, Commission shall only have the right to use any Alternate Source of Funds for the Phase I Predevelopment Work Loan if Commission first discloses to Developer in writing its intention to use such funds. Developer hereby acknowledges and agrees that the Phase I Predevelopment Work Loan will be funded, in part, with $95,492 of I IOME CHDO funds originally allocated to Community HousingWorks, the managing member of the limited liability company that is the managing 22 C:AData ALEG \NC-372.TOD Project\DDA.v.6.6.I Isx_doc general partner of Developer. Of that sum, $9,549 was allocated for the predevclopment of Phase I, and $85,943 was allocated as a set -aside development loan. In connection with these funds, Developer hereby agrees to comply with the requirements of the HOME Program as set forth in Exhibit ["R"] attached hereto (the "HOME Program Requirements"). With reference to Section "A" [Affordability] of those HOME Program Requirements, the parties acknowledge that Developer shall maintain one (1) dwelling unit in the Phase I Improvements as affordable under the HOME Program regulations for a term of not less than twenty (20) years. 7.15 Predevelopment Work Loan for Phase II. Sections [7.1 through and including Section 7.14] govern performance of and financing for the Phase I Predevelopment Work. Subject to the conditions set forth below, Commission and Developer agree to repeat the process for Phase II on the same terms and conditions only modified to reflect the fact that the work (the "Phase II Predevelopment Work") and the loan (the "Phase II Predevelopment Work Loan") will be for Phase II. Accordingly, attached hereto as Exhibit ["P"] is a "Phase II Preliminary Predevelopment Plan and Budget." Promptly after Close of Escrow for Phase I, Developer shall submit to the Executive Director for approval the following: (a) a proposed, updated "Phase II Predevelopment Plan and Budget" based on the Phase II Preliminary Predevelopment Plan and Budget, and (b) an updated Preliminary Project Budget for Phase II. The parties obligation to repeat the process for Phase II including, without limitation, Developer's obligation to perform the Phase II Predevelopment Work and Commission's obligation to make the Phase 11 Predevelopment Work Loan, shall be subject to satisfaction of the following conditions: (a) Close of Escrow for Phase I have occurred and neither party is then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)11; (b) the Executive Director have approved the updated Preliminary Project Budget for Phase II, which approval the Executive Director shall grant if (i) it is substantially similar to the then prevailing Preliminary Project Budget for Phase II, and (ii) it shows that Phase II can be completed at a cost to Commission not greater than the cost contemplated by this Agreement including, without limitation, the provision of the Commission Subordinate Loan for Phase II in principal amount not greater than Fourteen Million Nine IIundred Nine Thousand Dollars ($14,909,000); and (c) the Executive Director have approved the updated Phase II Predevelopment Plan and Budget submitted by Developer, which approval the Executive Director shall grant if (i) it is substantially similar to the Phase 11 Preliminary Predevelopment Plan and Budget, and (ii) it is consistent with the updated Phase II Preliminary Project Budget approved by the Executive Director pursuant to subdivision (b) immediately above. If and when the conditions set forth above have been satisfied, the parties agree to enter into an implementation agreement for the Phase II Predevelopment Work and the Phase II Predevelopment Work Loan, the terms and conditions of which shall be consistent with the contents of this Section [7.15]. Notwithstanding anything set forth above in this Section [7.15], Developer acknowledges and agrees that as to the Phase II Predevelopment Work Loan, the condition to disbursement set 23 C:lllata\LEG \NC-372.TOD Project \DDA.v 6 6_ I I.s.x.doc forth in Section [7.10(e) [No Default]], shall be understood to mean no "Event of Default" as to both Phase I and Phase II under this Agreement. 8. DESIGN REVIEW, VALUE ENGINEERING AND CONSTRUCTION BIDS 8.1 Scope of Development. Developer shall develop each Phase substantially in conformance with the Conceptual Development Program and the Scope of Development attached hereto as Exhibit ["F"] and with the plans, drawings, specifications, and permits for each Phase approved by City and Commission. 8.2 Basic Concept Plans. The parties acknowledge and agree that Commission, at the time it approved this Agreement, approved certain "Basic Concept Plans" for the Project. 8.3 Design Development Documents. By the time provided in the Schedule of Performance for each Phase, Developer shall prepare and submit to the Executive Director for architectural review and reasonable approval, including aesthetic considerations, the following "Design Development Documents" for each Phase: (a) Architectural design development drawings, including a massing (b) Color and materials board for the Building exterior and (c) Schematic landscape plans, facilities and architectural elevations. The Design Development Documents shall be consistent with the Basic Concept Plans approved by the Executive Director and with the Scope of Development. 8.4 Value Engineering/Bid Package. In connection with preparation of the Schematic Design Documents, the design shall be subject to a round of value engineering in which Developer and Commission shall participate and cooperate. Both the Executive Director and Developer shall have the right to reasonably approve or disapprove the bid package resulting from this process (the "Approved Bid Package"), which approval shall not be unreasonably withheld, conditioned, or delayed. plan and a site plan; landscaping; and 8.5 Construction Bidding/Contracts. The work of all the major trades (e.g., plumbing, electrical, etc.) shall be subjected to a process of competitive bidding based on the Approved Bid Package. Promptly upon opening and reviewing the bids received, Developer shall deliver true and complete copies of all bids to the Executive Director and shall designate which bid(s) Developer proposes to accept. The Executive Director shall have the right to reasonably approve or disapprove the bid(s) to be accepted by Developer, which approval shall not be unreasonably withheld, conditioned or delayed. Failure by the Executive Director to disapprove the bid(s) within five (5) Business Days shall be deemed approved provided that the submission to the Executive Director so stated. 24 C_AData\LEG\NC-372.TOD ProjectADDtiv.6.6. L Ls.x.doe Promptly upon execution, Developer shall deliver to Commission true and complete copies of all construction contracts for the Improvements (the "Construction Contract"). 8.6 City Design Review. In addition to the design review process described above and concurrent therewith, Developer shall cause the Improvements to be designed substantially in accordance with the Conceptual Development Program and the Scope of Development and shall diligently cause the Improvements to be processed through City's site plan, design review and plan check process on a schedule reasonably calculated to permit a Building Permit for each Phase to issue by the time provided in the Schedule of Performance for Close of Escrow for that Phase. 8.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase 1, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by thirty (30) days' notice to Commission if it has, despite diligent efforts, been unable, by the time provided in the Schedule of Performance, to obtain any of the Executive Director and/or City approvals required in this Article [8]. Prior to the Close of Escrow for Phase II, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)] may terminate this Agreement as to Phase II only by thirty (30) days' notice to Commission if it has, despite diligent efforts, been unable, by the time provided in the Schedule of Performance, to obtain any of the Executive Director and/or City approvals required in this Article 18] for Phase II. 8.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase 1, Commission, if it is not then in material default under this Agreement, may terminate this Agreement by thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance, Developer fails to obtain any approval of the Executive Director or City required by this Article [8]. That notwithstanding, Commission's right so to terminate shall he subject to the further condition that the approval at issue shall not have been unreasonably withheld or delayed by the Executive Director or City, as applicable. That notwithstanding, if Developer obtains the subject approval during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. Prior to the Close of Escrow for Phase II, Commission, if it is not then in material default under this Agreement, may terminate this Agreement as to Phase II only by thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance, Developer fails to obtain any approval of the Executive Director or City required by this Article [8] for Phase 11. That notwithstanding, Commission's right so to terminate shall be subject to the further condition that the approval at issue shall not have been unreasonably withheld or delayed by the Executive Director or City, as applicable. That notwithstanding, if Developer obtains the subject approval during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. 25 C.\Data\ LEG \NC-372.TOD Project\DDA.v.6.6. I l.s.x.doc 8.9 Project Architect. The Executive Director shall have the right to approve any replacement for the Project Architect. 9. FINANCING FOR PHASE I 9.1 Preliminary Project Budget for Phase I. Attached hereto as Exhibit ["G"] are the following preliminary budgetary materials for Phase I: (a) Preliminary Project Budget; (b) Sources and Uses of Funds Statement; (c) Cash Flow Projection; and (d) First Year Operating Budget; (collectively, the "Preliminary Project Budget for Phase I") Until the Close of Escrow for Phase I, Developer, if, as and when additional information becomes available, shall promptly revise the Preliminary Project Budget for Phase I to reflect the best information then available to Developer, and shall submit the revised documents to the Executive Director for review and approval. 9.2 Financing Plan for Phase I. It is contemplated that Developer will finance Phase I through: (a) Tax-exempt multifamily housing mortgage revenue bonds to be issued by the California Statewide Communities Development Authority (or another entity selected by Developer and reasonably approved by the Executive Director) and purchased by a reputable institutional lender selected by Developer and approved by the Executive Director, which approval shall not be unreasonably withheld, conditioned or delayed (the "Tax -Exempt Bonds"); (b) Partnership equity, consisting of equity raised by the sale to reputable investors of the "four -percent (4%)" low-income housing credit consistent with the Tax -Exempt Bonds and obtained pursuant to 26 U.S.C. §42 (the "Federal 4%'Fax Credits"); (c) As more particularly provided in Section [9.3], the Commission Subordinate Loan for Phase I; (d) A loan, subordinate to the Commission Subordinate Loan, from Community Housing Works or an affiliate thereof, in the principal amount of $14,957,000 (the "CHW Third Trust Deed Loan"); and (e) A loan, also subordinate to the Commission Subordinate Loan for Phase I, from Community Housing Works or an affiliate thereof, in principal amount equal to a 26 C\Data\ LEG \NC-372. IOD Projcct\DDA.v.6.6.I Is x.doc pro rata portion of the Proposition 1C Financial Assistance (the "CHW Fourth Trust Deed Loan"); (collectively, the "Phase I Financing"). 9.3 Commission Subordinate Loan for Phase I. 9.3.1 Amount and Purpose. Subject to the terms and conditions of this Agreement, Commission agrees to make a loan to Developer for Phase I (the "Commission Subordinate Loan for Phase I") in the principal amount reasonably determined by the Executive Director to be the gap, if any, between the Final Project Budget for Phase I less the total of (a) equity generated by the Tax Credits, (b) the principal amount of the Take -Out Loan, (c) the principal amount of the CHW Third Trust Deed Loan, and (d) the principal amount of the CHW Fourth Trust Deed Loan, provided, however, in no event shall the original principal amount of the Commission Subordinate Loan for Phase I be less than Six Million Dollars ($6,000,000) nor more than Six Million Two Hundred Fifty Thousand Dollars ($6,250,000). As indicated in the Preliminary Project Budget for Phase I originally attached to this Agreement, the parties' original estimate is that the Commission Subordinate Loan for Phase I will be in the principal amount of Six Million Dollars ($6,000,000). Accordingly, the final amount of the Commission Subordinate Loan for Phase I shall be related to changes in the Preliminary Project Budget for Phase I from the Effective Date until the date such final principal amount is fixed. If, as and when the Executive Director has fixed the final principal amount of the Commission Subordinate Loan for Phase I and such amount has been approved by Developer, the Executive Director, on behalf of Commission, and Developer shall enter into a writing the purpose of which shall be to memorialize the agreement to such sum. Subject to the terms and conditions of this Agreement, the Commission Subordinate Loan for Phase I shall close (i.e., the Commission Subordinate Loan Deed of Trust for Phase I shall record in the Official Records) concurrently with the Construction Loan Closing for Phase I (the "Commission Subordinate Loan Closing for Phase i" Developer acknowledges and agrees that the Commission Subordinate Loan for Phase I is inclusive of the Phase I Predevelopment Work Loan made to Developer pursuant to Article [7]. Accordingly, Commission and Developer agree that as part of the Close of Escrow for Phase I: (a) the Phase I Predevelopment Work Loan shall merge with the Commission Subordinate Loan for Phase I, and (b) the sum disbursed by Commission to Developer as the Phase I Predevelopment Work Loan shall (i) for the purposes of the Commission Subordinate Loan Note for Phase I, be deemed disbursed as of the date of the Close of Escrow for Phase I, and (ii) be credited against the sum to be disbursed by Commission at the Close of Escrow for Phase I. The balance of the proceeds of the Commission Subordinate Loan for Phase I shall hereinafter be referred to as the "Construction Portion of the Commission Subordinate Loan for Phase I." Through the Escrow for Phase I, Commission shall return the Phase I Predevelopment Work Loan Note to Developer marked "Satisfied." 9.3.2 Project Based Section 8 Vouchers for Phase I. Commission and Developer acknowledge and agree that Project Based Section 8 vouchers would, on certain conditions, be mutually advantageous for Phase I. Accordingly, if such vouchers become available in time for a contract therefor to be entered into by Developer prior to Close of Escrow 27 C:AData\LEG\NC-372.TOD Project\DDA.v.6.6.1 L_s x.doc for Phase I, then (a) Developer, subject to the conditions set forth below, shall timely file an application for as many such vouchers for Phase I as possible but not more than twenty-seven (27) or such greater number as may be agreed to by Developer and the Executive Director, and (b) Commission shall provide Developer, without out-of-pocket cost or expense to Commission, all appropriate assistance with such application. Developer's obligation to pursue such vouchers shall he subject to the following conditions: (a) the term of the vouchers shall be for not less than fifteen (15) years; and (b) Developer shall be reasonably able to secure a Take -Out Loan for Phase I in principal amount of not less than the sum of (i) the amount that had been expected for such Take -Out Loan without such vouchers as set forth in Preliminary Project Budget for Phase I, plus (ii) the product of $28,000 times the number of vouchers actually secured. If Developer secures such vouchers for Phase I, then (a) the Commission Subordinate Loan for Phase I shall be reduced by such sum of $28,000 per voucher, and (b) the annual ground rent under the Ground Lease for Phase I shall be increased by the sum of $2,000 per voucher for the duration of such voucher. 9.3.3 Sources of Funds for Commission Subordinate Loan for Phase I. Commission shall have the right to fund the Commission Subordinate Loan for Phase I with Set -Aside Funds and/or with any other funds (an "Alternate Source of Funds for the Commission Subordinate Loan for Phase I") that do not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed upon Developer pursuant to this Agreement for Phase I. That notwithstanding, Commission shall only have the right to use any Alternate Source of Funds for the Commission Subordinate Loan for Phase I if Commission first discloses to Developer in writing its intention to use such funds not later than thirty (30) days prior to Close of Escrow for Phase I. 9.3.4 Commission Subordinate Loan Note and Deed of Trust for Phase I. The Commission Subordinate Loan for Phase I shall be evidenced by the Commission Subordinate Loan Note for Phase I and shall he secured by the Commission Subordinate Loan Deed of Trust for Phase I. 9.3.5 Disbursement of Construction Portion of Commission Subordinate Loan for Phase I. The Construction Portion of the Commission Subordinate Loan for Phase I shall, subject to the conditions set forth below, be deposited by Commission into the Escrow for Phase I in time to permit the close thereof and shall be disbursed therefrom at Close of the Phase I Escrow (a) to pay closing costs and expenses shown on the closing statement for the Phase I Escrow, and (b) to the Construction Lender for Phase I for deposit into a construction account from which disbursements shall be made periodically by the Construction Lender only to pay Phase I Project Costs in accordance with the Final Project Budget for Phase I. Commission's obligation so to deposit the Construction Portion of the Commission Subordinate Loan for Phase I shall be subject to satisfaction of the following conditions precedent: 28 C\Data11.EG\NC-372 TOD Project\DDA.v.6.6.1 l.s.x.doc (a) Conditions to Ground Lease of Property. All of the conditions precedent set forth in Section [11.4] to Commission's obligation to ground lease the Phase I Parcel to Developer shall have been satisfied or waived. (b) Commission Subordinate Loan Note. Developer shall have duly executed the Commission Subordinate Loan Note for Phase I and delivered it to Commission or the Escrow Holder. (c) Commission Subordinate Loan Deed of Trust. The Commission Subordinate Loan Deed of Trust for Phase I shall have been recorded in the Official Records subject only to the Permitted Encumbrances. (d) Construction Lender/Commission Disbursement Agreement. The Phase I Construction Lender and Commission have entered into the Construction Lender/Commission Disbursement Agreement for Phase I and such Agreement has been approved by Developer, the Tax Credit Partner for Phase I, and, if required, HCD. (e) Request for Notice of Default. Commission shall have recorded a request for notice of default pursuant to Civil Code Section 2924(b), requesting that the beneficiaries of liens senior to the Commission Subordinate Loan Deed of Trust for Phase I notify Commission of any default under the instrument creating the lien. (f) Title Policy. Title Company is prepared to issue its LP-10 loan policy of title insurance naming Commission as the insured, in a policy amount not less than the principal amount of the Commission Subordinate Loan for Phase I, showing Developer as holding leasehold title to the Phase I Parcel and insuring the Commission Subordinate Loan Deed of Trust for Phase I to be a valid lien on the Phase I Parcel subject only to the Permitted Encumbrances (the "Commission Title Policy for Phase I"). (g) Corporate Resolution. If Developer is a corporation, or if Developer is a partnership or limited liability company and its managing general partner or general manager is a corporation, Commission shall have received a copy of a resolution of the board of directors of said corporation authorizing the execution and delivery of the Commission Subordinate Loan Note and the Commission Subordinate Loan Deed of Trust for Phase 1. (h) Closing Statement for Phase I. Commission, Developer, Senior Lender for Phase I, HCD, and the Tax Credit Partner for Phase 1 shall have approved the closing statement for the Phase I Escrow. 9.4 Final Project Budget for Phase I. Prior to the Close of Escrow for Phase I and as more particularly provided in Section [11.4(b)] Commission, Developer, Senior Lender for Phase I, HCD (if required), and the Tax Credit Partner for Phase I shall agree on the Final Project Budget for Phase I. 9.5 Best Effort to Minimize Commission Cost for Phase I. In order to minimize the principal amount of the Commission Subordinate Loan for Phase I, Developer agrees to use its best efforts to finance Phase I in the manner that yields the largest part possible 29 C.yDala\LEG\NC-372.TOD ProjectvDDA.v.6.6.11 s_x_doe. of the Project Cost for Phase I from sources other than the Commission Subordinate Loan for Phase I. Accordingly, Developer shall: (a) Make best efforts to obtain an allocation for the long-term Tax - Exempt Bonds in principal amount consistent with the Preliminary Project Budget for Phase I; (b) Make best efforts to obtain the Tax Credits for Phase I in principal amount consistent with the Preliminary Project Budget for Phase I and to sell such Tax Credits to a reputable institutional investor at the highest price and on the best terms reasonably possible; (c) Make best efforts to obtain the largest Take -Out Loan for Phase I reasonably supportable by Phase I based on a debt coverage ratio of not greater than 1.30:1; and (d) Make best efforts to obtain additional financing (including grant funds) for Phase I from any and all appropriate sources. 9.6 Application to CDLAC for Phase I. Developer shall pursue the Phase I Financing by: (a) Filing a complete application to CDLAC for an allocation for the Tax -Exempt Bonds for Phase I in accordance with the Schedule of Performance but not later than necessary to satisfy the conditions of the Proposition 1C Financial Assistance; and (b) Timely applying to reputable institutional lenders for the private placement of the Tax -Exempt Bonds for Phase I in order to provide Construction and Take -Out financing for Phase I. If the application to CDLAC fails to receive such allocation, then, upon agreement of the Executive Director and Developer, the parties shall thereafter file one or more applications within the time permitted by the Schedule of Performance. 9.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section 122.1]), may terminate this Agreement by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable to obtain the Phase I Financing on terms and conditions reasonably consistent with the economic assumptions contained in the Preliminary Project Budget for Phase I by the time provided in the Schedule of Performance therefor. 9.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase I and notwithstanding anything contained in this Agreement to the contrary, Commission, if it is not then in material default under this Agreement, may terminate this Agreement by giving thirty (30) days' notice to Developer if Developer fails to obtain the Phase I Financing by the time provided in the Schedule of Performance. That notwithstanding, if Developer obtains the Phase I Financing during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. 30 C:AData\LEG \NC372.TOD Project \DDA.v_6.6_I I s.x.doc 9.9 Developer Fee for Phase I. The fee payable to Developer for development of Phase I shall not exceed $2,500,000, of which $500,000 shall be delayed until not earlier than conversion of the Senior Loan for Phase I from construction to permanent status (the "Developer Fee for Phase I"). 10. FINANCING FOR PHASE II 10.1 Preliminary Project Budget for Phase II. Attached hereto as Exhibit ["H"] arc the following preliminary budgetary materials for Phase II: (a) Preliminary Project Budget; (b) Sources and Uses of Funds Statement; (c) Cash Flow Projection; and (d) First Year Operating Budget; (collectively, the "Preliminary Project Budget for Phase II") Until the Close of Escrow for Phase II, Developer, if, as and when additional information becomes available, shall promptly revise the Preliminary Project Budget for Phase II to reflect the best information then available to Developer, and shall submit the revised documents to the Executive Director for review and approval. 10.2 Financing Plan for Phase II. It is contemplated that Developer will finance Phase II through: (a) Tax-exempt multifamily housing mortgage revenue bonds to be issued by the California Statewide Communities Development Authority (or another entity selected by Developer and reasonably approved by the Executive Director) and purchased by a reputable institutional lender selected by Developer and approved by the Executive Director, which approval shall not be unreasonably withheld, conditioned or delayed (the "Tax -Exempt Bonds"); (b) Partnership equity, consisting of equity raised by the sale to reputable investors of the Federal 4% Tax Credits; (c) As more particularly provided in Section [10.3], the Commission Subordinate Loan for Phase II; and (d) A loan, subordinate to the Commission Subordinate Loan, from Community Housing Works or an affiliate thereof, in principal amount equal to a pro rata portion of the Proposition 1C Financial Assistance (the "CHW Third Trust Deed Loan for Phase II") (collectively, the "Phase I1 Financing"). 31 C:AData\LFG\NC-372.TOD Project\DDA.v.6.6. I.s.x.doc 10.2.1 Developer Right to Propose Alternate Financing Plan for Phase II. Developer shall have the right to propose to Commission in writing and in reasonable detail, an alternate plan for the Phase II Financing (the "Developer's Proposed Alternate Plan for Phase II Financing"). If any Developer's Proposed Alternate Plan for Phase II Financing will result in construction of the Phase II Improvements in accordance with this Agreement (a) at a cost to Commission not greater than the cost contemplated by this Agreement including, without limitation, the provision of the Commission Subordinate Loan for Phase II in principal amount not greater than Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000), (b) at a risk of cost or expense to Commission not materially greater than that contemplated by this Agreement, and (c) to be completed not later than the time provided by the Schedule of Performance, Commission agrees to negotiate in good faith an amendment to this Agreement the effect of which shall be to substitute such Developer's Proposed Alternate Plan for Phase II Financing for the form of Phase II Financing set forth above. 10.2.2 Commission Right to Propose Alternate Financing Plan for Phase ll. Commission shall have the right to propose to Developer in writing and in reasonable detail, an alternate plan for the Phase II Financing (the "Commission's Proposed Alternate Plan for Phase Il Financing"). If any Commission's Proposed Alternate Plan for Phase II Financing will result in construction of the Phase II Improvements in accordance with this Agreement (a) at a financial return to Developer not less than that contemplated by the Preliminary Project Budget for Phase II, (b) at a risk of cost or expense to Developer not materially greater than that contemplated by this Agreement, and (c) to be completed not later than the time provided by the Schedule of Performance, Developer agrees to negotiate in good faith an amendment to this Agreement the effect of which shall be to substitute such Commission's Proposed Alternate Plan for Phase II Financing for the form of Phase II Financing set forth above. 10.3 Commission Subordinate Loan for Phase II. 10.3.1 Amount and Purpose. Subject to the terms and conditions of this Agreement, Commission agrees to make a loan to Developer for Phase II (the "Commission Subordinate Loan for Phase II") in the principal amount reasonably determined by the Executive Director to be the gap, if any, between the Final Project Budget for Phase II less the total of (a) equity generated by the Tax Credits, (b) the principal amount of the Take -Out Loan, and (c) the Proposition 1C Financial Assistance for Phase II, provided, however, in no event shall the original principal amount of the Commission Subordinate Loan for Phase II be less than Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000) nor more than Fifteen Million Eighty -Six Thousand Five Hundred Dollars ($15,086.500). As indicated in the Preliminary Project Budget for Phase II originally attached to this Agreement, the parties' original estimate is that the Commission Subordinate Loan for Phase II will be in the principal amount of Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000). If, as and when the Executive Director has fixed the final principal amount of the Commission Subordinate Loan for Phase II and such amount has been approved by Developer, the Executive Director, on behalf of Commission, and Developer shall enter into a writing the purpose of which shall be to memorialize the agreement to such sum. Subject to the terms and conditions of this Agreement, the Commission Subordinate Loan for Phase II shall close (i.e., the Commission Subordinate Loan Deed of Trust for Phase II shall record in the Official Records) concurrently with the 32 C:\Data1LEG\NC-372_TOD Project\ DDA.v.6.6.I 1.s.x.doc Construction Loan Closing for Phase II (the "Commission Subordinate Loan Closing for Phase II"). Developer acknowledges and agrees that the Commission Subordinate Loan for Phase II is inclusive of the Phase II Predevelopment Work Loan, if any, made to Developer pursuant to Section [7.15]. Accordingly, Commission and Developer agree that as part of the Close of Escrow for Phase II: (a) the Phase II Predevelopment Work Loan shall merge with the Commission Subordinate Loan for Phase II, and (b) the sum disbursed by Commission to Developer as the Phase II Predevelopment Work Loan shall (i) for the purposes of the Commission Subordinate Loan Note for Phase II, he deemed disbursed as of the date of the Close of Escrow for Phase II, and (ii) be credited against the sum to be disbursed by Commission as the First Installment of the Commission Subordinate Loan for Phase II pursuant to Section [10.3.5(a)]. The balance of the proceeds of the Commission Subordinate Loan for Phase ll shall hereinafter be referred to as the "Construction Portion of the Commission Subordinate Loan for Phase II." Through the Escrow for Phase II, Commission shall return the Phase II Predevelopment Work Loan Note, if any, to Developer marked "Satisfied." 10.3.2 Project Based Section 8 Vouchers for Phase 11. Commission and Developer acknowledge and agree that Project Based Section 8 vouchers would, on certain conditions, be mutually advantageous for Phase II. Accordingly, if such vouchers become available in time for a contract therefor to be entered into by Developer prior to Close of Escrow for Phase II, then (a) Developer, subject to the conditions set forth below, shall timely file an application for as many such vouchers as possible but not more than twenty-three (23) or such greater number as may be agreed to by Developer and the Executive Director, and (b) Commission shall provide Developer, without out-of-pocket cost or expense to Commission, all appropriate assistance with such application. Developer's obligation to pursue such vouchers shall be subject to the following conditions: (a) the term of the vouchers shall be for not less than fifteen (I 5) years; (b) Developer and the Executive Director shall have reasonably agreed in writing on the per voucher amount by which, in the event such vouchers are secured, (i) the principal of the Commission Subordinate Loan for Phase 11 would be reduced (the "Agreed Section 8 Voucher Value for Phase II"), and (b) the annual ground rent under the Ground Lease for Phase 11 would be increased (the "Section 8 Ground Rent Adjustment for Phase 11") (including the duration of such increase); and (c) Developer shall be reasonably able to secure a Take -Out Loan for Phase 11 in a principal amount of not less than the sum of (i) the amount that had been expected for such Take -Out Loan without such vouchers as set forth in the Preliminary Project Budget for Phase II, plus (ii) the product of the Agreed Section 8 Voucher Value for Phase II times the number of vouchers secured. If Developer actually secures such vouchers for Phase II, then (a) the Commission Subordinate Loan for Phase II shall be reduced by the Agreed Section 8 Voucher Value for Phase II, and (b) the Section 8 Ground Rent Adjustment for Phase II shall be implemented. 33 C:1Data`,LEG\NC-372.1 OD ProjectADDA.v.6.6J Isx_doc 10.3.3 Sources of Funds for Commission Subordinate Loan for Phase II. Commission shall have the right to fund the Commission Subordinate Loan for Phase II with Set -Aside Funds and/or with any other funds (an "Alternate Source of Funds for the Commission Subordinate Loan for Phase II") that do not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed upon Developer pursuant to this Agreement for Phase IL That notwithstanding, Commission shall only have the right to use any Alternate Source of Funds for the Commission Subordinate Loan for Phase II if Commission first discloses to Developer in writing its intention to use such funds not later than thirty (30) days prior to Close of Escrow for Phase II. 10.3.4 Commission Subordinate Loan Note and Deed of Trust for Phase II. The Commission Subordinate Loan for Phase II shall be evidenced by the Commission Subordinate Loan Note for Phase II and shall be secured by the Commission Subordinate Loan Deed of Trust for Phase II. 10.3.5 Disbursement of Construction Portion of Commission Subordinate Loan for Phase II. The Construction Portion of the Commission Subordinate Loan for Phase II shall, subject to the conditions set forth below, be deposited by Commission into the Escrow for Phase 11 in time to permit the close thereof and shall be disbursed therefrom (a) to pay closing costs and expenses shown on the closing statement for the Phase II Escrow, and (b) to the Construction Lender for Phase II for deposit into a construction account from which disbursements shall be made periodically by the Construction Lender for Phase II only to pay Phase II Project Costs in accordance with the Final Project Budget for Phase II. Commission's obligation so to deposit the Construction Portion of the Commission Subordinate Loan for Phase II shall be subject to satisfaction of the following conditions precedent: (a) Conditions to Ground Lease of Property. All of the conditions precedent set forth in Section [12.4] to Commission's obligation to ground lease the Phase II Parcel to Developer shall have been satisfied or waived. (b) Commission Subordinate Loan Note. Developer shall have duly executed the Commission Subordinate Loan Note for Phase II and delivered it to Commission or the Escrow Holder. (c) Commission Subordinate Loan Deed of Trust. The Commission Subordinate Loan Deed of Trust for Phase 11 shall have been recorded in the Official Records subject only to the Permitted Encumbrances. (d) Construction Lender/Commission Disbursement Agreement. The Phase II Construction Lender and Commission have entered into the Construction Lender/Commission Disbursement Agreement for Phase II and such Agreement has been approved by Developer, the Tax Credit Partner for Phase II, and HCD. (e) Request for Notice of Default. Commission shall have recorded a request for notice of default pursuant to Civil Code Section 2924(b), requesting that 34 C:AData\I.EG\NC-372_TOD Project\DDA.v.6.6.11 s_x.doc the beneficiaries of liens senior to the Commission Subordinate Loan Deed of Trust for Phase II notify Commission of any default under the instrument creating the lien. (f) Title Policy. Title Company is prepared to issue its LP-10 loan policy of title insurance naming Commission as the insured, in a policy amount not less than the principal amount of the Commission Subordinate Loan for Phase II, showing Developer as holding leasehold title to the Phase II Parcel and insuring the Commission Subordinate Loan Deed of Trust for Phase 11 to be a valid lien on the Phase II Parcel subject only to the Permitted Encumbrances (the "Commission Title Policy for Phase II"). (g) Corporate Resolution. If Developer is a corporation, or if Developer is a partnership or limited liability company and its managing general partner or general manager is a corporation, Commission shall have received a copy of a resolution of the board of directors of said corporation authorizing the execution and delivery of the Commission Subordinate Loan Note for Phase II and the Commission Subordinate Loan Deed of Trust for Phase II. (h) Closing Statement for Phase II. Commission, Developer, Senior Lender for Phase II, HCD, and the Tax Credit Partner for Phase II shall have approved the closing statement for the Phase 1I Escrow. 10.4 Final Project Budget for Phase II. Prior to the Close of Escrow for Phase II and as more particularly provided in Section [12.4(b)], Commission, Developer, Senior Lender for Phase II, HCD (if required), and the Tax Credit Partner for Phase II shall agree on the Final Project Budget for Phase II. 10.5 Best Effort to Minimize Commission Cost for Phase II. In order to minimize the principal amount of the Commission Subordinate Loan for Phase 1I, Developer agrees to use its best efforts to finance Phase II in the manner that yields the largest part possible of the Project Cost for Phase II from sources other than the Commission Subordinate Loan for Phase 11. Accordingly, Developer shall: (a) Make best efforts to obtain an allocation for the long-term Tax - Exempt Bonds in principal amount consistent with the Preliminary Project Budget for Phase II; (b) Make best efforts to obtain the Tax Credits for Phase II in principal amount consistent with the Preliminary Project Budget for Phase II and to sell such Tax Credits to a reputable institutional investor at the highest price and on the best terms reasonably possible; (c) Make best efforts to obtain the largest Take -Out Loan for Phase I1 reasonably supportable by Phase 11 based on a debt coverage ratio of not greater than 1.20:1; and (d) Make best efforts to obtain additional financing (including grant funds) for Phase II from any and all appropriate sources. 10.6 Application for Tax Credits for Phase II. Developer shall pursue the Phase II Financing by: 35 C:\llata\LEG\NC-372.TOD Project \DDA.v.6.6. I I.s.x_doc (a) Filing a complete application to CDLAC for an allocation for the Tax -Exempt Bonds for Phase 11 at the first application date not less than thirty (30) days following notice to Developer that the conditions set forth in Sections [12.4(u) and (v)] have been satisfied, if such ever be the case, but not later than necessary to satisfy the conditions of the Proposition 1 C Financial Assistance for Phase II; and (b) Timely applying to reputable institutional lenders for the private placement of the Tax -Exempt Bonds for Phase II in order to provide Construction and Take -Out financing for Phase II. If the application to CDLAC fails to receive such allocation, then, upon agreement of the Executive Director and Developer, the parties shall file such an application in one or more succeeding rounds and, if necessary, the Schedule of Performance for Phase I shall be adjusted accordingly. 10.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase II, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.11), may terminate this Agreement as to Phase 11 only by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable to obtain the Phase II Financing on terms and conditions reasonably consistent with the economic assumptions contained in the Preliminary Project Budget for Phase II after not less than three (3) rounds of application; provided that the Executive Director agrees to the second and third rounds. 10.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase II and notwithstanding anything contained in this Agreement to the contrary, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1]), may terminate this Agreement as to Phase II only by giving thirty (30) days' notice to Developer if Developer fails to obtain the Phase II Financing by the time provided in the Schedule of Performance. That notwithstanding, if Developer obtains the Phase II Financing during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. 10.9 Developer Fee for Phase II. The fee payable to Developer for development of Phase II shall not exceed $2,500,000, of which $500,000 shall he delayed until not earlier than conversion of the Senior Loan for Phase II from construction to permanent status (the "Developer Fee for Phase II"). 11. GROUND LEASE OF PHASE I PARCEL 11.1 Agreement. Commission, subject to the conditions set forth in Section [11.4]. agrees to ground lease to Developer, and Developer, subject to the conditions set forth in Section [11.5], agrees to ground lease from Commission, the Phase I Parcel pursuant to the form of "Ground Lease" attached hereto as Exhibit ["I"]. 11.2 Escrow for Phase I. Conveyance of the Phase 1 Parcel pursuant to the Ground Lease for Phase I shall be made through the Escrow for Phase I. This Agreement shall 36 C:\Data\l.PGANC-372.TOD Project \DDA.v.6.6.1 Is.x.doc constitute escrow instructions to the Escrow Holder for Phase 1. Commission and Developer shall execute such further escrow instructions as are consistent with this Agreement and as may be reasonably required by the Escrow Holder for Phase I. 11.3 Term of Escrow for Phase I. The Escrow for Phase 1 shall close concurrent with the Construction Loan Closing for Phase I. 11.4 Conditions for Commission's Benefit for Phase I. Commission's obligation to ground lease the Phase I Parcel to Developer shall be subject to satisfaction of the following conditions precedent: (a) Land Use Entitlements. Developer has secured and possesses the Land Use Entitlements for the Phase I Parcel. (b) Final Project Budget. The Executive Director, Developer, Construction Lender for Phase I, Tax Credit Partner for Phase I, and, HCD have approved (i) the final Project Budget for Phase I, including, without limitation, (i) the terms and conditions of the Developer Fee for Phase I, and (ii) the terms and conditions of any reserve funds to be established and maintained for the Phase I Project, (iii) the terms and conditions for the disbursement of the Phase I: Construction Loan, Commission Subordinate Loan, Tax Credit Funds, (iv) the terms and conditions of disbursement of the CHW Third Trust Deed Loan, and (v) the terms and conditions of disbursement of the Proposition -I C Financial Assistance for Phase I via the CHW Fourth Trust Deed Loan (the "Final Project Budget for Phase I"). The Final Project Budget for Phase I may be revised from time to time, subject to the approval of the Executive Director. (c) Evidence of Financing. The Executive Director has received and approved the following "Evidence of Phase I Financing:" (i) Construction Loan. True and complete copies of the Phase I Construction Loan documents evidencing the obligation of a reputable institutional lender, subject only to reasonable and customary conditions, to make the Construction Loan for Phase Ito Developer. (ii) Tax Credit Financing. Documentary evidence reasonably acceptable to the Executive Director that Developer has (a) either (x) obtained at least three (3) competitive bids for the Tax Credits for Phase I, or (y) if it has obtained less than three (3) such bids, made all commercially reasonable efforts to obtain such bids, and (b) committed, or caused to be committed, funds from the sale of the Tax Credits for Phase Ito construction of the Phase I Improvements, which commitment may he subject only to reasonable and customary conditions (the "Tax Credit Funds for Phase I"). (iii) CHW Third Trust Deed Loan. True and complete copies of the CHW Third Trust Deed Loan Documents evidencing the obligation of CHVv' to make the CHW Third Trust Deed Loan to Developer subject to only reasonable and customary conditions. 37 C:\Data\LEG\NC-372.TOD Project\DDA.v.6.6.1 I.s.x.doc (iv) Proposition IC Financial Assistance for Phase I and CHW Fourth Trust Deed Loan. Documentary evidence reasonably acceptable to the Executive Director that disbursement of the Proposition IC Financial Assistance for Phase I is fully committed to construction of the Phase I Improvements subject only to IICD requirements, which requirements have been approved by the Executive Director, which approval shall not be unreasonably withheld. True and complete copies of the CHW Fourth Trust Deed Loan Documents evidencing the obligation of CHW to make the CIIW Fourth Trust Deed Loan to Developer subject to only reasonable and customary conditions. (v) Gap Financing. Documentary evidence that Developer has committed, or caused to be committed, equity and/or financing to construction of the Phase I Improvements in the amount of the remainder, if any, of the Project Costs less the amount of the total of any Phase I: Construction Loan, Tax Credit Funds, Commission Subordinate Loan, and Proposition IC Financial Assistance for Phase I (to be introduced into Phase I via the CHW Fourth Trust Deed Loan); and the CHW Third Trust Deed Loan (the "Gap Financing for Phase I"). Gap Financing for Phase I, if any, shall be from sources, and subject only to conditions, reasonably acceptable to the Executive Director. (vi) Take -Out Loan Commitment. A commitment from a reputable institutional lender, subject only to reasonable and customary conditions, pursuant to which said lender agrees to make a Take -Out Loan to Developer for Phase I. with a term of not less than fifteen (15) years, in sum sufficient, when added to any Tax Credit Funds for Phase Ito be disbursed for such purpose, to take-out the Construction Loan for Phase I. (d) General Contractor. The general contractor for Phase I (the "General Contractor for Phase I") has been approved by the Executive Director. Commission hereby pre -approves as General Contractor for Phase I either Portrait Homes, Inc. and/or its affiliates, or Hensel Phelps and/or its affiliates. (c) Construction Contract. Commission has received a true and complete copy of a contract by and between Developer and the General Contractor for Phase I pursuant to which the General Contractor for Phase I has agreed to make the Phase I Improvements at a cost consistent with the Final Project Budget for Phase I (the "Construction Contract for Phase I"). (f) Final Construction Documents. City has approved the Final Construction Documents for the Phase I Improvements and Commission has received a full set thereof. (g) Completion Bond. If the Construction Lender for Phase I or the Tax Credit Partner for Phase I requires that a completion bond be posted by the General Contractor, then such completion bond shall name Commission as a co -obligee. 38 C \Data\LEG\NC-372.TOD Project ADDA.v.6.6_I1_sxdoc (h) Completion Guaranty. Commission shall have received a duly executed completion guaranty for the Phase I Improvements from The Related Companies, L.P., substantially in the form attached hereto as Exhibit ["L"]. (i) Organizational Documents. The Executive Director has received and approved a copy of such portions of the organizational documents (e.g., partnership agreement, limited liability company operating agreement) of Developer or Developer's successor -in -interest as the Executive Director deems reasonably necessary to document the power and authority of the organization to perform its obligations as to Phase I under this Agreement. Developer has also made full disclosure to Commission of the names and addresses of all persons and entities that have a beneficial interest in Developer as to Phase I, excluding, if Developer is a limited partnership, limited partners with less than a majority interest in Developer. (j) Loan to Close. All of the conditions to closing the Commission Subordinate Loan for Phase I set forth in Section [9.3.6] have been satisfied or waived. (k) Building Permit. The Building Permit for the Phase I Improvements has issued or is ready to issue upon only' payment of a sum certain. (1) Work to Commence. The Executive Director shall be reasonably satisfied that the work of the Phase I Improvements will commence not later than ten (10) days after the Close of Escrow for Phase I and will thereafter be completed in a diligent and continuous manner by the time required in the Ground Lease for Phase I. (m) Assignment of Plans and Architect's Contract. Developer shall, by an instrument substantially in the form attached hereto as Exhibit ["M"], conditionally assign to Commission the Final Construction Documents for the Phase I Improvements and the Project Architect's contract for Phase I. Developer shall also deliver to Commission, in the form included as part of Exhibit ["M"], the written consent of said Project Architect to said assignment, including, without limitation, to the use by Commission of the Final Construction Documents for Phase I, as well as the ideas, designs, and concepts contained within them. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase I. (n) Assignment of Construction Contract. Developer shall conditionally assign to Commission, as additional security for the Commission Subordinate Loan Note for Phase I, the Construction Contract for Phase I. The form of such assignment shall be substantially similar to the form of the assignment made by Developer of the Construction Contract for Phase I to the Construction Lender for Phase I. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase I. (o) Notice of Affordability Restrictions. Developer shall have duly executed and deposited into the Phase I Escrow for recordation in the Official Records a "Notice 39 C:UJatalLEG\NC372.TOD Project\DDA_v6.6 1 1.s.x.doc of Affordability Restrictions on Transfer of Property" for Phase I in form and substance sufficient to satisfy the requirements of Health & Safety Code Section 33334.3(f)(3)(B). (p) Insurance. Commission has received satisfactory evidence that the insurance required pursuant to Article [9] of the Ground Lease for Phase I is in full force and effect. (q) Management Plan. Executive Director has received from Developer and approved a comprehensive management plan for Phase I Improvements, including a fair housing component. (r) Management Agreement. Executive Director has received and approved an executed agreement by and between Developer and Related Management Company, L.P., or another reputable and experienced property manager for management of the Phase I Improvements (the "Management Agreement for Phase I"), which Management Agreement for Phase I shall he consistent with this Agreement, including, without limitation, Section [8.12] of the Ground Lease for Phase I. (s) Affirmative Marketing Plan. Developer shall prepare and submit to the Executive Director for reasonable approval an affirmative marketing plan for Phase 1 that satisfies the requirements of 24 CFR 92.351. (t) Documents Executed. Developer has duly executed the Ground Lease for Phase I and the Memorandum of Ground Lease for Phase I and such documents have been deposited into escrow. (u) Final PMP. Commission and DISC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (v) Final SPP. Commission and Developer have entered into the Final SPP for Phase I, such agreement is in full force and effect, Developer shall have completed all work required by it to be completed thereunder prior to the Close of Escrow for Phase I, and Developer shall not otherwise be in default thereunder. (w) DTSC Partial Certificate. DISC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to he completed, pursuant to the Final PMP, prior to Close of Escrow for Phase 1. (x) Reciprocal Rights Documents. Commission and Developer have entered into the Reciprocal Rights Documents to be recorded in the Official Records against the Phase I and Phase 11 Parcels. Commission and Developer agree that (i) if the Reciprocal Rights Documents record in the Official Records through the Escrow for Phase I, the Reciprocal Rights Documents shall include provision for termination thereof in the event that this Agreement is terminated prior to Close of Escrow for Phase II, and (ii) in the alternative, in lieu of recording the Reciprocal Rights Documents at the Close of Escrow for Phase I, the parties may agree to defer such recordation until the Close of Escrow for Phase II on the condition that Commission, 40 C:AData\LEG\NC-372.TOD Project \DDAv.6.6.11_s_x.doc Developer, Senior Lender, HCD and the Tax Credit Partner all agree, in writing, (x) both as to such deferral and to cooperate fully therewith (i.e., to execute any and all necessary documents including, without limitation, subordination agreements), (y) on the form of the document(s) to record through the Escrow for Phase II, and (z) on the exact priority such documents will have at such time as they record. If Commission and Developer elect option (ii), above, they agree that if this Agreement terminates prior to the Close of Escrow for Phase II, such Reciprocal Rights Documents shall never record. (Y) the Escrow for Phase I. Parcel Map. The Parcel Map has recorded or will record through (z) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Close of Escrow for Phase I as though made on and as of that date and. if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. (aa) No Default. No Event of Default by Developer with respect to Phase I shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer with respect to Phase I and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. 11.5 Covenants of Developer. Developer covenants and agrees to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.1 1 ]), any and all of the conditions set forth in Section [11.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy and (b) the satisfaction of which is entirely within the reasonable control of Developer. Developer covenants and agrees to make its best efforts to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.11]), any and all of the conditions set forth in Section [11.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy, (b) Developer has not elsewhere in this Agreement expressly covenanted and agreed to make best or commercially reasonable efforts to satisfy, and (c) the satisfaction of which is within the reasonable control of Developer. 11.6 Conditions for Developer's Benefit for Phase I. Developer's obligation to ground lease the Phase I Parcel from Commission shall be subject to satisfaction of the following conditions precedent: (a) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (b) Final SPP. Commission and Developer have entered into the Final SPP for Phase I, such agreement is in full force and effect, Commission shall have completed all work required by it to be completed thereunder prior to the Close of Escrow for Phase I, and Commission shall not otherwise he in default thereunder. 41 C:\Data\LEGWC-372.TOD Project\DDA.v.6.6.1 I.s.x.doc (c) AR 389 Agreement. Developer and DISC have entered into an agreement under AB 389 for the Site and DTSC is not in default thereunder. (d) DTSC Partial Certificate. DISC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP, prior to Close of Escrow for Phase I. (e) Title Insurance. Title Company is prepared to issue its ALTA leasehold form policy of title insurance, with liability in the amount of the total of the equity raised from the sale of the Tax Credits for Phase I plus the principal amounts of the Take -Out Loan for Phase I, Proposition IC Financial Assistance for Phase I, and Commission Subordinate Loan for Phase I, showing leasehold title to the Phase I Parcel and fee title to the Phase I Improvements located thereon vested in Developer, subject only to the lien of the Senior Loan Security Documents for Phase I, the Commission Subordinate Loan Deed of Trust for Phase 1, and such other exceptions as Developer has previously notified Commission were acceptable to Developer pursuant to Section 14.31 (the "Developer Title Policy for Phase I"). (I) Commercial Pollution Legal Liability Coverage. Developer shall have secured a policy of commercial pollution legal liability insurance (the "Commercial PLL") that will become effective not later than upon issuance of the No Further Action letter for Phase I from DISC. Such policy shall: (i) name Developer as the primary insured and, at the election of Commission, City and/or Commission as additional insureds, and (ii) have terms and conditions substantially equivalent to the following: Each Loss Limit S 10,000,000 Total All Losses $10,000,000 Deductible/Retention $100,000 Term 10 years Coverage Third Party Bodily Injury for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Third Party Bodily Injury for New Pollution Conditions Included Property Damage Claims for Known Conditions / Prc-Existing Conditions / Historical Conditions Included Property Damage Claims for New Pollution Conditions Included Clean Up/Remediation Costs for Known Conditions / Pre -Existing Conditions / Historical Conditions Excluded Clean Up/Remediation Costs for New Pollution Conditions Included Third Party Claims related to transportation of cargo Included Waste Disposal — Non Owned Locations Coverage Included Emergency Response Costs Included Development Soft Cost Coverage Included 42 C:\Dala1LEO\NC-372.TOD Project\DDA.v.6.6.1 1.s.x.doc The premium for such policy shall be paid in full as a Phase I Project Cost at Close of Escrow by the Escrow Holder; provided, however, the incremental cost of any coverage broader than that set forth in the schedule above shall be borne solely by Developer out of its own funds. Developer, not later than ten (10) Business Days prior to the Close of Escrow, shall submit a specimen copy of the proposed policy to the Executive Director for approval as to terms, coverage, exceptions and exclusions, which approval shall not be unreasonably withheld. (g) Documents Executed. Commission has duly executed the Ground Lease for Phase I and Memorandum of Ground Lease for Phase I, and such documents have been deposited into the Phase I Escrow. (h) Land Use Entitlements. The Land Use Entitlements for Phase I are in full force and effect. (i) Final Project Budget. The Executive Director, Developer, Construction Lender for Phase 1, Tax Credit Partner for Phase I, and HCD have approved (i) the Final Project Budget for Phase I. The Final Project Budget for Phase I may be revised from time to time, subject to the approval of Developer. (j) Evidence of Phase I Financing. The Executive Director has approved the Evidence of Phase I Financing. (k) Final Construction Documents. City has approved the Final Construction Documents for the Phase I Improvements. (1) Building Permit. The Building Permit for the Phase I Improvements has issued or is ready to issue upon only payment of a sum certain. (m) Parcel Map. The Parcel Map has recorded or will record through the Escrow for Phase I. (n) Site Clearance. All improvements have been removed from the Phase I Parcel, including all subsurface elements that must be removed to permit construction of the Phase I Improvements. (o) CIIW/Commission Grant Agreement. The CHW/Commission Grant Agreement is in full force and effect, and neither CHW nor Commission is in default thereunder. (p) No Default. No Event of Default by Commission with respect to Phase I shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Commission with respect to Phase I and, if requested by Developer, Developer shall have received a certificate to that effect signed by the Executive Director. 43 C:\Data\LEC\NC•372.TOD Project\i)DA v 6 6.l l.s x.doc 11.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable, by the time provided in the Schedule of Performance (subject to Section [27.11]), to satisfy any of the conditions set forth in Section [11.4]. 11.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase I, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance (subject to Section [27.111), Developer has failed to satisfy any of the conditions set forth in Section [11.4]. That notwithstanding, (a) if Developer, during said thirty (30)-day notice period, satisfies said conditions or causes said conditions to be satisfied, then the Commission notice of termination shall be deemed nullified thereby, (b) with respect to the condition set forth in Subdivision [11.4(a)], Commission shall have no such right to terminate this Agreement unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal a denial of the Land Use Entitlements and/or the time to file any such appeal has expired, (c) with respect to the condition set forth in Subdivision [1 1.4(f)], Commission shall have no such right to terminate this Agreement if approval of such Final Construction Documents for Phase I has been unreasonably withheld or delayed by City, and (d) with respect to the condition set forth in Subdivision [ 11.4(y)], Commission, if Developer is diligently and continuously pursing approval of said parcel map, shall have no such right to terminate this Agreement unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal any condition or conditions to approval or denial of such parcel map by the Planning Commission of City. J 11.9 Waiver of Conditions. The conditions set forth in Section [11.4] arc for Commission's benefit only and the Executive Director may waive all or any part of such rights by notice to Developer and the Escrow Holder for Phase 1. The conditions set forth in Section [11.6] are for Developer's benefit only and Developer may waive all or any part of such rights by notice to Commission and the Escrow Holder for Phase I. 12. GROUND LEASE OF PHASE II PARCEL 12.1 Agreement. Commission, subject to the conditions set forth in Section [12.4], agrees to ground lease to Developer, and Developer, subject to the conditions set forth in Section [12.5], agrees to ground lease from Commission, the Phase II Parcel pursuant to the form of "Ground Lease" attached hereto as Exhibit ["i"]. 12.2 Escrow for Phase II. Conveyance of the Phase II Parcel pursuant to the Ground Lease for Phase II shall he made through the Escrow for Phase II. This Agreement shall constitute escrow instructions to the Escrow Holder for Phase II. Commission and Developer shall execute such further escrow instructions as are consistent with this Agreement and as may be reasonably required by the Escrow Holder for Phase II. 44 C:AData\LEG\NC-372.TOD ProjectDDA.v.6.6.1 I s_x_doc 12.3 Term of Escrow for Phase II. The Escrow for Phase II shall close concurrent with the Construction Loan Closing for Phase II. 12.4 Conditions for Commission's Benefit for Phase II. Commission's obligation to ground lease the Phase II Parcel to Developer shall be subject to satisfaction of the following conditions precedent: (a) Land Use Entitlements. Developer has secured and possesses the Land Use Entitlements for the Phase II Parcel. (b) Final Project Budget. The Executive Director. Developer, Construction Lender for Phase II, Tax Credit Partner for Phase II, and HCD have approved the final Project Budget for Phase II, including, without limitation, (i) the terms and conditions of the Developer Fee for Phase II, (ii) the terms and conditions of any reserve funds to be established and maintained for the Phase II Project, and (iii) the terms and conditions for the disbursement of the Phase II: Construction Loan, Commission Subordinate Loan, Tax Credit Funds, and Proposition IC Grant (the "Final Project Budget for Phase II"). The Final Project Budget for Phase II may be revised from time to time, subject to the approval of the Executive Director. (c) Evidence of Financing. The Executive Director has received and approved the following "Evidence of Phase II Financing:" (i) Construction Loan. True and complete copies of the Phase II Construction Loan documents evidencing the obligation of a reputable institutional lender, subject only to reasonable and customary conditions, to make the Construction Loan for Phase II to Developer. (ii) Tax Credit Financing. Documentary evidence reasonably acceptable to the Executive Director that Developer has (a) either (x) obtained at least three (3) competitive bids for sale of the Tax Credits for Phase II, or (y) if it has obtained less than three (3) such bids, made all commercially reasonable efforts to obtain such bids, and (b) committed, or caused to he committed, funds from the sale of the Tax Credits for Phase II to construction of the Phase II Improvements, which commitment may be subject only to reasonable and customary conditions (the "Tax Credit Funds for Phase II"). (iii) Proposition IC Financial Assistance for Phase II. Documentary evidence reasonably acceptable to the Executive Director that disbursement of the Proposition 1C Financial Assistance for Phase II is fully committed to construction of the Phase II Improvements subject only to HCD requirements, which requirements have been approved by the Executive Director, which approval shall not be unreasonably withheld. (iv) Gap Financing. Documentary evidence that Developer has committed, or caused to be committed, equity and/or financing to construction of the Phase II Improvements in the amount of the remainder, if any, of the Project Costs less the amount of the total of any Phase II: Construction Loan, Tax Credit Funds, Commission Subordinate Loan, and Proposition 1C Financial Assistance (the "Gap Financing for Phase II"). Gap Financing for 45 C:\Data\LEG\NC-372.TOD Project \DDA.v.6.6.11.s.x.doc Phase II, if any, shall be from sources, and subject only to conditions, reasonably acceptable to the Executive Director. (v) Take -Out Loan Commitment. A commitment from a reputable institutional lender, subject only to reasonable and customary conditions, pursuant to which said lender agrees to make a Take -Out Loan to Developer for Phase II, with a term of not less than fifteen (15) years, in sum sufficient, when added to any Tax Credit Funds for Phase II to be disbursed for such purpose, to take-out the Construction Loan for Phase II. (d) General Contractor. The general contractor for Phase II (the "General Contractor for Phase II") has been approved by the Executive Director. Commission hereby pre -approves as General Contractor for Phase II either Portrait Homes, Inc. and/or its affiliates, or Hensel Phelps and/or its affiliates. (e) Construction Contract. Commission has received a true and complete copy of a contract by and between Developer and the General Contractor for Phase II pursuant to which the General Contractor for Phase II has agreed to make the Phase 1I Improvements at a cost consistent with the Final Project Budget for Phase II (the Construction Contract for Phase II"). (f) Final Construction Documents. City has approved the Final Construction Documents for the Phase II Improvements and Commission has received a full set thereof. (g) Completion Bonds. If the Construction Lender for Phase Il or the Tax Credit Partner for Phase II requires that a completion bond be posted by the General Contractor for Phase II, then such completion bond shall name Commission as a co -obligee. (h) Completion Guaranty. Commission shall have received a duly executed completion guaranty for the Phase II Improvements from The Related Companies, L.P., substantially in the form attached hereto as Exhibit [11. (i) Organizational Documents. 'the Executive Director has received and approved a copy of such portions of the organizational documents (e.g., partnership agreement, limited liability company operating agreement) of Developer or Developer's successor -in -interest for Phase II as the Executive Director deems reasonably necessary to document the power and authority of the organization to perform its obligations as to Phase II under this Agreement. Developer has also made titll disclosure to Commission of the names and addresses of all persons and entities that have a beneficial interest in Developer as to Phase II, excluding, if Developer is a limited partnership, limited partners with less than a majority interest in Developer. (j) Loan to Close. All of the conditions to closing the Commission Subordinate Loan for Phase II set forth in Section [10.3.6] have been satisfied or waived. 46 C\Data\LEG \NC-372.TOD Project\DDA.v.6.6.I I.s.x.doc (k) Building Permit. The Building Permit for the Phase II improvements has issued or is ready to issue upon only payment of a sum certain. (1) Work to Commence. The Executive Director shall be reasonably satisfied that the work of the Phase II Improvements will commence not later than ten (10) days after the Close of Escrow for Phase II and will thereafter be completed in a diligent and continuous manner by the time required in the Ground Lease for Phase II. (in) Assignment of Plans and Architect's Contract. Developer shall, by an instrument substantially in the form attached hereto as Exhibit ["M"], conditionally assign to Commission the Final Construction Documents for the Phase II Improvements and the Project Architect's contract for Phase II. Developer shall also deliver to Commission, in the form included as part of Exhibit ["M"], the written consent of said Project Architect to said assignment, including, without limitation, to the use by Commission of the Final Construction Documents for Phase II, as well as the ideas, designs, and concepts contained within them. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase II. (n) Assignment of Construction Contract. Developer shall conditionally assign to Commission, as additional security for the Commission Subordinate Loan Note for Phase II, the Construction Contract for Phase II. The form of such assignment shall be substantially similar to the form of the assignment made by Developer of the Construction Contract for Phase Ti to the Construction Lender for Phase Il. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase II. (o) Notice of Affordability Restrictions. Developer shall have duly executed and deposited into the Phase II Escrow for recordation in the Official Records a "Notice of Affordability Restrictions on Transfer of Property" for Phase II in form and substance sufficient to satisfy the requirements of Health & Safety Code Section 33334.3(f)(3)(B). (p) Insurance. Commission has received satisfactory evidence that the insurance required pursuant to Article [9] of the Ground Lease for Phase II is in full force and effect. (q) Management Plan. Executive Director has received from Developer and approved a comprehensive management plan for Phase II Improvements, including a fair housing component. (r) Management Agreement. Executive Director has received and approved an executed agreement by and between Developer and Related Management Company, L.P., or another reputable and experienced property manager for management of the Phase II Improvements (the "Management Agreement for Phase II"), which Management Agreement for Phase II shall be consistent with this Agreement, including, without limitation, Section [8.12] of the Ground Lease for Phase II. 47 C:AData\LEG \NC-372.TOD ProjectADDA.v.6.6. i I.s x doc (s) Affirmative Marketing Plan. Developer shall prepare and submit to the Executive Director for reasonable approval an affirmative marketing plan for Phase II that satisfies the requirements of 24 CFR 92.351. (t) Documents Executed. Developer has duly executed the Ground Lease for Phase II and the Memorandum of Ground Lease for Phase II and such documents have been deposited into escrow. (u) Redevelopment Plan Amendment. The Redevelopment Plan Amendment shall have been adopted and be in full force and effect. Developer acknowledges and agrees (i) that Commission does not represent and/or warrant that the Redevelopment Plan Amendment can or will be adopted, and (ii) in any case, adoption of the Redevelopment Plan Amendment would be at the sole and absolute discretion of the Commission and the City Council. (v) Bond Issue. Commission, subsequent to the Effective Date of this Agreement, have been able to issue (a) at a reasonable interest rate and on reasonable and customary terms and conditions, and (b) based on the pledge of unencumbered Set -Aside Funds, new, tax allocation bonds the net proceeds of which are (i) equal to not less than $23,000,000, and (ii) not subject to the claim of any third party and, consequently, available to fund the Commission Subordinate Loan for Phase II (the "Bonds for Phase II"). Developer expressly acknowledges and agrees that Commission has no obligation to fund the Commission Subordinate Loan for Phase II with any of the proceeds of that certain "$39,660,000 Community Development Commission of the City of National City (San Diego County, California) (National City Redevelopment Project) 2011 Tax Allocation Bonds," or any funds now or hereafter pledged to the payment thereof; or any refunding or refinancing thereof (the "2011 Bonds"). (w) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (x) Final SPP. Commission and Developer have entered into the Final SPP for Phase II, such agreement is in full force and effect, Developer shall have completed all work required by it to be completed thereunder prior to the Close of Escrow for Phase 1I, and Developer shall not otherwise be in default thereunder. (y) DTSC Partial Certificate/No Further Action Letter. DTSC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP, prior to Close of Escrow for Phase II. That notwithstanding, if by Close of Escrow for Phase II all of the work of the Final PMP has been completed, then DTSC shall have executed and delivered the No Further Action Letter. (z) Reciprocal Rights Documents. Commission and Developer have entered into the Reciprocal Rights Documents to be recorded in the Official Records against the Phase I and Phase II Parcels. 48 C:AData\I I GWC-372.TOD Project DDA.v.6.6.I 1.s_x_doc (aa) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Close of Escrow for Phase I1 as though made on and as of that date and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. (bb) No Default. No Event of Default by Developer with respect to Phase II shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer with respect to Phase II and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. 12.5 Covenants of Developer. Developer covenants and agrees to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.111), any and all of the conditions set forth in Section [12.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy and (b) the satisfaction of which is entirely within the reasonable control of Developer. Developer covenants and agrees to make its best efforts to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.1 1 ]), any and all of the conditions set forth in Section [12.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy, (b) Developer has not elsewhere in this Agreement expressly covenanted and agreed to make best or commercially reasonable efforts to satisfy, and (c) the satisfaction of which is within the reasonable control of Developer. 12.6 Conditions for Developer's Benefit for Phase II. Developer's obligation to ground lease the Phase II Parcel from Commission shall be subject to satisfaction of the following conditions precedent: (a) Final PMP. Commission and DISC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (b) Final SPP. Commission and Developer have entered into the Final SPP for Phase II, such agreement is in full force and effect, Commission shall have completed all work required by it thereunder to be completed prior to the Close of Escrow for Phase II, and Commission shall not otherwise be in default thereunder. (c) AB 389 Agreement. Developer and DISC have entered into an agreement under AB 389 for the Site and DTSC is not in default thereunder. (d) DTSC Partial Certificate/No Further Action Letter. DTSC has executed and delivered a DISC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP,' prior to Close of Escrow for Phase II. That notwithstanding, if by Close of Escrow for Phase II all of the work of the Final PMP has been completed, then DISC shall have executed and delivered the No Further Action Letter. (e) Title Insurance. Title Company is prepared to issue its ALIA leasehold form policy of title insurance, with liability in the amount of the total of the equity raised from the sale of the Tax Credits for Phase II plus the principal amounts of the Take -Out 49 C:\Data\LEG\NC:-372.TOD Project\DD.A.v.6.6.I I.s.x.doc Loan for Phase II, Proposition 1C Financial Assistance for Phase II, and Commission Subordinate Loan for Phase II, showing leasehold title to the Phase II Parcel and fee title to the Phase II Improvements located thereon vested in Developer, subject only to the lien of the Senior Loan Security Documents for Phase II, the Commission Subordinate Loan Deed of Trust for Phase II, and such other exceptions as Developer has previously notified Commission were acceptable to Developer pursuant to Section [4.3] (the "Developer Title Policy for Phase II"). (f) Commercial Pollution Legal Liability Coverage. Developer shall have secured a policy of commercial pollution legal liability insurance (the "Commercial PLL") that will become effective not later than upon issuance of the No Further Action letter for Phase II from DTSC. Such policy shall: (i) name Developer as the primary insured and, at the election of Commission, City and/or Commission as additional insureds, and (ii) have terms and conditions substantially equivalent to the following: Each Loss Limit $10,000,000 Total All Losses $10,000,000 Deductible/Retention $100,000 Term 10 years Coverage Third Party Bodily Injury for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Third Party Bodily Injury for New Pollution Conditions Included Property Damage Claims for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Property Damage Claims for New Pollution Conditions Included Clean Up/Remediation Costs for Known Conditions / Pre -Existing Conditions / Historical Conditions Excluded Clean Up/Remediation Costs for New Pollution Conditions Included Third Party Claims related to transportation of cargo Included Waste Disposal —Non Owned Locations Coverage Included Emergency Response Costs Included Development Soft Cost Coverage Included The premium for such policy shall be paid in full as a Phase 11 Project Cost at Close of Escrow by the Escrow Holder; provided, however, the incremental cost of any coverage broader than that set forth in the schedule above shall be borne solely by Developer out of its own funds. Developer, not later than ten (10) Business Days prior to the Close of Escrow, shall submit a specimen copy of the proposed policy to the Executive Director for approval as to terms, coverage, exceptions and exclusions, which approval shall not be unreasonably withheld. (g) Documents Executed. Commission has duly executed the Ground Lease for Phase II and Memorandum of Ground Lease for Phase II, and such documents have been deposited into the Phase II Escrow. 50 C:A Data \ LEG \NC-372_TOD Project\DDA.v.6.6.11 s.x.doc (h) Land Use Entitlements. The Land Use Entitlements for Phase II are in full force and effect. (i) Final Project Budget. The Executive Director, Developer, Construction Lender for Phase II, Tax Credit Partner for Phase I, and IICD have approved (i) the Final Project Budget for Phase II. The Final Project Budget for Phase II may be revised from time to time, subject to the approval of Developer. (j) Evidence of Phase II Financing. The Executive Director has approved the Evidence of Phase II Financing. (k) Final Construction Documents. City has approved the Final Construction Documents for the Phase II Improvements. (I) Building Permit. The Building Permit for the Phase II Improvements has issued or is ready to issue upon only payment of a sum certain. (m) Site Clearance. All improvements have been removed from the Phase II Parcel, including all subsurface elements that must be removed to permit construction of the Phase II Improvements. (n) No Default. No Event of Default by Commission with respect to Phase II shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Commission with respect to Phase II and, if requested by Developer, Developer shall have received a certificate to that effect signed by the Executive Director. 12.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase II, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)1), may terminate this Agreement as to Phase 11 only by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable, by the time provided in the Schedule of Performance (subject to Section [27.11]), to satisfy any of the conditions set forth in Section [12.4]. Additionally, if, following the Close of Escrow for Phase I but prior to the Close of Escrow for Phase II, Developer (a) (i) reasonably determines that one or more of the conditions set forth in Section [12.6] cannot be satisfied by the time provided in the Schedule of Performance, and (ii) is unwilling or unable to waive that condition and, (b) consequently, desires to terminate this Agreement as to Phase II only, it shall notify Commission thereof. Promptly upon the giving of such notice, Commission and Developer shall meet and confer about the situation without, however, the obligation on the part of either party to agree to any modification to this Agreement. If, at the earlier of (a) the conclusion of the meeting and conference or (b) thirty (30) days following the giving of the notice, Developer still desires to terminate this Agreement as to Phase II only, Developer, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)1), may so terminate this Agreement as to Phase II only by notice to Commission. 51 C:AData1LEG NC-372.'POD Project 'DDA.v.6.6.I t_s_x_doc 12.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase II, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement as to Phase II only by giving thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance (subject to Section [27.11]), any of the conditions set forth in Section [12.4] have not been satisfied. That notwithstanding, (a) if Developer, during said thirty (30)-day notice period, satisfies said conditions or causes said conditions to be satisfied, then the Commission notice of termination shall be deemed nullified thereby, (b) with respect to the condition set forth in Subdivision [12.4(a)], Commission shall have no such right to terminate this Agreement unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal a denial of the Land Use Entitlements and/or the time to file any such appeal has expired, and (c) with respect to the condition set forth in Subdivision [12.4(0], Commission shall have no such right to terminate this Agreement if approval of such Final Construction Documents for Phase I has been unreasonably withheld or delayed by City. Additionally, if, following the Close of Escrow for Phase I but prior to 'the Close of Escrow for Phase II, Commission (a) (i) reasonably determines that one or more of the conditions set forth in Section [12.4] cannot be satisfied by the time provided in the Schedule of Performance, and (ii) is unwilling or unable to waive that condition, and (b) consequently, desires to terminate this Agreement as to Phase II only, it shall notify Developer thereof. Promptly upon the giving of such notice, Commission and Developer shall meet and confer about the situation without, however, the obligation on the part of either party to agree to any modification to this Agreement. If, at the earlier of (a) the conclusion of the meeting and conference or (b) thirty (30) days following the giving of the notice, Commission still desires to terminate this Agreement as to Phase II only, Commission, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may so terminate this Agreement as to Phase II only by notice to Developer. 12.9 Waiver of Conditions. The conditions set forth in Section [12.4] are for Commission's benefit only and the Executive Director may waive all or any part of such rights by notice to Developer and the Escrow Holder for Phase II. The conditions set forth in Section [12.6] are for Developer's benefit only and Developer may waive all or any part of such rights by notice to Commission and the Escrow Holder for Phase II. 13. AFFORDABILITY COVENANTS 13.1 Phase I. As more particularly provided in the Ground Lease:for Phase I, for a period of ninety-nine (99) years the dwelling units in Phase I shall be rented as follows: (a) Twelve (12) of the dwelling units in the Phase I Improvements shall be rented to persons and families whose incomes do not exceed thirty' percent (30%) of area. median at rents affordable to said persons and families, of which three (3) of said units shall be one (1)-bedroom units, five (5) shall be two (2)-bedroom units, and four (4) shall be three (3)- bedroom units; 52 C:1Data\LFG\NC-372.TOD Project\DDA.v 6 6.1 I.s x.doc (b) Twenty-three (23) of the dwelling units in the Phase I Improvements shall be rented to persons and families whose incomes do not exceed forty percent (40%) of area median at rents affordable to said persons and families, of which five (5) of said units shall be one (1)-bedroom units, ten (10) shall be two (2)-bedroom units, and eight (8) shall be three (3)-bedroom units; (c) Eighteen (18) of the dwellings units in the Phase I Improvements shall be rented to persons and families whose incomes do not exceed fifty percent (50%) of area median at rents affordable to said persons and families, of which three (3) of said units shall be one (1)-bedroom units, nine (9) shall be two (2)-bedroom units, and six (6) shall be three (3)- bedroom units; and (d) The remaining dwelling units in the Phase I Improvements (save for one (1) manager's unit) shall be rented to persons and families whose incomes do not exceed one hundred ten percent (110%) of area median at rents affordable to said persons and families. 13.2 Phase II. As more particularly provided in the Ground Lease for Phase II, for a period of ninety-nine (99) years the dwelling units in Phase II shall be rented as follows: (a) Eleven (11) of the dwelling units in the Phase II Improvements shall be rented to persons and families whose incomes do not exceed thirty percent (30%) of area median at rents affordable to said persons and families, of which one (1) of said units shall be a studio apartment, three (3) of said units shall be one (1)-bedroom units, four (4) shall be two (2)- bedroom units, and three (3) shall be three (3)-bedroom units; (b) Twenty-one (21) of the dwelling units in the Phase II Improvements shall be rented to persons and families whose incomes do not exceed forty percent (40%) of area median at rents affordable to said persons and families, of which two (2) of said units shall be studio apartments, five (5) of said units shall be one (1)-bedroom units, eight (8) shall be two (2)-bedroom units, and six (6) shall be three (3)-bedroom units; (c) Thirteen (13) of the dwellings units in the Phase II Improvements shall be rented to persons and families whose incomes do not exceed fifty percent (50%) of area median at rents affordable to said persons and families, of which two (2) of said units shall be one (1)-bedroom units, five (5) shall be two (2)-bedroom units, and six (6) shall be three (3)- bedroom units; and (d) The remaining dwelling units in the Phase II Improvements (save for one (1) manager's unit) shall be rented to persons and families whose incomes do not exceed one hundred ten percent (110%) of area median at rents affordable to said persons and families. 14. ENVIRONMENTAL CONDITIONS 14.1 Commission Obligations. (a) Disclosures. The Site has been studied by Commission, which has commissioned environmental review of all or parts of the Site in the form of a "Phase I" report, in conformance with U.S. EPA rules requiring "All Appropriate Inquiry" and has further 53 C:\Data\.RG\NC:-372.TOD Project\DDA v6.6.11.s.x.doc commissioned "Phase II" reports in which samples of the subsurface condition have been taken and analyzed. A list of all reports in the possession of Commission, which is believed to be but which is not represented to be a comprehensive list of all reports that exist regarding the Site, is attached hereto as Exhibit F"N"] and has been made available to Developer for its review. As a result of the historic uses at the Site, the Site has been found to have been impacted by substances that are regulated and listed under laws pertaining to hazardous substances and materials, and some of such substances located on the Site are listed as "hazardous." Except as disclosed in the reports set forth on Exhibit ["N,"] Commission represents to Developer that it is not aware of, and it has not received any additional notice or communication from any governmental agency having jurisdiction over the Site, notifying it of the presence of hazardous substances in, on, or under the Site, or any portion thereof. (b) Remediation. With respect to each Phase/Parcel of the Project and taking into account the fact that the project will be built in two (2) Phases: (i) Property Mitigation Plan. Commission has entered into or will enter into a voluntary contract with DISC for the review of historic site conditions and approval of remedial steps that will mitigate those conditions. Commission will continue to stay in contractual privity with DISC and will (in accordance with Section [4.41) develop the Final PMP(s) or similar document(s) that will: (A) identify known environmental conditions on the Site that require remediation, (B) propose and describe methods to remediate conditions that might impact the residential use of the Site contemplated by this Agreement, (C) identify those tasks that must be completed prior to achieving closure of the Site, (D) allow Developer to receive the benefits available under the Polanco Act, and (E) provide for DISC to indicate that the Site is safe for its intended use by issuing a "Certificate of Completion," or a "No Further Action" letter, or some other written statement indicating that all remedial work necessary for the safe use of the Site has been completed. After the Preliminary PMP has been approved by Developer pursuant to Section [4.4], Developer shall have the right to review and approve all subsequent drafts thereof including, without limitation, those drafts to be submitted to DTSC for interim or final approval. Approval by Developer of each such draft shall not be unreasonably withheld or delayed. If Developer reasonably disapproves any draft submitted by Commission and Commission fails promptly to overcome Developer's reasonable objection(s), either party may terminate this Agreement by notice in writing. Developer agrees to cooperate fully with Commission in the development and processing of the Final PMP(s) by, among other things, timely supplying to Commission such information as Commission reasonably requires (and as would be typically generated by a developer at that stage of the development process) including, without limitation, preliminary grading and development plans for the Site. (ii) Site Preparation Plan. After the Preliminary SPP has been approved by Developer pursuant to Section [4.4], Commission shall, concurrent with preparation of the Final PMP, revise that Preliminary SPP to reflect development of the Final PMP, including DISC review, comment and approval of that Final PMP. Commission shall submit progressive drafts of the Final SPP to Developer for review and approval, which approval shall not be unreasonably withheld or delayed. lf, (A) Developer reasonably disapproves any draft of the Final SPP submitted by Commission and Commission fails promptly to overcome Developer's reasonable objection(s), or (b) at such time as DISC approves the Final PMP, 54 C:AData\LEG \NC-372.'POD Project\DDA.v.6.6. I I _s_x_doc Developer reasonably disapproves the Final SPP submitted by Commission and Commission fails promptly to overcome Developer's reasonable objection(s), either party may terminate this Agreement by notice in writing. (iii) Extension of Schedule of Performance Dates. If, following receipt of the Final PMP and Final SPP, either Developer or Commission determines that tasks required thereunder will necessitate the extension of times for performance under the Schedule of Performance beyond the times set forth therein, then the parties will meet and confer to reasonably agree on an extension of time in the Schedule of Performance to complete such tasks. (c) No Further Action. The Final SPP for each Phase shall provide for the process by which the parties will pursue at the earliest reasonable opportunity for each Phase/Parcel a 'No Further Action Letter' from DISC or such other written evidence reasonably acceptable to Developer confirming that the remediation work has been completed for the subject Phase/Parcel in accordance with the Final PMP for that Phase/Parcel (the "No Further Action Letter"). Commission agrees to seek in the Final PMP for each Phase/Parcel an interim action by DISC whereby DISC indicates, in writing and prior to the Close of Escrow for each Phase/Parcel, that remediation measures taken to date have been completed satisfactorily (the "DISC Partial Certificate"). (d) Immunities. Once a No Further Action Letter has been issued for each Phase/Parcel by DISC or other appropriate regulatory agency pursuant to the Final PMP for each Phase/Parcel, all benefits and immunities established under the Polanco Act shall attach and inure to the benefit of Developer, its lenders, tenants, successors and assigns as provided by law. 14.2 Limitation of Commission Obligations. (a) "As Is" Conveyance. Except as otherwise provided in this Agreement including, without limitation, the provisions of Section [14.1(b)], each Parcel shall be conveyed to Developer in "as is" physical condition. Except for Commission's obligation to remediate hazardous materials as expressly provided in this Agreement, including without limitation, the Commission's obligations to remediate pre-existing, historical hazardous materials under Sections [4.4 (g) and (h)(i) through (iv)], the Final PMP or the Final SPP, Commission shall have no responsibility for the suitability of each Parcel or portions thereof for the development of the Improvements to be made to that Parcel, and if the conditions of a Parcel or portions thereof are not entirely suitable for such development and Developer or Commission do not otherwise terminate this Agreement in accordance with the terms of this Agreement, then Developer shall put that Parcel in a condition suitable for that development. Subject to Commission's performance of its obligations under this Agreement, including, without limitation, the Final SPP for each Parcel, Developer waives any right of reimbursement or indemnification from Commission for Developer's costs related to any physical conditions on each Parcel unless such condition was known to Commission and not disclosed to Developer and such condition was not readily discoverable by Developer upon reasonable inspection of the subject Parcel. This waiver shall survive termination of this Agreement. 55 C:1Data1LEGW C-372TOD ProjcctA DDA.v.6.6.11.s.x.doc (b) Disclosure. In anticipation of Developer's acquiring the Site and in fulfillment of the requirements of Health and Safety Code Section 25359.7(a), Commission has no knowledge of any hazardous materials or substances in or on the Site other than the Hazardous Materials investigation reports listed in Exhibit ["N"] and the additional information provided to Developer as part of the Preliminary and Final PMP and the information, if any, provided to Commission by Developer pursuant to Developer's due diligence activities related to the Site. (c) Limit of Commission Liability. Developer accepts that not all contamination may be removed from each Parcel following completion of activities described in the Final PMP, even after issuance of a "No Further Action Letter" for a Parcel. However, notwithstanding anything contained in this Agreement to the contrary, Commission obligation for environmental assessment, rcmcdiation and/or transportation of regulated materials terminates upon DTSC's agreement that the Final PMP has been fully implemented as evidenced by issuance of the No Further Action Letter. Developer understands that although each Parcel will be prepared to a condition in which impacts have been mitigated to a level where it meets applicable human health risk assessment criteria, and construction -related nuisance impacts have been abated (or will be abated simultaneous with construction activities), some substances may remain at the Site, at or below concentrations consistent with regulatory guidelines and the Final PMP. As a result of the immunities and protections described above in Section [14.1(d)], Developer, its lender, successors and assigns should have no liability for future remediation of these substances, and they will be held harmless and immune from such liability by operation of California law. However, should Developer, its successors or assigns determine or desire to undertake future construction or additional redevelopment activities at the Site following completion of the Improvements, any increased costs related to said redevelopment by reason of residual impacts shall be borne solely by Developer, its successors and assigns, and Commission will assume no responsibility for such costs. In addition, Developer, and its successors and assigns, accept that the immunities described in Section [14.1(d)] do not shield or protect against liability as a result of new releases of hazardous materials that may occur during or after the construction and operation of the Improvements or against third -party liability suits brought by residents or other users of the Site. Commission will accept no responsibility for such new releases, and Developer waives and abandons any such claims for liability against Commission for such new releases, except to the extent that Commission was an active discharger or actively participated in such post -conveyance discharge or release of hazardous substance. 15. CONDITION PRECEDENT TO PHASE II OBLIGATIONS Notwithstanding anything contained in this Agreement to the contrary, neither Commission nor Developer is required to perform any material obligation hereunder with respect to Phase II, other than an obligation the performance of which is incidental to the development of Phase 1 or that is reasonably necessary in order to permit the development of Phase I as required by this Agreement, unless and until the condition set forth in Section 12.4[v] has been satisfied or has been waived by Commission, and Commission has given notice thereof to Developer (the "Phase II Notice"). 56 C:AData\ LEG \NC-372.TOD I'rojcctADDA.v.6.6.I I.s.x.doc 16. LABOR STANDARDS Developer shall carry out the construction of the Improvements on the Site in conformance with all applicable federal and state labor standards, including, without limitation, the payment of prevailing wages. Phase o 17. CLOSE OF ESCROW; EXPENSES 17.1 Documents to be Delivered. Upon receipt by the Escrow Holder for each f: (a) The Commission Subordinate Loan Note for the subject Phase; (b) The Commission Subordinate Loan Deed of Trust for the subject Phase; (c) The Memorandum of Ground Lease Phase for the subject Phase; (d) The Notice of Affordability Restrictions on Transfer of Property for the subject Phase; (e) The Reciprocal Rights Documents (unless, as to the Close of Escrow for Phase I, Commission and Developer, pursuant to Section [I 1.6(x)], elect to defer recordation until the Close of Escrow for Phase 11; and (0 All other funds and documents required to close the Escrow for the subject Phase in accordance with this Agreement; and (x) as to Phase I, (i) when the conditions precedent described in Section [ 1 1.4] been satisfied or waived in writing by the Executive Director, and (ii) when the conditions precedent described in Section [11.6] have been satisfied or waived in writing by Developer; and (y) as to Phase II, (i) when the conditions precedent described in Section [12.4] been satisfied or waived in writing by the Executive Director, and (ii) when the conditions precedent described in Section [12.6] have been satisfied or waived in writing by Developer, the Escrow Holder for the subject Phase shall, in the following order, record in the Official Records: (a) The Reciprocal Rights Documents (subject to the possible deferral of recordation described above); (b) The Memorandum of Lease for the subject Phase; (c) The Senior Loan Security Documents for the subject Phase; (d) The Commission Subordinate Loan Deed of Trust for the subject Phase I; 57 CAData Project \DDA_v.6.6.I ] s.xdoc (e) As to Phase I only: (i) The CHW Third Trust Deed Loan Security Documents for Phase I; and (ii) The CHW Fourth Trust Deed Loan Security Documents for Phase I; (I) (g) (h) Such other documents required to close the Escrow for the subject Phase in accordance with this Agreement; As to Phase II only: The CHW Third Trust Deed Loan Security Documents for Phase 11; Notice of Affordability Restrictions on Transfer of Property for the subject Phase; and and shall deliver to Commission: (a) The Commission Subordinate Loan Note for the subject Phase; (h) Conformed copies of all of the documents and instruments that recorded in the Official Records for the subject Phase; and (c) The Commission Title Policy for the subject Phase; and shall deliver to Developer: (a) A copy of the Commission Subordinate Loan Note for the subject Phase; (b) Conformed copies of all of the documents and instruments that recorded in the Official Records for the subject Phase; and (c) The Developer Title Policy. 17.2 Expenses of Developer. For each Phase, Developer shall pay: (a) any and all documentary transfer taxes and recording fees arising from leasehold conveyance of the subject Parcel from Commission to Developer by the Ground Lease for the subject Phase. (b) the Escrow fee for the subject Phase, (c) the premium for the Commission Title Policy for the subject Phase, and (d) all such other costs and expenses related to such Escrow and not expressly provided for herein. 17.3 Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and Recording Fees. The Escrow Holder for each Phase is hereby instructed to seek such 58 C:AData\I.F,G\NC-372_TOD Project\DDA.v.6.6. I l.s.x.doc waivers and exemptions from transfer taxes and recording fees as are available pursuant to Revenue and Taxation Code Section 11922 and Government Code Section 6103, respectively. 17.4 Broker's Commissions. Developer represents and warrants that it has not engaged any broker, agent or finder in connection with this Agreement, and Developer agrees to indemnify, protect, hold harmless, and defend the Indemnitees from any claim by any brokers, agents or finders retained by Developer. 18. OTHER ESCROW INSTRUCTIONS 18.1 Funds in Escrow. All funds received in an Escrow shall he deposited by the Escrow Holder in a general escrow account with any state or national bank doing business in the State of California and reasonably approved by the Executive Director and Developer, and such funds may be combined with other escrow- funds of the Escrow Holder. All disbursements shall be made on the basis of a thirty (30) day month. 18.2 Failure to Close. If an Escrow is not in condition to close on or before the time established in the Schedule of Performance therefor, any party who then shall have fully performed the acts to be performed before the conveyance of title may, in writing, demand the return of its money, papers, or documents from the Escrow Holder. No demand for return shall be recognized until fifteen (15) days after the Escrow Holder (or the party making such demand) shall have mailed copies of such demand to the other party. Objections, if any, shall be raised by written notice to the Escrow Holder and to the other party within the 15-day period, in which event the Escrow Holder is authorized to hold all money, papers and documents until instructed by mutual agreement of the parties or, upon failure thereof, by a court of competent jurisdiction. If no such demands are made, such Escrow shall be closed as soon as possible. If objections are raised in the manner provided above, the Escrow Holder shall not be obligated to return any such money, papers or documents except upon the written instructions of both the Executive Director and Developer, or until the party entitled thereto has been determined by a final decision of a court of competent jurisdiction. If no such objections are made within said 15-day period, the Escrow Holder shall immediately return the demanded money, papers or documents. 18.3 Amendments. Any amendment to these Escrow instructions shall be in writing and signed by the Executive Director or Commission Counsel and Developer. At the time of any amendment, the Escrow Holder shall agree to carry out its duties as the Escrow Holder under such amendment. 18.4 Notices. All Notices from the Escrow I -{older to Commission or Developer shall be given in the manner provided in Article [23]. 18.5 Liability. The liability of the Escrow Holder under this Agreement is limited to performance of the obligations imposed upon it under Sections [17.I], [I7.3], and [18.1]. 59 C:1Data\LFG\NC-372.To1) Project ProjecmDDAv6m_ 11.s.x.dnc 19. CERTIFICATE OF COMPLETION Promptly after completion of all construction and development of the Improvements for a Phase in conformity with the Final Construction Documents and the Scope of Development for such Phase, and after written request therefor from Developer, Commission shall furnish Developer with a final Certificate of Completion for the subject Phase. Such final Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction and development required by this Agreement for the subject Phase. The Certificate of Completion shall be in such form as to permit it to be recorded in the Official Records of the County. lf, after written request therefor from Developer, Commission refuses or fails to furnish the applicable Certificate of Completion, Commission shall, within sixty' (60) days after the written request, provide Developer with a written statement of the reasons Commission refused or failed to furnish the Certificate of Completion. The statement shall also contain Commission's opinion of the action Developer must take to obtain the Certificate of Completion. If the reason for such refusal is confined to either (a) the immediate unavailability of specific items or materials for landscaping or (b) the need only to complete "punch list" items, Commission will issue the Certificate of Completion upon the posting of a bond by Developer with Commission in an amount representing the fair value of the work not yet completed. If Commission shall have failed to provide such written statement within said (sixty) 60-day period, Developer shall be deemed entitled to the Certificate of Completion. Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any' obligation of Developer to any holder of a mortgage or any insurer of a mortgage securing money loaned to finance the Improvements. Such Certificate of Completion shall not he notice of completion as referred to in Section 3093 of the California Civil Code, nor shall such Certificate of Completion serve as a certificate of occupancy for the subject Phase. 20. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS 20.1 Developer's Formation, Qualification and Compliance. Developer (a) is validly existing and in good standing under the laws of the State of California, (b) has all requisite authority' to conduct its business and own and lease its properties, and (c) has all requisite authority to execute and perform its obligations under this Agreement. 20.2 Litigation. Developer represents and warrants that there are no material actions, lawsuits or proceedings pending or, to the best of Developer's knowledge, threatened against or affecting Developer, the adverse outcome of which could have a material adverse affect on Developer's ability to perform its obligations under this Agreement. 60 C:\Data\LEG\NC-372 TOD Project\DDA.v.6.6.I I.s.x.doc 21. INDEMNIFICATION AND INSURANCE 21.1 Nonliability of Commission. Developer acknowledges and agrees that: (a) Commission 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 Project, including matters relating to: (i) the Final Construction Documents, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, or (iii) the progress of the Project and its conformity with the Final Construction Documents; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledge that any review, inspection, supervision, approval or information supplied to Developer by Commission in connection with such matters is solely for the protection of Commission and that neither Developer nor any third party is entitled to rely on it; (b) Notwithstanding any other provision of this Agreement: (i) Commission is not a partner, joint venturer, alter -ego, manager, controlling person or other business associate or participant of any kind of Developer and Commission does not intend to ever assume any such status; (ii) Commission shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) Except to the extent, if any, expressly set forth in the Final SPP for a Phase as to work to be performed by Commission, Commission shall not he 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, contractors, licensees or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon not caused by the sole and willful negligence of the Indemnitees; and (d) By accepting or approving anything required to be performed or given to under this Agreement, including any certificate, financial statement, survey, appraisal or insurance policy, Commission 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 Commission to anyone. 21.2 Indemnity. Developer shall indemnify, protect, hold harmless and defend (with counsel reasonably satisfactory to the Executive Director and Commission General Counsel) the Indemnitees from and against any and all losses, costs, claims, expenses, damages (including, without limitation, foreseeable or unforeseeable consequential damages) and liabilities (including, without limitation, reasonable attorneys' fees and court costs) directly or indirectly arising from, related to, or as the result of (a) the death of any person at the Site after Developer takes possession of the Phase applicable thereto, (b) damage, injury or loss to any person at the Site after Developer takes possession of the Phase applicable thereto, (c) damage or injury to any property occurring or resulting directly or indirectly from the use, occupancy or development of the Property by Developer, its agents or invitees pursuant to this Agreement, the activities of Developer or its officers, directors, employees, agents, servants or contractors, or 61 C:AData1LEG\NC-372.TOD Project ADDA.v.6.6.1 Ls.x.doc from any other cause, except to the extent caused by the Indemnitees' gross negligence or willful misconduct. This indemnity shall survive termination of this Agreement and issuance of the Certificate of Completion for each Phase. Notwithstanding anything in this Agreement, the foregoing shall not apply to and nothing in this Section [21.2] shall affect or excuse the Commission's obligations under this Agreement to remediate hazardous wastes, including without limitation Commission's obligation to remediate pre-existing, historical hazardous materials pursuant to Sections [4.4 (g) and (h)(i) through (iv)]. 21.3 Reimbursement of Commission. Developer shall, within fifteen (15) days after written demand, reimburse Commission for all costs reasonably incurred by Commission (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants) in connection with Commission enforcement of the Project Documents and all related matters, including, without limitation, the following: (a) Commission's commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any Project Document; and (b) all claims, demands, causes of action, liabilities, losses, and other costs against which Commission is indemnified under the Project Documents. Such reimbursement obligations shall bear interest from the date occurring fifteen (15) days after Commission makes written demand to Developer at the rate of ten percent (10%) per annum. Such reimbursement obligations shall survive cancellation of the Commission Subordinate Loan Note, and the release and reconveyance of the Commission Subordinate Loan Deed of Trust. 22. DEFAULTS AND REMEDIES 22.1 Event of Default. Any of the following events or occurrences with respect to either party shall constitute a material breach of this Agreement and, after the expiration of any applicable cure period, shall constitute an "Event of Default" by such party: (a) The failure by either party to pay any amount in full when it is due under this Agreement, if the failure has continued for a period of fifteen (15) days after the party entitled to payment demands in writing that the other party cure that failure. (b) The failure by either party to perform any material obligation under this Agreement, which by its nature such party has no capacity to cure. (c) The failure by either party to perform any other obligation under this Agreement, including, without limitation, the other Project Documents, if the failure has continued for a period of thirty (30) days after demand in writing that such party cure the failure. If, however, by its nature the failure cannot reasonably be cured within thirty (30) days, such party may have such longer period of time as is reasonably necessary to cure the failure, provided, however, that such party commence said cure within said thirty (30)-day period, and thereafter diligently prosecute said cure to completion within one hundred eighty (180) days. Notwithstanding anything to the contrary contained in this Agreement, there shall be no cross -default between Developer's obligations with respect to Phase I under this Agreement and Developer's obligations with respect to Phase 11 under this Agreement. If Developer shall 62 Cz\DataALEG\NC-372.TOD Project \DDA.v.6.6.I I.s .doe commit an Event of Default in any obligation hereunder with respect to a particular Phase, Commission's sole and exclusive right shall be to pursue remedies permitted hereunder with respect to the Event of Default on such Phase, and Commission expressly acknowledges that it has and retains no rights or remedies with respect to any other Phase unless an Event of Default separately occurs with respect thereto. 22.2 No Waiver. Except as otherwise expressly provided in this Agreement, any failure or delay by any party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default, or of any such rights or remedies, or deprive any such party 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. 22.3 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of such rights or remedies shall not preclude the exercise by it, at the same time or different times, of any other rights or remedies for the same default or any other default by another party. 23. NOTICES All notices, consents, demands, approvals and other communications (the "Notices") that are given pursuant to this Agreement shall be in writing to the appropriate party and shall be deemed to have been fully given when delivered, including delivery by commercial delivery service, or if deposited in the United States mail, certified or registered, postage prepaid, when received or refused. All Notices shall be addressed as follows: If to Developer: and to: If to Commission: Paradise Creek Housing Partners, L.P. c/o The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Community Housing Works 4305 University Avenue, Suite 550 San Diego, California 92105 Community Development Commission of the City of National City 1243 National City Blvd. National City, California 91950 Attn: Executive Director Addresses for notice may he changed from time to time by notice to all other parties. Notwithstanding that Notices shall be deemed given when delivered, the nonreceipt of any Notice as the result of a change of address of which the sending party was not notified shall be deemed receipt of such Notice. 63 C\Data1LEGWC-372.TOD ProjectADDA.v.6.6.I I.s,x.doc 24 PROJECT SIGN Developer agrees to construct, erect and maintain upon the Property during the course of construction a sign that identifies the Project as a Commission -assisted activity. The design, content and dimensions of such signs shall be subject to the prior approval of the Executive Director, which approval shall not be unreasonably withheld or delayed. 25. ASSIGNMENT Except as otherwise expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of Commission, which consent may be withheld in its sole and absolute discretion. Any such assignment or delegation without such consent shall, at Commission's option, be void. Notwithstanding the foregoing, Developer, prior to Close of Escrow for Phase I and without the prior consent of Commission, may, subject to the condition set forth immediately below, assign all of its right, title and interest hereunder with respect to Phase II to a limited partnership in which affiliates of The Related Companies of California, LLC, and Community HousingWorks act as general partners (the "Phase II Developer"). The effectiveness of such assignment shall be subject to the condition that the original Developer and the Phase II Developer deliver to Commission, in form and substance reasonably acceptable to the Executive Director, the assignment in writing, including assumption by the Phase II Developer of all of the duties and obligations of the original Developer under this Agreement with respect to Phase II. From and after the occurrence of such assignment by original Developer hereunder, (a) the original Developer hereunder shall only be obligated under this Agreement with respect to Phase I, and shall have no obligation, past or present, with respect to Phase II and shall be released and forever discharged from any obligation, past or present, with respect to Phase II, and (b) the Phase II Developer hereunder shall only be obligated under this Agreement with respect to Phase II, and shall have no obligation, past or present, with respect to Phase I and shall be released and forever discharged from any obligation, past or present, with respect to Phase I. 26. ADMINISTRATION Following approval of this Agreement by Commission, this Agreement shall be administered and executed on behalf of Commission by the Executive Director. The Executive Director shall have the authority to issue interpretations, waive terms and conditions, and enter into amendments of this Agreement (including, without limitation, to the Schedule of Performance) on behalf of Commission provided that such actions do not substantially' change the uses or development permitted of the Property or materially add to the costs of Commission provided herein. All other waivers or amendments shall require the formal consent of Commission. 27. MISCELLANEOUS 64 CALM. \ LEG \NC372.TOD Project ADDA.v.6 6.11.s_x.doc 27.1 Counterparts. This Agreement may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document. 27.2 Prior Agreements; Amendments; Consents. This Agreement contains the entire agreement between Commission and Developer with respect to the Property, and all prior negotiations, understandings and agreements are superseded by this Agreement. No modification of this Agreement (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. 27.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. Assuming proper service of process, Developer and Commission waive any objection regarding personal or in rem jurisdiction and agree that venue shall be proper in the County of San Diego, California. 27.4 Severability of Provisions. No provision of this Agreement that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of this Agreement are hereby declared to be severable. 27.5 Headings. Article and section headings are included in this Agreement for convenience of reference only and shall not be used in construing this Agreement. 27.6 Time of the Essence. Time is of the essence of this Agreement. 27.7 Conflict of Interest. No member, official or employee of Commission shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to this Agreement which is prohibited by law. 27.8 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. 27.9 Nonliability of Commission Officials and Employees. No member, official or employee of Commission shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by Commission or for any amount which may become due to Developer or successor, or on any obligation under the terms of this Agreement. 65 C:\Data1LEG\NC-372.TOD Project \DDA,v.6.6.1 I .s.x.doc 27.10 Submission of Documents and Other Matters for Approval. Whenever this Agreement requires either party to submit plans, drawings, documents or other matters to the other party for approval, and there is no time specified herein for such approval, the submitting party may submit a letter requiring approval or rejection by the other party of the documents or matter submitted within thirty (30) days after submission, and unless rejected within the stated time such documents or matter shall be deemed approved. Except where such approval is expressly reserved to the sole discretion of the approving party, or requires the discretion of the Commission, all approvals required hereunder by either party shall be reasonable and not unreasonably withheld or delayed. Developer expressly acknowledges and agrees that inasmuch as City is not a party to this Agreement, neither this Section, nor any other term or condition of this Agreement is applicable to or binding on City. 27.11 Force Majeure. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; litigation beyond the reasonable control of a party and pursuant to which performance under this Agreement is enjoined; unusually severe weather; inability, despite best efforts, to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier beyond the reasonable control of a party; acts of the other party; acts or the failure to act of any public or governmental entity (except that acts or the failure to act of Commission shall not excuse performance by Commission); or any other acts or causes beyond the reasonable control 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 of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Force Majeure shall serve also to extend the time by which any condition, for the benefit of either party, shall be satisfied under this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date set forth above. 66 C:AData\LEG\NC-372.TOD Project\DDA.v.6.6.11.s.x.doc "Developer" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managiyl Member [Signatures Continue Next Page] 67 By: nne g. Wilson nior Vice President C:AData\LEG\NC-372.TOD Project\DDA.v.6.6,11.s.x.doc "Commission" COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER, Commission Special Counsel By: G-� Lance E. Garber 68 , Chairman C:AData\ LEG \NC-372.TOD Project\DDA.v.6.6.I I.s.x.doc LIST OF EXHIBITS EXHIBIT DESCRIPTION ui6c, „C„ "N" „Qft IIR,1 Site Map "A-1 " - Legal Description of Public Works Yard IIA_') II Legal Description of Ines Trust Property Conceptual Development Program Proposition IC Financial Assistance Schedule of Performance Phase I Predevelopment Plan and Budget Scope of Development Preliminary Project Budget for Phase I Preliminary Project Budget for Phase II Form of Ground Lease Form of Commission Subordinate Loan Note Form of Commission Subordinate Loan Deed of Trust Form of Completion Guaranty Form of Assignment of Plans and Architect's Contract List of Environmental Reports Form of Disbursement Request Preliminary Phase II Predevelopment Plan and Budget Draft Redevelopment Plan Amendment HOME Program Requirements 69 C\Data\LFG\NC-372 TOD Project \DDA.v.6.6.I I.sx.dac EXHIBIT "A" SITE MAP EXHIBIT "A" S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc EXHIBIT "A-1" LEGAL DESCRIPTION OF PUBLIC WORKS YARD LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: Lots 7 to 16 inclusive of Block 85 of National City, in the City of National City, County of San Diego, State of California according to map thereof no. 348 filed in the Office of the County Recorder of San Diego County October 2, 1882, excepting therefrom that portion of land as set forth in that certain Corporation Grant Deed recorded November 20, 1964 as file no. 211364 of Official Records. In addition, that portion of Coolidge Avenue between 20th Street and 22 Street, and 21st Street between Harding Avenue and Hoover Avenue as set forth in that certain Order of Vacation (Resolution No. 8338 of the City Council of the City of National City) recorded April 8, 1963 as file no. 59590 of Official Records; And those portions of the Unnamed Alley lying within Block 85 of said map no. 348 as set forth in the certain Order of Vacation (Resolution No. 9816 of the City Council of the City of National City) recorded May 12, 1969 as file no. 82961 of Official Records. (End of Legal Description) EXHIBIT "A-1" Page 1 of 3 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Centcr\DDA\EXECUTED DOCUMENI'S\ELECfRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: Lots 1 to 22 inclusive of Block 86 of National City, in the City of National City, County of San Diego, State of California according to map thereof no. 348 filed in the Office of the County Recorder of San Diego County October 2, 1882. In addition, that portion of Coolidge Avenue between 20th Street and 22nd Street, and 21st Street between Harding Avenue and Hoover Avenue as set forth in that certain Order of Vacation (Resolution No. 8338 of the City Council of the City of National City) recorded April 8, 1963 as file no. 59590 of Official Records; And the Unnamed Alley lying within Block 86 of said map no. 348 as set forth in the certain Order of Vacation (Resolution No. 4816 of the City Council of the City of National City) recorded May 12, 1969 as file no. 82961 of Official Records (End of Legal Description) EXHIBIT "A-1" Page 2 of 3 S:1TRC-DEV1Projects\PROSPECT \National City Public Works Centcr\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DOA v 6 6 II s x.doc LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: Lots 1 to 22 inclusive of Block 107; and Lots 1 to 22 inclusive of Block 108 of National City, in the City of National City, County of San Diego, State of California according to map thereof no. 348 filed in the Office of the County Recorder of San Diego County October 2, 1882; Together with that portion of Coolidge Avenue between 20th Street and 22o1Street, and 21St Street between Harding Avenue and Hoover Avenue as set forth in that certain Order of Vacation (Resolution No. 8338 of the City Council of the City of National City) recorded April 8, 1963 as file no. 59590 of Official Records; And those portions of the Unnamed Alley lying within Blocks 107 and 108 of said map no. 348 as set forth in the certain Order of Vacation (Resolution No. 9816 of the City Council of the City of National City) recorded May 12, 1969 as file no. 82961 of Official Records (End of Legal Description) EXHIBIT "A -I" Page 3 of 3 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "A-2" LEGAL DESCRIPTION OF ILLES TRUST PROPERTY LEGAL DESCRIPTION The land referred to herein is situated In the State of California, County of San Diego, City of National City, and described as follows: PARCEL 1: BLOCK 84 AND THAT PORTION OF BLOCK 85 IN NATIONAL CITY, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 348, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, OCTOBER 2, 1882, TOGETHER WITH PORTIONS OF 20TH STREET, LYING BETWEEN SAID BLOCKS 84 AND 85 AND OF COOLIDGE AVENUE ADJOINING SAID BLOCKS ON THE SOUTHWEST AS SAID STREET AND AVENUE ARE CLOSED AND VACATED TO PUBLIC USE, ALL LYING NORTHWESTERLY OF A LINE DRAWN PARALLEL WITH AND 130 FEE! NORTHWESTERLY OF THE CENTER LINE OF 21ST STREET ADJOINING SAID BLOCK 85 OF THE SOUTHEAST. EXCEPTING THEREFROM THE ABOVE DESCRIBED PARCEL OF LAND ALL THAT PORTION LYING WESTERLY OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF BLOCK 151 OF SAID MAP 348, DISTANT THEREON 200 FEET NORTHEASTERLY FROM THE MOST WESTERLY CORNER OF LOT 1 IN SAID BLOCK 151; THENCE NORTHERLY IN A STRAIGHT LINE TO THE MOST WESTERLY CORNER OF LOT 1 IN BLOCK 45 OF SAID MAP 348. ALSO EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND, ALL THAT PORTION LYING SOUTHERLY OF A LINE PARALLEL WITH THE SOUTHERLY LINE OF SAID PARCEL AND 214.00 FEET NORTHERLY OF SAID SOUTHERLY LINE AS MEASURED ALONG TILE EASTERLY LINE OF SAID PARCEL PARCEL 2: BLOCK 85 IN NATIONAL CITY, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 348, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON OCTOBER 2, 1882; TOGETHER WITH PORTIONS OF 20TH STREET LYING NORTHWESTERLY OF SAID BLOCK 85, AND OF COOLIDGE AVENUE ADJOINING SAID BLOCK ON THE SOUTHWEST AS SAID STREET AND AVENUE ARE CLOSED AND VACATED TO PUBIC USE, ALL LYING NORTHWESTERLY OF A LINE DRAWN PARALLEL WITH AND 130.00 FEET NORTHWESTERLY OF THE CENTERLINE OF 21ST STREET ADJOINING SAID BLOCK 85 ON THE SOUTHEAST. EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND ALL THAT PORTION LYING WESTERLY OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF BLOCK 151 OF SAID MAP 348, DISTANT THEREON 200 FEET NORTHEASTERLY FROM THE MOST WESTERLY CORNER OF LOT 1 IN SAID BLOCK 151; THENCE NORTHERLY IN A STRAIGHT LINE TO THE MOST WESTERLY CORNER OF LOT 2 IN BLOCK 45 OF SAID MAP.348. EXHIBIT "A-2" Page 1 of 2 S: TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES \DDA v 6 6 I I s x.doc ALSO EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND, ALL THAT PORTION LYING NORTHERLY OF A LINE PARALLEL WITH AND SOUTHERLY LINE OF SAID PARCEL AND 214.00 FEET NORTHERLY OF SAID SOUTHERLY LINE AS MEASURED ALONG THE EASTERLY LINE OF SAID PAR(`.Fl (End of Legal Description) EXHIBIT "A-2" Page 2 of 2 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\F.XFCUTED DOCUMENTS\ELECTRONIC VERSION OF FILES \UDA v 6 6 II s x.doc EXHIBIT "B" CONCEPTUAL DEVELOPMENT PROGRAM EXHIBIT "B" Page 1 of 2 S:1TRC-DEV\Projects\PROSPECT1National City Public Works Center'DDA1F.XECt.ITED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc CONCEPTUAL PARADISE CREEK HOUSING STUDY NATIONAL CITY, CALIFORNIA THE RELATED COMPANIES OF CALIFORNIA 413E new •� F I�Mf��e�� sn! 4t! 3 wu ;ryigoNeuw�.w 0 1r . 00. M pie r�� P *IC "A244 r,, "...ea. It TlIwX4J••77.714Y MAX fn'Y�w6� rR416ANNa,47- Amy f .$[sriry FFG' ' NY'LIt(bVY Yw f7 ?.w /la3T'1w.. s7 cw. a.v.G. --'+ 4/044A6 r4-3YNc16 77, EXHIBIT "C" PROPOSITION 1C FINANCIAL ASSISTANCE EXHIBIT "C" Page 1 of 4 S:TRC-DEV1Projects\PROSPECT\National City Public Works Center\DOA \EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 I I s x.doc STA- .iF CALIFORNIA-e ICINF{ `_SS TRANGPffR,(B.T�N(AND HDSj tNG /�[gaGx DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF FINANCIAL ASSISTANCE 1800 Thud Street. Suite 390 Sacramento. CA 95811 (916) 322-1560 FAX (916) 327.6660 May 20, 2010 William Witte, President The Related Companies of California, LLC 18201 Von Karmen Avenue, Suite 900 Irvine, CA 92612 Sue Reynolds, President Community HousingWorks 4305 University Avenue, Suite 550 San Diego, CA 92105 RE: National City Westside Infill TOD Buildings Contract No. 09-IIG-6009 Dear Mr. Witte and Ms. Reynolds: Arnold G�wanwpea4C[. Governor I am pleased to inform you that the Department of Housing and Community Development (Department) has awarded a grant from the Infill Infrastructure Grant Program (IIG) to The Related Companies of California, LLC and Community HousingWorks. This letter constitutes a notice of conditional award of IIG Program funds in the amount of $11,238,516 for National City Westside Infill TOD Buildings project in the city of National City, San Diego County. This notice of conditional award letter amends the Award Letter dated July 1, 2009 to delete in its entirety the "Conditions Related to Availability of Funds'. All other conditions remain in effect. This commitment is conditioned on compliance with the requirements of all applicable statutes and guidelines of the IIG Program, as well as any project agreements stipulated in the commitment letter and contract documents, which will be forwarded to the awardees. Please note that the Department does not have authority to disburse any funds until all required agreements are fully executed. The mission of the Department is to preserve and expand safe and affordable housing opportunities and promote strong communities for all Californians. The IIG Program provides grants for infrastructure costs related to high density infill housing and mixed use development. Awards are being widely distributed throughout the State. EXHIBIT "C" Page 2 of 4 S:1TRC-DEVIProjects\PROSPECT \National City Public Works Ccntcr1DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\UDA v 6 6 II s x.doc William Witte Sue Reynolds Page 2 of 3 We look forward to working with you on this project. If you have any questions, please contact Nadine Ford, Infrastructure and Rental Housing Branch Chief at (916) 327-3942_ Sincerely, A AziA Chris Westlake Deputy Director EXHIBIT "C" Page 3 of 4 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "C" Page 4 of 4 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 11 s x.doc William Witte Sue Reynolds Page 3 of 3 ACCEPTANCE OF CONDITIONAL AWARD The conditions of this award may differ from those contemplated at the time of application. To indicate acknowledgement and acceptance of this Conditional Award, an authorized representative of the Awardee must sign and date where indicated below. Please send a facsimile or pdf email of the executed Acceptance to the attention of Patricia Jones, Office Technician. • Facsimile — (916) 445-0117 • Email pjones©hcd.ca.gov Please return the executed original to the address in the letterhead of the Conditional Award no later than 14 days from the date of this letter. THE FOREGOING CONDITIONAL AWARD IS ACKNOWLEDGED AND ACCEPTED. -Q Authorized Signatory, Title (per resolution) Date Authorized Signatory, Title (per resolution) Date National City Westside Infill TOO Buildings Contract No. 09-11G-6009 EXHIBIT "C" Page 5 of 4 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCIIMFNTS\F,I.ECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc William Witte Sue Reynolds Page 3 of 3 ACCEPTANCE OF CONDITIONAL AWARD The conditions of this award may differ from those contemplated at the time of application. To indicate acknowledgement and acceptance of this Conditional Award, an authorized representative of the Awardee must sign and date where indicated below. Please send a facsimile or pdf email of the executed Acceptance to the attention of Patricia Jones, Office Technician. • Facsimile — (916) 445-0117 • Email pjones©hcd_ca.gov Please return the executed original to the address in the letterhead of the Conditional Award no later than 14 days from the date of this letter. THE FOREGOING CONDITIONAL AWARD IS ACKNOWLEDGED AND ACCEPTED. orized Signatory, Title PP.esrr S-'nlo per resolution e3Wstt 1...1a (�ii6KS Date Authorized Signatory, Title (per resolution) National City Westside Infid TOO Buildings Contract No. 09-IIG-6009 Date EXHIBIT "C" Page 6 of 4 S\TRC-DEV\Projects\PROSPECT \National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\UDA v 6 6 l I s x.doc EXHIBIT "D" SCHEDULE OF PERFORMANCE FOR PHASE I Responsible Party/Milestone Time for Performance 1. Commission / Submission of Not later than 30 days after the Effective Date. Preliminary PMP and Preliminary SPP. Per Section [4.4], Commission shall submit to the Developer the Preliminary PMP and Preliminary SPP. 2. Developer / Response to Preliminary Not later than 20 Business Days after receipt of PMP and SPP. Per Section [4.4], Developer Commission's Preliminary PMP and shall approve, conditionally approve, or Preliminary SPP. disapprove the Commission's Preliminary PMP and Preliminary SPP. 3. Developer / Due Diligence Period. Not later than [120] days after the Effective Per Section [4.1 ], Developer shall deliver Date. notice to Commission to approve, conditionally approve, or disapprove of the physical and environmental condition of the Site. 4. Developer / Submit Application for Not later than [240] days after the Effective Land Use Entitlements. Per Section 5.1, Date. Developer shall submit an application to City for the Land Use Entitlements. 5. Commission / Submission of Draft As soon as the parties agree on the Draft PMP, PMP to DTSC. Per Section [4.4], but not later than [315] days after the Effective Commission shall submit the Draft PMP to Date. DTSC for approval. 6. DTSC Approval of Final PMP. Per Not later than [390] days after the Effective Section [4.4], DTSC approval of the Final Date. PMP shall be obtained and a copy thereof delivered to Developer 7. Developer / Commission Agreement Not later than [20] days after DTSC approval on Final SPP. Per Section [4.4], Developer of the Final PMP. and Commission shall agree on the Final SPP for Phase I. EXHIBIT "D" Page 1 of 5 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x_doc 8. Secure Land Use Entitlements. Date by which the Land Use Entitlements shall have been secured (per Section [5.11) or the rights set forth in Sections [5.2 and 5.3] become effective (subject to their terms). 9. Developer / Prepare and Submit Proposed Map to City. Per Section [6.1], Developer shall prepare and submit the Proposed Map to City for approval. 10. Secure Acceptable Parcel Map. Date by which a parcel map reasonably acceptable to Developer shall have been secured (per Section [6.1]) or the rights set forth in Sections [6.1.1 and 6.1.2] become effective (subject to their terms). 11. City / Street Vacations. Per Section [6.2], City Council approval of vacation of such public right-of-way as required by the Parcel Map shall have occurred. 12. Developer / Submission of Phase I Design Development Documents. Section [8.3], Developer shall submit Design Development Documents to Executive Director for approval. Per the the Not later than [390] days after the Effective Date. As soon as the Land Use Entitlement process reasonably permits. Not later than [180] days after Developer submits the Proposed Map to City for approval. Not later than reasonably necessary to permit the Parcel Map to record in time to permit the Close of Escrow for Phase 1 to occur at the earliest reasonable opportunity. Not later than reasonably necessary to permit the Close of Escrow for Phase Ito occur at the earliest reasonable opportunity. 13. Executive Director / Phase I Design Not later than [14] days after Developer Development Documents. Per Section [8.3], submission of the Design Development the Executive Director shall approve, Documents to the Executive Director. conditionally approve or disapprove the Design Development Documents submitted by Developer. 14. Approval of Plans, Drawings, Etc. Developer shall have secured all of the approvals required under Article [8]. Not later than reasonably necessary to permit the Close of Escrow for Phase I to occur at the earliest reasonable opportunity. 15. Commission / Completion of After (a) DTSC approval of the Final PMP for Commission's Portion of Final SPP for Phase I, and (b) execution of the Final SPP for EXHIBIT "D" Page 2 of 5 S:\TRC-DEV\Projccts\PROSPECT\National City Public Works Center\DDA\EXECUPED DOCUMENTS\ ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc Phase I. Per the Final SPP for Phase I, Commission shall have completed Commission's portion of the work under Final SPP for Phase I. the the the 16. Developer / Submission of Phase I Construction Documents for Building Permits. Per Section [8.6], Developer shall submit the Phase I Construction Documents to City for Building Permits. 17. Developer / Application to CDLAC for Allocation. Per Section [9.6], Developer shall make an application to CDLAC for the Tax -Exempt Bonds for Phase I. 18. Developer / Secure Phase I Financing. Date by which the Phase l Financing shall have been secured (per Section [9.6]) or the rights set forth in Sections [9.7 and 9.8] become effective (subject to their terms). 19. Developer / Satisfaction of Conditions to Close of Escrow. Date by which the conditions set forth in Section [11.4] shall have been satisfied or the rights set forth in Sections [11.7 and 11.8] become effective (subject to their terms). Phase I and on a schedule reasonably calculated to permit all of the conditions set forth in Sections [11.4] and [11.6] to be satisfied in time to permit the Close of Escrow for Phase I to occur at the earliest reasonable opportunity, but not later than December 31, 2014. Commission and Developer hereby agree that the Final SPP for each Phase shall contain a refined schedule for performance of the work required thereunder. On a schedule reasonably calculated to permit such Building Permits to issue in time to permit the Close of Escrow for Phase I at the earliest reasonable opportunity. As soon as Developer and the Executive Director reasonably agree that all of the conditions set forth in Sections [11.4] and [11.6] can and will be satisfied in time to permit the Close of Escrow for Phase Ito occur within the time permitted by CDLAC to issue the Tax -Exempt Bonds for Phase I. That notwithstanding, such application shall be made not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. As soon as reasonably possible after an allocation from CDLAC for the issuance of the Tax -Exempt Bonds for Phase 1 in order to permit Close of Escrow for Phase I to occur within the time permitted by CDLAC to issue such Tax -Exempt Bonds. That notwithstanding, Developer shall secure the Phase I Financing not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. As soon as reasonably possible after an allocation from CDLAC for the issuance of the Tax -Exempt Bonds for Phase I in order to permit Close of Escrow for Phase I to occur within the time permitted by CDLAC to issue such Tax -Exempt Bonds. That EXHIBIT "D" Page 3 of 5 S:\TRC-DEV\Projects\PROSPECTWational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 20. Developer / Submit Phase I Construction Bidding and Contracts. Developer shall comply with the requirements of Section [8.5] by submitting certain construction bid information and materials to the Executive Director for approval. 21. Executive Director / Approval of Phase I Construction Bidding and Contracts. The Executive Director shall approve, conditionally approve, or disapprove the information and materials submitted by Developer pursuant to No. 20, immediately above. 22. Close of Escrow for Phase I. The Escrow for Phase I shall close. 23. Developer / Complete Construction of Phase I Improvements. Developer shall complete construction of the Phase I Improvements. notwithstanding, Developer shall cause such conditions to be satisfied not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. As soon as reasonably possible after an allocation from CDLAC for the issuance of the Tax -Exempt Bonds for Phase I in order to permit Close of Escrow for Phase I to occur within the time permitted by CDLAC to issue such Tax -Exempt Bonds. That notwithstanding, Developer shall cause such submission to occur not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. Not later than 5 Business Days after receipt. Promptly upon satisfaction of the conditions set forth in Sections [11.4] and [11.6], but in no event later than December 31, 2014. Not later than the earlier of: (a) [720] days after Close of Escrow for Phase I or (b) the time required to satisfy the requirements of the Proposition IC Financial Assistance. Pursuant to Section [7.6] of the Ground Lease for Phase I, the Executive Director may, at his sole and absolute discretion, grant one or more extensions of the date by which such construction must be completed of, in the aggregate, not more than ninety (90) days. If Developer fails to satisfy any obligation by the deadline set forth above, Developer shall not be in default under this Agreement unless Developer has first been given written notice of such failure and an opportunity to cure pursuant to Section [22.1(c)]. Any cure by Developer within the period set forth by Section [22.1(c)] shall constitute a full and complete cure of the failure, notwithstanding the fact that the deadline established herein was not first met by Developer. EXHIBIT "D" Page 4 of 5 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc Additionally, if, pursuant to the Agreement, a party has an express right to terminate the Agreement provided that it is not then in material default under the Agreement, but such party is not then in compliance with this Schedule of Performance with respect to the basis for such right of termination, such non-compliance shall neither constitute a material default under this Agreement, nor shall it be deemed, construed or interpreted in any way so as to deprive such party of such right to terminate. SCHEDULE OF PERFORMANCE FOR PHASE ❑ If and when Commission gives Developer the Phase II Notice pursuant to Article 15 of the Agreement, Commission and Developer shall promptly negotiate, in good faith, a Schedule of Performance for Phase II generally based on the Schedule of Performance for Phase I; provided, however, such Schedule of Performance for Phase II shall require the Close of Escrow for Phase II to occur not later than December 31, 2015. EXHIBIT "D" Page 5 of 5 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "E" PHASE I PREDEVELOPMENT PLAN AND BUDGET PHASE I PREDEVELOPMENT PLAN {WO BUDGET Pre -Land Use Entitlement Plan and Budget Post -Land Use Entitlement Total Phase I Predeveiopment Plan and 8 dgel Plan and Budget Ar- "la..N2 and Engceeri g 2 5B0 S1.113.0170 tli S2.07O.500 Permits and Fees ST5.000 S 125.000 S330.000 GSA / Legal SR1,500 SAG, COD 3101.WO Constructor, Coos {Miter -aloe; SO St25U.000 al SI '�OA00 Crt Ar S TCAC Fees SO S l litEi70 $ I Ig,200 TOTAL 11 I These finds rill rt t 6e spent ender than re {2) Requtes oorrnetOee lading_ Y 31,089,000 to permit a COLAC a 32.652.600 S3,741.600 Close or Escrow to coca, al Pm earliest reasonable cwoittnrty. EXHIBIT "E" Page l of l S:\TRC-DEV\ProjectsWPROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc EXHIBIT "F" SCOPE OF DEVELOPMENT The development shall consist of a two phase 201-unit affordable housing community on approximately 12.75 acres in the City of National City. The property shall be developed in two phases, Phase I consisting of 109-units and Phase II consisting of 92-units. The property is bordered by residential and light industrial/commercial to the west, residential and Kimball Elementary School to the north, and light industrial/commercial to the east and south. The existing Paradise Creek intersects the site and generally runs from the northeast corner to southwest corner of the site. The recreational facility for Phase I shall include a community building, office areas, multi- purpose room and miscellaneous other uses. Laundry facilities will be included within the Phase I site. Outdoor amenities for Phase I may include barbeque pits, a tot lot and a swimming pool. The recreational facility for Phase II shall include a community room, office areas and miscellaneous other uses. Laundry facilities will be included within the Phase II site. Phase II shall have access to the recreational facilities and outdoor amenities located in Phase I. The development of the Project shall include the improvement of the Paradise Creek Parcel and expansion of the Paradise Creek Educational Park. The development of the Project shall also include enhanced streetscape along 22°d street connecting the development to the existing 24th Street Trolley Station located at 22°d Street and Wilson Avenue. EXHIBIT "F" Page 1 of 1 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc EXHIBIT "G" PROJECT SUMMARY National City - Phase 1- Bdgs 1&2&3 - Final DDA Proforma Development Pr afoma I.4 Related Companies of California Printed on 6R/1 l at 1:45 PM Project Data Project Type County Total Units Parking Spaces Land Area Net Residential Area Operating Economic Assumptions Residential Vacancy Rate Retail Vacancy Rate Income Inflator Expense Inflator CPI Stabilized Cash Flow Gross Scheduled Rent Laundry Income Other Income Vacancy & Collection Retail Income Retail Vacancy Effective Gross Income Operating Expenses Net Operating Income (41 10.00% Family San Diego 109 183 3.46 Acres 102,520 SF 5,0% 10.0% 2.5% 3.5% 3.0% Year i S959,868 7,848 0 @ 5.00% (48,386) 0 0 919,330 1645,056) 274,274 Basis Calculations Total Eligible Basis Adjusted Threshold Basis Limit Total Eligible Basis as a % of Threshold Basis Limit Permanent Sources Tax Credit Equity Permanent Financing (Tranche A) Commission Subodinate Loan for Phase I CHW Third Trust Deed Loan for Phase I (City Grant) Proposition IC Financial Assistance (Pro-rata) Sources and Uses S37,694,764 $67,087,838 56.19% Amount Debt Service 14,508,783 nia S2,781 500 S2 t0,972 S6,000,000 n/a 14,957,000 n!a 4,663,682 n/a Total S42,910,964 $210,972 Total Permanent Sources Total Development Cost Over/(Under) S42,910,964 42,910,964 S0 EXHIBIT "G" Page I of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works CenterlDDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES DDA v 6 6 II s x.doc UNIT DISTRIBUTION National City - Phase I - Bdya 1&2&3 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed on 6(7i 1 I at 1:45 PM Total Number Income Grope Utility Net Net Rent Monthly Amami Square Of Volts Category SF Rent Allowance Rent Per S.Ft Rent Rent Uait% Footage Studio 0 30%TC 0 0 35%TC 0 0 40%TC 0 0 45%TC 0 0 50%TC 0 0 60%TC 0 0 Market 0 0 Manager 0 0 I 8 8 8 8 8 8 8 538 0 da SO S0 0% 0 S38 0 a/a S0 SD 0% 0 538 0 der S0 $D 0% 0 538 0 Ma SO S0 0% 0 S38 0 n/a SO S0 0% 0 S38 0 n/a SO S0 0% 0 S0 0 da S0 SO 0% 0 SO 0 der S0 SO 0% 0 1 Bedroom 3 30%TC FLAT 615 $441 553 3388 30.63 $1,104 S13.968 3% 1,845 0 35% TC 615 S0 $53 0 da $0 SD 0% 0 5 40%, TC FLAT 615 $589 $53 $536 $0.87 $2,680 $32.160 5% 3,075 0 45%TC 615 S0 353 0 da $0 S0 0% 0 13 50% TC FIAT 615 $716 S53 3683 31.11 $8,879 $106,548 12% 7,995 3 50%TC AND RDA FLAT 615 $736 $53 $683 $1,11 $2,049 $24,588 3% 1,845 0 Market 615 S0 30 0 da SO SD 0% 0 0 Manager 615 S0 S0 0 a/a S0 SD 0% 0 24 2 Bedrooms 3 30%TC FLAT 825 $530 S69 $461 SD.56 $1,383 SI6,596 3% 2,475 2 30%TCTH 940 $530 $69 $461 $0.49 $922 S11,064 2% 1,880 5 40% TC FLAT 825 S707 369 $638 $0.77 $3,190 538,280 5% 4,125 5 40%TC Ttl 940 $707 S69 3638 $0.68 $3,190 538,280 5% 4,700 12 50% TC FLAT 825 $883 $69 $814 $0.99 $9,768 S117,216 II% 9,900 12 50% TC TH 940 3883 369 $814 $0.87 $9,768 SI17,216 11% 11,280 4 50%TC AND RDA FLAT 825 $849 169 $780 $0.95 $3,120 $37,440 4% 3,300 5 50% TC AND RDA TH 940 $849 369 $780 $0.83 $3,900 S46,800 5% 4,700 0 Market 825 S0 SD 0 n/a SO S0 0% 0 I Manager 940 $0 SO 0 da S0 $0 1% 940 49 3 Bedrooms 4 30%TCTH 1,235 $612 $84 $528 S0.43 $2,112 $25,344 4% 4,940 0 35%TC 1,235 S0 $84 0 da S0 SO 0% 0 8 40%TCTH 1,235 S816 884 $732 $0.59 $5,856 $70,272 7% 9,880 0 45%TC 1,235 SO $84 0 da S0 SO 0% 0 18 50%TCTH 1,235 $1,020 $84 $936 $0.76 516,848 $202,176 17% 22,230 6 50% TC AND RDATH I,235 S944 S84 $860 $0,70 $5,160 361,920 6% 7,410 0 Market 1,235 SO S0 0 der S0 $0 0% 0 0 Manager 1.235 50 $5 0 as $0 S0 0% 0 36 4 Bedrooms 30%TC 0 $0 $107 0 n/a 35%TC' 0 SD $107 0 n/a 40%TC 0 SD $107 0 Mt 45%TC 0 S0 $107 0 n/a 50%TC 0 $0 $107 0 n/a 60% TC 0 30 $107 0 We Market 0 S0 S0 0 n/a Manager 0 SO SO 0 Mt Unit Distribution Summary 8nr8s8sg SO 0% . 0 $0 0% 0 SO 0% 0 S0 0% 0 S0 0% 0 S0 0% 0 SO 0% 0 S0 0% 0 Summary Income Units Total % Unit Size Undo Total'!. Total SF 102,520 30%TC 12 11% Studio 0 0% Avg. Uait SF 941 35%TC 0 0% I Bedroom 24 229; Monthly Rem $79,989 40%TC 23 21% 2Bedroms 49 45% Annual Rem $959,868 45%TC 0 0% 3 Bedrooms 36 33% Avg. Rent (earl. manger's) $741 50%TC Sr RDA 18 17% 4 Bedrooms 0 0% 50%TC 55 51% Avg. Rent PST (excl. manager's) $D.79 60% TC 0 0% Total 109 100% Bedrooms 230 Market 0 0% Subtmel 108 100% Manager I Total 109 EXHIBIT "G" Page 2 of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Ccntcr\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES DDA v 6 6 11 s x.doc DEVELOPMENT COSTS & ELIGIBLE BASIS DETERMINATION National City- Plow 1- Bdgs 1&2&3 - Final BOA Proforma Devdapmeot Prelims 1.4 Related Companies of California Printed on 617/I1 et 1:45 PM 109 units TCAC TCAC Budget %Eligible Eligible Basis ACQUISITION COSTS Purchase Price 80 0% 0 OOut Acquisition Costs 50,000 0% 0 TOTAL ACQUISMON COSTS 50,000 0% 0 PROFESSIONAL FEES Architecture & Engineering 1,962,000 100% 1,962,060 Other Prokmional/Consulting 530,000 - 100% 500,000 TOTAL. PROFESSIONAL FEES L462,000 0% 2.462,000 FEES AND PERMITS 1,090,000 100% 1,090,000 CONSTRUCTION COSTS 0 0% 0 Demolition 355,000 0% 0 White Improvements 2,100,436 0% 0 Non -Residential Structures 0 0% 0 Site Improvements 2,112,400 100% 2,112,400 Parking Pacilities 6,449,724 100% 6,449,724 Landscaping /Canunon Arco D 100% 0 Residential Structures 13,040,200 150% 13 840,200 Other Construction 810,000 100% 810,000 Retail Core t Shell 0 0% 0 Ormond Conditions 1,540,066 100% 1,540,066 Conhsl« Overhead 770033 100% 770,033 Connectou Profit 1,283,388 100% 1.283.388 CooUactoe Insurance 438,919 100% 410,911 Cousin:elion Bond Premiums 445,502 100% 445,502 Construction Contingency 1,507,283 100% 1,507,283 Residential Structures - Non GC 0 100% 0 Contraction Management 0 100% 0 TOTAL CONSTRUCIIONCOSI'S 31.,652,950 0% 29,197,514 FINANCING COSTS Acquisition Loan Costs 0 0% 0 Gap Loan Costs 100,000 100% 100,000 Construction Lam Cones 100,000 100% 100,000 Consructon Loan Fees 217,000 100% 217,1100 Construction Period Interest S67,000 100% 867.000 Post -Construction Interest 988,000 0% 0 Permanent Loan Costs 50,000 0% 0 Permanent Loan Fees 42,000 0% 0 Bend Issuance Cams 210,000 0% 0 TCAC Fees 64.000 0% 0 Miss Fisurme Costs 0 0% 0 TOTAL FINANCING COSTS 2,628 000 0% 1,284,000 OTHER COSTS Furnishings, Fixtures & Equipment 325,000 100% 325,000 Marketing Crisis 175,000 0% 0 Legal Fees 125,000 30% 37,500 Property Tares 25,000 75% 18,750 Soft Cost Contingency 100,000 100% 100,000 Relocation Expenses 0 11% 0 Environmental Insurance Policy 150,000 80% 120,000 Accounting I Audit/ Other Insurance 700,000 80% 560,000 Developer Ovehud 1,000,000 100% 1,000,000 Developer Fees 1,500,000 l00% 1500.000 Transition /Operating Reserve 500,000 0% 0 Other Costs/Reserves 428,014 0% 0 TOTAL OTHER COSTS 5.028.014 0% 1,661,250 TOTAL DEVELOPMENT Cw I S / TOTAL ELIGIBLE BASIS $42,910,964 $37,694,764 TOTAL BASIS REDUCTION (Amount over Adjusted Threshold Bans Limit) 0 TOTAL REQUESTED UNADJUSTED ELIGIBLE BASIS 37,694,764 High Coot Arta Adjustment 130% TOTAL ADJUSTED ELIGIBLE BASIS 49,003,194 Applicebk Fraction 100% TOTAL QUALIFIED BASIS 49 003,194 Total Credit Reduction 0% 0 TOTAL ADJUSTED QUALIFIED BASIS 49,003,194 EXHIBIT 11Gtt Page 3 of 6 S:\TRC-DEV\Projects\PROSPECT1National City Public Works Center\DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc TAX CREDIT CALCULATION National City - Phase I - Bdgs I&2&3 - Final DDA Proforma Development Protons" 1.4 Related Companies of California Printed on 6/7/1 I at I:45 PM Total Project Cost Total Permanent Sources Funding Shortfall Total Qualified Basis Annual Federal Credits - Calculated Annual Federal Credits - Awarded Total Federal Credits (10 Years) Federal Tax Credit Investor Equity Total Qualified Basis Total 4 -Year State Credits - Calculated Total 4 -Year State Credits - Awarded State Tax Credit Investor Equity Calculated Acquisition Basis Available Acquisition Basis Annual Acquisition Credits - Calculated Annual Acquisition Credits - Awarded Total Acquisition Credits (10 Years) Acquisition Tax Credit Investor Equity Total Tax Credit Investor Equity (Federal + State-1 Acquisilion) $42,910,964 (28,402,182) $14,508,783 $49,003,194 $1,612,205 $0 $16,122,051 S14,508,783 $49,003,194 $0 $0 so $0 $0 $0 $o $o so SI4,508,783 Threshold Bash Limits (Year 2011) Limits Efficiency I Bedroom 2 Bedrooms 3 Bedrooms 4 Bedroom Special Features Threshold Basis Limit Increases Units 0 24 49 36 0 109 Limit 174,861 201,613 243,200 311,296 346,803 Total 0 4,838,712 11,916,800 11,206,656 0 27,962,168 10% Increase: 95% of the project's upper floor units are serviced by an elevator 0 20% Increase: State or Federal Prevailing Wage Requirement 5,592,434 7% Increase: New Construction with Parking beneath Residential Units 1,957,352 2% Increase: Day Care Center 0 2% Increase: Special Needs Populations 0 Total Percentage Increase to Unadjusted Eligible Basis (Combined not to exceed 39%) 7,549,785 4% Increase: tnet 3 energy efficiency/resource conservation/indoor air quality items 0 Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis max.) 0 Development Impact Fees 817,500 5% Increase: Distributive Energy Technologies 0 Bond Deals 1% Increase: Every t%of the project's units between 35% and 50% Abfl 24,606,708 2% Increase: Every I% of the project's units at or below 35% AMI 6,151,677 Adjusted Threshold Basis Limit Total Unadjusted Eligible Basis Over ((Under) Basis Limit 567,087,83E $37,694,764 (529393,074) EXHIBIT "G" Page 4 of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 66 11 s xdoc ANNUAL OPERATING EXPENSE BUDGET National City - Phase I - Wigs 1&2&3 - Final DI)A Proformi Development Profnma 1.4 Related Conµnaniea of California Pruned on 4r5..'I1 at 2:01 P51 Project Budget (109 units) RENTING Advertising S I.300 Misc Renting 4,700 TOTAL RENTING 6.000 ADFQNISTRATION Office 6,275 Legal 2,650 Audit 15,300 Teleplione. Comptner 10.900 Tenant Relations 3,350 Misc. Administrative 6,525 TOTAL ADMINISTRATION 45.000 MANAGEMENT FEE Contract Management TOTAL MANAGEMENT OPERATING Electricity Water figs Seaver Extemiluati ng RnbbiSii Removal Misc. Operating TOTAL OPERATING 55.160 55,160 200(M) 65.000 14,000 15A(N) 3.250 20.000 3.946 141.196 ALAINTENANCE Security Grounds 19.150 Repairs 16.250 Elevator 0 Unit Tunis 6.000 Misc. Maintenance 3,600 TOTAL MAINTENANCE 55.000 SALARIES AND BENEFITS Office Salaries 1 45.(MI0 Maintenance Salaries 0 Payroll Taxes and Benefits 0 TOTAL SALARIES AND BENEFITS 145.000 TAXES AND INSURANCE Real Estate Taxes 0 Business Taxes and Licenses 5.00) Insurance 35.000 Annual Ground Lease Payment 75.000 TOTAL TAXES AND INSURANCE 115.000 RESERVES AND OTHER EXPENSES Replacement Reserves 32,700 Operating Reserves It Social Promnins 60.000 TOTAI. RESERVES AND OTIIER COSTS 92,70M) TOTAL OPERATING EXPENSES S645,056 Page 3 EXHIBIT "G" Page 5 of 6 S:\TRC-DEV\Projects\PROSPECT1National City Public Works Center \DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc SOURCES AND USES OF FUNDS National City - Phase I - Bdgs l &2&3 - Final DDA Proforma Development Profoma t.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Permanent Sources and Uses. Sources Tax Crcdit Equity 14,508,783 Permanent Financing (Tranche A) 2,781,500 Commission Subodinate Loan for Phase' 6,000,000 CHW Third Trust Deed Loan for Phase I (City Grant) 14,957,000 Proposition IC Financial Assistance (Pro-rata) 4,663,682 Total Permanent Sources 42,910,964 Uses Total Development Cost 42,910,964 Amount Over/(Under) 0 EXHIBIT "G" Page 6 of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc EXHIBIT "I I" PROJECT SUMMARY National City - Phase II - Ridge 4&5 - Final DDA Proforma Development Profema 1.4 Related Companies of California Printed on 60/I I at 1.45 PM Project Data Project Type County Total lints Parking Spaces Land Area Net Residential Area Operating Economic Assumptions Residential Vacancy talc Retail Vacancy Rate Income Inflator Expense Inflator CPI Stabilized Cash Flow Gross Scheduled Item Laundry Income Other Income Vacancy & Colketior Retail Income Retail Vacancy Effective Gross Income Operating Expenses Net Operating Income @ 10.00% Family San Diego 92 145 3.69 Acres 83,685 SF 5 0% 100% 2.5% 3.5% 3.0% Year I S789,696 6,624 0 (4 5.00% t39.816) 0 0 756,504 (495,368) 261,136 Bass Calculations Total Eligible Basis Adjusted Threshold Basis Limit Total Eligible Basis as a % of Threshold Basis Limit Permanent Sources Tax Credit Equity Permanent Financing Commission Subordinate Loan for Phase II PropIC Financial Assistance (Pro-rata) Sources and Uses S30,026,714 555,536,659 54.02% Amount Debt Service I I ,556,253 n/e 32,648,000 5203,846 14,909,000 Na 3,936,318 n/a Total $33,049,571 5200.346 Total Permanent Sauces Total Development Cost Overi(Under) S33,049,571 33,049,571 S0 EXHIBIT "H" Page I of 6 S:1TRC-DEV\Projects\PROSPECTINational City Public Works Center\DDAIEXECUTED DOCUMENTS ELECTRONIC VERSION OF FILESIDDA v 6 6 II s x.doc UNIT DISTRIBUTION National City - Phase II - Backs 4&5 De0dopmeet Profoma 1.4 Related Companies of California Primal on 6/7/11 at 1:45 PM Final DDA Proforma Total Number Income Gross Utility Net Net Rent Monthly Annual Square Of Units Category SF Rent Allowance Rent Per SgFt Rant Rent Unit% Footage Stadia !Bedroom 2 Bedrooms 1 30%TC 400 $412 $38 $374 50.94 $374 74,488 1% 400 0 35% TC 400 SO 338 0 Ma SO 50 0% 0 2 40% TC 400 $550 536 $512 $1.28 $1,024 $12,288 2% MO 0 IS%TC 400 S0 $38 0 nit SO S0 0% 0 3 50%TC 400 $687 $38 $649 Si.62 $1,947 $23,364 3% 1,200 O 60% TC 400 10 338 0 n /a $0 S0 0% 0 0 Market 400 S0 S0 0 rda 30 SO 0% 0 O Manager 400 S0 S0 0 n/a S0 S0 0% 0 6 3 30% IC FLAT 625 $441 553 3383 50.62 41,164 513,968 3% 1,875 0 35% TC 625 SO 553 0 WA S0 SO 0% 0 5 40% TC FLAT 625 $589 553 $536 $0.86 $2,680 $32,160 5% 3,125 0 45% IC 625 50 353 0 Na SO SO 0% 0 ll 50% IC FLAT 625 5736 353 $683 $1.09 $7,513 $90,156 12% 6,675 2 50% TC AND RDA FLAT 625 $736 $53 S683 11.09 51,366 116.392 2% 1,250 0 Market 625 S0 S0 0 Na S0 S0 0% 0 O Manage 625 SO SO 0 Na 80 $0 0% 0 11 1 30% TC FLAT 825 $530 $69 5461 $0.56 $461 $5,532 1% 825 3 30%TCTH 940 S530 569 S461 $0.49 51,383 186,596 3% 2,820 3 40°. TC FLAT 825 $707 $69 5638 50.77 $1,914 $22,968 3% 2,475 5 4056 TC TH 940 $707 569 3638 30.68 33,190 $36,280 5% 4,700 7 50% TC FLAT 825 5883 569 $814 $0.99 55,698 568,376 8% $,775 II 5016 TC TH 940 5853 S69 $814 $0.87 $8,954 $107,448 12% 10,340 I 50% TC AND RDA FLAT 825 51119 569 5780 S0,95 51.560 318,720 2% 1.650 3 50%TC AND RDA TH 940 5849 569 3730 50.83 S2,340 526,060 3% 2,620 0 Market 825 S0 50 0 oh SO S0 0% 0 I Manager 940 SO 5O 0 ids $0 $0 1% 940 36 3 Bedroom 3 30%TCTH 1,235 $612 0 35%TC 1,235 S0 6 40% TC TH 1,235 3816 0 45% TC 1,235 SO 14 50%TCTH 1,235 S1,020 6 50% TC AND RDAT81 1,235 $944 0 Market 1,235 S0 0 Manager 1,235 S0 4 Bedrooms 29 0 30%TC 0 D 35% TC 0 0 40% TC 0 0 45%TC 0 O Meg TC 0 0 60%TC 0 O Market 0 O Manager 0 0 UM* Distribution Summary 88888800 S84 $528 50.43 $1,584 519,008 3% 3,705 $84 0 t✓a S0 S0 0% 0 $84 $732 50,59 54.392 $52,704 7% 7,410 584 0 da S0 S0 0% 0 384 $936 $0.76 S13,104 $157,248 15% 17,290 S84 $860 $0.70 $5,160 561,920 7% 7,410 50 0 da SO S0 0% 0 SA 0 Ns 50 $0 0% 0 $107 1107 $107 $807 5107 $807 $0 so da da n/a rda Na Na a/a da 8/2 8SSgS 888888238 0 0 0 0 0 0 0 Summary Income Mies Total % Unit She Units Total % Total SF 83,685 30%TC 11 12% Studio 6 7% Avg IJait SF 910 35%TC 0 0% I Bodrmn 2l 23% Monody Rem $65,808 40% TC 21 23% 2 Bedrooms 36 39% Annual Rant $789,696 45% TC 0 0% 3 Bedrooms 29 32% Avg. Rent (excl. managers) $723 50% TC B RDA 13 14% 4 Bedrooms 0 0% 50% TC 46 51% Avg. Root PSF (excl. manages) 50.80 60% TC 0 0% Total 92 100% Bedrooms I80 Medtet 0 0% Subtotal 91 100% Mmagor t Total 92 EXHIBIT "H" Page 2 of 6 S:\TRC-DEV1Projects\PROSPECT\National City Public Works CenterlDDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc DEVELOPMENT COSTS & ELLCIRLR BASIS DETERMINATION National City - Phase II - Bid 4&5- Flail DIM Proforma Development Pratoma 1.4 Rehired Companies ofCaIfomia Printed an 6/7/11 a 1.45 PM 92 units TCAC TCAC Budget % P3ghble Ellglbk Basis ACQUISmON COSTS Purchase Price SO 0% 0 Other Acquisition Costs 50,000 0% 0 TOTAL ACQuISION COSTS 50,000 0% 0 PROFESSIONAL FEES Arcdit oore & Bngiauaring 1,656,000 100% 1,656,000 Otter Professional / Consulting I0Qfg0 100% 100,000 TOTAL PROFESSIONAL FEES 1,756,000 0% 1,756,000 FEES AND PERMITS 920,000 100% 920,000 CONSTRUCTION COSTS 0 0% 0 Demolition 105000 0% 0 Offsite Improvements 1,000,000 0% 0 Non -Residential Structures 0 0% 0 Site Impmvanenet 1,917,216 1011% 1,917,216 Puking Facilities 5,564,373 100% 5,564,373 Landscaping / Common Arem 0 100% 0 Residrn6sl 9auctu.es 02701,093 100% 10,301,093 Other Constructors 766,990 100% 366,990 Retail Core 1. Shell 0 0% 0 General Conditions 1,155,280 100% 1,155,280 Conneaut- 0.1.0 517,640 100% 577.640 Contactor Profit 962,734 100% 962,734 Contractor Ignorance 329,255 100% 329,255 Contraction Band Premiums 334,194 100% 334,194 Construction Contingency 1,130,689 100% 1,130,689 Raidensal Structures - Non GC 0 100% 0 Construction Management 0 100% 0 TOTAL CONSTRUCTION COSTS 23,794,464 0% 22,639,464 FMNANCINI: CASTS Acquisition Loan Costs 0 0% 0 Gap Loan Costs 100,000 100% 100,000 Construction Loan Cosa I00,IX0 100% IOO,OO° Construction Loan Fees 174,000 100% 174,000 Cons1utiw, Poied In.. 760,000 100% 710,000 Post -Contuse inn Interest 764,000 0% 0 Permanent Lunn Costs 50,000 0% 0 Permanent i.oen Pre. 40000 0% 0 Bond Issuance Cosa 200,000 0% 0 TCAC Fees 53,000 (1% 0 Miser Finance Coss 0 0% 0 TOTAL FINANCING COSTS 2,261,000 0% 1,154,000 OTHER. COSTS Furnishings, FiMINCE & Equipment 325,000 100% 325,000 Marketing Ceps 175,000 0% 0 Legal Fern 125,000 10% 31,500 Property Taxes 25,000 75% 16,750 Soft Cost Cootngm y 100,1100 100% 100,000 Relocation Etonses 0 0% 0 Environments' Insurance Policy 150,000 to% 130,000 Avsmaning/Audit /Other latutanw 570,000 10% 456,000 Developer Ovdhead 1000,000 IOTA 1,000,000 Developer Fees 1,500,000 10054 1.500,000 Other Costs / Reserves 346,107 0% 0 TOTAL OTHER COSTS 4,318,107 033 3,557,250 TOTAL DEVELOPMENT' LVS'IS 633,049,571 S30,026,714 /TOTAL RLIGIRI.R BASIS TOTAL BASIS REDUCTION (Amount over Adjusted Threshold Basis Limit) 0 TOTAL REQUESTED UNADJUSTED ELIGIBLE BASIS 30,026,714 triad Cos. Arcs Adjustment 130% TOTAL ADJUSTED ELIGIBLE BASIS 39,034,726 APPOSE& fraction 100% TOTAL QUALIFIED BASIS 39,034,728 Total Credit Re -amber 0% 0 TOTAL ADJUSTED QUALIFIED BASIS 39,034,728 EXHIBIT "H" Page 3 of 6 S,\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc TAX CREDIT CALCULATION National City - Phase II - Bldgs 4&5 - Final DOA Proforma Development Profoma 1.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Total Project Cost Total Permanent Sources Funding Shortfall Total Qualified Basis Annual Federal Credits - Calculated Annual Federal Credits - Awarded Total Federal Credits (IC Years) Federal Tax Credit Investor Equity Total Qualified Basis Total 4 -Year State Credits - Calculated Total 4 -Year State Credits - Awarded State Tax Credit lavestor Equity Calculated Acquisition Basis Available Acquisition Basis Annual Acquisition Credits - Calculated Annual Acquisition Credits - Awarded Total Acquisition Credits (10 Yema) Acquisition Tax Credit Investor Equity Total Tex Credit Investor Equity (Federal + State+ Acquisition) $33,049.571 121.493,3181 SI 1,556,253 S39,034,728 31,284,243 so S 12,842,426 $11,556,253 539,034,728 so SO so so so s0 s0 SO SO S11,556,253 Threshold Basis Limits (Year 2011) Limits Units Limit Total Efficiency 6 174,861 1,049,166 1 Bedroom 21 201,611 4,233,873 2 Bedrooms 36 243,200 8,755,200 3 Bedrooms 29 311,296 9,027,584 4 Bedrooms 0 346,803 0 92 23,065,823 Special Features Threshold Basis Limit Increases 10% Increase: 95% of the proje is upper floor units are serviced by an elevator 0 20% Increase. State or Federal Prevailing Wage Requirement 4,613,165 7% Increase: New Construction with Parking beneath Residential Units 1,614,608 2% Increase- Day Care Center 0 2% Increase: Special Needs Populations 0 Total Percentage Increase to Unadjusted Eligible Bases ( Combined not to exceed 39%) 6,227,772 4% Increase: Incl. 3 energy eftuaency/resource conservation/indoor air quality items 0 Seismic Upgrading or Environmental Mitigation (15% unadjeligible basis max.) 0 Development Impact Fees 690,E 5% Increase: Distributive Energy Technologies 0 Bond Deals 1% Increase: Every I% of the projects units between 35% and 50% AMI 2% Increase: Every 1% of the projeet's units at or below 35% AMI Adjusted Threshold Basis Limit Total Unadjusted Eligible Basis Over /(Under) Basis Limit 20,067,266 5,535,798 555,586459 S30,026,714 (525,559,945) EXHIBIT "H" Page 4 of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s xdoc AN'\TAL OPERATING EXPENSE BUDGET National City - Phase II - Bidgs 4.0 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed on 68:1 I at 2:02 PM Project Budget (92 units} RENTING Advertising 51.200 1Mlisc. Renting 4.100 TOTAL. RENTING 5300 ADMINISTRATION Office 5.750 Legal 2,250 Audit 13.000 TelepltoneContputer 10.800 Tenant Relations 3.000 Misc. Adnuuisnative 5.650 TOTAL ADMINISTRATION _._--10.450 3IANAGEMENT FEE Contract Management IOTA!. \LANAGEMFNT 45390 45,390 OPERATING Electricity 17.000 Water 55,000 Gas 12.000 Setvet 12.500 Estennivatiug 2.750 Rubbish Removal 17,000 Mist. Operating 3,703 TOTAL OPERA TING ...__._. 119,03 MAINTENANCE Security Grounds 16,650 Repairs 12,125 Elevator 0 U'uit Tunis 5.000 Misc. Maintenance 3.600 TOTAL MAINTENANCE 46.675 SALARIES AND BENEFITS Office Salaries 115.000 Maintenance Salaries 0 Payroll faxes and Beuetits 0 TOTAL SALARIES AND BENEFITS 115.000 TAXES AND INSURANCE Real Estate Taxes 0 Business Taxes and Licenses 5.000 Insurance 5110HI Annual Ground Lease Payment TOTAL TAXES AND LNSCR.A\C E 35.000 RESERVES AND OTHER EXPENSES Replacement Reserves 27,600 Operating Reserves 0 Social Programs 60.000 TOTAL RESERVES AND OTHER COSTS 87.600 TOTAL OPERATING EXPENSES $495.363 Page 3 EXHIBIT 11H" Page 5 of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA \EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc SOURCES AND USES OF FUNDS National City - Phase II - Bldgs 4&5 - Final DOA Proforma Development Profoma 1.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Permanent Sources and Uses Sources Tax Credit Equity 11,556,253 Permanent Financing 2,648,000 Commission Subordinate Loan for Phase II 14,909,000 Prop IC Financial Assistance (Pro-rata) 3,936,318 Total Permanent Sources 33,049,571 Uses Total Development Cost 33,049,571 Amount Ovcrl(Undcr) 0 EXHIBIT "H" Page 6 of 6 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 l 1 s x.doc EXHIBIT "I" FORM OF GROUND LEASE [FOLLOWING THIS PAGE] EXHIBIT "I" S-\TRC-DEV\Projects\PROSPECTW ational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc GROUND LEASE FOR PHASE _ [Transit -Oriented Infill Affordable Housing and Paradise Creek Enhancement Project] By and Between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY "Landlord" and , L.P. "Tenant" Dated as of , 201_ EXHIBIT "I" Page 1 of 67 S:TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUfED DOCUMENTS\ELECTRONIC VERSION OF FILES VDDA v 6 6 II s x.doc GROUND LEASE FOR PHASE THIS GROUND LEASE (the "Lease"), dated, for identification purposes only, as of , 201_, is entered into by and between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Landlord" or "Commission"), and , L.P., a California limited partnership ("Tenant" or "Developer"). RECITALS A. WHEREAS, Commission is a California community development commission acting to implement the California Redevelopment Law, Part 1 of Division 24 of the Health and Safety Code; B. WHEREAS, Developer is controlled by an experienced owner, developer and manager of affordable housing for very -low and low-income families; C. WHEREAS, Commission is the owner of certain real property situated in the City of National City, County of San Diego, State of California, and legally described in Exhibit "A" (the "Property"); D. WHEREAS, Commission and Developer entered into that certain "Disposition and Development Agreement" dated as of June 21, 2011 (the "DDA"); E. WHEREAS, the DDA provided that upon the satisfaction of certain conditions, Commission would ground lease the Property to Developer; and F. WHEREAS, all conditions precedent to the parties entering into this Lease have been satisfied or waived. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, Commission and Developer agree as follows: ARTICLE 1. LEASE OF THE PROPERTY 1.1 Lease of the Property. Landlord leases to Tenant, and Tenant hires from Landlord, the Property on the terms and conditions as set forth in this Lease. 1.2 Purpose of Lease. The purpose of this Lease is to provide for the construction, maintenance, management and operation of a -unit, multi -family, low- income rental housing project. Tenant will not occupy or use the Property, or permit the Property to be used or occupied, nor do or permit anything to be done in or on the Property, in whole or in part, for any other purpose. The foregoing notwithstanding, after EXHIBIT "P" Page 2 of 67 S:TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 11 s x.doc the foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment or deed in lieu of foreclosure, the Property may be used for any lawful purpose. 1.3 Recorded Encumbrances. This Lease, the interests of Landlord and Tenant hereunder, and the Property, are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights -of -way and easements of record including, without limitation: 1.4 Memorandum of Lease. A short form Memorandum of Lease referring to this Lease is being executed by Landlord and Tenant concurrently herewith, and recorded in the Official Records of the County of San Diego, California (the "Official Records"). 1.5 Assignment of Utility Rights. Landlord, by virtue of its fee title to the Property, may hold certain rights, entitlements or credits with respect to utility capacity, connections, etc. (the "Utility Rights"). Landlord hereby assigns said Utility Rights to Tenant as an incidence of its leasehold interest in the Property. ARTICLE 2. DEFINITIONS All capitalized terms used herein may be defined where first used in this Lease and/or as set forth in this Article 2. Unless otherwise defined herein, all capitalized terms shall have the same meanings ascribed to them in the DDA. For the purpose of supplying such definitions, the DDA, notwithstanding anything contained therein or herein to the contrary, shall not merge with this Lease. "Award" means any compensation or payment made or paid for the Total, Partial or Temporary Taking of all of any part of or interest in the Property and/or the Improvements, whether pursuant to judgment, agreement or otherwise. "Capital Improvements" means all work and improvements with respect to the Property for which costs and expenses may be capitalized in accordance with GAAP. Note. "Cash Flow" has the meaning set thrth in the Commission Subordinate Loan "Commencement Date" has the meaning set forth in Article 3 of this Lease. "Commission Subordinate Loan Note" means that certain promissory note, dated as of even date with this Lease, made by Tenant in favor of Landlord in the original principal amount of $ "Compliance Period" has the meaning set forth in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended. EXHIBIT "I" Page 3 of 67 S:\TRC-DEV\Projects\PROSPECT1National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES DDA v 6 6 II s x.doc "Construction" means the improvement of the Property pursuant to the Plans. "Construction Loan" refers to the loan from a lender (or consortium of lenders) acceptable to the Executive Director of Landlord, the proceeds of which are used to construct the Project. "Debt Service" has the meaning set forth in the Commission Subordinate Loan Note. "Environmental Law" means any federal, state or local environmental, health and/or safety -related law, rule, regulation, requirement, order, ordinance, directive, guideline, permit or permit condition, currently existing and as amended, enacted, issued or adopted in the future. The term Environmental Law includes, but is not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and similar state or local laws. "Event of Default" has the meaning set forth in Article [21]. "Executive Director" means the Executive Director of Landlord or his designee. "Fiscal Year" has the meaning set forth in the Commission Subordinate Loan Note. "Hazardous Materials" means any chemical, substance, object, condition, material, waste, or controlled substance which is or may be hazardous to human health or safety or to the environment, due to its radioactivity, ignitability, corrosiveness, explosivity, flammability, reactivity, toxicity, infectiousness, or other harmful or potentially harmful properties or effects, including, without limitation, all chemicals, substances, materials, or wastes that are now or hereafter may be listed, defined, or regulated in any manner by any federal, state, or local government agency or entity, or under any federal, state, or local law, regulation, ordinance, rule, policy or procedure due to such properties or effects. "Impositions" means all taxes (including, without limitation, sales and use taxes); assessments (including, without limitation, all assessments for public improvements or benefits whether or not commenced or completed prior to the Commencement Date and whether or not to be completed within the Term); water, sewer or other rents, rates and charges; excises; levies; license fees; permit fees; inspection fees and other authorization fees and other charges; in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interests and penalties thereon), which are attributable or applicable to any portion of the Term and may be assessed, levied, confirmed or imposed on or in respect of, or be a lien upon (a) the Property or the Improvements, or any part thereof, or any estate, right or EXHIBIT "I" Page 4 of 67 S:TRC-DEV\Projects\PROSPEC11National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc interest therein, (b) any occupancy, use or possession of or activity conducted on the Property or the Improvements, or any part thereof, or (c) this Lease. The term "Impositions" shall also include any and all increases in the foregoing, whether foreseen or unforeseen, ordinary or extraordinary, including, without limitation, any increase in real property taxes resulting from a sale of the Property by Landlord. "Improvements" means all buildings, structures and other improvements, including the building fixtures thereon, now located on the Property or hereafter constructed on the Property; all landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas, roadways and similar site improvements now located or hereafter placed upon the Property. "Indemnitees" means Landlord, the Community Development Commission of the City of National City, the City of National City, California ("City") and their employees, agents, members and officials. "Index" means the Consumer Price Index -Urban Wage Earners and Clerical Workers (San Diego, All Items, Base 1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics. Should the Bureau discontinue the publication of the Index, or publish the same less frequently or on a different schedule, or alter the same in some other manner including, without limitation, changing the name of the Index or the geographic area covered by the Index, Landlord and Tenant shall adopt a substitute index or procedure which reasonably reflects and monitors consumer prices. "Institutional Lender" means any one or combination (including, without limitation, a consortium) of the following lending institutions: a commercial or savings bank; a trust company; an insurance company; a savings and loan association; a building and loan association; an educational institution; a pension, retirement or welfare fund; a charity; an endowment fund or foundation authorized to make loans in the State of California; a company engaged in the ordinary course of business as a lender with net unencumbered assets in the amount of not less than $50,000,000 which is duly licensed or registered with any regulatory agency having jurisdiction over its operation, if any, and is not under any order or judgment of any court or administrative agency restricting or impairing its operation as a lender where the restriction or impairment would be directly related to a proposed loan to Tenant, and which is regularly engaged in business in an office or location in the State of California; or any other entity having a net worth of $75,000,000 or more whether or not a so-called institution; or any division, subsidiary, parent or affiliate owned or controlled by, owning or in control of or in common control or ownership with any of the foregoing entities. "Insurance Requirements" means all terms of any insurance policy covering or applicable to the Property or the Improvements, or any part thereof, all requirements imposed by the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising EXHIBIT "I" Page 5 of 67 S:\TRC-DEV\ProjectsU'ROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc similar functions) applicable to or affecting the Property or the Improvements, or any part thereof, or any use or condition of the Property or the Improvements, or any part thereof. "Lease Year" means the year commencing on the first day of the first full calendar month following the Commencement Date, or anniversary thereof, and ending at midnight on the last day of the month in which an anniversary of the Commencement Date occurs. "Legal Requirements" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of and agreements with all governments, departments, commissions, boards, courts, authorities, agents, officials and officers, foreseen or unforeseen, ordinary or extraordinary, which now or at any time hereafter may be applicable to the Property or the Improvements, or any part thereof, or to any of the adjoining sidewalks, streets or ways, or to any use or condition of the Property or the Improvements, or any part thereof. "Memorandum of Lease" refers to the memorandum of lease which has been recorded as described in Section [1.4]. "Mortgage" has the meaning set forth in Section [18.1.1] of this Lease. "Mortgagee" has the meaning set forth in Section [18.1.1] of this Lease. "Net Operating Income" has the meaning set forth in the Commission Subordinate Loan Note. "Notice of Intended Taking" means any notice or notification on which a reasonably prudent person would rely and which said person would interpret as expressing an existing intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes, without limitation, the service of a condemnation summons and complaint on a party to this Lease. The notice is considered to have been received when a party to this Lease receives from the condemning agency or entity a notice of intent to take, in writing, containing a description or map of the taking which reasonably defines the extent of the taking. "Official Records" means the Official Records of San Diego County, California. "Operating Deficits" means, for the applicable period, the shortfall, if any, between Operating Income and Operating Expenses. "Operating Expenses" has the meaning set forth in the Commission Subordinate Loan Note. EXHIBIT "I" Page 6 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 It s x.doc "Operating Income" has the meaning set forth in the Commission Subordinate Loan Note. "Partial Taking" means any taking of the fee title of the Property and/or the Improvements that is not either a Total, Substantial or Temporary Taking. "Plans" means the plans and specifications for the Construction, a set of which, initialed by Tenant, are on file in the offices of Landlord. "Potential Default" means any condition or event which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. "Project" refers to the Property and the Improvements constructed and maintained thereon. "Property" has the meaning set forth in Recital "C," above. "Substantial Taking" means the taking of so much of the Property and/or the Improvements that the portion of the Property and/or the Improvements not taken cannot be repaired or reconstructed, taking into consideration the amount of the Award available for repair or reconstruction, so as to constitute a complete, rentable structure, capable of producing a proportionately fair and reasonable net annual income after payment of all Operating Expenses, and all other charges payable under this Lease, and after performance of all covenants and conditions required by Tenant by law and under this Lease. "Taking" means a taking or damaging, including severance damage, by eminent domain or by inverse condemnation or for any public or quasi -public use under any statute. The taking may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a voluntary transfer or conveyance to the taking authority under threat of condemnation, or a transfer while condemnation proceedings are pending. Unless otherwise provided, the taking shall be deemed to occur as of the earlier of (a) the date actual physical possession is taken by the condemnor, or (b) the date on which the right to compensation and damages accrues under the law applicable to the Property and/or the Improvements. A taking as used in this Lease does not include the voluntary dedication of any portion of the Property necessary to obtain building permits or to comply with any other applicable governmental rule, regulation or statute; nor does it include the enactment of any law, ordinance or regulation which may affect the use or value of the Property but which does not involve an actual taking of any portion thereof. Eminent domain actions filed by Landlord against owners of portions of the Property and pending as of the Commencement Date shall not be deemed, construed or interpreted as a Taking under this Lease. EXHIBIT "I" Page 7 of 67 S:1TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA1EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 1 I s x.doc "Tax Credit Partner" means a , and its successors and assigns. "Temporary Taking" means a taking of all or any part of the Property and/or the Improvements for a term certain which term is specified at the time of taking. Temporary Taking does not include a taking which is to last for an indefinite period or a taking which will terminate only upon the happening of a specified event unless it can be determined at the time of the taking substantially when such event will occur. If a taking for an indefinite term should take place, it shall be treated as a Total, Substantial or Partial Taking in accordance with the definitions set forth herein. "Term" has the meaning set forth in Article [3] of this Lease. "Total Taking" means the taking of the fee title to all of the Property. "Unit" means a dwelling unit on the Property. ARTICLE 3. TERM The term of this Lease (the "Term") shall commence on the date the Memorandum of Lease records in the Official Records (the "Commencement Date"), and shall continue thereafter until the earlier of: (a) the fifty-fifth (55th) anniversary of the date on which a Notice of Completion records in the Official Records for the Construction or (b) June 30, 20. [Note: Following are two (2) versions of Article 4, one (1) for Phase I and one (1) for Phase II. Only the appropriate version will be included in the final form of this Ground Lease for the subject Phase. Also note that the Annual Rent set forth in Section 4.1 would be subject to increase pursuant to Sections [9.3.2J and [10.3.21 of the DDA if Section 8 vouchers are secured./ ARTICLE 4. RENTAL [PHASE I] 4.1 Rent. Tenant shall pay, without abatement, deduction, or offset, the following sums (the "Annual Rent"): (a) Rent Commencement Date. Lease Year I shall commence on the Commencement Date of this Lease. That notwithstanding, Annual Rent shall not commence until the earlier of (the "Rent Commencement Date"): (i) the date that the Construction Loan converts from temporary construction to permanent status pursuant to its terms (the "Loan Conversion Date"), or (ii) the third (3rd) anniversary of the Commencement Date of this Lease. If the Loan Conversion Date, occurs prior to the third (3rd) anniversary of the Commencement Date of this Lease, Tenant shall promptly give notice of such loan conversion to Landlord. EXHIBIT "I" Page 8 of 67 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DOA v 6 6 11 s x.doc (b) First 30 Lease Years from Rent Commencement Date. For each of the first thirty (30) Lease Years commencing with the Rent Commencement Date (the "First 30 Rent Year Period"), the Annual Rent shall be the fixed sum of Seventy -Five Thousand Dollars ($75,000). For the first Lease Year of such First 30 Rent Year Period, the Annual Rent shall be prorated at the rate of Two I lundred Five Dollars ($205) per day to account for the number of days between the Rent Commencement Date and the first day of such Lease Year. (c) Next 25 Lease Years. For each of the next twenty-five (25) Lease Years following the First 30 Rent Year Period (the "Next 25 Rent Year Period), the Annual Rent shall be the sum of Seventy -Five Thousand Dollars ($75,000) as escalated at the fixed rate of two percent (2%) per Lease Year. Accordingly, the Annual Rent for such first Lease Year of the Next 25 Rent Year Period shall be Seventy -Six 'thousand Five Hundred Dollars ($76,500). (d) Remainder of Term. For each of the Lease Years following the Next 25 Rent Year Period until the end of the Term (the "Appraisal/COLA Period"), `Tenant shall pay Annual Rent at a rate determined by a two (2) part process, as follows: (i) Part 1. Periodic Appraisal. The Annual Rent for the first Lease Year of the Appraisal/COLA Period (the " First Appraisal/COLA Period Lease Year") through Lease Year 60, Lease Years 71 through 75, and 86 through 90 shall be the result of the following process: 1. Step 1: Meet and Confer. Not later than ten (10) days after the first day of each of the last Lease Year of the Next 25 Rent Year Period, Lease Year 70 and Lease Year 85, the parties shall meet and confer for the purpose of attempting to agree on the Annual Rent for, in each case (except only the very first case), the next succeeding "Five (5)-Lease Year Period" (i.e., First Appraisal/COLA Period Lease Year through Lease Year 60, 71 through 75, and 86 through 90, respectively). Landlord and Tenant acknowledge and agree that the first such Five (5)-Lease Year Period only will be truncated as a consequence of it commencing closer to the end of Lease Year 60 than a full five (5) years. In each case, agreement, if any, shall be confirmed in writing by Landlord and Tenant. If, in any case, the parties fail to agree within thirty (30) days of such meeting (the "Meet and Confer Period"), then the parties shall proceed to Step 2. 2. Step 2: Selection of Appraiser(s). First the parties shall attempt to agree on a single MAI appraiser. If the parties have not so agreed in writing within fifteen (15) days after expiration of the Meet and Confer Period, then within fifteen (5) days thereafter each shall appoint an MAI appraiser (with an active practice in the appraisal of commercial real property in the County of San Diego) to participate in the appraisal process provided for in this section and shall give written notice thereof to the other party. Upon the failure of either party so to appoint, the EXHIBIT "I" Page 9 of 67 S:\1RC-DEV\Projects\PROSPEC \National City Public Works Center1DDA\EXECUrED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc nondefaulting party shall have the right to apply to the Superior Court for the County of San Diego, California, to appoint an appraiser to represent the defaulting party. Within ten (10) days of the parties' appointments, the two (2) appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord and Tenant, or if, within ten (10) days of the appointment of said appraisers, the two (2) appraisers shall fail to appoint a third, then either party hereto shall have the right to make application to said Superior Court to appoint such third appraiser. 3. Step 3: Appraisal Process. The appointed appraiser(s) shall be given the "Letter of Instruction" attached to this Lease as Exhibit ["E" J and shall complete his/her/their appraisal(s) within sixty (60) days, and shall execute and acknowledge his/her/their determination of fair market ground rent in writing and cause a copy thereof to be delivered to each of the parties hereto. 4. Step 4: Establishment of Annual Rent. If the parties agreed on a single appraiser, then the determination of that appraiser shall fix the Annual Rent for the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods). If three (3) appraisers made such determinations, then the three (3) determinations shall be added together and divided by three (3). The resulting quotient shall be the fair market ground rent. If, however, the low determination and/or high determination is or are more than twenty-five percent (25%) lower and/or higher than the middle determination, the low and/or high determination shall be disregarded. If only one determination is disregarded, the remaining two (2) determinations shall be added together and their total divided by two (2). The resulting quotient shall be the Annual Rent for the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods). If both the low and the high appraisals are disregarded, the middle determination shall be the Annual Rent for the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods). If the determination of the appraisal process is not completed by the commencement of the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods), Tenant shall continue to pay rent at the then prevailing Annual Rent rate until the adjusted rate is determined, at which time Tenant shall pay any difference for the period affected by the adjustment. (ii) Part 2. Intermediate Cost of Living Adjustment. The Annual Rent for the Five (5)-Lease Year Periods 61 through 65, 66 through 70, 76 through 80, 81 through 85, 91 through 95, and 95 through 99 shall be set in accordance with the following cost of living process: 1. Step 1. For each of the subject Five (5)-Lease Year Periods, the Annual Rent in effect for the immediately preceding Five (5)-Lease Year Period shall be adjusted upward, but never downward. EXHIBIT "I" Page 10 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCIJMENTS\F,LECTRONIC VERSION OE FILES\DDA v 6 6 11 s x.doc 2. Step 2. For each of the subject Five (5)-Lease Year Periods, the index shall be the then most recently published monthly figure as shown in the Consumer Price Index (CPI) for All Urban Consumers for San Diego MSA based on the year 1982-1984=100 as published by the U.S. Department of Labor's Bureau of Labor Statistics (BLS) (the "Adjustment Index"). The base for computing the adjustment shall be the index figure for the same month as the Adjustment Index but twenty (20) years earlier (the "Base Index"). [For example, if the Adjustment Index is the month of March 2068, the base for that computation would be March 2048.] The Adjustment Index shall be computed as a percentage of the Base Index and the percentage increase shall be divided by four (4) (the "Divisor"); provided, however, the Divisor for the first of such Five (5)-Lease Ycar Periods only shall be adjusted upward to reflect the extent to which the preceding Five (5)-Lease Year Period was truncated. For example, assuming the Base Figure is 110 and the Adjustment Index is 190, the percentage increase is 190/110=1.7272=173%, for a percentage increase of 73% for the subject twenty (20)-year period. That percentage increase is then divided by four (4) (or such larger Divisor for the first of such Five (5)-Lease Year Periods) to yield the percentage to be applied or 18.25%. So 118.25% shall be applied to the Annual Rent for the Five (5)-Lease Year Period then prevailing. If the index is changed so that the base year differs from that in effect on the Commencement Date, the index shall be converted in accordance with the conversion factor published by the BLS. If the index is discontinued or revised during the Term, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the index had not been discontinued or revised. The Annual Rent as adjusted above shall prevail for the subsequent five (5)-Lease Year Period. 4.2 Time for Payment of Annual Rent. The Annual Rent shall be due and payable in arrears not later than the last day of the Lease Year for which such Annual Rent is due. 4.3 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity and other utilities used by Tenant on the Property. 4.4 Taxes and Assessments. 4.4.1 Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property. In accordance with California Revenue and EXHIBIT "I" Page 11 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc Taxation Code Section 107.6(a), Landlord states that by entering into this Lease, a possessory interest subject to property taxes may be created. Tenant or other party in whom the possessory interest is vested may he subject to the payment of property taxes levied on such interest. 4.4.2 Payment of Taxes. Subject to any applicable exemptions, Tenant shall pay the real property and/or possessory interest taxes applicable to the Property during the term of this Lease. All such payments shall be made prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid or that an exemption from such taxes has been obtained. If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord within ten (10) days after demand from Landlord together with interest at the rate set forth in Section [4.5]. 4.4.3 Definition. As used herein, the term "real property tax" shall include any form of real estate tax or assessment (including, without limitation, on possessory interests), general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes) imposed on the Property or any interest (including, without limitation, possessory interests) therein by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in the Property or in the real property of which the Property are a part, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Property. The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of "real property tax," or (ii) the nature of which was hereinbefore included within the definition of "real property tax," or (iii) which is imposed as a result of a transfer, either partial or total, of Landlord's interest in the Property or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (v) which is imposed by reason of this lease transaction, any modifications or changes hereto, or any transfers hereof. 4.4.4 Personal Property. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. EXHIBIT "I" Page 12 of 67 S:\TRC-DE V\Protects\PROSPECT1National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc 4.4.6 Apportionment. If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to the date said taxes are due and payable. 4.5 Overdue Interest. Any amount due to Landlord, if not paid when due and before expiration of the applicable grace period, if any, shall bear interest from the date due until paid at the lower of: (a) the reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time plus three percent (3%); or (b) the highest rate of interest allowed under applicable usury law. ARTICLE 4. RENTAL [PHASE III 4.1 Rent. The rent shall be the nominal sum of One Dollar ($1.00) per year payable in advance. 4.2 Right to Audit. Tenant shall keep full and accurate books of account, records and other pertinent data with respect to operations of the Project. Such books of account, records, and other pertinent data shall be kept for a period of three (3) years after the end of each Lease Year. Landlord shall be entitled within two (2) years after the end of each Lease Year to inspect and examine all Tenant's books of account, records, and other pertinent data. Tenant shall cooperate fully with Landlord in making the inspection. Landlord shall also be entitled, also within two (2) years after the end of each Lease Year, to an independent audit of Tenant's books of account, records, and other pertinent data. 4.3 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity and other utilities used by Tenant on the Property. 4.4 Taxes and Assessments. 4.4.1 Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property. In accordance with California Revenue and Taxation Code Section I07.6(a), Landlord states that by entering into this Lease, a possessory interest subject to property taxes may be created. Tenant or other party in whom the possessory interest is vested may be subject to the payment of property taxes levied on such interest. 4.4.2 Payment of Taxes. Subject to any applicable exemptions, Tenant shall pay the real property and/or possessory interest taxes applicable to the Property during the term of this Lease. All such payments shall be made prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence EXHIBIT "I" Page 13 of 67 S.\TRC-DEV\Projects\PROSPECTNNational City Public Works CenterM)DA\EXECUTED DOCUMENTS\ELEClRONIC VERSION OF FILES\DDA v 6 6 II s x.doc that such taxes have been paid or that an exemption from such taxes has been obtained. If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord within ten (10) days after demand from Landlord together with interest at the rate set forth in Section [4.5]. 4.4.3 Definition. As used herein, the term "real property tax" shall include any form of real estate tax or assessment (including, without limitation, on possessory interests), general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes) imposed on the Property or any interest (including, without limitation, possessory interests) therein by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in the Property or in the real property of which the Property are a part, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Property. The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of "real property tax," or (ii) the nature of which was hereinbefore included within the definition of "real property tax," or (iii) which is imposed as a result of a transfer, either partial or total, of Landlord's interest in the Property or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (v) which is imposed by reason of this lease transaction, any modifications or changes hereto, or any transfers hereof. 4.4.4 Personal Property. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. 4.4.6 Apportionment. If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to the date said taxes are due and payable. 4.5 Overdue Interest. Any amount due to Landlord, if not paid when due and before expiration of the applicable grace period, if any, shall bear interest from the date due until paid at the lower of: (a) the reference or prime rate of Bank of America, N.T. & EXHIBIT "I" Page 14 of 67 S:\TRC-DFV'Projects \PROSPECT\National City Public Works Center \ODA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 I l s x.doc S.A., in effect from time to time plus three percent (3%); or (b) the highest rate of interest allowed under applicable usury law. ARTICLE 5. POSSESSION OF PROPERTY 5.1 Acceptance of Premises. Tenant hereby accepts the Property. 5.2 Ownership of Improvements. During the term of this Lease title to all Improvements, now existing or later made, on the Property are and shall be vested in Tenant. Tenant shall not, however, remove or demolish any Improvements from the Property except as permitted herein. 5.3 Surrender of Property. 5.3.1 Upon Expiration. Tenant agrees that on expiration or termination of the Term, the Improvements on the Property shall become the property of Landlord, free from any liens or claims whatsoever, without any further compensation therefor from Landlord to Tenant or any other person. 5.3.2 Condition. On expiration or termination of the Term, Tenant shall peaceably and quietly leave and surrender the Property and the Improvements to Landlord in good order, condition and repair, reasonable wear and tear and obsolescence excepted. Tenant shall leave in place and in good order, condition and repair, all fixtures and machinery; except (if Tenant is not then in default under this Lease) Tenant shall have the right to remove only Tenant -owned appliances, other unattached equipment, furniture and merchandise that Tenant shall have installed, which removal must be done without damage to the Property or Improvements. Landlord shall have the right to have the Property and the Improvements inspected at Tenant's cost to determine whether the Property and the Improvements have been properly maintained, repaired and restored in accordance with the terms of this Lease. That notwithstanding, Tenant shall not be responsible for the interior condition of individual occupied apartments on the termination or expiration of this Lease. 5.3.3 Delivery of Documents. Contemporaneous with the expiration or termination of the Term, Tenant shall immediately deliver to Landlord the following: (a) Such documents, instruments and conveyances as Landlord may reasonably request to enable Landlord's ownership of the Property and the Improvements to be reflected of record, including, without limitation, a quitclaim deed in recordable form to the Property and the Improvements. (b) If requested by Landlord, title insurance, surety bond, or other security reasonably acceptable to Landlord insuring against all claims and EXHIBIT "I" Page 15 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \ DOA \EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 I 1 s x doc liens against the Property and the Improvements other than those incurred by Landlord or accepted by Landlord in writing. (c) All construction plans, surveys, permits and other documents relating to the Improvements as may be in the possession of Tenant at the lime and from time to time thereafter. (d) All documents and instruments required to be delivered by Tenant to Landlord pursuant to this Section shall be in form reasonably satisfactory to Landlord. 5.4 Abandonment. Tenant shall not abandon or vacate the Property or the Improvements at any time during the Term. If Tenant shall abandon, vacate or otherwise surrender the Property or the Improvements, or be dispossessed (other than dispossession as the result of a Substantial Taking or a Taking) thereof by process of law or otherwise, the same shall constitute a default under this Lease on the part of Tenant and, in addition to any other remedy available on the part of Landlord, any of Tenant's property left in, upon or about the Property or the Improvements (except for underground storage tanks) shall, at Landlord's option, be deemed to be abandoned and shall become the property of Landlord. The appointment of a receiver pursuant to a Mortgagee's exercise of its rights under a Mortgage, or the foreclosure of a Mortgage, shall not be a default under this Section. ARTICLE 6. REPRESENTATIONS AND WARRANTIES 6.1 Landlord's Representations. Landlord represents and warrants to Tenant that it owns the Property in fee simple and has the power and authority to enter into this Lease and perform all obligations and agreements incidental or pertinent to the Lease. Landlord makes no representation or warranty with respect to the condition of the Property or its fitness or availability for any particular use, and Landlord shall not be liable for any latent or patent defect therein. 6.2 Tenant's Representations. Tenant represents and warrants to Landlord that it has examined the Property and acknowledges that it hereby accepts possession of the Property in its "AS IS" condition, with all faults and defects, including, without limitation, infestation of or damage to the Property caused by wood -destroying pests or organisms. ARTICLE 7. DEVELOPMENT OF THE PROPERTY 7.1 Construction. Within ten (10) days after the Construction Loan Closing, or such longer period as the Executive Director may approve, Tenant shall commence the Construction. All Improvements, together with all off -site improvements that may be EXHIBI"1' "I" Page 16 of 67 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc made by reason of governmental requirements as a condition to the Construction upon the Property, shall be constructed in a good and workmanlike manner using materials of good quality and in substantial compliance with the Plans as modified pursuant to this Article [71, and shall comply with all applicable governmental permits, laws, ordinances and regulations. Any of the Plans, including, without limitation, landscaping plans, not approved by the Executive Director as of the Construction Loan Closing shall be subject to the prior approval of the Executive Director. 7.2 Construction Cost. Tenant shall bear the cost of the Construction, including all fees and mitigation measures. 7.3 Changes; Landlord Consent. Except as otherwise provided in this Lease, Tenant shall not make any changes in the Plans without the Executive Director's prior written consent if such change (a) constitutes a material change in the building material or in the architectural design, value or quality of any of the Improvements, or (b) would result in an increase in construction costs in excess of Seventy -Five Thousand Dollars ($75,000.00) for any single change or in excess of Three Hundred Thousand Dollars ($300,000.00) for all such changes. Without limiting the above, Landlord agrees that Tenant may make minor changes which do not change the Projects aesthetics without the Executive Director's prior written consent, provided that such changes do not violate any of the conditions specified herein. 7.3.1 Submission Requirement; Consent Process. Tenant shall submit any proposed material changes in the Plans to the Executive Director at least ten (10) days prior to the commencement of construction relating to such proposed material change. Requests for any material change which requires consent shall be accompanied by working drawings and a written description of the proposed change, submitted on a change order form acceptable to the Executive Director, signed by Tenant and, if required by the Executive Director, also by the Project architect. If a proposed change is approved, then Tenant shall be notified in writing within ten (10) days after submission. If the Executive Director fails to disapprove a proposed change within said ten (10)-day period, and state the reason(s) for such disapproval with reasonable particularity, then the proposed change shall be deemed approved. 7.4 Landlord's Review. Landlord does not have, and by this Lease expressly disclaims, the right to or duty for any review of the Plans for the purpose of determining compliance with building codes, safety features or standards or for the purpose of deter- mining or approving engineering or structural design, sufficiency or integrity. Landlord's approval of a direction or request to change the plans, specifications or drawings submitted by Tenant is not and shall not be a review or approval of the quality, adequacy or suitability of such plans, specifications or drawings, nor of the labor, materials, services or equipment to be furnished or supplied in connection therewith. Landlord does not have and expressly disclaims any right of supervision or control over the architects, designers, engineers or other draft persons and professionals responsible for EXHIBIT "I" Page 17 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center 1DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES IDDA v 6 6 11 s x.doc the drafting and formulation of the Plans, or any right of supervision or control of contractors, builders, trades and other persons engaged in constructing and fabricating the improvements pursuant to the Plans. Landlord further acknowledges that it shall not have any right to disapprove any plan, specification or drawing which logically evolves from any previously approved plan, specification or drawing or to request or require a change in any previously approved item. 7.5 Soil Conditions. Landlord makes no covenants or warranties respecting the condition of the soil or subsoil or any other condition of the Property, provided, however, that the foregoing shall not constitute a release of Landlord under any statute or common law theory. 7.6 Diligent Prosecution to Completion. Once the work is begun, Tenant shall, with reasonable diligence, prosecute the Construction to completion. The Construction shall be completed and ready for use not later than the earlier of: (a) seven hundred twenty days (720) days after the Construction Loan Closing (subject to the right to notice and cure set forth in Section [21.1.5]), or (b) the time required to satisfy the requirements of the Proposition IC Finanacing; provided, however, that the time for completion shall be extended for as long as Tenant shall be prevented from completing the Construction by delays beyond Tenant's control. Additionally, upon the written request of Tenant, the Executive Director may, at his sole and absolute discretion, grant one or more extensions of the date by which the Construction must be completed of, in the aggregate, not more than ninety (90) days. All work shall be performed in a good and workmanlike manner, shall substantially comply with the Plans, and shall comply with all applicable governmental permits, laws, ordinances, and regulations. 7.7 Right of Access. During normal construction hours, representatives of Landlord shall have the reasonable right of access to the Property without charges or fees for the purpose of inspecting the work of the Construction; provided, however, that such representatives shall present and identify themselves at Tenant's construction office, be accompanied by a representative of Tenant while on the Property and obey Tenant's, or its contractor's, safety rules and regulations. In addition, Landlord shall have the right to authorize the City and other public agencies to enter the Property, upon the same terms after reasonable prior written notice to Tenant, for the purpose of constructing, reconstructing, maintaining or repairing any public improvements or public facilities located on the Property. Landlord shall deliver written notice of the identity of its representatives to Tenant before such representatives enter the Property. Landlord hereby indemnifies and holds Tenant, and its contractors, subcontractors, agents, representatives and employees, and the Property, harmless from and against any loss, cost, damage or liability, including, without limitation, attorneys' fees, which results from the exercise by Landlord, or any party acting under Landlord's authority, of the rights granted by this Section. EXHIBIT "I" Page 18 of 67 S\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMFNTSIF.T.ECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 7.8 Governmental Approvals. If requested by Landlord in writing, Tenant covenants and agrees to deliver to Landlord conformed copies (and certified copies of all recorded instruments) of all governmental approvals and permits obtained by Tenant for the construction, alteration or reconstruction of any Improvements upon the Property in accordance with the Plans. In no event shall Tenant commence construction of any Improvements pursuant to the provisions of this Article [7] until such time as Tenant shall have obtained all necessary governmental approvals and permits to so construct such Improvements. 7.9 Landlord's Right to Discharge Lien. If Tenant does not cause to be recorded the bond described in California Civil Code Section 3143 or otherwise protect the Property under any alternative or successor statute, and a final judgment has been entered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic's, materialman's, contractor's, or subcontractor's lien claim, and if Tenant fails to stay the execution of the judgment by lawful means or to pay the judgment, Landlord shall have the right, but not the duty, subject to the notice and cure rights of Mortgagees and the Tax Credit Partner set forth elsewhere in this Lease, to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together with all Landlord's reasonable attorneys' fees and costs, plus interest on those sums, fees, and costs from the date of payment until the date of reimbursement at the rate set forth in Section [4.5]. 7.10 Force Majeure. All obligations of Tenant to promptly commence and thereafter diligently prosecute to completion the Construction shall be extended by such number of days as Tenant shall be delayed by reason of events of force majeure pursuant to Article [24]. 7.11 Notice of Non -Responsibility. After the recordation of the Certificate of Completion for the Improvements in the Official Records, Tenant shall provide Landlord with prior written notice of not less than fifteen (15) days before commencing construction of any structural alteration of the Improvements, or any non-structural alteration which will cost more than Twenty -Five Thousand Dollars ($25,000.00), and shall permit Landlord to record and post appropriate notices of non -responsibility on the Property. The foregoing Twenty -Five Thousand Dollar ($25,000.00) limitation shall be increased each calendar year by the corresponding percentage increase in the Index. 7.12 Notice of Completion. On completion of construction of the Improvements, Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as Tenant's attorney -in -fact to file the notice of completion on Tenant's failure to do so after the work of improvement has been substantially completed. 7.13 Subsequent Alterations. Following the Construction in substantial accordance with the Plans, Tenant may from time to time, at its sole expense, make EXHIBIT "I" Page 19 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc improvements and other alterations to the Property which Tenant reasonably determines to be beneficial. Tenant shall not make any alteration or improvement to the Property the cost of which exceeds Fifty Thousand Dollars ($50,000.00) without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed. The foregoing dollar amount limitations shall be increased each calendar year by the corresponding increase in the Index. Tenant shall timely pay any obligation incurred by Tenant with respect to any such alterations or improvements that could become a lien against the Property and shall defend, indemnify and hold Landlord harmless in connection therewith. ARTICLE 8. USE OF THE PROPERTY, HAZARDOUS MATERIALS, AND NONDISCRIMINATION 8.1 Definitions Applicable to this Article. All capitalized terms used in this Article [8] and not elsewhere defined shall have the following meanings: "Adjusted Income" means the adjusted income of a person (together with the adjusted income of all persons of the age of eighteen (18) years or older who intend to reside with such person in one residential unit) as calculated in the manner prescribed under Section 142(d)(2)(B) of the Code. "Affordable Rent for 30% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of thirty percent (30%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Affordable Rent for 40% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of forty percent (40%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Affordable Rent for 50% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of fifty percent (50%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Affordable Rent for 110% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of one hundred ten EXI IIBIT "I" Page 20 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc percent (110%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Certificate of Continuing Program Compliance" shall mean the Certificate to be filed annually (or quarterly at the written request of the Executive Director) by Grantee with the Executive Director which shall be substantially in the form attached to this I,ease as Exhibit ["C"]. "Code" means the Internal Revenue Code of 1986, as amended, including the Regulations promulgated thereunder or under any predecessor statute. "30% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed thirty percent (30%) of the Median Income for the Area, adjusted for household size. "40% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed forty percent (40%) of the Median Income for the Area, adjusted for household size. "50% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed fifty percent (50%) of the Median Income for the Area, adjusted for household size. "110% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed one hundred ten percent (110%) of the Median Income for the Area, adjusted for household size. "Median Income for the Area" means the median income for the area as determined and published annually by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, median income for the Area determined under the method used by the Secretary of Housing and Urban Development prior to such termination. "Utility Allowance" means a monthly allowance for Utility Services based on a utility allowance schedule published annually by Landlord. "Utility Services" means all utility services included on the utility allowance schedule published annually by Landlord. (Note: Following are two (2) versions of Section [8.21, one (1) for Phase I and one (1) for Phase II. Only the appropriate version will be included in the final form of this Ground Lease for the subject Phase.] EXHIBIT "I" Page 21 of 67 S�\TRC-DEV\Projects \PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 8.2 Affordable Housing (Phase I Version). As hereinafter more particularly provided, Tenant shall use the Property and the Improvements as multi -family rental housing and ancillary purposes as follows: (a) twelve (12) of the Units shall he leased to 30% of Median Income Tenants at Affordable Rent for 30% of Median Income Tenants, of which three (3) of said Units shall be one (1)-bedroom Units, five (5) of said Units shall be two (2)-bedroom Units, and four (4) of said Units shall be three (3)-bedroom Units; (b) twenty-three (23) of the Units shall be leased to 40% of Median Income Tenants at Affordable Rent for 40% of Median Income Tenants, of which five (5) of said Units shall be one (1)-bedroom Units, ten (10) of said Units shall be two (2)-bedroom Units, and eight (8) of said Units shall be three (3)-bedroom Units; and (c) eighteen (18) of the Units shall be leased to 50% of Median Income Tenants at Affordable Rent for 50% of Median Income Tenants, of which three (3) of said Units shall be one (1)- bedroom Units of which nine (9) of said Units shall be two (2)-bedroom Units, and six (6) of said Units shall be three (3)-bedroom Units. The remaining Units (save for one (1) manager's unit) shall be leased to 110% of Median Income Tenants at Affordable Rent for 110% of Median Income Tenants. The one (1) manager's unit, if not so used, shall also be leased to 110% of Median Income Tenants at Affordable Rent for 110% of Median Income Tenants. Except for such reasonable periods during which a Unit is, or Units are, being maintained, repaired or rehabilitated, Tenant shall actively market any vacant unit or units and lease it or them as soon as reasonably possible so as to satisfy the subleasing requirements immediately above. "Tenant acknowledges and agrees that one (1) of the Units described above shall also coextensively be maintained as affordable under the HOME Program regulations for a term of not less than twenty (20) years. 8.2 Affordable Housing (Phase II Version). As hereinafter more particularly provided, Tenant shall use the Property and the Improvements as multi- family rental housing and ancillary purposes as follows: (a) eleven (1 I) of the Units shall be leased to 30% of Median Income Tenants at Affordable Rent for 30% of Median Income Tenants, of which one (1) of said Units shall be a studio apartment, three (3) of said Units shall be one (1)-bedroom Units, four (4) of said Units shall be two (2)- bedroom Units, and three (3) of said Units shall be three (3)-bedroom Units; (b) twenty- one (21) of the Units shall he leased to 40% of Median Income Tenants at Affordable Rent for 40% of Median Income Tenants, of which two (2) of said Units shall be studio apartments, five (5) of said Units shall be one (1)-bedroom Units, eight (8) of said Units shall be two (2)-bedroom Units, and six (6) of said Units shall be three (3)-bedroom Units; and (c) thirteen (13) of the Units shall be leased to 50% of Median Income Tenants at Affordable Rent for 50% of Median Income Tenants, of which two (2) of said Units shall be one (1)-bedroom Units, of which five (5) of said Units shall be two (2)-bedroom Units, and six (6) of said Units shall be three (3)-bedroom Units. The remaining Units (save for one (1) manager's unit) shall be leased to 110% of Median Income Tenants at Affordable Rent for 110% of Median Income Tenants. The one (1) manager's unit, if not so used, shall also be leased to 110% of Median Income Tenants at Affordable Rent for EXHIBIT "I" Page 22 of 67 S:1TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA1EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 II s x.doc 110% of Median Income Tenants. Except for such reasonable periods during which a Unit is, or Units arc, being maintained, repaired or rehabilitated, Tenant shall actively market any vacant unit or units and lease it or them as soon as reasonably possible so as to satisfy the subleasing requirements immediately above. 8.2.1 Subtenant Selection. In the selection of subtenants for occupancy of the Units, Tenant shall give priority to eligible persons and families displaced by Landlord or by the National City Redevelopment Agency. Any such priority shall be subject to the rules and regulations of the Tax Credit Program and to each such subtenant meeting screening criteria (pursuant to the management plan delivered by Tenant to Commission pursuant to Section (11.4(q) or 12.4(q) of the DDA) approved by the Executive Director, which approval shall not be unreasonably withheld. 8.3 Increase in Person's or Family's Income. For purposes of satisfying the obligation to rent the dwelling units as set forth in Section [8.2] above, a person or family who at the commencement of his, hers or its occupancy qualified as a 30%, 40%, 50% or 110% of Median Income Tenant shall continue to be treated as such Tenant irrespective of any later increase in his, her or their income. A Unit occupied by a 30%, 40%, 50% or 110% of Median Income Tenant shall be deemed, upon the termination of such person's or family's occupancy, to be continuously occupied by such 30%, 40%, 50% or 110% of Median Income Tenant until reoccupied, provided that Owner actively, diligently and continuously markets such Unit for occupancy by a Tenant of the same income classification. 8.4 Section 8 Certificate Holders. Tenant shall accept as Low -Income Tenants, on the same basis as all other prospective Low -Income Tenants, persons and families that are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, as amended, or its successor, and shall not apply selection criteria to Section 8 certificate holders that are more burdensome than the criteria applied to all other prospective Low -Income Tenants. Tenant agrees to modify the subleases for the Units, as necessary, to allow the rental of Units to Section 8 certificate holders. 8.5 Rent Increases. Tenant may adjust the Affordable Rents in accordance with periodic revisions to the Median Income for the area by the U.S. Secretary of Housing and Urban Development; provided, however, that the Affordable Rent for any Unit may not be increased more often than one time per 12-month period, and only after at least thirty (30) days prior written notice to the affected Low -Income Tenant. 8.6 Initial Income Certification. Immediately prior to the initial occupancy of each subtenant, and at least annually thereafter, Tenant shall obtain, in substantially the form set forth on Exhibit ['B"], current income certification statements for each subtenant. Tenant shall make a good faith effort to verify each income certification statement provided by an applicant for subtenancy or a subtenant by taking one or more EXHIBIT "I" Page 23 of 67 S:\TRC-DEV1Projects\PROSPECI\National City Public Works Center\DDAIEXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc of the following steps as part of the verification process: (a) obtain a pay stub for the most recent pay period, (b) obtain an income tax return for the most recent tax year, (c) conduct a credit rating or similar search, (d) obtain an income verification form from the applicant's or subtenant's current employer, (e) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies, or (f) if the applicant is unemployed and has no such tax return, obtain another form of independent verification. Tenant shall maintain each such income certification statement on file for not less than three (3) years. 8.7 Annual Recertification. Not less than annually, Tenant shall obtain and maintain a file, again in substantially the form set forth in Exhibit ["B"], of current income recertification statements for each subtenant. Tenant shall make a good faith effort to verify each income recertification statement in the manner described in Section [8.6]. Tenant shall also maintain each such income recertification statement on file for not less than three (3) years. 8.8 Form of Sublease. The form of sublease or subrental agreement used by Tenant shall clearly notify subtenants that Tenant has relied on the income certification supplied by the subtenant, and will rely on the annual income recertification to be supplied by the subtenant, in determining qualification for occupancy at Affordable Rent, and that any material misstatement in such certification or recertification will be cause for immediate termination of such sublease or subrental agreement. 8.9 Low -Income Housing Tax Credit Program. Notwithstanding anything contained in this Lease to the contrary, if and when the Property is subject to the requirements of the Federal Low -Income Housing Tax Credit Program under the provisions of Section 42 of the Code (the "Tax Credit Program"), and there is a conflict between the requirements of the Tax Credit Program, the HOME Program (as to the one (1) Unit required to be maintained as affordable thereunder) and the affordability provisions set forth in Sections [8.1] through [8.8] above, inclusive, then (a) as to the Units described in Section [8.2(a) and (b)], above, the Tax Credit Program provisions shall prevail, and (b) as to the Units described in Section 8.2(c), above, the more restrictive terms and conditions provisions shall prevail. 8.10 Access and Reporting. Tenant shall permit the representatives of Landlord at any time or from time to time, upon one business day's notice, to inspect, audit and copy all of its properties, books, records and accounts. Tenant shall maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements which shall be in conformity with GAAP basis of accounting. Tenant shall furnish or cause to be furnished to Landlord the following: (a) Notice of Default. As soon as possible, and in any event not later than five (5) days after the occurrence of any Event of Default, a statement of an EXHIBIT "I" Page 24 of 67 S-\TRC-DEV\Projects\PROSPECRNational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc officer of Tenant describing the details of such Event of Default and any curative action Tenant proposes to take; (b) Annual Statements. As soon as available, and in any event not later than one hundred twenty (120) days after the close of each fiscal year of Tenant, financial statements of Tenant, including a profit and loss statement, reconciliation of capital accounts and a consolidated statement of changes in financial position of Tenant as at the close of and for such fiscal year, all in reasonable detail, certified as provided in clause (a) above by an officer or partner of Tenant and, upon request of Landlord, if total Operating Expenses for such year exceed the total amount set forth in the Approved Budget by more than five percent (5%), accompanied by a compilation report prepared by a firm of certified public accountants, and in a format, each reasonably acceptable to the Executive Director; (c) Pro Forma Budget. As soon as available and in any event not later than December 15 of each calendar year beginning with the year in which Construction is completed, Tenant shall provide Landlord, for the Executive Director's approval, with a detailed projection of Operating Income and budgets of estimated Operating Expenses for the immediately succeeding calendar year (the "Pro Forma Budget") and a detailed Cash Flow projection for the next succeeding year. Tenant shall also submit to Landlord on request additional detail, information and assumptions used in the preparation of the Pro Forma Budget. Within fifteen (15) days following its receipt of the Pro Forma Budget, Landlord shall deliver to Tenant its written approval or disapproval thereto, which approval shall not be unreasonably withheld. If Landlord disapproves the Pro Forma Budget, it shall set forth its reasons with reasonable specificity. If Landlord fails to indicate either its approval or disapproval of the Pro Forma Budget within such period, then Landlord shall be deemed to have approved the Pro Forma Budget as submitted by Tenant. Once the Pro Forma Budget is approved or deemed approved by Landlord, such approved Pro Forma Budget shall become the "Approved Budget" for the entire applicable calendar year. Tenant shall use commercially reasonable efforts to operate the Property during such calendar year within the Approved Budget; provided, however, that the Tenant shall not be required to obtain the approval of Landlord for any deviation from the Approved Budget so long as the total Operating Expenses and expenditures for Capital improvements paid or incurred during such calendar year do not exceed the originally budgeted amount thereof in the Approved Budget by more than five percent (5%) in the aggregate. To the extent required hereunder, any request by Tenant to deviate from the Approved Budget shall be submitted to Landlord in writing with an explanation thereof and EXHIBIT "I" Page 25 of 67 S:\TRC-DEV1Projects\PROSPECT1National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x doc shall be accompanied by supporting information for the request. Landlord shall reasonably respond to any such request within fifteen (15) days of the receipt of same and if Landlord fails to do so, such request shall be deemed to be approved; (d) Tax Returns. As soon as available, and in any event not later than at the time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules, if any) of Tenant; (e) Certificate of Performance. Concurrently with delivery of each of the financial statements provided for in clause (b) above, a certificate of an officer or partner of Tenant stating that Tenant has, in all material respects, performed and observed each of its covenants contained in this Lease and that no Event of Default or Potential Default has occurred or, if any such event has occurred, specifying its nature; (t) Redevelopment Monitoring. Tenant shall submit to Landlord on an annual basis the annual report required by Section 33418 of the California Health and Safety Code. The annual report shall include for each dwelling unit the rental rate and the income and the family size of the occupants. (g) Rent Roll. As soon as possible and in any event not later than forty-five (45) days after the close of each calendar quarter, the rent roll as of the end of such calendar quarter setting forth such information, and in such format, as is reasonably acceptable to the Executive Director; (h) Audit Reports. Promptly upon receipt thereof, copies of all reports submitted to Tenant by independent certified public accountants in connection with each annual, interim or special audit of the financial statements of Tenant made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit; (i) Notices, Certificates or Communications. Immediately upon giving or receipt thereof, copies of any notices, certificates or other communications given by or on behalf of Tenant or received by or on behalf of Tenant from lenders pursuant to or in connection with any of the loan documents, as well as any notices and other communications delivered to the Property or to Tenant naming Landlord or the "Construction Lender" as addressee, or which could reasonably be deemed to affect the Construction or the ability of Tenant to perform its obligations to Landlord; (j) Monthly Leasing Report. As soon as available and in no event later than the twenty fifty (25th) day of every calendar month, a monthly property analysis report for the Property indicating the current leasing status for the Property; EXHIBIT "I" Page 26 of 67 S:\TRC-DEV\Projects\PROSPECI\National City Public Works Center\DDA\EXECUTED DOCIJMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 S x.doc (k) Monthly Operating Statements. As soon as available and in no event later than the twenty-fifth (25th) day of every calendar month, commencing with the first full calendar month following commencement of lease -up of the Property, a "Monthly Operating Statement" showing all Operating Income, Operating Expenses, Debt Service and any other amounts taken into consideration in computing Net Operating Income, Operating Deficits, and/or Cash Flow, as applicable, for the prior month, in a form reasonably satisfactory to the Executive Director; (I) Certificate of Continuing Program Compliance. Tenant shall submit to Landlord on an annual basis the Certificate of Continuing Program Compliance. (m) Other Information. Such other documents and information relating to the affairs of Tenant and the Property as Landlord reasonably may request from time to time which Tenant can provide for a reasonable cost. 8.11 Onsite Manager. Tenant, through an onsite professional property manager or property management company, shall manage the Project or cause it to be managed. Any manager or management company retained to act as agent for Tenant in meeting the obligation of providing an onsite manager shall be subject to prior written approval of the Executive Director, which approval shall not be unreasonably withheld or delayed. Related Management Company, L.P. ("RMC") is hereby approved by Landlord as the initial property manager. In exercising his/her approval rights hereunder, the Executive Director may require proof of ability and qualifications of the manager and/or management company based upon (i) prior experience, (ii) assets, and (iii) other factors determined by the Executive Director as necessary. Furthermore, upon sixty (60) days prior written demand from Landlord with cause, Tenant shall remove and replace a property manager and/or property management company. In any agreement with a property manager or property management company ("Management Agreement"), Tenant shall expressly reserve the right to terminate such agreement upon written demand of Landlord with cause. That notwithstanding, Landlord agrees that RMC shall be entitled to a thirty (30)-day notice of default and a reasonable opportunity to cure before any such termination. 8.12 No Use of Hazardous Materials on the Property. Tenant covenants and agrees that it shall not, and that it shall not permit any subtenant to, treat, use, store, dispose, release, handle or otherwise manage Hazardous Materials on the Property from and after the date hereof except in connection with any construction, operation, maintenance or repair of the Improvements or in the ordinary course of its business, and that such conduct shall be done in compliance with all applicable federal, state and local laws, including all Environmental Laws. Tenant's violation of the foregoing prohibition EXHIBIT "I" Page 27 of 67 S:TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCIJMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc shall constitute a breach hereunder and Tenant shall indemnify, hold harmless and defend the Landlord for such violation as provided below. 8.13 Notice and Remediation by Tenant. Tenant shall promptly give the Landlord written notice of any significant release of any Hazardous Materials, and/or any notices, demands, claims or orders received by Tenant from any governmental agency pertaining to Hazardous Materials which may affect the Property. 8.14 Environmental Indemnity. Tenant agrees to indemnify, protect, hold harmless, and defend (with counsel reasonably satisfactory to Landlord) the Indemnitees from and against any and all losses, costs, claims, expenses, damages (including, without limitation, foreseeable or unforeseeable consequential damages), and liabilities directly or indirectly arising out of or in any way connected with (a) Tenant's breach or violation of any covenant, prohibition or warranty in this Lease concerning Hazardous Materials, or (b) the activities, acts or omissions of Tenant, its employees, contractors or agents on or affecting the Property from and after the Commencement Date, including but not limited to the release of any Hazardous Materials or other kinds of contamination or pollutants of any kind into the air, soil, groundwater or surface water on, in, under or from the Property. This indemnification supplements and in no way limits the scope of the indemnification set forth in Article [13]. 8.15 Termination; Subtenants. The agreements and obligations of Tenant under this Article [8] with regard to indemnification of Landlord shall survive the scheduled termination or sooner expiration of the Term for any reason, for five (5) years and all claims relating thereto must be delivered in writing to Tenant within such period. That notwithstanding, the extension of time within which to deliver a claim to Tenant shall not extend, beyond the date of expiration or termination of this Lease, the period in which Claims may arise. No action by any subtenant in violation of its sublease shall constitute a cause to terminate this Lease provided that Tenant diligently pursues its available remedies against such subtenant. 8.16 Nondiscrimination. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property nor shall the Tenant itself, or any person claiming under or through Tenant, 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, sublessees, subtenants, or vendees in the Property. 8.17 Form of Nondiscrimination and Nonsegregation Clauses. Tenant covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that it shall refrain from restricting the lease, sublease, rental, transfer, use, occupancy, tenure, or enjoyment of the Property (or any part thereof) EXHIBIT "I" Page 28 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All such leases, or contracts pertaining thereto shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 8.17.1 In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, religion, creed, national origin, or ancestry, in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, or occupancy of tenants, lessees, sublessees, tenants, or vendees in the land herein leased." 8.17.2 In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee 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 land." 8.18 Social Services. From not later than six (6) months after the date of issuance of a temporary certificate of occupancy for the Project until expiration of the Term, Tenant shall provide, or cause to be provided by a reasonably qualified person or firm, services to the residents of the Project in accordance with the plan therefor attached hereto as Exhibit ["D,"] as such plan may be amended from time to time with the consent of the Executive Director. Community Housing Works is hereby approved by Landlord as the initial provider of such social services 8.19 Effect and Duration of Covenants. Subject to Section [8.21] below, the covenants established in this Article shall, without regard to technical classification and designation, be binding on Tenant and any successor in interest to the Property, or Tenant's leasehold interest therein, or any part thereof, for the benefit and in favor of the Landlord, its successors and assigns, and the City until the expiration of the Term, except to the extent said covenant expressly provides that it shall survive the expiration of the Term. 8.20 Indemnification. Tenant hereby saves, defends, indemnifies and holds the Indemnitees harmless from and against any and all losses, costs, damages or liabilities, including, without limitation, attorneys' fees and costs, which result from the breach of any representations and warranties contained in this Article [8]. EXHIBIT "I" Page 29 of 67 S.\TRC-DEV\Projects\PROSPEC11National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 II s x.doc 8.21 Terminable Upon Foreclosure. Notwithstanding anything contained in this Lease to the contrary, upon foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment or deed in lieu of foreclosure, Section [8.1] through Section [8.16], inclusive, and Section [8.20] of this Lease shall be terminable by the purchaser at the foreclosure sale, or the assignee or grantee of a deed in lieu of foreclosure, by notice to Landlord. Termination of such Sections pursuant to this provision shall not affect the validity of the remaining provisions of this Lease and Tenant's rights hereunder. ARTICLE 9. INSURANCE 9.1 Landlord Not Liable. Except as the result of the sole or willful negligence or intentional acts or omissions by Landlord or its representatives, employees or agents, or as otherwise expressly set forth herein, Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom or for any damage or liability of any kind or for any injury to or death of persons or damage to property of Tenant, or to Tenant's agents, employees, servants, contractors, subtenants, licensees, concessionaires, customers or business invitees or any other person which occurs on the Property during the Term. 9.2 Indemnification. Except as the result of the sole or willful negligence or intentional acts or omissions by Landlord or its representatives, employees or agents, Tenant shall indemnify, defend and hold the Indemnitees harmless from and against all liability, loss, damage, cost or expense (including attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person caused by Tenant's performance of its obligations under this Lease or any errors or omissions of Tenant, whether such performance, errors or omissions of Tenant be made by Tenant, its contractors or subcontractors, or anyone directly or indirectly employed by Tenant, and whether such damage shall accrue or be discovered before or after the termination of this Lease. This indemnification provision supplements and in no way limits the scope of the indemnifications in Article [13]. The indemnity obligation of Tenant under this Article shall survive the expiration or termination, for any reason, of this Lease. This Section notwithstanding, indemnification with respect to Hazardous Materials shall be governed by Section [8.14]. 9.3 Insurance. From and after the Commencement Date until the termination of this Lease, Tenant shall take out and maintain the following types of insurance in the forms and amounts (as may be increased each calendar year by the corresponding increase in the Index) set forth below, at Tenant's sole expense. Notwithstanding the amounts of insurance set forth below, the Executive Director shall have the right, but not the obligation, to reduce the amounts required from time to time. 9.3.1 Comprehensive General Liability in an amount not less than Two Million Dollars ($2,000,000.00) combined single limit for each occurrence or Four EXHIBIT "I" Page 30 of 67 SAT RC-DFV1Projects‘PROSPECT National City Public Works Ccntcr1DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\ODA v 6 6 II s x.doc Million Dollars ($4,000,000.00) general aggregate for bodily injury, personal injury and property damage including contractual liability. The limits of this insurance shall be increased to an amount not less than Five Million Dollars ($5,000,000.00) combined single limit upon the recordation of the Certificate of Completion for any of the Improvements in the Official Records. The Indemnitees shall be covered as additional insureds with respect to liability arising out of activities by or on behalf of Tenant or in connection with the use or occupancy of the Property. Coverage shall be in a form acceptable to the City Risk Manager and shall be primary and non-contributing with any insurance or self-insurance maintained by City or Commission. 9.3.2 Automobile Liability in an amount not less than One Million Dollars ($1,000,000.00) combined single limit per accident for bodily injury and property damage covering owned, non -owned and hired vehicles. 9.3.3 Workers' Compensation as required by the Labor Code of the State of California and Employers' Liability insurance in an amount not less than One Million Dollars ($1,000,000.00). 9.3.4 "All Risk" property including builder's risk protection during the course of construction, covering the full replacement value of the Improvements constructed on or about the Property by Tenant. Said insurance shall include debris removal, and, if typically carried upon similar affordable housing projects in San Diego County, California, coverage for earthquake and flood if this protection is required by the Senior Lender. Landlord shall be named as insured under a standard loss payable endorsement. 9.4 Other Insurance. Tenant shall also obtain and maintain such other insurance in forms and amounts reasonably required from time to time by Landlord or the City Risk Manager for protection against the same or other insurable hazards which are then typically insured against by similar properties in San Diego County, California, provided that such coverage is available at commercially reasonable rates. 9.5 Contractors. All contractors employed by Tenant with contracts of Fifty Thousand Dollars ($50,000.00) or more shall be required to furnish evidence of Comprehensive General Liability insurance subject to all the requirements stated herein with limits of not less than One Million Dollars ($1,000,000.00) combined single limit each occurrence. The Indemnitees shall have the right to receive evidence of compliance with the foregoing by contractors at any time upon written request therefor. 9.6 Acceptable Terms of Coverage. Acceptable insurance coverage shall be placed with carriers admitted to write insurance in California, or carriers with a rating of or equivalent to A-:VII[ by A.M. Best & Company. Any deviation from this rule shall require specific approval in writing from the City's Risk Manager. Any deductibles in excess of Twenty -Five Thousand Dollars ($25,000.00) per occurrence or self -insured EXHIBIT "I" Page 31 of 67 S:\TRC-DEV\Projects\PROSPEC1rNutional City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc retentions must be declared to and approved by the City Risk Manager. At the option of the City Risk Manager, Tenant may be required to reduce or eliminate such deductibles or self -insured retentions or to procure a bond guaranteeing payment of losses and related investigations, claim administration and defense costs. In the event such insurance provides for deductibles or self -insured retention, Tenant agrees that it will fully protect the Indemnitees in the same manner as those interests would have been protected had the policy or policies not contained a deductible or retention. Coverage under each policy shall not be suspended, avoided or canceled by either party except after thirty (30) days' prior written notice to Landlord. Tenant shall furnish the Indemnitees with certificates of insurance and with original endorsements effecting coverage as required under this Article. The certificates and endorsements for each insurance policy shall be signed by a person authorized by the insurer to bind coverage on its behalf. The Indemnitees reserve the right to require complete certified copies of all insurance policies not previously provided at any time. 9.7 Blanket Coverage. Notwithstanding anything to the contrary set forth in this Article [9], Tenant's obligations to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Tenant; provided, however, (i) that the Indemnitees and other parties in interest to it shall be named as additional insureds as their interests may appear, and (ii) that the coverage afforded the Indemnitees will not be reduced or diminished by reason of the use of such blanket policy of insurance, and (iii) that the requirements set forth in this Article [9], are otherwise satisfied. 9.8 Waiver of Subrogation. Each policy of insurance procured pursuant to Article [9] shall contain, if obtainable upon commercially reasonable terms, either (i) a waiver by the insurer of the right of subrogation against either party hereto for negligence of such party, or (ii) a statement that the insurance shall not be invalidated should any insured waive in writing prior to a.loss any or all right of recovery against any party for loss accruing to the property described in the insurance policy. Each of the parties hereto waives any and all rights of recovery against the other, or against the officers, employees, agents and representatives of such other party, for loss or damage to such waiving party or its property or the property of others under its control, arising from any cause insured against under the form of insurance policies required to be carried pursuant to Article [9] of this Lease or under any other policy of insurance carried by such waiving party. ARTICLE 10. MAINTENANCE; REPAIRS; ALTERATIONS; RECONSTRUCTION 10.1 General Maintenance. Throughout the Term, Tenant shall, at Tenant's sole cost and expense, maintain the Property and the Improvements in good condition and repair, ordinary wear and tear excepted, and in accordance with all applicable federal, state and local laws, ordinances and regulations of (a) governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and EXHIBIT "I" Page 32 of 67 S:\TRC-DEV\Projects\PROSPECT1National City Public Works Center\ )DA\EXECUrED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc officials, (b) insurance underwriting boards or insurance inspection bureaus having or claiming jurisdiction, and (c) all insurance companies insuring all or any part of the Property or the Improvements, or both. 10.2 Program Maintenance. In addition to the routine maintenance and repair required pursuant to Section [10.1], Tenant shall perform the following programmed maintenance on the Improvements: (a) Interior painting and window covering replacement at least every five (5) years; (b) Exterior painting at least every ten (10) years; (c) Repair and resurfacing of parking areas and walkways at least every five (5) years; and (d) Replacement of all deteriorated or worn landscaping and play equipment at least every five (5) years. Upon the request of Tenant, the Executive Director, at his sole and absolute discretion, may grant a waiver or deferral of any program maintenance requirement. Tenant shall keep such records of maintenance and repair as are necessary to prove performance of the program maintenance requirements. ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS 11.1 Ownership During Term. 11.1.1 Improvements. All Improvements on the Property as permitted or required by this Lease shall, during the Term, be and remain the property of Tenant, and Landlord shall not have title thereto. Tenant shall not, however, demolish or remove any Improvements from the Property except as permitted herein. 11.1.2 Personal Property. All personal property, furnishings, fixtures and equipment, including, without limitation, Tenant -owned appliances, which are not so affixed to the Property or the buildings thereon as to require substantial damage to the buildings upon removal thereof shall constitute personal property including, but not limited to: (a) functional items related to the everyday operations of the Property; (b) personal property furnishings, fixtures and equipment of the nature or type deemed by law as permanently resting upon or attached to the buildings or land by any means, including, without limitation, cement, plaster, nails, bolts or screws, or essential to the ordinary and convenient use of the Property and the Improvements. At any time during the Term and at termination thereof, Tenant shall have the right to remove any and all EXHIBIT "I" Page 33 of 67 S:\TRC-DEV\Projects\PROSPECTNational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I I s x.doc such personal property, furnishings, fixtures and equipment; provided, that Tenant repairs any damage to the Property or the Improvements caused by such removal. 11.1.3 Basic Building Systems. For purposes of this Lease, the personal property, furnishings, fixtures and equipment described in this Section [11.1] shall not include those major building components or fixtures necessary for operation of the basic building systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central air-cooling system. 11.2 Ownership at Expiration or Termination. 11.2.1 Property of Landlord. At the expiration or earlier termination of the Term, except as provided in Section [11.2.2], all Improvements which constitute or are a part of the Property shall become (without the payment of compensation to Tenant or others) the property of Landlord free and clear of all claims and encumbrances on such Improvements by Tenant, and anyone claiming under or through Tenant, except for such title exceptions permitted or required during the Term. Tenant shall then quitclaim to Landlord any and all rights, interests and claims to the Improvements. Tenant agrees to and shall defend, indemnify and hold Landlord harmless from and against all liability and loss which may arise from the assertion of any such claims and any encumbrances on such Improvements (except claims arising due to Landlord's actions) and except for such title exceptions permitted or required during the Term. 11.2.2 Removal by Tenant. Tenant shall not be required or permitted to remove the Improvements, or any of them, at the expiration or sooner termination of the Term; provided, however, that, within thirty (30) days following the expiration or sooner termination of the Term, Tenant may remove all personal property, furniture, and equipment. 11.2.3 Unremoved Property. Any personal property, furnishings or equipment not removed by Tenant within thirty (30) days after the expiration or sooner termination of the Term, shall, without compensation to Tenant, become Landlords' property, free and clear of all claims to or against them by Tenant or any third person, firm or entity arising by, through or under Tenant. 11.2.4 Maintenance and Repair of Improvements. Subject to the provisions of this Lease concerning condemnation, alterations and damage and destruction, Tenant agrees to assume full responsibility for the operation and maintenance of the Property and the Improvements and all fixtures and furnishings thereon or therein throughout the Term hereof without expense to Landlord, and to perform all repairs and replacements necessary to maintain and preserve the Property, the Improvements, fixtures and furnishings in a decent, safe and sanitary condition consistent with good practices and in compliance with all applicable laws. Tenant agrees that Landlord shall not he required to perform any maintenance, repairs or services, or to assume any expense not EXHIBIT "I" Page 34 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\➢DA v 6 6 Ifs x.doc specifically assumed herein in connection with the Property and the Improvements thereon unless specifically required under the terms of this Lease. Except as otherwise provided in this Section [11.2] and in Section [11.4], the condition of the Improvements required to be maintained hereunder upon completion of the work of maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. 11.3 Waste. Subject to the alteration rights of Tenant and damage and destruction or condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be committed any waste of the Property or the Improvements, or any part thereof. Tenant agrees to keep the Property and the Improvements clean and clear of refuse and obstructions, and to dispose properly of all garbage, trash and rubbish. 11.4 Alteration of Improvements. Except as provided in Section [7.1], Tenant shall not make or permit to be made any material, exterior alteration of, addition to or change in, the Improvements which would materially affect the exterior elevations (including materials selection and color) or the size, bulk and scale of the Property, other than routine maintenance and repairs, nor demolish all or any part of the Improvements, without the prior written consent of Landlord. Nothing herein shall prohibit interior alterations or decorations, or the removal and replacement of interior improvements consistent with the specified use of the Property. In requesting consent for such exterior improvements as required by the foregoing, Tenant shall submit to Landlord detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Tenant may make such other improvements, alterations, additions or changes to the Improvements which do not materially affect the exterior elevations (including materials selection and color) or the size, bulk and scale thereof without Landlord's prior written consent. Notwithstanding the prohibition in this Section [11.4], Tenant may make such changes, repairs, alterations, improvements, renewals or replacements to the exterior elevations, materials, size, bulk or scale of the Improvements as are required (a) by reason of any law, ordinance, regulation or order of a competent government authority, (b) for the continued safe and orderly operation of the Property, or (c) to continue to receive the Low Income Housing Tax Credit. ARTICLE 12. SIGNS Tenant shall not place or suffer to be placed on the Property or upon the roof or any exterior door or wall or on the exterior or interior of any window of the Improvements, any sign, awning, canopy, marquee, advertising matter, decoration, lettering or other thing of any kind (exclusive of the signs, awnings and canopies, if any, EXHIBIT "1" Page 35 of 67 S:\TRC-DEV1Projects\PROSPECTWational City Public Works Center\DDA\EXECUTED DOCUMENTS \ ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc which may be provided for in the Plans) without the written consent of the Executive Director first had and obtained. ARTICLE 13. INDEMNIFICATION Tenant will protect, indemnify and save the Indemnitees harmless from and against all liabilities, obligations, claims, damages, penalties, causes of action, judgments, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against Landlord, or the Property or the Improvements during the Term, unless caused solely by the willful act or gross negligence of Landlord, by reason of (a) any accident or injury to or death of persons or loss of or damage to property occurring on or about the Property or the improvements, (b) any failure on the part of Tenant to perform or comply with any of the terms of this Lease, or (c) any negligence or tortious act on the part of Tenant or any of its agents, employees, contractors, subtenants, licensees or invitees. In the event that any action, suit or proceeding is brought against the Indemnitees by reason of any such occurrence, Tenant, upon Landlord's request, will, at Tenant's expense, defend such action, suit or proceeding with counsel approved by Landlord. This Section notwithstanding, indemnification with respect to Hazardous Materials shall be governed by Section [8.14]. ARTICLE 14. DAMAGE OR DESTRUCTION OF PROPERTY OR IMPROVEMENTS 14.1 Tenant's Repair Obligation. 14.1.1 In case of damage to or destruction of the Property or the Improvements, or any part thereof, by fire or other cause at any time during the Term of this Lease, Tenant, if and to the extent insurance proceeds arc available, shall restore the same as nearly as possible to their value, condition and character immediately prior to such damage or destruction. Such restoration shall be commenced with due diligence and in good faith, and prosecuted with due diligence and in good faith, unavoidable delays excepted. 14.1.2 In case of damage to or destruction of the Improvements by fire or other cause resulting in a loss exceeding in the aggregate Ten Thousand Dollars ($10,000), Tenant shall promptly give written notice thereof to Landlord. 14.2 Tenant's Restoration of Premises. 14.2.1 If, during the Term, the Improvements are damaged or destroyed, and the total amount of loss does not exceed thirty-three percent (33%) of the replacement value of the Improvements, Tenant shall make the loss adjustment with the insurance company insuring the loss, with the approval of Landlord, which approval shall not be unreasonably withheld or delayed. The proceeds shall be paid directly to a EXHIBIT "I" Page 36 of 67 S:\TRC-DEV1Projects\PROSPECT1National City Public Works Center\DDAIEXECUTED DOCUMENFS\ELECTRONIC VERSION OF FILESIDDA v 6 6 11 s x.doc Mortgagee, if any, and if there is not a Mortgagee, to Landlord and Tenant for the sole purpose of making the restoration of the Improvements in accordance with this Article [14]. 14.2.2 If, during the 'Perm, the Improvements are damaged or destroyed, and the total amount of loss exceeds thirty-three percent (33%) of the replacement value of the Improvements, Tenant shall make the loss adjustment with the insurance company insuring the loss, with the approval of Landlord, which approval shall not be unreasonably withheld or delayed, and the insurance company shall immediately pay the proceeds to a bank or trust company designated by Landlord and approved by 'Tenant ("Insurance Trustee"), which approval shall not be unreasonably withheld or delayed. Any leasehold mortgagee shall be an acceptable Insurance Trustee. All sums deposited with the Insurance Trustee shall be held for the following purposes and the Insurance Trustee shall have the following powers and duties: (a) The sums shall be paid in installments by the Insurance Trustee to the contractor retained by Tenant and approved by Landlord as construction progresses, for payment of the cost of restoration. A ten percent (10%) retention fund shall be established that will be paid to the contractor on completion of restoration, payment of all costs, expiration of all applicable lien periods, and proof that the Property and the Improvements are free of all mechanics' liens and lienable claims; (b) Payments shall be made on presentation of certificates or vouchers from the architect or engineer retained by Tenant and approved by Landlord (which approval shall not be unreasonably withheld or delayed) showing the amount due. If the Insurance Trustee, in its reasonable discretion, determines that the certificates or vouchers are being improperly approved by the architect or engineer retained by Tenant, the Insurance Trustee shall have the right to appoint an architect or an engineer to supervise construction and to make payments on certificates or vouchers approved by the architect or engineer retained by the Insurance Trustee. The reasonable expenses and charges of the architect or engineer retained by the Insurance Trustee shall be paid by the Insurance Trustee out of the trust fund; (c) If, after the work of restoration has commenced, the sums held by the Insurance Trustee are not sufficient to pay the actual cost of restoration, Tenant shall deposit the amount of the deficiency with the Insurance Trustee within ten (10) days after receipt of request for payment of such amount from the Insurance Trustee, which request shall be made by the Insurance Trustee promptly after it is determined there will be a deficiency; (d) If the Insurance Trustee has received notice from Landlord that the Tenant is in default under this Lease or under the Commission EXHIBIT "I" Page 37 of 67 S:\TRC-DEV1Projects\PROSPECT1National City Public Works Center'DDA\EXECUTED DOCUMENTS1ELECTRONIC VERSION OF FILESIDDA v 6 6 11 s x.doc Subordinate Loan Note, then, subject to the lien of a Mortgagee's Mortgage and the Mortgagee's prior written consent, the Insurance Trustee shall pay to Landlord an amount sufficient to cure such default as specified in Landlord's notice to the Insurance Trustee; (e) Any amounts remaining after making the payments hereinabove referred to in clauses (a), (b) and (d), and after paying the reasonable costs and expenses of the Insurance Trustee, shall be paid to any leasehold Mortgagee to the extent (a) required by any Mortgage and (b) such leasehold Mortgagee makes written demand therefor to the Insurance Trustee; (0 Any undisbursed funds remaining after compliance with all of the provisions of this Section [14.2] shall, if and to the extent required by any Mortgage, be delivered to the Mortgagee, and if there is no leasehold Mortgagee, to Tenant; and (g) All actual costs and charges of the Insurance Trustee shall be paid by Tenant. If the Insurance Trustee resigns or for any reason is unwilling to act or continue to act, Landlord shall substitute a new Insurance Trustee in the manner described in this Section. 14.2.3 Both parties shall promptly execute all documents and perform all acts reasonably required by the Insurance Trustee to perform its obligations under this Section [14.2]. 14.3 Procedure for Restoring Improvements. 14.3.1 If and to the extent Tenant is obligated to restore the Improvements pursuant to this Article [14], Tenant shall restore the Improvements substantially in accordance with the Plans. Within forty-five (45) days after the date of such damage or destruction (as such time may be reasonably extended at the written request of Tenant), Tenant, at its cost, shall prepare and deliver to Landlord final plans and specifications and working drawings complying with applicable laws that will be necessary for such restoration. Such plans and specifications shall specify differences from the Plans. The plans and specifications and working drawings are subject to the approval of Landlord only insofar as they vary from the Plans. Landlord shall have twenty (20) days after receipt of the plans and specifications and working drawings to either approve or disapprove the plans and specifications and working drawings and return them to Tenant. If Landlord disapproves the plans and specifications and working drawings, Landlord shall notify Tenant of its objections in writing, specifying the objections clearly and stating what modifications are required for Landlord's approval. Tenant acknowledges that the plans and specifications and working drawings shall be subject to approval of the appropriate government bodies and that they will be prepared in such a manner as to obtain that approval. EXHIBIT "I" Page 38 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x doc 14.3.2 The restoration shall be accomplished as follows: (a) Tenant shall complete the restoration within fifteen (15) months after final plans and specifications and working drawings have been approved by the appropriate government bodies and all required permits have been obtained. (b) Tenant shall retain a licensed contractor that is bondable. The contractor shall be required to carry public liability and property damage insurance, builders risk insurance, standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, during the period of construction in accordance with Article [9]. Such insurance shall contain waiver of subrogation clauses in favor of Landlord and Tenant in accordance with the provisions of and to the extent required by Section [9.8]. (c) Tenant shall notify Landlord of the date of commencement of the restoration not later than ten (10) days before commencement of the restoration to enable Landlord to post and record notices of nonresponsibility. The contractor retained by Tenant shall not commence construction until a completion bond and a labor and materials bond have been delivered to Landlord to insure completion of the construction. (d) Tenant shall accomplish the restoration in a manner that will cause the least inconvenience, annoyance, and disruption to the Property and the Improvements. (e) On completion of the restoration Tenant shall immediately record a notice of completion. (0 If Section [14.2.2] is applicable, the restoration shall not be commenced until sums sufficient to cover the cost of restoration are placed with the Insurance Trustee as provided in said Section [14.2.2]. 14.4 Mortgagee Protection. The following provisions are for the protection of a Mortgagee and shall, notwithstanding anything contained in this Lease to the contrary, control: 14.4.1 Insurance. Any insurance proceeds payable from any policy of insurance (other than liability insurance) required by the Lease shall be paid to the Mortgagee, if any, to the extent required by the Mortgage. The Mortgagee, if any, shall have the right to participate in all adjustments, settlements, negotiations or actions with the insurance company regarding the amount and allocation of any such insurance proceeds. Any insurance policies permitted or required by this Lease shall name the EXI IIBIT "P" Page 39 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS \ ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x doc Mortgagee, if any, as an additional insured or loss payee, as appropriate, if required by such Mortgage. 14.4.2 Restoration. Tenant shall have no obligation to restore or repair the Improvements following the occurrence of any casualty for which insurance is not required under this Lease. The Mortgagee, if any and if it exercises any of its remedies set forth in this Lease, shall have no obligation to restore or repair damage to the Improvements that cost in excess of available insurance proceeds. Tenant shall have no obligation to restore or repair damage to the Improvements if the casualty occurs during the last five (5) years of the Lease term. In the event such a loss occurs in the last five (5) years, then, at the election of Tenant, with the prior written consent of the Mortgagee, if any, insurance proceeds shall be used, first, to clear the Property of the damaged Improvements and any debris, and second, to reduce or pay in full the Mortgage, with any excess being payable as provided in this Lease. Article 15. EMINENT DOMAIN 15.1 Notice. The party receiving any notice of the kind specified in this Section [15.11 shall promptly give the other party notice of the receipt, contents and date of the notice received. For purposes of this Article [151, the term "Notice" shall include: (a) Notice of Intended Taking; (b) Service of any legal process relating to condemnation of the Property or the Improvements; (c) Notice in connection with any proceedings or negotiations with respect to such condemnation; or (d) Notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation. 15.2 Representation in Proceedings or Negotiations. Landlord and Tenant shall each have the right to represent their respective interests in each proceeding or negotiation with respect to a Taking or intended Taking and to make full proof of their claims. No agreements or settlement with or sale or transfer to the condemning authority shall be made without the consent of Landlord, but, as to its reversionary interest only, Landlord may enter into such agreement, settlement, sale or transfer without the consent of Tenant. Landlord and Tenant each agree to execute and deliver to the other any instruments which may be required to effectuate or facilitate the provisions of this Lease relating to condemnation. 15.3 Total Taking. EXHIBIT "I" Page 40 of 67 S:\TRC-DEV1Projects\PROSPECT1National City Public Works Center\DDA\EXECUTED DOCUMENTS \ELECTRONIC. VERSION OF FILESVDDA v 6 6 11 s x.doc 15.3.1 In the event of a Total Taking, this Lease shall terminate as of the date of the Taking. 15.3.2 If this Lease is terminated pursuant to this Section [15.3], the Award for such Taking shall be apportioned and distributed as follows: 15.3.2.1 First, to the Mortgagee, if any, to the extent of the Mortgage; 15.3.2.2 Second, to Landlord, a sum equal to the fair market value of the Property (subject to the remaining Term and the Rent reserved) on the date immediately preceding the Taking as determined by the appraisal method set forth in Article [16] and determined as if there were no taking nor threat of condemnation. The parties shall commence said appraisal by the earlier of ten (10) days after Tenant's receipt of a copy of a Notice of Intended Taking or ten (10) days after the date of the Taking; 15.3.2.3 Third, to Tenant, a sum equal to the fair market value of the Improvements made by Tenant on the date immediately preceding the Taking as determined by the appraisal method set forth in Article [16] and determined as if there were no Taking, nor threat of condemnation; plus the residual value of the Term, subject to the Rent reserved; plus any part of the Award attributable to the Low Income Housing Tax Credit; and 15.3.2.4 Fourth, to Landlord, the remainder, if any. 15.4 Substantial Taking. 15.4.1 In the event of a Taking which, in Tenant's reasonable judgment is substantial, Tenant may, subject to the rights of the Mortgagee, if any, terminate this Lease. If Tenant elects to terminate this Lease under this provision, Tenant shall give written notice of its election to do so to Landlord within forty-five (45) days after receipt of a copy of a Notice of Intended Taking. In the event Landlord disputes the right of Tenant to terminate this Lease under this provision, Landlord shall give Tenant notice of this fact within forty-five (45) days after receiving the notice of Tenant's election to terminate, and the parties shall either raise this issue in the eminent domain proceeding, if any, as an issue with respect to the apportionment of the Award between Landlord and Tenant or, if there is no eminent domain proceeding, submit the issue to arbitration as provided in Article [23]. In the event it is determined that Tenant does not have the right to terminate this Lease, the apportionment of the Award for such Taking and the obligations of Tenant to restore shall be governed by the terms of Section [15.6] or Section [15.8], whichever is applicable. 15.4.2 In the event it is determined that Tenant has the right to terminate this Lease, or in the event Landlord does not dispute Tenant's right to terminate this EXHIBIT "1" Page 41 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS\EL.ECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc Lease, such termination shall be as of the time when the Taking entity takes possession of the portion of the Property and the Improvements taken. In such event, the Award for such Substantial Taking (including any award for severance, consequential or other damages which will accrue to the portion of the Property and/or the Improvements not taken) shall be apportioned and distributed as follows: (a) First, to the Mortgagee, if any, to the extent of the Mortgage; (b) Second, to Landlord, a sum equal to the fair market value of the Property taken (subject to the remaining Term and the Rent reserved) immediately preceding the date of the Taking as determined by the appraisal process provided for in Article [16], commenced as provided in Section [15.3.2], and as modified by Section [15.6.3]; (c) Third, to Landlord, an amount equal to the portion of the award for severance, consequential or other damages which accrued to the portion of the Property and/or Improvements not taken; (d) Fourth, to Tenant a sum equal to the fair market value of the Improvements made by Tenant taken immediately preceding the date of the Taking as determined by the appraisal process provided for in Article [16], commenced as provided in Section [15.3.2], and as modified by Section [15.6.3]; plus the residual value of the Term, subject to the Rent reserved; plus any part of the Award attributable to the Low Income Housing Tax Credit; and (e) Fifth, to Landlord, the remainder, if any. 15.5 Tenant's Right to Revoke Notice of Termination. Notwithstanding anything to the contrary contained in Section [15.4], if Tenant has elected to terminate this Lease, and the taking authority abandons or revises the Taking, Tenant shall have forty-five (45) days from receipt of written notice of such abandonment or revision to revoke its notice of termination of this Lease. 15.6 Partial Taking. 15.6.1 In the event of a Partial Taking, this Lease shall continue in full force and effect and there shall be no abatement in or reduction of any of Tenant's obligations hereunder. 15.6.2 The Award for such Partial Taking shall be apportioned and distributed first to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord and Tenant in proportion to the fair market value of their respective interests in the Property and Improvements, as such interests existed immediately prior to such Partial EXHIBIT "I" Page 42 of 67 S:TRC-DEV\Projects\PROSPECT\National City Public Works CenterlDDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILESIDDA v 6 6 II s x_doc Taking. Tenant's only interest in the Property and the Improvements for purposes of this Section [15.6.2] is in those Improvements constructed by Tenant. Notwithstanding anything contained herein to the contrary, any part of the Award attributable to the Low Income Housing Tax Credit shall belong to Tenant. 15.6.3 The fair market value of the parties' respective interests in the Property and the Improvements shall be determined by the appraisal process provided in Article [16], except that the assumptions listed in such Article shall not apply. Rather, the appraisal shall be based on the value of the Property as improved and encumbered by this Lease and on the value of the Improvements as they stand, but without regard to any Taking or threat of condemnation. 15.6.4 Any Award for severance, consequential or other damages which accrues by reason of the Partial Taking to the portion of the Property or the Improvements not taken shall be distributed first to the Mortgagee, if any, to the extent of the Mortgage, then shall be apportioned between Landlord and Tenant in accordance with the diminution in value of their respective interests. 15.7 Obligation to Repair on Partial Taking. Promptly after any Partial Taking and regardless of the amount of the Award for such Taking, "Tenant shall, to the extent of the Award received by Tenant and in the manner specified in the provisions of this Lease, repair, alter, modify or reconstruct the Improvements and/or other improvements on the Property so as to make them usable for the designated purpose and capable of producing a fair and reasonable net income. 15.8 Temporary Taking. 15.8.1 In the event of a Temporary Taking of the whole or any part of the Property and/or Improvements, the Term shall not be reduced or affected in any way and Tenant shall continue to pay in full any sum or sums of money and charges herein reserved and provided to be paid by Tenant, and, subject to the other provisions of this Section [15.8], Tenant shall be entitled to any Award or payment for the temporary use of the Property and/or Improvements prior to the termination of this Lease, and Landlord shall be entitled to any Award or payment for such use after the termination of this Lease. 15.8.2 If possession of the Property and/or Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, unless at such time there remains less than five (5) years in the Term, restore the Property and/or Improvements whether or not the Taking authority has made any Award or payment for such restoration and regardless of the amount of any award or payment and in all other respects indemnify and hold Landlord harmless from the effects of such Taking so that the Property and/or Improvements in every respect shall upon completion of such restoration be in the same condition as they were prior to the taking thereof. EXHIBIT "I" Page 43 of 67 S:ATRC-DEV1Projects\PROSPEC71National City Public Works Center ADDA\EXEC urn) DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 15.8.3 If possession of the Property shall revert to Landlord after expiration of the Term, any sums deposited pursuant to this Section [15.8] shall be paid over to Landlord in their entirety and without apportionment and Tenant shall be excused from its obligation to restore the Property and/or Improvements. 15.8.4 Any Award or payment for damages or cost of restoration made on or after the termination of this Lease shall he paid first to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord absolutely, together with the remaining balance of any other funds paid to Tenant for such damages or cost of restoration and Tenant shall thereupon be excused from any obligation to restore the Property and/or Improvements upon the termination of such Temporary Taking except that any obligation that may have accrued for Tenant to restore the Property and/or Improvements prior to the commencement of said Temporary Taking shall continue to be the obligation of Tenant. 15.9 Mortgagee Protection. Notwithstanding anything contained in this Lease to the contrary, any and all condemnation proceeds shall be paid first to the Mortgagee, if any, to be applied to reduce the Mortgage if required by the mortgage documents. ARTICLE 16. APPRAISAL Whenever an appraisal of the Property is called for under the terms of this Lease (for Phase I only: other than as set forth in Section 4.1(d)(i)), the parties shall use the following procedure: 16.1 Appointment of Appraiser. Within ten (10) days after notice from Landlord to Tenant, Landlord and Tenant shall each appoint an MAI appraiser to participate in the appraisal process provided for in this Article [16] and shall give written notice thereof to the other party. Upon the failure of either party so to appoint, the nondefaulting party shall have the right to apply to the Superior Court of the County of San Diego, California, to appoint an appraiser to represent the defaulting party. Within ten (10) days of the parties' appointment, the two (2) appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord and Tenant, or if within ten (10) days of the appointment of said appraisers the two (2) appraisers shall fail to appoint a third, then either party hereto shall have the right to make application to said Superior Court to appoint such third appraiser. 16.2 Determination of Fair Market Value. 16.2.1 Within thirty (30) days after the appointment of the third appraiser, the appraisers shall determine the fair market value of the Property and the Improvements in accordance with the provisions hereof, and shall execute and acknowledge their determination of fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto. EXHIBIT "1" Page 44 of 67 S:VFRC-DEV\Projects\PROSPECTNational City Public Works CenterlDDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES \DDA v 6 6 II s x.doc 16.2.2 The appraisers shall determine the fair market value of the Property and the Improvements as of the date of Landlord's notice referred to in Section [16.1] above, based on sales of comparable property in the area in which the Property is located. If, however, in the judgment of a majority of the appraisers, no such comparable sales are available, then the appraisal shall be based on the following assumptions: (i) that the Property is free and clear of this Lease, the Improvements and all other improvements, and all easements and encumbrances; and (ii) that the Property is available for immediate sale and development for the purposes and at the density and intensity of development permitted under the zoning, subdivision and land use planning ordinances and regulations applicable to the Property in effect on the Commencement Date of this Lease, and any changes or amendments thereto or modification or variance from the provisions thereof or conditional use permits which could reasonably be anticipated to have been granted or approved as of the date of this Lease. Notwithstanding anything contained herein to the contrary, if the appraisal, for the particular purposes for which it is being done, should reasonably reflect the rent restrictions imposed on the Property pursuant to Article [8] of this Lease, and such other covenants, conditions and restrictions to which the Property is subject pursuant to this Lease or to other documents recorded against the Property in the Official Records of the County of San Diego, California, then such covenants, conditions and restrictions shall be taken into consideration by the appraisers. 16.2.3 If a majority of the appraisers arc unable to agree on fair market value within thirty (30) days of the appointment of the third appraiser, the three (3) appraisals shall be added together and their total divided by three (3). The resulting quotient shall be the fair market value of the Property and the Improvements. If, however, the low appraisal and/or high appraisal is or are more than ten percent (10%) lower and/or higher than the middle appraisal, the low and/or high appraisal shall be disregarded. If only one appraisal is disregarded, the remaining two appraisals shall be added together and their total divided by two (2). The resulting quotient shall be the fair market value of the Property and the Improvements. If both the low and high appraisals are disregarded, the middle appraisal shall be the fair market value of the Property. 16.4 Payment of Fees. Each of the parties hereto shall (a) pay for the services of its appointee, (b) pay one-half (1/2) of the fee charged by the appraiser selected by their appointees, and (c) pay one-half (1/2) of all other proper costs of the appraisal. ARTICLE 17. ASSIGNMENT/TRANSFER 17.1 Prohibition Against Transfer. 17.1.1 Prior to Recordation of the Certificate of Completion. Prior to recordation of the Certificate of Completion, but subject to Article [19] pursuant to which Tenant is permitted to sublease the Units for residential occupancy, Tenant shall not assign or attempt to assign this Lease or any right herein (other than to a general or EXHIBIT "I" Page 45 of 67 S:1TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS IELECTRONIC VERSION OF FILESIDDA v 6 6 1 l s x_doc limited partnership of which Tenant is the managing general partner) without the prior written consent of Landlord, which consent may be withheld in Landlord's absolute discretion. 17.1.2 Following Recordation of the Certificate of Completion. Following recordation of the Certificate of Completion, but subject to Article [19] pursuant to which Tenant is permitted to sublease the Units for residential occupancy, Tenant shall not assign or attempt to assign this Lease or any right herein, nor make any total or partial sublease, sale, transfer, conveyance or assignment of the whole or any part of the Property or the Improvements thereon, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. In the absence of specific written agreement by Landlord, no unauthorized sublease, sale, transfer, conveyance or assignment of the Property, or any portion thereof, or approval thereof by Landlord shall be deemed to relieve Tenant or any other party from any obligations under this Lease. 17.1.3 Qualifications of Tenant. In connection with the above prohibition and limitation on assignments, Tenant acknowledges that the qualifications, expertise and identities of Tenant are of particular concern to Landlord, and that Landlord continues to rely on such expertise to ensure the satisfactory completion of the construction and operation of the Improvements on the Property. Tenant further recognizes that it is because of such qualifications and identities that Landlord is entering into this Lease with Tenant. No voluntary or involuntary successor in interest of Tenant shall acquire any rights or powers under this Lease except as expressly set forth in the Lease. 17.1.4 Conditions. Tenant's right to make an assignment after the recordation of the Certificate of Completion shall be subject to compliance with the following further conditions: (a) No Default. At the time of such assignment, this Lease shall be in full force and effect and either no Event of Default (as defined in Section [21.1]) then exists or no Event of Default will exist upon consummation of the assignment. (b) Assumption. The assignee shall have executed an express assumption of the obligations and liabilities of Tenant under this Lease from and after the date of delivery and recording of the assignment and there shall have been delivered to Landlord at the time of the request for such assignment a conformed copy of such assumption. (c) Net Worth of Assignee. The assignee shall have a Net Worth equal to at least One Million Dollars ($1,000,000.00) ("Net Worth Minimum"), which Net Worth Minimum shall be increased on the date that is five (5) years after the first day of the first calendar year following the EXHIBIT "I" Page 46 of 67 S:VTRC-DEV\Projects \PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc Commencement Date, and on the same date every fifth (5th) year thereafter ("Net Worth Adjustment Date"), by an amount equal to the percentage change in construction industry costs, from the first day of the calendar year following the Commencement Date until the applicable Net Worth Adjustment Date, as published by the Engineering News Record, or such similar construction industry index as the parties shall agree in the event such information is not available in the Engineering News Record or such publication is no longer published. Net Worth is to be evidenced by a statement of financial condition as of a date not more than three hundred sixty (360) days prior to the date of assignment which is accompanied either by an opinion of a certified or a chartered public accountant or by a certificate by the chief financial or accounting officer of the assignee that it fairly represents the financial condition of the assignee. In the event Tenant agrees to remain liable under this Lease from and after the effective date of such assignment and to guaranty the obligations of the assignee under this Lease, the Net Worth Minimum standard set forth in this Section [17.1J shall not apply to such assignee. Notwithstanding the foregoing, the Executive Director, at her sole and absolute discretion, shall be permitted to waive the Net Worth Minimum standard for a proposed assignee that is (a) a California nonprofit, public benefit corporation, and (b) has demonstrated experience and ability in owning, operating and managing similar affordable housing projects in the State of California. 17.1.5 Assignment Agreement. No assignment of any interest in the Lease made with Landlord's consent or as herein otherwise permitted shall be effective unless and until there shall have been delivered to Landlord an executed counterpart of such assignment or other transfer document containing an agreement, in recordable form, executed by the assignor and the proposed assignee, wherein and whereby such assignee assumes due performance of the obligations on the assignor's part to be performed under this Lease from the effective date of the assignment to the end of the Term. 17.1.6 Further Assignments. The consent by Landlord to an assignment shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment if required by the terms of this Lease. 17.2 Terminable Upon Foreclosure. Notwithstanding anything contained in this Lease to the contrary, upon foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment or deed in lieu of foreclosure, Article [17] of this Lease shall be terminable by the purchaser at the foreclosure sale, or the assignee or grantee of a deed in lieu of foreclosure, by notice to Landlord. 17.3 Other Rights of Mortgagees. Landlord agrees that none of the restrictions or limitations on assignment or transfer by Tenant set forth in this Article 17 EXHIBIT "I" Page 47 of 67 S:\TRC-DEV\Projects\PROSPECTNational City Public Works Center \ODA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc shall be construed to limit or abrogate the rights of a Mortgagee to (a) seek the appointment of a receiver, or (b) delegate or assign its rights under this Lease to any third party in connection with the exercise of said Mortgagee's rights and remedies under its Mortgage. 17.4 Limitation on Transfer by Landlord. Landlord agrees, during the Compliance Period, not to transfer its interest in the Property or under this Lease without the prior written approval of the Tax Credit Partner; provided, however, no such approval shall be required for such a transfer to another public body. 17.5 Transfer by Tax Credit Partner. Notwithstanding the foregoing limitations on transfer and assignment, nothing herein shall limit or condition a transfer, sale, assignment or other conveyance of all or a portion of the limited partner interests of the Tax Credit Partner to any affiliate of the Tax Credit Partner, and the interests of the Tax Credit Partner shall be freely transferable to any affiliate of the Tax Credit Partner without the consent or approval of but only with prior, written notice to Landlord; provided however that in the event of non-payment of capital contribution obligations by the transferee pursuant to the terms and conditions of the Tenant's Partnership Agreement, the Tax Credit Partner shall remain liable for the amount of such unpaid capital contribution obligations. ARTICLE 18. MORTGAGES 18.1 Leasehold Mortgages 18.1.1 General Provisions. At all times during the Term, Tenant shall have the right to mortgage, pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely for purposes of security if required by any lender) assign its interest in this Lease, or otherwise encumber this Lease, and/or the interest of Tenant hereunder, in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon and subject to each and all of the following terms and conditions: (a) Prior to the issuance of a Certificate of Completion, Mortgages entered into by Tenant shall be limited in purpose to and shall not exceed the amount necessary and appropriate to develop the Improvements, and to acquire and install equipment and fixtures thereon. Said amount shall include all hard and soft costs of acquisition, development, construction, lease -up and operation of the Improvements. After the recordation of the Certificate of Completion, the limitation contained in this subsection shall no longer apply. EXHIBIT "I" Page 48 of 67 S:\TRC-DEV1Projects\PROSPECT1National City Public Works Center\DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc (b) Any permitted Mortgages entered into by Tenant are to be originated only by lenders approved in writing by Landlord, which approval will not be unreasonably withheld. Landlord shall state the reasons for any such disapproval. Notwithstanding the forgoing, Landlord shall be deemed to have automatically approved (i) a commercial or savings bank, a trust company, an insurance company, a savings and loan association, a building and loan association, an educational institution, a pension, retirement or welfare fund, or other fund authorized to make loans in the State of California; (ii) any other entity having a net worth of $50,000,000 or more whether or not a so-called institution, or any division, subsidiary, parent or affiliate owned or controlled by, owning or in control of or in common control or ownership with any entities described in (i) or (ii); or (iii) a lender regularly engaged in business in an office or location in the State of California, or who has a registered agent for service of process in California. In addition, any lender must be duly licensed or registered with any regulatory agency having jurisdiction over its operation, if any; and any lender must not be under any order or judgment of any court or administrative agency restricting or impairing its operation as a lender where the restriction or impairment would be directly related to the proposed loan to Tenant. If the lender is other than a lender deemed automatically approved pursuant to subdivisions (i), (ii) or (iii) of this Section, then upon the reasonable request of Landlord, the beneficial owners of lender must be disclosed to Landlord. (c) All rights acquired by said Mortgagee shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of Landlord thereunder, none of which covenants, conditions and restrictions is or shall be waived by Landlord by reason of the giving of such Mortgage. If Tenant encumbers its leasehold estate by way of a Mortgage as permitted herein, and should Landlord be advised in writing of the name and address of the Mortgagee, then this Lease shall not be terminated or canceled on account of any Event of Default by Tenant in the performance of the terms, covenants or conditions hereof until Landlord shall have complied with the provisions of Section [18.2] as to the Mortgagee's rights to cure and to obtain a new lease. 18.1.2 Consent of Mortgagee Required. No cancellation, surrender, termination, or modification of this Lease shall be effective without the written consent of the holder of any Mortgage. 18.2 Rights and Obligations of Leasehold Mortgagees. If Tenant or Tenant's successors or assigns shall mortgage the leasehold interest herein demised, then, as long EXHIBIT "I" Page 49 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \ODA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES VDOA v 6 6 II s x_doc as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply: 18.2.1 No Cancellation. Landlord will not cancel, accept a surrender of, terminate or modify this Lease in the absence of a default by Tenant without the prior consent in writing of the Mortgagee. 18.2.2 Notice of Defaults. Landlord agrees to give each Mortgagee immediate notice of all defaults by Tenant under the Lease, and to simultaneously give to each Mortgagee a written copy of all notices and demands that Landlord gives to Tenant. No notice or demand under the Lease shall be effective until after notice is received by Mortgagee. Any notices of default given by Landlord under the Lease shall describe the default(s) with reasonable detail. Each Mortgagee shall have the right to cure any breach or default within the time periods given below. 18.2.3 Mortgagee's Cure Rights. (a) Notice and Cure. After receipt by Tenant of a notice of default under the Lease and the expiration of any applicable period of cure given to Tenant under the Lease, Landlord shall deliver an additional notice ("Mortgagee's Notice") to each Mortgagee specifying the default and stating that Tenant's period of cure has expired. Each Mortgagee shall thereupon have the additional periods of time to cure any uncured default, as set forth below, without payment of default charges, fees, late charges or interest that might otherwise be payable by Tenant. Landlord shall not terminate the Lease or exercise its other remedies under the Lease if: (i) Within ninety (90) days after Mortgagee's receipt of the Mortgagee's Notice, any Mortgagee (i) cures the default, or (ii) if the default reasonably requires more than ninety (90) days to cure, commences to cure said default within such ninety (90)-day period and thereafter diligently prosecutes the same to completion; or (ii) Where the default cannot be cured by payment or expenditure of money or without possession of the Property or otherwise, Mortgagee initiates foreclosure or other appropriate proceedings within ninety (90) days after receipt of the Mortgagee's Notice, thereafter cures all other defaults reasonably capable of cure by the payment of money to Landlord, and thereafter continues to pay all rents, real property taxes and assessments, and insurance premiums to be paid by Tenant under the Lease. Mortgagee shall then have ninety (90) days following the later to occur of (i) the date of execution and delivery of a new EXHIBIT "1" Page 50 of 67 S:1TRC-DEV\Projects\PROSPECVNational City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES \DDA v 6 6 11 s x.doc lease of the Property pursuant to Section [18.2.4] of the Lease (a "New Lease"), or (ii) the date on which Mortgagee or its nominee is able to occupy the Property following foreclosure under such Mortgage and the eviction of or vacating by Tenant of the leased premises, to cure such default; provided, however, that if any such default, by its nature, is such that it cannot practicably be cured within ninety (90) days, then Mortgagee shall have such additional time as shall be reasonably necessary to cure the default provided that Mortgagee commences such cure within such ninety (90)-day period and thereafter diligently prosecutes the cure to completion. (b) Landlord agrees to accept performance by Mortgagee of all cures, conditions and covenants as though performed by Tenant, and agrees to permit Mortgagee access to the Property to take all such actions as may be necessary or useful to perform any condition or covenants of the Lease or to cure any default of Tenant. Mortgagee shall not be required to perform any act or cure any default which is not reasonably susceptible to performance or cure by Mortgagee. (c) Mortgagee elects any of the above -mentioned options, then upon Mortgagee's acquisition of the Lease by foreclosure, whether by power of sale or otherwise or by deed or assignment in lieu of foreclosure, or if a receiver be appointed, the Lease shall continue in full force and effect, provided that, if Mortgagee elects the option provided in Section [18.2.3(a)(ii)] above, then upon Mortgagee's acquisition of the Lease, Mortgagee shall cure all prior defaults of Tenant under the Lease that are reasonably capable of being cured by Mortgagee within the time set forth in said Section, and Landlord shall treat Mortgagee as Tenant under the Lease. If Mortgagee commences an action as set forth in Section [18.2.3(a)(ii)] above, and thereafter Tenant cures such defaults (which cure Landlord shall be obligated to accept) and Mortgagee then terminates all proceedings under the option in said Section, then the Lease shall remain in full force and effect between Landlord and Tenant. 18.2.4 New Lease. In the event the Lease is terminated for any reason prior to the end of the Lease Term, Landlord shall promptly give Mortgagee written notice of such termination and shall enter into a new lease ("New Lease") with Mortgagee or Mortgagee's nominee covering the Property, provided that Mortgagee (a) requests such New Lease by written notice to Landlord within sixty (60) days after Mortgagee's receipt of written notice by Landlord of termination of the Lease, and (b) cures all prior defaults of Tenant that are reasonably capable of being cured by Mortgagee. The New Lease shall be for the remainder of the Lease Term, effective at the date of such termination, and shall only include all the rents and all the covenants, agreements, conditions, provisions, restrictions and limitations contained in the Lease, except as otherwise provided in the Lease. In connection with a New Lease, Landlord shall assign to Mortgagee or its EXHIBIT "I" Page 51 of 67 S:\TRC-DEV\ProjectslPROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES \UDA v 6 6 11 s x.doc nominee all of Landlord's interest in all existing subleases of all or any part of the Property and all attornments given by the sublessees. Landlord shall not terminate or agree to terminate any sublease or enter into any new lease or sublease for all or any portion of the Property without Mortgagee's prior written consent, unless Mortgagee fails to deliver its request for a New Lease under this Section. In connection with any such New Lease, Landlord shall, by grant deed, convey to Mortgagee or its nominee title to the Improvements, if any, which become vested in Landlord as a result of termination of the Lease. Landlord shall allow to the tenant under the New Lease a credit against rent equal to the net income derived by Landlord from the Property during the period from the date of termination of the Lease until the date of execution of the New Lease under this Section. 18.2.5 Security Deposits. Mortgagee or any other purchaser at a foreclosure sale of the Mortgage (or Mortgagee or its nominee if one of them enters into a New Lease with Landlord) shall succeed to all the interest of Tenant in any security or other deposits or other impound payments paid by Tenant to Landlord. 18.2.6 Permitted Delays. So long as Mortgagee is prevented by any process or injunction issued by any court or by any statutory stay, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant or any other person, from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, Mortgagee shall not be deemed for that reason to have failed to commence such proceedings or to have failed to diligently prosecute such proceedings, provided that Mortgagee uses reasonable efforts to contest and appeal the issuance or continuance of any such process, stay or injunction. 18.2.7 Defaults Deemed Cured. On transfer of the Lease at any foreclosure sale under the Mortgage or by deed or assignment in lieu of foreclosure, or upon creation of a New Lease, any or all of the following defaults relating to the prior owner of the Lease shall be deemed cured: (a) Attachment, execution or other judicial levy upon the Lease; (b) Assignment of the Lease for the direct or indirect benefit of creditors of the prior Tenant; (c) Judicial appointment of a receiver or similar officer to take possession of the Lease; EXHIBIT "I" Page 52 of 67 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTROMC VERSION OF FILES\DDA v 6 6 I I s x.doc (d) Filing any petition by, for or against Tenant under any chapter of the federal Bankruptcy Act or any federal or state debtor relief statute, as amended; (e) Any failure by Tenant to make a disclosure of a hazardous substance release as required by the California Health and Safety Code, the Lease or otherwise; and (0 Any other defaults personal to Tenant and/or not otherwise reasonably curable by Mortgagee. 18.2.8 Anything herein contained to the contrary notwithstanding, the provisions of this Section shall inure only to the benefit of the holders of Mortgages. If the holders of more than one such Mortgage shall make written requests upon Landlord in accordance with this Lease, the new lease (as provided for in subsection [18.2.4] above) shall be entered into pursuant to the request of the holder whose Mortgage shall be prior in lien thereto and thereupon the written requests for a new lease of each holder of a Mortgage junior in lien shall be and be deemed to be void and of no force or effect. 18.3 Landlord's Forbearance and Right to Cure Defaults on Leasehold Mortgages 18.3.1 Notice. Landlord will give to Mortgagee, at such address as is specified by the Mortgagee in accordance with Section [26.1] hereof, a copy of each notice or other communication with respect to any claim that a default exists or is about to exist from Landlord to Tenant hereunder at the time of giving such notice or communication to Tenant, and Landlord will give to Mortgagee a copy of each notice of any rejection of this Lease by any trustee in bankruptcy of Tenant. Landlord will not exercise any right, power or remedy with respect to any Event of Default hereunder, and no notice to Tenant of any such Event of Default and no termination of this Lease in connection therewith shall be effective, unless Landlord has given to Mortgagee written notice or a copy of its notice to Tenant of such Event of Default or any such termination, as the case may be. 18.3.2 Mortgagee's Transferees, Etc. In the event the leasehold estate hereunder shall be acquired by foreclosure, trustee's sale or deed or assignment in lieu of foreclosure of a Mortgage, the purchaser at such sale or the transferee by such assignment and its successors as holders of the leasehold estate hereunder shall not he liable for any Rent, if any, or other obligations accruing after its or their subsequent sale or transfer of such leasehold estate and such purchaser or transferee and its successors shall be entitled to transfer such estate or interest without consent or approval of Landlord; provided that, the purchaser or transferee or successor as holder of the leasehold estate hereunder shall be liable for the payment of all Rent, if any, becoming due with respect to the period during which such purchaser, transferee or other successor is the holder of the leasehold EXHIBIT "I" Page 53 of 67 S:\TRC-DEV1Projects\PROSPECTWational City Public Works Center\DDAIEXECUTED DOCUMENTSIELECFRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc estate hereunder. This Section shall also apply to the rights of a Mortgagee in connection with the entry into a new lease under Section [18.2.4] and to the appointment of a receiver on behalf of a Mortgagee. 18.3.3 Insurance and Condemnation. In the event of any casualty to, or condemnation of, all or any part of the leased premises or any improvements now or hereafter located thereon, the provisions of the Mortgages relating thereto shall prevail over any provisions of this Lease relating thereto. 18.4 No Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee shall not be obligated to assume the liability of Tenant for any indemnities arising for a period prior to Mortgagee's acquiring the right to possession of the Property under this Lease. 18.5 Landlord Cooperation. Landlord covenants and agrees that it will act and fully cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee, Landlord shall promptly execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge and/or perfect the rights of Mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Tenant's interest herein and such matters as are reasonably requested by Tenant or such Mortgagees. Such estoppel certificate shall include, but not be limited to, certification by Landlord that (a) this Lease is unmodified and in full force and effect (or, if modified, state the nature of such modification and certify that this Lease, as so modified, is in full force and effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to Landlord's knowledge, any uncured Events of Default on the part of Tenant under the Lease or facts, acts or omissions which with the giving of notice or passing of time, or both, would constitute an Event of Default. Any such estoppel certificate may be conclusively relied upon by any proposed or existing leasehold Mortgagee or assignee of Tenant's interest in this Lease. 18.6 Priority. The Lease, and any extensions, renewals or replacements thereof, and any sublease entered into by Tenant as sublessor, and any Mortgage or other encumbrance recorded by any Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any lien right, if any, of Landlord on the buildings, and any furniture, fixtures, equipment or other personal property of Tenant upon the Property or any interest of Landlord in sublease rentals or similar agreements. 18.7 Claims. Landlord and Tenant shall deliver to Mortgagee notice of any litigation or arbitration proceedings between the parties or involving the Property or the Lease. Mortgagee shall have the right, at its option, to intervene and become a party to any such proceedings. If Mortgagee elects not to intervene or become a party, Landlord EXHIBIT "I" Page 54 of 67 S-\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc shall deliver to Mortgagee prompt notice of and a copy of any award, decision or settlement agreement made in connection with any such proceeding. 18.8 Further Amendments. Landlord and Tenant shall cooperate in including in the Lease by suitable amendment from time to time any provision which may be reasonably requested by any proposed Mortgagee for the purpose of implementing the mortgagee protection provisions contained in this Lease and allowing that Mortgagee reasonable means to protect or preserve the lien of its Mortgage upon the occurrence of a default under the terms of the Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge for recording purposes, if necessary) any agreement required to effect any such amendment. ARTICLE 19. SUBLEASING 19.1 Subleasing of Property. All subleases ("Subleases") made by Tenant shall be subject to the following provisions and restrictions: 19.1.1 Tenant may, without the consent of Landlord, let individual units of the Improvements to any person who qualifies. 19.1.2 Each Sublease shall contain a provision, satisfactory to Landlord, requiring the Subtenant to attorn to Landlord upon (a) an Event of Default by Tenant under this Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and instructions to make such Subtenant's rental payments to Landlord. 19.1.3 On any termination of this Lease prior to the expiration of the Term, all of Tenant's interest as sublessor under any and all existing valid and enforceable Subleases for which Landlord has issued a non -disturbance agreement shall be deemed automatically assigned, transferred and conveyed to Landlord and subtenants under such Subleases shall be deemed to have attorned to Landlord. Landlord shall thereafter be bound on such Subleases to the same extent Tenant, as sublessor, was hound thereunder and Landlord shall have all the rights under such Subleases that Tenant, as sublessor, had under such Subleases; provided, however, that any amendments to any such Sublease made after the issuance of a non -disturbance agreement to a subtenant shall not be binding on Landlord. 19.1.4 Any subtenant qualifying shall, upon written request, receive a non -disturbance agreement from Landlord. 19.1.5 Not later than thirty (30) days after each anniversary of the date of commencement of the term of this Lease, Tenant shall deliver to Landlord a current list of the name and mailing address of each Subtenant. EXHIBIT "I" Page 55 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUFED DOCUMENTS\ELECTRONIC VERSION OF FILES \DDA v 6 6 1 I s x.doc 19.1.6 Tenant shall not accept, directly or indirectly, more than two (2) months prepaid rent plus a reasonable security deposit from any subtenant. 19.1.7 Each Sublease shall expressly provide that it is subject to each and all of the covenants, conditions, restrictions and provisions of this Lease. 19.2 Rights of Mortgagees. Notwithstanding anything contained in this Lease to the contrary, all attornment provisions applicable to the Landlord shall also be applicable to a Mortgagee and, as between Landlord and Mortgagee, the Mortgagee shall have priority in any attornment situation. ARTICLE 20. PERFORMANCE OF TENANT'S COVENANTS 20.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or other charge in accordance with Article [4] hereof, within the time period therein permitted, or shall fail to pay for or maintain any of the insurance policies provided for in Article [9] hereof, within the time therein permitted, or to make any other payment or perform any other act on its part to be made or performed hereunder, within the time permitted by this Lease, then Landlord, after thirty (30) days' written notice to Tenant (or, in case of an emergency, on such notice, or without notice, as may be reasonable under the circumstances) and without waiving or releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to): (a) pay such Imposition or other charge payable by Tenant pursuant to the provisions of Article [4] hereof, or (b) pay for and maintain such insurance policies provided for in Article [9] hereof, or (c) make such other payment or perform such other act on Tenant's part to be made or performed as in this Lease provided. 20.1.1 Rights of Mortgagees. Notwithstanding anything contained in this Lease to the contrary, all of the performance rights available to Landlord under Section [20.1] shall also be available to Mortgagee and, as between Landlord and Mortgagee, the rights of the Mortgagee shall take precedence over the rights of Landlord. 20.2 Reimbursement and Damages. All sums so paid by Landlord and all costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at the rate provided in Section [4.5] from the respective dates of Landlord's making of each such payment or incurring of each such cost or expense, shall be paid by Tenant to Landlord on demand. Landlord shall not be limited EXHIBIT "1" Page 56 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc in the proof of any damages which Landlord may claim against Tenant arising out of or by reason of Tenant's failure to provide and keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not paid or incurred by Tenant and which would have been payable upon such insurance, but Landlord shall also be entitled to recover as damages for such breach, the uninsured amount of any loss (to the extent of any deficiency in the insurance required by the provisions of this Lease), damages, costs and expenses of suit, including attorneys' fees, suffered or incurred by reason of damage to, or destruction of, the Improvements, occurring during any period in which Tenant shall have failed or neglected to provide insurance as aforesaid. ARTICLE 21. EVENTS OF DEFAULT; REMEDIES 21.2 Events of Default. Any one or all of the following events shall constitute an Event of Default hereunder: 21.1.1. If Tenant shall default in the payment of any Rent when and as the same becomes due and payable and such default shall continue for more than ten (10) days after Landlord shall have given written notice thereof to Tenant; or 21.1.2 Default or delinquency in the payment of any loan secured by a Mortgage permitted by this Lease to be placed by Tenant against its leasehold interest in the Property after expiration of any cure period provided therein; or 21.1.3 The abandonment or vacation of the Property by Tenant for a period of thirty (30) days; or 21.1.4 The entry of any decree or order for relief by any court with respect to Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case under the Federal Bankruptcy Code or any other applicable federal or state law; or the appointment of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any Assignee (unless such appointment is in connection with a Mortgagee's exercise of its remedies under its Mortgage), or of any substantial part of the property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a period of ninety (90) days or more (whether or not consecutive); or the commencement by Tenant or any such Assignee of a voluntary proceeding tinder the Federal Bankruptcy Code or any other applicable state or federal law or consent by Tenant or any such Assignee to the entry of any order for relief in an involuntary case under any such law, or consent by Tenant or any such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any such Assignee, or of any substantial property of any of the foregoing, or the making by Tenant or any such Assignee of any general assignment for the benefit of creditors; or Tenant or any such EXHIBIT "I" Page 57 of 67 S:\TRC-DFV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 66 Its x.doc Assignee takes any other voluntary action related to the business of Tenant or any such Assignee or the winding up of the affairs of any of the foregoing. 21.1.5 If Tenant shall default in the performance of or compliance with any other term, covenant or condition of this Lease (other than as set forth in Paragraphs [21.1.1] and [21.1.2] of this Section [21.1]) and such default shall continue for more than thirty (30) days after Landlord shall have given written notice thereof to Tenant, provided, however, if cure of such default reasonably requires more than thirty (30) days, then, provided that Tenant commences to cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the cure to completion, Tenant shall not be in default during the cure period. 21.2 Remedies. 21.2.1 If an Event of Default shall occur and continue as aforesaid, then in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and bring suit against Tenant or submit the issue of Tenant's default to arbitration as provided in Article [23] and recover as an award in such suit or arbitration proceeding the following: (a) the worth at the time of award of the unpaid rent and all other sums due hereunder which had been earned at the time of termination; (b) the worth at the time of award of the amount by which the unpaid rent and all other sums due hereunder which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (c) the worth at the time of award of the amount by which the unpaid rent and all other sums due hereunder for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; (d) any other amount necessary to compensate Landlord for all the detriment proximately caused by the Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things could be likely to result therefrom; and (e) such amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law. 21.2.2 The "worth at the time of the award" of the amounts referred to in Subparagraphs [21.2.1(a)] and [21.2.1(b)] above shall be computed by allowing interest EXHIBIT "I" Page 58 of 67 S:\TRC-DEV\ProjectslPROSPECT\National City Public Works Center ODA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x doc at the rate provided in Section [4.5] as of the date of the award. The "worth at the time of award" of the amount referred to in subparagraph [21.2.1(c)] above shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). 21.2.3 If an Event of Default occurs, Landlord shall also have the right, with or without terminating this Lease, but subject to any nondisturbance agreements entered into with Subtenants, to reenter the Property and remove all persons and property from the Property; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant. 21.2.4 If an Event of Default occurs, Landlord shall also have the right, with or without terminating this Lease, to relet the Property. If Landlord so elects to exercise its right to relet the Property but without terminating this Lease, then rentals received by Landlord from such reletting shall be applied: First, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; Second, to the payment of any cost of such reletting; Third, to the payment of the cost of any alterations and repairs to the Property; Fourth, to the payment of rent due and unpaid hereunder; and Fifth, the residue, if any, shall be held by Landlord and applied in payment of tuture rent as the same may become due and payable hereunder. Should the amount of rental received from such reletting during any month which is applied to the payment of rent hereunder be less than that agreed to be paid during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making alterations and repairs not covered by the rentals received from such reletting. 21.2.5 No reentry or taking possession of the Property by Landlord pursuant to Paragraphs [21.2.3] or [21.2.4] shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Tenant because of any default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such default. 21.3 Receipt of Rent, No Waiver of Default. The receipt by Landlord of the rents or any other charges due to Landlord, with knowledge of any breach of this Lease by Tenant or of any default on the part of Tenant in the observance or performance of any of the conditions or covenants of this Lease, shall not be deemed to be a waiver of any provisions of this Lease. No acceptance by Landlord of a lesser sum than the rents or any other charges then due shall be deemed to be other than on account of the earliest installment of the rents or other charges due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of rent or charges due be deemed an accord and satisfaction, and Landlord may accept such check or payment EXHIBIT "I" Page 59 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 II s x.doc without prejudice to Landlord's right to recover the balance of such installment or pursue any other remedy provided in this Lease. The receipt by Landlord of any rent or any other sum of money or any other consideration paid by Tenant after the termination of this Lease, or after giving by Landlord of any notice hereunder to effect such termination, shall not, except as otherwise expressly set forth in this Lease, reinstate, continue, or extend the term of this Lease, or destroy, or in any manner impair the efticacy of any such notice of termination as may have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money or other consideration, unless so agreed to in writing and signed by Landlord. Neither acceptance of the keys nor any other act or thing done by Landlord or by its agents or employees during the Term shall be deemed to be an acceptance of a surrender of the Property or the Improvements, excepting only an agreement in writing signed by Landlord accepting or agreeing to accept such a surrender. 21.4 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in this Article [21] shall be construed to limit the Indemnitees' right to indemnification as otherwise provided in this Lease. 21.5 Limited Waiver of Right to Terminate Lease. Landlord hereby waives it right to terminate this Lease during the Compliance Period for a non -monetary default by Tenant. That notwithstanding, Landlord, during the Compliance Period, shall retain all other rights and remedies available hereunder or by law for such a non -monetary default, including, without limitation, an action to compel performance of the covenant or condition that is the subject of the alleged default. ARTICLE 22. PERMITTED CONTESTS Tenant, at no cost or expense to Landlord, may contest (after prior written notice to Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity or application, in whole or in part, of any Imposition or lien or any Legal Requirement or Insurance Requirement, provided that (a) in the case of liens of mechanics, materialmen, suppliers or vendors, or Impositions or liens therefor, such proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure against the Property and/or the Improvements, or any interest therein, or any Rent, if any, (b) neither the Property or the Improvements, nor any part thereof or interest therein, or the Rent, if any, or any portion thereof, would be in any danger of being sold, forfeited or lost by reason of such proceedings, (c) in the case of a Legal Requirement, Landlord would not be in any danger of any criminal liability or, unless Tenant shall have furnished a bond or other security therefor satisfactory to Landlord, any additional civil liability for failure to comply therewith and the Property and the Improvements would not be subject to the imposition of any lien as a result of such failure, and (d) Tenant shall have furnished to Landlord, if requested, a bond or other security, satisfactory to Landlord. If Tenant shall fail to contest any such matters, or to give Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, contest the matter or EXHIBIT "I" Page 60 of 67 S:\TRC-DEVtProjects\PROSPECI'National City Public Works Center\DDA\EXECUfED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc or this Lease; settle or compromise the same without inquiring into the validity or the reasonableness thereof Landlord, at the sole cost and expense of Tenant, will cooperate with Tenant and execute any documents or pleadings legally required for any such contest. ARTICLE 23. ARBITRATION OF DISPUTES 23.1 Matters Subject to Arbitration. All disputes arising under this Lease shall be submitted to arbitration prior to either party bringing suit based on such disputes, except that any dispute relating to the following rights and obligations shall not be subject to arbitration: 23.1.1 Tenant's obligation to: (a) pay Rent, if any, and other charges due under this Lease; (b) indemnify Landlord as provided herein; and (c) keep the Property and the Improvements free and clear of any mechanics' or other liens: 23.1.2 Landlord's right to: (a) pursue any of the remedies defined in Article [21]; and (b) assign, transfer, sell or encumber its interest in the Property 23.1.3 Any right or obligation the exercise or performance of which is dependent on Landlord's approval, if the issue is the reasonableness of Landlord's action. 23.1.4 Any right of the Mortgagee to exercise its remedies under its Mortgage or in connection with the bankruptcy of the Tenant or Landlord. 23.2 Arbitration Process. Either party may refer a dispute subject to arbitration for settlement by arbitration in National City, California, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction. EXHIBIT "1" Page 61 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHT'S YOU MAY POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Tenant's Initials Landlord's Initials ARTICLE 24. FORCE MAJEURE 24.1 Subject to Paragraph [24.21 below, any prevention, delay, nonperformance or stoppage by Tenant due to any of the following causes shall be excused: any regulation, order, act, restriction or requirement or limitation imposed by any federal, state, municipal or foreign government or any department or agency thereof, or civil or military authority; acts of God; acts or omissions of Landlord or its agents or employees; fire; explosion; floods and/or earthquakes; strikes, walkouts or inability to obtain materials; war, riots, sabotage or civil insurrection; or any other causes beyond the reasonable control of Tenant. 24.2 No prevention, delay, or stoppage of performance shall be excused unless: 24.2.1 Tenant notifies Landlord within thirty (30) days of such prevention, delay or stoppage that it is claiming excuse of its obligations under this Article [24J; and 24.2.2 Tenant diligently proceeds within thirty (30) days of the conclusion of such prevention, delay or stoppage to cure the condition causing the prevention, delay or stoppage; and 24.2.3 Tenant effects such cure within a reasonable time. EXHIBIT "I" Page 62 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I I s x.doc ARTICLE 25. GENERAL PROVISIONS 25.1 Notices. All notices or demands shall be in writing and shall be served personally, by overnight courier, or by express or certified mail. Service shall be deemed conclusively made at the time of service if personally served; the next business day if sent by overnight courier and receipt is confirmed by the signature of an agent or employee of the party served; the next business day after deposit in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by express mail; and three (3) days after deposit thereof in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail. 25.1.1 Any notice to Landlord shall be given to: Community Development Commission of the City of National City 1243 National City Blvd. National City, California 91950 Attn: Executive Director 25.1.2 Any notice to Tenant shall be given to: L.P. 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attn: William A. Witte and to: Community HousingWorks 4305 University Avenue, Suite 550 San Diego, California 92105 With copies to: Any party may, by virtue of written notice in compliance with this Section [25.1], alter or change the address or the identity of the person to whom any notice, or copy thereof, is to be sent. EXHIBIT "I" Page 63 of 67 S:\TRC-DEV\Projects1PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc 25.2 Certificates. Landlord or Tenant, as the case may be, shall execute, acknowledge and deliver to the other, promptly upon request, a Certificate of Landlord or Tenant, as the case may be, certifying (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the Lease is in full force and effect, as modified, and stating the date of each instrument so modifying the Lease), (b) the date, if any, through which the Rent, if any, has been paid, (c) whether there are then existing any offsets or defenses against the enforcement of any term hereof on the part of Tenant to be performed or complied with (and, if so, specifying the same), and (d) whether any default exists hereunder and, if any such default exists, specifying the nature and period of existence thereof and what action Landlord or Tenant, as the case may be, is taking or proposes to take with respect thereto and whether notice thereof has been given to the party in default. Any Certificate may be relied upon by any prospective purchaser, transferee, mortgagee or trustee under a deed of trust of the fee or leasehold estate in the Property or any part thereof or of Landlord's or Tenant's interest under this Lease. Tenant will also deliver to Landlord, promptly upon request, such information with respect to the Property or any part thereof as from time to time may reasonably be requested. 25.3 No Merger of Title. There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate in the Property or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly: (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in any such leasehold estate, and (b) any other estate in the Property and the Improvements or any part thereof or any interest in such estate, and no such merger shall occur unless and until all persons, corporations, firms and other entities, including any leasehold mortgagee or leasehold mortgagees, having any interest (including a security interest) in (i) this Lease or the leasehold estate created by this Lease, and (ii) any other estate in the Property or the Improvements or any part thereof shall join in a written instrument effecting such merger and shall duly record the same. 25.4 Utility Services. Tenant shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Property or the Improvements, or any part thereof, and shall comply with all contracts existing on the date hereof or subsequently executed by Tenant relating to any such services, and will do all other things required for the maintenance and continuance of all such services. 25.5 Quiet Enjoyment. Tenant, upon paying the Rent, if any, and other charges herein provided for and upon performing and complying with all covenants, agreements, terms and conditions of this Lease to be performed or complied with by it, shall lawfully and quietly hold, occupy and enjoy the Property during the term of this Lease without hindrance or molestation by Landlord, or any person or persons claiming through Landlord. EXHIBIT "I" Page 64 of 67 S:\TRC-DEV\Projects\PROSPECTtNational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc 25.6 No Claims Against Landlord. Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord or its interest in the Property in respect thereof. 25.7 Inspection. Landlord and its authorized representatives may enter the Property or any part thereof at all reasonable times for the purpose of inspecting, servicing or posting notices, protecting the Property or the Improvements, or for any other lawful purposes. That notwithstanding, Landlord may only enter residential units after giving Tenant three (3) days prior written notice. 25.8 No Waiver by Landlord. To the extent permitted by applicable law, no failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a default under this Lease, and no acceptance of rent during the continuance of any such default, shall constitute a waiver of any such default or of any such term. No waiver of any default shall affect or alter this Lease, which shall continue in full force and effect, or the rights of Landlord with respect to any other then existing or subsequent default. 25.9 Holding Over. In the event Tenant shall hold over or remain in possession of the Property or the Improvements with the consent of Landlord after the expiration of the Term, such holding over or continued possession shall create a tenancy for month to month only, upon the same terms and conditions as are herein set forth so far as the same are applicable. 25.10 Exculpation of Certain Personal Liability. Notwithstanding anything to the contrary provided in this Lease, including, without limitation, the remedies provisions set forth in Section [21.2] above, it is specifically understood and agreed that except as to: (a) the obligation to pay Annual Rent pursuant to Section [4.1]; (b) the obligation to pay any and all Impositions; (c) acts of fraud and/or criminal misconduct; (d) acts of gross negligence and/or willful misconduct; (e) any and all legal costs and expenses reasonably incurred by Landlord in the enforcement of this Lease; and/or EXHIBIT "I" Page 65 of 67 S:\TRC-DEVlProjects \PROSPEC[1National City Public Works Center\DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc (1) liability for risks required to be covered by insurance under this Lease but for which Tenant fails to maintain such coverage; there shall be no personal liability or obligation on the part of any partner in Tenant or any assignee or successor in interest of any such partner with respect to the provisions of this Lease. 25.11 No Partnership. Anything contained herein to the contrary notwithstanding, Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder. 25.12 Remedies Cumulative. The various rights, options, elections and remedies of Landlord and Tenant, respectively, contained in this Lease shall be cumulative and no one of them shall be construed as exclusive of any other, or of any right, priority or remedy allowed or provided for by law and not expressly waived in this Lease. 25.13 Attorney's Fees. In the event of a dispute between the parties arising out of or in connection with this Lease, whether or not such dispute results in arbitration or litigation, the prevailing party (whether resulting from settlement before or after arbitration or litigation is commenced) shall be entitled to have and recover from the losing party reasonable attorneys' fees and costs of suit incurred by the prevailing party. 25.14 Time Is Of The Essence. Time is of the essence of this Lease and all of the terms, provisions, covenants and conditions hereof. 25.15 Survival of Representations, Warranties and Covenants. The respective representations, warranties and covenants contained herein shall survive the Commencement Date and continue throughout the Term. 25.16 Construction of Agreement. This Lease shall be construed in accordance with the substantive laws of the State of California, without regard to the choice of law rules thereof. The rule of construction that a document be construed strictly against its drafter shall have no application to this Lease. 25.17 Severability. If one or more of the provisions of this Lease shall be held to be illegal or otherwise void or invalid, the remainder of this Lease shall not be affected thereby and shall remain in full force and effect to the maximum extent permitted under applicable laws and regulations. 25.18 Entire Agreement: Modification. This Lease contains the entire agreement of the parties with respect to the matters discussed herein. This Lease may be EXHIBIT "I" Page 66 of 67 S\TRC-DEV\ProjectsWPROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DOA v 6 6 11 s x doc amended only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extensions or discharge is sought. 25.19 Binding Effect and Benefits. This Lease shall inure to the benefit of and be binding on the parties hereto and their respective successors and assigns. Except as otherwise set forth herein, nothing in this Lease, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Lease. 25.20 Further Assurances. Each party hereto will promptly execute and deliver without further consideration such additional agreement, assignments, endorsements and other documents as the other party hereto may reasonably request to carry out the purposes of this Lease. 25.21 Counterparts. This Lease may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Lease. 25.22 Number and Gender. Whenever the singular number is used in this Lease and required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. 25.23 Incorporation by Reference. Every Exhibit attached to this Lease and referred to herein is hereby incorporated by reference. 25.24 Tax Credit Partner Rights. Notwithstanding anything to the contrary contained in this Lease, Landlord agrees to extend to Tax Credit Partner rights equal to those of the Mortgagee set forth in Sections [18.2 through 18.4, inclusive, 18.8, and 20.1] provided, however, any and all notices to be given by Landlord under said Sections shall be given concurrently with the giving of such notice to Tenant and the cure period, if any, for Tax Credit Partner associated with each such notice shall commence to run from the effective date of such notice. Additionally, Landlord hereby agrees that Tax Credit Partner shall be entitled to request and receive the Certificate of Landlord set forth in Section [25.2]. IN WITNESS WHEREOF, the undersigned have executed this Lease as of the date first above written. "Landlord" EXHIBIT "I" Page 67 of 67 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\UDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: , Chairman APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER Commission Special Counsel By: Lance E. Garber "Tenant" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner EXHIBIT "I" Page 68 of 67 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President EXHIBIT "P" Page 69 of 67 S:1TRC-DEV\Projects \PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY Real property in the City of National City, County of San Diego, State of California, described as follows: [TO BE INSERTED] EXHIBIT "A" TO EXHIBIT' "I" Page 1 of 1 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS\ELECTROMC VERSION OF FILESIDDA v 6 6 11 s x.doc EXHIBIT "B" INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD") Regulations (24 CFR 813). You should make certain that this form is at all times up to date with the HUD Regulations. Re: Housing Project, National City, California I/We, the undersigned state that I/we have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit: 1. Names of Members of Household 2. Relationship to Head of Household 3. Age 4. Social Security Number 5. Place/Source of Employment 6. Monthly Gross Income Amount (before deductions) HEAD SPOUSE Income Computation 6. The total anticipated income, calculated in accordance with the provisions of this paragraph 6, of all persons over the age of 18 years listed above for the 12-month period beginning the date that I/we plan to move into a unit is $ Included in the total anticipated income listed above are: EXHIBIT "B" TO EXHIBIT "I" Page 1 of 14 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc (a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; (b) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets), (c) interest and dividends (including income from assets excluded below); (d) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts, including any lump sum payment for the delayed start of a periodic payment; (e) payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; (0 the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; (g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (I) liability. any earned income tax credit to the extent that it exceeds income tax Excluded from such anticipated income are: (a) casual, sporadic or irregular gifts; (b) amounts which are specifically for or in reimbursement of medical expenses; (c) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains and settlement for personal or property losses; EXHIBIT "B" TO EXHIBIT "I" Page 2 of 14 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FII.F.SIDDA v 6 6 I I s x.doc (d) amounts of educational scholarships paid directly to the student or the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans not used for the above purposes are to be included in income; (e) special pay to a household member who is away from home and exposed to hostile fire: (f) relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; (g) foster child care payments; (h) the value of coupon allotments for the purchase of foods pursuant to the Food Stamp Act of 1977; (i) 1973; payments to volunteers under the Domestic Volunteer Service Act of (j) payments received under the Alaska Native Claims Settlement Act; (k) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; (1) payments or allowances made under the Department of I Iealth and Human Services' Low -Income Home Energy Assistance Program; (m) payments received from the Job Training Partnership. Act; (n) income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and (o) the first $2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims. 7. Do the persons whose income or contributions are included in item 6 above: (a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as Yes No furniture and automobiles and interests in Indian trust land); or EXHIBIT "B" TO EXHIBIT "I" Page 3 of 14 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Ccntcr\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DOA v 6 6IIsxdoc (b) have they disposed of any assets (other than at a foreclosure or Credit Bankruptcy sale) during the last two years at less than fair market value? (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? Yes Yes EXHIBIT "B" TO EXHIBIT "I" Page 4 of 14 S:1TRC-DEV1Projecls\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 611 s x.doc (d) If the answer to (c) above is yes, state: (1) the amount of income expected to be derived from such assets in the 12-month period beginning on $ the date of initial occupancy in the unit that you propose to rent: (2) the amount of such income, if any, that $ was included in item 6 above: 8. (a) Are all of the individuals who propose to Yes No reside in the unit full-time students*? A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? Yes No 9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the "Owner"), has any family relationship to the Owner, or owns directly or indirectly any interest in the Owner. For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member, ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trustee held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual. 10. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit, and I/we declare that all information set forth herein is true, correct and complete and based upon information I/we deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. I/we will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year. EXHIBIT "B" TO EXHIBIT "I" Page 5 of 14 S:\TRC-DEVtProjects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6Ilsxdoc 12. I/we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the unit and will entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. 13. Housing Commission Statistical Information (Optional - will be used for reporting purposes only). Race (Head of Household) White Black Asian Hispanic Native American Other Physical Disability: Yes No 1/we declare under penalty of perjury that the foregoing is true and correct. Executed this day of California. in the County of Applicant Applicant [Signatures of all persons over the age of 18 years listed in number 2 above required.] EXHIBIT "B" TO EXHIBIT "I" Page 6 of 14 S 1TRC-DEV1Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc FOR COMPLETION BY APARTMENT OWNER ONLY: 1. Calculation of eligible income: a. Enter amount entered for entire household in 6 above: $ b. (1) If answer to 7(c) above is yes, enter the total amount entered in 7(d)(1), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ) (2) • Multiply the amount entered in 7(c) times the current passbook savings rate to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook savings ($ ), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ) (3) Enter at right the greater of the amount calculated $ under (1) and (2) above: c. TOTAL ELIGIBLE INCOME (line I.a plus line I.b(3)): $ 2. The amount entered in l.c: Qualifies the applicant(s) as a Very Low -Income Tenant(s). Does not qualify the applicant(s) as a Very Low -Income Tenant(s). 3. Number of apartment unit assigned: Bedroom Size: Rent: $ Tenant -Paid Utilities: Water Gas Electric Crash Other (list Type) 4. Was this apartment unit last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the Yes No apartment unit qualified them as Very Low -Income Tenants? EXHIBIT "B" TO EXHIBIT "I" Page 7 of 14 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s z.doc 5. Method used to verify applicant(s) income: Employer income verification. Social Security Administration verification Department of Social Services verification Copies of tax returns Other: ( ) Manager EXHIBIT "B" TO EXHIBIT "I" Page 8 of 14 S\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc Article I. INCOME VERIFICATION (For Employed Persons) The undersigned employee has applied for a rental unit located in a under the Multifamily Housing Program for persons Every income statement of a prospective tenant must be stringently verified. below the employee's current annual income from wages, overtime, bonuses, any other form of compensation received on a regular basis. Annual Wages: Overtime: Bonuses: Commissions: Total Current Income: project financed of low income. Please indicate commissions or I hereby certify that the statements above are true and complete to the best of my knowledge. Dated: Signature Title: I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under Multifamily Housing Program. Dated: Signature Please send form to: EXHIBIT "B" TO EXHIBIT "I" Page 9of14 S:\TRC-DEV\ProjectsPPROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6IIszdoc EXHIBIT "B" TO EXHIBIT "I" Page 10 of 14 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc INCOME VERIFICATION (For Social Security Recipients) TO: SOCIAL SECURITY ADMINISTRATION Ladies and Gentlemen: I have applied for a rental unit located in a project financed under the Multifamily Housing Program for persons of low income. Every income statement of a prospective tenant must be stringently verified. In connection with my application for a rental unit, I hereby give my consent to release to the specific information requested below. Dated: Signature Social Security No.: Name (Print): Address (Print): Monthly Benefits Began/Will Begin: Social Security Benefit Amount: $ Other Benefit(s): Amount: $ Medicare Deduction: $ Are benefits expected to change? Yes No If yes, please state date and amount Date: of change: Amount: If recipient is not receiving full benefit amount, please indicate reason and date recipient will start receiving full benefit amount: Reason: Date of Resumption: Amount: $ Dated: Telephone: Please send form to: Signature Name (Print): Title: EXHIBIT "B" TO EXHIBIT "I" Page 1 1 of 14 S:\TRC-DEVWProjects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc INCOME VERIFICATION (For Department of Social Services Aid Recipients) TO: CALIFORNIA DEPARTMENT OF SOCIAL SERVICES Ladies and Gentlemen: I am receiving assistance through your office. I have applied for a rental unit located in a project financed under the Multifamily Housing Program for persons of very low income. Every income statement of a prospective tenant must be stringently verified. In connection with my application for a rental unit, I hereby authorize the Department of Social Services to release to the specific information requested below. Dated: Caseload Number: Case Number: Signature Name (Print): Case Worker: 1. Number of persons included in budget: 2. Total monthly budget: $ a. Amount of grant: $ Date aid last began: b. Other income and source: c. Is other income included in total budget? Yes No 3. Please specify type of aid (AFDC, FR, Food Stamps, ANB, MediCal, etc.) 4. If recipient is not receiving full grant, please indicate reason: Overpayment due to client's failure to report other income Computation error Other EXHIBIT "B" TO EXHIBIT "I" Page 12 of 14 S\TRC-DEV1Projects\PROSPECT\National City Public Works Ccntcr\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "B" TO EXHIBIT "I" Page 13 of 14 S:\TRC-DEV\Projects\PROSPEC \National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 5. Date when full grant will resume: Dated: Case Worker's Signature Telephone: District Office Your very early response will be appreciated. Please return form to: EXHIBIT "B" TO EXHIBIT "I" Page 14 of 14 S:VIRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc INCOME VERIFICATION (For Self -Employed Persons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Dated: Signature EXHIBIT "B" TO EXHIBIT "I" Page 15 of 14 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONrc VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "C" CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE [ Housing Project] With reference to that certain Lease Agreement by and between , L.P. ("Tenant") and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, dated as of , (the "Lease Agreement"), Tenant hereby certifies, as of the date of this Certificate, the following percentages of units at the Housing Project, National City, California are occupied or being held vacant for low-income tenants: 1. Occupied by 30%, 40%, and 50% of Median Income Tenants: %; Unit Nos. The undersigned hereby certifies that the information contained in this Certificate is true and complete and that Tenant is not in default under the Ground Lease. , L.P., a California limited partnership By: California managing general partner By: a its , a California EXHIBIT "C" TO EXHIBIT "I" Page 1 of 1 S:TRC-DEV\ProjectslPROSPECT \National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I I s x.doc Datc: nonprofit corporation, its sole member and manager By: President EXHIBIT "C" TO EXHIBIT "I" Page 1 of 1 S:\TRC-DFV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I I s x.doc EXHIBIT "D" PLAN FOR SOCIAL SERVICES Community HousingWorks (CHW) will provide outcome -based, result -oriented services and programs for residents in the community building, starting no later than six (6) months after the date of issuance of a temporary certificate of occupancy for each phase of the affordable housing, until expiration of the Term. The services will be administered by on -site CHW staff. Programs will be tailored to the needs of the community and age - appropriate for the entire family. The services will include, but not be limited to: • Learning Communities — This program will provide access to computers and after -school tutoring and homework assistance designed to improve school performance. The Learning Center will be available to both children and adults, and will provide: family education on sustainable green practices through CHW's nationally -recognized Green Curriculum; accessibility to work readiness; and vocational and leadership empowerment opportunities; • Financial Fitness Training — Family Asset Building Programs (FAB), such as the nationally recognized Financial Fitness Education, will be provided in classes tailored to residents, and will focus on empowering residents to create and attain sustainable financial goals, including potential homeownership; and, ■ Homebuyer Education (HBE) — Programs will provide an incubator for homeownership with educational tools and counseling to assist residents in realizing the dream of homeownership. Qualified residents will also have access to first time homebuyer loans after completion of homebuyer education workshops. EXHIBIT "D" TO EXHIBIT "I" Page 1 of I S;\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES DDA v 6 6 11 s x.doc EXHIBIT "E" LETTER OF INSTRUCTION TO APPRAISER(S) Dear Sir or Madam: The land legally described in Exhibit "A" hereto is subject to a certain Ground Lease dated as of , 201 (the "Ground Lease"), a complete copy of which is enclosed. At this juncture, the Ground Lease requires that the ground rent be adjusted to fair market in accordance with an appraisal. Your duties in connection with the making of that appraisal are as follows: 1. Determine the fair market value of the land as of [insert first day of Lease Year 55 (for the Five (5)-Lease Year Period 56 through 60), Year 70 (for the Five (5)-Lease Year Period 71 through 75), Lease Year 85 (for the Five (5)-Lease Year Period 86 through 90) — See Section 4. l (d)(i) of the Ground Lease[ for use as multifamily rental housing in accordance with and subject to (a) all of the terms, conditions, and restrictions set forth in the Ground Lease, including, without limitation, the restrictions on the rents that may be charged to residents of the dwelling units set forth in Article [8] of the Ground Lease, and (b) any other covenants, conditions, and/or restrictions to which the land is subjcct pursuant to a document recorded in the Official Records of the County of San Diego. You shall also take into account any property tax exemption or reduction to which the Tenant is entitled by virtue of the restricted use of the property as affordable multifamily rental housing, unless the Tenant is contractually committed not to avail itself of such exemption or reduction. Your appraisal is to be based upon approaches to value mandated by the Appraisal Standards Board of the Appraisal Foundation, or its successor organization. 2. For the purposes of such appraisal, disregard any depreciation of the improvements. 3. Once you have established the fair market value of the land, determine, based on rates prevailing in the market area, the percentage rate to be applied to that fair market value so as to produce the fair market ground rent. 4. State the fair market ground rent in annual terms. EXHIBIT "E" TO EXHIBIT "I" Page 1 of 1 S:\TRC-DEV\Pmjects\PROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS\ELECTRONIC VERSION OF FII.ES\DDA v 6 6 II s x.doc EXHIBIT "J" FORM OF COMMISSION SUBORDINATE LOAN NOTE Project/Phase RECITALS As of ,201_ National City, California A. WHEREAS, PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership ("Borrower"), and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Lender"), entered into that certain Disposition and Development Agreement dated as of 2011 (the "DDA"); and B. WHEREAS, pursuant to the DDA. Lender has made the "Commission Subordinate Loan" to Borrower to finance up to Dollars ($_ ) in Project Costs for Phase . NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender, at 1243 National City Blvd., National City, California 91950. or at such other place as Lender may from time to time designate in writing, (a) the principal sum of Dollars ($ ), with interest from the Recordation Date until paid at the simple rate of one -quarter of one percent (0.25%) per annum, and (b) all fees, costs and expenses payable hereunder. 1. Definitions; Interpretation; Accounting. 1.1 Definitions. Initially capitalized words and terms used in this Note without definition shall have the meanings ascribed thereto in the DDA or the following definitions, unless the context or use clearly requires otherwise: "Appraisal Process" shall mean the parties shall first attempt to agree on the Fair Market Value of the subject property. If they are unable to come to an agreement within ten (10) Business Days, the Fair Market Value shall be determined by appraisal. Lender and Borrower shall each name one (1) M.A.I. appraiser within five (5) Business Days. If the two (2) appraisers cannot agree on the Fair Market Value within thirty (30) days after the date on which the second appraiser is named, they shall appoint a third M.A.1. appraiser. If the third appraiser agrees with either of the originally asserted appraisals of the first two (2) appraisers, then the agreed value shall be the Fair Market Value. If there is no such agreement, then the arithmetic average of the two (2) closest of the three (3) appraisals shall be the Fair Market Value. Each party shall bear the cost of its own appraiser. The cost of the third appraiser, if any, shall be borne equally by the parties. EXHIBIT "J" Page 1 of 13 S\TRC-DEV\Projects\PROSPECT\NVational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILE v 6 6 II s x.doc "Area" means the Primary Metropolitan Statistical Area in which the Property is located, as promulgated by the U.S. Department of Housing and Urban Development. "Base Rate" means a fluctuating interest rate per annum as shall be in effect from time to time, which rate at all times shall be equal to the rate of interest announced publicly by Bank of America, N.A., from time to time as its base rate. "Capital Improvements" means all work and improvements with respect to the Property for which costs and expenses may be capitalized in accordance with GAAP. "Cash Flow" means, for the applicable period of time, the remainder of Net Operating Income less Debt Service. "CHW" means Community Housing Works, its successors and assigns. "CHW Third Trust Deed Loan Note" means that certain promissory note, dated as of , 201_, made by Borrower in favor of CHW in the original principal amount of $14,957,000. "Commencement Date" shall mean the earlier of (a) when the Construction has been completed as evidenced by recordation in the Official Records of the Notice of Completion therefor, or (b) when the Improvements have been placed in service. "Commission Subordinate Loan Deed of Trust" means the Deed of Trust of even date herewith by which this Note is secured. "Construction" means the construction to be performed by Borrower pursuant to Article [10] of the DDA. "CPU' means the Consumer Price Index -Urban Wage Earners and Clerical Workers (San Diego, California, All Items, Base 1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics. Should the Bureau discontinue the publication of the Index, or publish the same less frequently or in a different schedule, or alter the same in some other manner including, without limitation, changing the name of the Index or the geographic area covered by the Index, Borrower and Lender shall adopt a substitute index or procedure which reasonably reflects and monitors consumer prices. "Debt Service" means scheduled debt service on the Senior Loan and any other loans approved by Lender which are senior to the Commission Subordinate Loan Deed of Trust. "Effective Gross Income" means Operating Income after allowance for vacancy and collection losses. "Executive Director" means the Executive Director of Lender or his designee. "Fair Market Value" shall have the meaning provided in Section 1263.320(a) of the California Code of Civil Procedure or any successor statute thereto. EXHIBIT "J" Page 2 of 13 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc "Fiscal Year" means the fiscal year of Borrower, which is the calendar year. "GAAP" has the meaning set forth in Section [1.3] of this Note. "Improvements" means the improvements to be made to the Property by Borrower in accordance with the DDA. "Median Income for the Area" means the median income for the Area as determined and published annually by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, median income for the Area determined under the method used by the Secretary prior to such termination. "Net Operating Income" means, for the applicable period of time, the amount, if any, by which Operating Income for such period exceeds Operating Expenses paid by Borrower during such period. The calculation of Net Operating Income for each Fiscal Year shall be computed based on GAAP (whether or not Operating Expenses are properly deductible or must be characterized as a capital expenditure under the Internal Revenue Code). "Net Refinancing Proceeds" means, from time to time, the proceeds of any Refinancing in excess of (a) the amount of any senior obligation or debt secured by the Property and satisfied out of such proceeds, and (b) the reasonable and customary costs and expenses incurred in connection with such Refinancing. "Net Sale Proceeds" means, from time to time, the gross proceeds of a Sale, irrespective of the form of said proceeds, less (a) payment in full of the Senior Loan and any other loans approved by Lender which are senior to the Commission Subordinate Loan Deed of Trust, (b) return of the cash equity invested in the Project by the partners in Borrower, (c) any reserve reasonably contemplated by Borrower's partnership agreement at the time this Note was executed by Borrower, and (d) the reasonable and customary costs and expenses incurred by Borrower in connection with the subject Sale. If Lender reasonably determines that any Sale is not made in an arm's length transaction, other than to a general partner in Borrower pursuant to an option or right of first refusal granted to such general partner (or its affiliate) on or before the date this Note was executed by Borrower, then instead of the Net Sale Proceeds being the result of the aforementioned deductions from the gross proceeds of the subject Sale, the Net Sale Proceeds shall be the result of the aforementioned deductions from the Fair Market Value of the Property. "Official Records" means the Official Records of the County of San Diego, California. "Operating Expenses" means, for the applicable period of time, all costs and expenses incurred by Borrower in the ordinary course of the management, ownership, and/or operation of the Property by Borrower, including, without limitation, (a) tax credit syndication, partnership management, guaranty, monitoring, asset management and other fees payable to the partners in Borrower in the aggregate amount of not more than Twenty -Five Thousand Dollars ($25,000.00) per year, as such sum shall be adjusted annually on January 1 by the change in the EXHIBIT "J" Page 3 of 13 S:1TRC-DEV\Projects\PROSPECT1National City Public Works Center \DDA\EXECUTED DOCUMENTS ELECTRONIC VERSION OF FILES\DOA v 6 6 11 s x.doc CPI from the previous January 1, (b) special limited partner fee (until such time, if any, that the special limited partner is no longer a partner in the partnership) in the aggregate amount of not more than Five Thousand Dollars ($5,000.00) per year, as such sum shall be adjusted annually on January 1 by the change in the CPI from the previous January 1, (c) all amounts deposited in the reserve fund of the Project for replacements, provided, however, such amounts shall not, without the prior approval of the Executive Director, which approval shall not be unreasonably withheld, exceed those amounts deposited as reserves for similar projects in California, (d) all amounts deposited in the operating reserve fund of the Project, provided, however, such amounts shall not, without the prior approval of the Executive Director, which approval shall not be unreasonably withheld, exceed those amounts deposited as operating reserves for similar projects in California, (e) any development fee payable to Developer and approved by the Executive Director, the payment of which has been deferred, (f) Sixty Thousand Dollars ($60,000.00) per year, as adjusted annually on January 1 by the change in the CPI from the previous January 1, to be used to provide social services to the residents of the Property (the "Social Services Fee"), and (g) a property management fee not to exceed six percent (6%) of Effective Gross Income. With reference to the reserve funds referred to in subdivisions (c) and (d), above, Lender agrees that any such reserve funds required by the Senior Lender and/or the Tax Credit Partner shall be deemed reasonable. Debt Service is not an Operating Expense. Operating Expenses shall not include any expenses for Capital Improvements, except for Capital Improvements approved by the Senior Lender and by the Executive Director for treatment as an Operating Expense. Operating Expenses shall be calculated on a cash basis. The first adjustment of the Social Services Fees shall be made on January 1 following the date on which the Certificate of Completion issues. "Operating Income" means, for the applicable period of time, all proceeds received by Borrower from the operation of the Property and from any and all sources resulting from or attributable to the operation of the Property, including, without limitation, all rentals, parking receipts, laundry receipts, forfeited Security Deposits, and all expense reimbursements paid to Borrower by tenants of the Property. Operating Income shall be calculated on a cash basis. Operating Income shall not include any Senior Loan funds, payments for tax credits or the sale of partnership interests in Borrower, or proceeds of a casualty loss or condemnation. Operating Income for the last year of the term of the Ground Lease shall include all amounts, if any, remaining in the reserve fund of the Project. Operating Income shall also include any funds on deposit in a reserve fund for the Project in excess of such amounts as are permitted to be included as Operating Expenses under this Note. "Project" means the improvements to be made to the Property pursuant to the "Property" has the meaning ascribed thereto in the Commission Subordinate Loan Deed of Trust. "Recordation Date" means the date on which the Commission Subordinate Loan Deed of Trust records in the Official Records. "Refinancing" means changing the existing financing on the Property, or relating to the Property, by increasing the amount of the existing mortgage(s), adding one or more EXHIBIT "J" Page 4 of 13 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 t I s x.doc mortgages to the existing mortgage(s), or paying off an existing mortgage or mortgages and obtaining a new, larger mortgage or mortgages. A Refinancing may be in any form, including, without limitation, debt or a sale and leaseback. Notwithstanding anything contained herein to the contrary, the taking of the Take -Out Loan by Borrower shall not constitute a Refinancing under this Note. "Sale" has the meaning set forth in subparagraph [29(d)] of the Commission Subordinate Loan Deed of Trust. "Security Deposits" means all security deposits collected from tenants of the Property. "Senior Lender" means or its successors and assigns. "Senior Loan" means that certain construction loan made to Borrower by , for the Construction, and take-out financing therefor to be provided by or such other lender as may be approved by the Executive Director. "Senior Loan Documents" means the documents evidencing and securing the Senior Loan. "Tax Credit Partner" means or its successors and assigns. 1.2 Interpretation. In this Note, (a) the singular includes the plural and the plural the singular; (b) words and terms which include a number of constituent parts, things or elements, unless otherwise specified, shall be construed as referring separately to each constituent part, thing or element thereof, as well as to all of such constituent parts, things or elements as a whole; (c) words importing any gender include the other genders; (d) references to statutes are to be construed as including all rules and regulations adopted pursuant to the statute referred to and all statutory provisions consolidating, amending or replacing the statute referred to; (e) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms; (f) the words "hereto" or "herein" or "hereof' or "hereunder" or words of similar import refer to this Note in its entirety; (g) the words "include" or "including" or words of similar import, unless otherwise specified herein, shall be deemed to be followed by the words "without limitation"; (h) all references to Articles and Sections, unless otherwise specified, are to the Articles and Sections of this Note; and (i) headings of Articles and numberings and headings of Sections and paragraphs are inserted as a matter of convenience and shall not affect the construction of this Note. 1.3 Accounting Terms and Determinations. Unless otherwise specified herein, (a) all accounting terms used herein shall be interpreted, (b) all accounting determinations hereunder shall be made, and (c) all books, records and financial statements required to be delivered EXHIBIT "J" Page 5 of 13 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x_doc hereunder shall be prepared in accordance with generally accounting principles as in effect from time to time, consistently applied ("GAAP"), except for changes approved by Lender. 2. Disposition and Development Agreement. The principal sums hereunder are being loaned by Lender to Borrower in accordance with and pursuant to the DDA. The terms of the DDA are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. An Event of Default by Developer [Borrower] under the DDA shall be a default hereunder, and a default hereunder, after delivery of notice and expiration of the cure period described in Section [15] below, shall be an Event of Default by Developer [Borrower] under the DDA. 3. Ground Lease. The principal sums hereunder are being loaned by Lender to Borrower to finance development of the Property for use as affordable housing pursuant to the Ground Lease. An Event of Default by Tenant [Borrower] under the Ground Lease shall be a default hereunder, and a default hereunder shall be an Event of Default by Tenant [Borrower] under the Ground Lease. 4. !Intentionally Omitted! 5. Financial Reporting and Accounting Covenants. Borrower will permit the representatives of Lender at any time or from time to time, upon one (1) business day's notice and during normal business hours, to inspect, audit and copy all of Borrower's books, records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to Lender the following: 5.1 Quarterly Statements. As soon as available, and in no event later than forty-five (45) days after the close of each of the first three calendar quarters of each Fiscal Year, commencing with the calendar quarter ending, 201 _, financial statements of Borrower, including a balance sheet and profit -and -loss statement, as at the close of and for such quarter, all in reasonable detail and prepared in accordance with GAAP; such statements to be accompanied by a certificate signed by a general partner of Borrower to the effect that such statements fairly present the financial condition of Borrower as at the date indicated and the results of operations for the period indicated, subject, however, to year-end audit adjustments; 5.2 Annual Statements. As soon as available, but in no event later than one hundred twenty (120) days after the close of each Fiscal Year, financial statements of Borrower, including a profit -and -loss statement, reconciliation of capital accounts and a consolidated statement of changes in financial position of Borrower as at the close of and for such Fiscal Year, all in reasonable detail, certified as provided in clause (a) above by a general partner of Borrower; 5.3 Annual Operating Statements. As soon as available but in no event later than one hundred twenty (120) days after the close of each Fiscal Year, an "Annual Operating Statement" showing all Operating Income, Operating Expenses, Debt Service and any other EXHIBIT "J" Page 6 of 13 S:1TRC-DEV1Projects\PROSPECT1National City Public Works Center\DDAIEXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc amounts taken into consideration in computing Net Operating Income and Cash Flow, if any, for the subject Fiscal Year, in a form reasonably satisfactory to the Executive Director; 5.4 Tax Returns. As soon as available, but in no event later than at the time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules, if any) of Borrower; 5.5 Audit Reports. Promptly upon receipt thereof, copies of all reports submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower, made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit; 5.6 Notices, Certificates or Communications. Immediately upon giving or receipt thereof, copies of any material notices, certificates or other communications given by or on behalf of Borrower or received by or on behalf of Borrower from Senior Lender pursuant to or in connection with any of the Senior Loan Documents, as well as any material notices and other communications delivered to the Property or to Borrower naming Lender or the "Construction Lender" as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Borrower to perform its obligations to Lender. 6. Payment. Borrower shall make payment on this Note in accordance with the following: 6.1 Annual Payment. If, when Borrower delivers each Annual Operating Statement to Lender pursuant to Subdivision [5.3], above, said Annual Operating Statement shows that there was Cash Flow for the subject Fiscal Year, or part thereof, Borrower shall make payment to Lender on account of this Note in the amount of fifty percent (50%) of such Cash Flow. That notwithstanding, Lender hereby agrees that as long as the CHW Third Trust Deed Loan Note is outstanding, this fifty percent (50%) of Cash Flow shall be paid to Lender on account of this Note and to CHW on account of the CHW Third Trust Deed Loan Note in pari passu. 6.2 Refinancing. As and when there is any Refinancing of the Property, Borrower shall pay the Net Refinancing Proceeds to Lender on account of this Note to the extent of the outstanding balance of principal and accrued interest. 6.3 Mandatory Prepayments. If, upon completion of construction and when an independent audit of the total cost of the development has been prepared as required by the Tax Credit Allocation Committee, the remainder of said total cost of the development less the sum of (a) the actual syndication proceeds of the State and Federal Low -Income Housing Tax Credits, and (b) the permanent loan proceeds (whether the product of a take-out or sale of the Senior Loan) for the Project is less than [Total of the principal amount of this Note and the principal amount of the CHW Third Trust Deed Loan Note ] Dollars ($ ), then Borrower shall, in connection with the closing of the permanent loan, make a prepayment to Lender in the amount of such difference. That notwithstanding, Borrower shall not be obligated under this Section to make all or any part this payment if to do so would (a) violate any rule or regulation of EXHIBIT "J" Page 7 of 13 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc the Tax Credit Allocation Committee in place as of the date on which the Commission Subordinate Loan Deed of Trust recorded in the Official Records of the County of San Diego, or (b) would jeopardize the Tax Credits for the Project. 6.4 Sale. As and when there is any Sale, Borrower shall pay the Net Sale Proceeds to Lender on account of this Note to the extent of the outstanding balance of principal and accrued interest. 6.4.1 Seller Financing. In the event that the Net Sale Proceeds include financing to be provided by Borrower as a purchase money lender, Lender shall not be obligated to accept any part of said financing. All or any part of the payment to Lender shall be made in cash. 6.4.2 In Kind Consideration. In the event that the Net Sale Proceeds include in kind consideration, Lender shall not be obligated to accept any part of such in kind consideration, but Borrower shall be entitled to substitute cash for the cash equivalent value of the in kind consideration. The cash equivalent value of the in kind consideration shall be its Fair Market Value as determined by the Appraisal Process. 7. Distribution of Profits. From and after the Commencement Date, Borrower covenants and agrees that, except for fees payable as Operating Expenses pursuant to this Note, Borrower shall not withdraw or distribute to the partners in Borrower any of the rents, issues and/or profits of the Project for any Fiscal Year unless payment is concurrently made to Lender of the percentage of such rents, issues and profits payable to Lender pursuant to Section [6.1]. 8. Maturity. This Note shall be all due and payable on , 206_ [Fill in date that is 55 years from the commencement date of the Ground Lease]. 9. Application of Payments. Any payments received by Lender pursuant to the terms hereof shall be applied first to sums, other than principal and interest, due Lender pursuant to this Note; next to the payment of all interest accrued to the date of such payment; and the balance, if any, to the payment of principal. 10. Form of Payment. All amounts due hereunder are payable in immediately available funds and lawful monies of the United States of America. 11. Dispute Regarding Annual Operating Statement. EXHIBIT "J" Page 8 of 13 S:\TRC-DEV\Projects\PROSPECT1National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\IJDA v 6 6 11 s x.doc If Lender disputes any Annual Operating Statement, Lender shall notify Borrower of such dispute and the parties shall cause their representatives to meet and confer concerning the dispute and to use all reasonable efforts to reach a mutually acceptable resolution of the matter in question within thirty (30) days after Lender's notice of such dispute. If the parties are unable to achieve a mutually acceptable resolution within such 30-day period, then, within twenty (20) days after the expiration of such period, Borrower and Lender shall appoint a national firm of certified public accountants to review the dispute and to make a determination as to the matter in question within thirty (30) days after such appointment. If the parties cannot, within ten (10) days, agree on the firm to be appointed, then, upon the application of either party, such firm shall be appointed by the Presiding Judge of the Superior Court for the County of San Diego, California. Such firm's determination shall be final and binding upon the parties. Such firm shall have full access to the books, records and accounts of the Borrower and the Project. 11.1 Underpayment. If any audit by Lender reports an underpayment by Borrower on this Note, Borrower shall pay the amount of any such underpayment, together with the late charge specified in Section [14] of this Note, to Lender within five (5) days after notice thereof to Borrower or, in the event of a dispute, after notice to Borrower of the resolution of such dispute by the independent firm of certified public accountants, as the case may be, and, if such underpayment amounts to more than three percent (3%) of the disputed payment for the period audited, then, notwithstanding anything to the contrary in this Section, Borrower shall pay to Lender, within five (5) days after demand, Lender's reasonable costs and expenses in conducting such audit and exercising its rights under Section [11] of this Note (including a reasonable charge for the services of any employees of Lender conducting such audit and exercising its rights under this Section). 12. Prepayment. At any time, Borrower may prepay in whole or in part, without penalty, the outstanding principal balance under this Note, together with all accrued and unpaid interest, fees, costs and expenses payable hereunder. 13. Security. This Note and all amounts payable hereunder are secured by the Commission Subordinate Loan Deed of Trust. The terms of the Commission Subordinate Loan Deed of Trust are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. A default under any of the provisions of the Commission Subordinate Loan Deed of Trust shall be a default hereunder, and a default hereunder shall be a default under the Commission Subordinate Loan Deed of Trust. 14. Late Payment. If any annual payment of accrued interest and principal is not received by the Lender within ten (10) calendar days after the installment is due, Borrower shall pay to the Lender a late charge of five percent (5%) of such payment, such late charge to be immediately due and payable without demand by Lender. EXHIBIT "J" Page 9 of 13 S.\TRC-DEV\Proiects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc 15. Acceleration and Other Remedies. If: (a) any payment under this Note is not made when due and Borrower fails to cure said default within fifteen (15) days after notice from Lender; (b) Borrower defaults under any other provision of this Note and Borrower shall have failed to cure said default within thirty (30) days after notice from Lender, provided, however, if cure of such default reasonably requires more than thirty (30) days, then, provided that Borrower commences to cure within such thirty (30)- day period and thereafter diligently and continuously prosecutes the cure to completion, Borrower shall not be in default during the cure period; (c) Borrower, subject to force majeure (as defined in Section [25.11] of the DDA), fails to complete the Construction; (d) there is an event or occurrence which, pursuant to the Commission Subordinate Loan Deed of Trust, gives rise to acceleration of the indebtedness evidenced by this Note, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of Lender. 16. Remedies. Upon the occurrence of an event of default and the expiration of any cure period therefor as provided in this Note without such event of default having been cured, then, at the option of Lender, the entire balance of principal together with all accrued interest thereon shall, without demand or notice, but subject to the non -recourse provisions of Section [22] of this Note, immediately become due and payable. Upon the occurrence of an event of default (and so long as such event of default shall continue), the entire balance of principal together with all accrued interest shall thereafter bear interest at the lesser of (a) the maximum rate permitted by law, and (b) the Base Rate plus three percent (3%) per annum. No delay or omission on the part of Lender in exercising any right under this Note or under the Commission Subordinate Loan Deed of Trust shall operate as a waiver of such right. 17. Third Party Cure Rights. Notwithstanding anything to the contrary contained in this Note, Lender, prior to any action to enforce this Note, shall give and its successors and assigns (the "Tax Credit Partner") notice and opportunity to cure for a period of not less than (a) fifteen (15) days if a monetary default, and (b) thirty (30) days if a nonmonetary default; provided, however, if in order to cure such a default Tax Credit Partner reasonably determines that it must remove the general partner of Borrower, Tax Credit Partner shall so notify Lender and so long as Tax Credit Partner is diligently and continuously attempting to so remove such general partner, Tax Credit EXHIBIT "J" Page 10 of 13 S:\TRC-DEV\Projects\PROSPECI\National City Public Works Center\DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc Partner shall have until the date thirty (30) days after the effective date of the removal of the general partner or general partners to cure such default but in no event more than one (1) year. 18. Waiver. Except as otherwise expressly provided herein, Borrower hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note, and expressly agrees that, without in any way affecting the liability of Borrower hereunder, Lender may extend any maturity date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note. Borrower further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on any deed of trust, security agreement, lease assignment, guaranty or other agreement now or hereafter securing this Note. 19. Attorneys' Fees. If this 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 attorney's fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 20. Severability. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 21. Interest Rate Limitation. Lender and Borrower stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California. In such event, if any holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of California, all such sums deemed to constitute interest in excess of such maximum rate shall, at the option of such holder, be credited to the payment of the sums due hereunder or returned to Borrower. 22. Non -Recourse. Notwithstanding anything to the contrary contained in this Note or in the Commission Subordinate Loan Deed of Trust referred to in this Note, but without in any manner affecting the validity of this Note or the lien or charge of the Commission Subordinate Loan Deed of Trust, in the event of any default under the terms of this Note or the Commission Subordinate Loan Deed EXHIBIT "J" Page 11 of 13 S \TRC-DEV\Projects'PROSPECT \National City Public Works Center\DDA\EXECUTED DOCUMENTS 1ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc of Trust, the sole recourse of the Lender for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, or such other appropriate means of enforcing the Commission Subordinate Loan Deed of Trust, and the undersigned, and the partners of the undersigned, shall not be personally liable for the payment of this Note or for any other default under the Commission Subordinate Loan Deed of Trust or for the payment of any deficiency established after judicial foreclosure or trustee's sale under the Commission Subordinate Loan Deed of Trust. Notwithstanding the limitations of liability set forth above, Borrower shall be fully liable for: (a) Cash Flow payable to Lender pursuant to Section [6.1] but not applied to this Note; and (b) all legal costs and expenses reasonably incurred by Lender in the enforcement of this Note. 23. Headings. Headings at the beginning of each numbered Section of this Note are intended solely for convenience and are not to be deemed or construed to be a part of this Note. 24. Giving of Notice. Unless applicable law requires a different method, any notice that must be given to Borrower under this Note will be given by mailing it by first class mail to Borrower at the following address: Paradise Creek Housing Partners, L.P. c/o "The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 or at a different address if Borrower gives Lender a notice of that different address. Any notice that must be given to Lender under this Note will be given by mailing it by first class mail to Lender at the following address: 1243 National City Blvd. National City, California 91950 Attention: Executive Director or at a different address if Lender gives Borrower a notice of that different address. EXHIBIT "J" Page 12 of 13 S\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\ODA v 6 6 II s x.doc 25. Choice of Law. This Note shall be governed by and construed and enforced in accordance with the laws of the State of California. "Borrower" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISI4', CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President EXHIBIT "J" Page 13 of 13 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "K" RECORDING REQUESTED BY: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AND WHEN RECORDED RETURN TO: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY Records Management Department 1243 National City Blvd. National City, California 91950 [Free Recording Requested Government Code § 6103] SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS [ Project/Phase _] [Commission Subordinate Loan Deed of Trust for Phase _] This DEED OF TRUST is made as of . 201_, by and between PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership ("Trustor"), TITLE COMPANY, a California corporation ("Trustee"), and COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Beneficiary"). Trustor grants, transfers and assigns to Trustee in trust, upon the trusts, covenants, conditions and agreements and for the uses and purposes hereinafter contained, with power of sale, and right of entry and possession, all of its ground leasehold title and interest in that real property (the "Property") in the City of National City, County of San Diego, State of California, described in Exhibit A attached hereto and incorporated herein by this reference. Together with Beneficiary's interest in all buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Property; and Together with the rents, issues and profits thereof; and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, EXHIBIT "K" Page 1 of 12 C-\DataALEG \NC-372_TOD Project\DDA.v.6.6_I I.s.x.doc whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and Together with all building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and Together with all plans, drawings, specifications, and articles of personal property 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 completion 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 chattels and personal property as are ever used or furnished 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. To have and to hold the property hereinbefore described (including the Property and all appurtenances), all such property being referred to collectively herein as the "Property," to Trustee, its successors and assigns forever. FOR THE PURPOSE of securing (1) payment of indebtedness of Trustor to the Beneficiary in the principal sum of Dollars ($ ) (the "Commission Subordinate Loan"), evidenced by a promissory note of even date herewith between Trustor and Beneficiary (the "Commission Subordinate Loan Note"), together with all sums due thereunder including interest and other charges; and (2) the performance of each agreement of Trustor in this Deed of Trust and the Commission Subordinate Loan Note. Said Commission Subordinate Loan Note and all of its terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances of the Commission Subordinate Loan evidenced by any note reciting that it is secured hereby. AND TO PROTECT THE SECURITY OF TIlIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: I. 'That it will pay the Commission Subordinate Loan Note at the time and in the manner provided therein; 2. That it will not permit or suffer the use of any of the Property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed, namely, as affordable rental housing; 3. That the Commission Subordinate Loan Note is incorporated herein and made a part of this Deed of Trust. Upon default under the Commission Subordinate Loan Note or this Deed of Trust (after expiration of any applicable cure rights), Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable; EXHIBIT "K" Page 2 of 12 C:\Data\LEG\NC-372.TOD Project\DDA.v.6.6.1 1.s.x.doc 4. That all rents, profits and income from the Property covered by this Deed of Trust are hereby assigned to Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder, to collect such rents, profits and income; 5. That upon default hereunder (after expiration of any applicable cure rights), Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the Property described herein and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the improvements now existing or hereafter erected on the Property insured against loss by fire and such other hazards, casualties and contingencies as may be required in writing from time to time by Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies, in the amount of the replacement value of the improvements. Such policies shall be endorsed with a standard mortgage clause with loss payable to Beneficiary subordinate to the rights and interest of the beneficiary of the Senior Loan Deed of Trust described in paragraph 31, below) and certificates thereof together with copies of original policies shall be deposited with Beneficiary; 7. To pay, before delinquency, any taxes and assessments affecting said Property when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto, all costs, fees and expenses of this Trust; 8. To keep said Property in good condition and repair, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor (unless contested in good faith if Trustor provides security satisfactory to Beneficiary that any amounts found to be due will be paid and no sale of the Property or other impairment of the security hereunder will occur); to comply with all laws affecting said Property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said Property in violation of law and/or covenants, conditions and/or restrictions affecting said Property; not to permit or suffer any alteration of or addition to the buildings or improvements hereafter constructed in or upon said Property without the consent of Beneficiary; 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 10. Should Trustor fail to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Beneficiary or Trustee, being authorized to enter upon said Property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or EXHIBIT "K" Page 3 of 12 C:\Data\LEG\NC-372.TOD Project \DDA.v.6.6.11.s.x.doc compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay counsel's reasonable fees; 11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by Beneficiary shall be added to the principal sum secured hereby; 12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the Commission Subordinate Loan Note; 13. That the Commission Subordinate Loan advanced hereunder is to be used in the development of the Property; and upon the failure of Trustor to keep and perform such covenants, the principal sum and all arrears of interest, and other charges provided for in the Commission Subordinate Loan Note shall, at the option of Beneficiary, become due and payable, anything contained herein to the contrary notwithstanding; 14. Trustor further covenants that it will not voluntarily create, suffer or permit to be created against the Property, subject to this Deed of Trust, any lien or liens except as authorized by Beneficiary and further that it will keep and maintain the Property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on the Property; 15. That any and all improvements made or about to be made upon the Property, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; 16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of Beneficiary a charge not to exceed that permitted by law for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2, Title 14, Division 3 of the California Civil Code. IT IS MUTUALLY AGREED THAT: 17. Subject to the additional cure rights in Section 17 of the Commission Subordinate Loan Note, if the construction of any improvements as herein referred to shall not be carried on with reasonable diligence, or shall be discontinued at any time for any reason other than events of Force Majeure pursuant to Paragraph 36 hereof, Beneficiary, after due notice to Trustor or any subsequent owner and the failure by same to exercise any cure rights, is hereby invested with full and complete authority to enter upon the Property. employ watchmen to protect such improvements from depredation or injury and to preserve and protect the personal property therein, and to continue any and all outstanding contracts for the erection and completion of said building or buildings, to make and enter into any contracts and obligations wherever necessary, either in its own name or in the name of Trustor, and to pay and discharge all debts, obligations EXHIBIT "K" Page 4of12 C:\Data\LEG\NC-372.TOD Project\DDA.v.6.6.1 Is.x.doc and liabilities incurred thereby. All such sums so advanced by Beneficiary (exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured hereby and shall be secured by this Deed of Trust and shall be due and payable on demand; 18. In the event of any fire or other casualty to the Project or eminent domain proceedings resulting in condemnation of the Project or any part thereof, Trustor shall have the right to rebuild the Project, and to use all available insurance or condemnation proceeds therefor, provided that (a) such proceeds are sufficient to rebuild the Project in a manner that provides adequate security to Beneficiary for repayment of the Commission Subordinate Loan or if such proceeds are insufficient then Trustor shall have funded any deficiency, (b) Beneficiary 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 uncured material default then exists under the Commission Subordinate Loan Note or this Deed of Trust. If the casualty or condemnation affects only part of the Project and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Commission Subordinate Loan in a manner that provides adequate security for repayment of the remaining balance of the Commission Subordinate Loan. The rights of the Beneficiary to any insurance proceeds or condemnation awards pursuant to this paragraph 18 are and shall be subject to the prior right to any insurance proceeds or condemnation awards of the beneficiary of the Senior Loan Deed of Trust described in paragraph 31; 19. Upon default by Trustor in making any payments provided for herein or in the Commission Subordinate Loan Note secured hereby, and if such default is not made good within fifteen (15) days after notice from Beneficiary, or if Trustor shall fail to perform any covenant or agreement in this Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Trustor fail to promptly commence such cure, and diligently prosecute same to completion), Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of 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 Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust, the Commission Subordinate Loan Note and all documents evidencing expenditures secured hereby; 20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said Property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or EXHIBIT "K" Page 5 of 12 CADatalLEG\NC-372.TOD ProjectADDA.v.6.6_l I.s.x.doc Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attorneys' fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the Commission Subordinate Loan Note; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto; 21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee; 22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law; 23. Upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Commission Subordinate Loan Note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto"; 24. The trust created hereby is irrevocable by Trustor; 25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Beneficiary" shall include not only the original Beneficiary hereunder hut also any future owner and holder including pledgees, of the Commission Subordinate Loan Note secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of each Trustor hereunder are joint and several; 26. Trustee accepts this trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee; 27. The undersigned Trustor requests that copies of any notice of default and of any notice of sale hereunder be mailed to it c/o The Related Companies of California, 18201 Von Kaman Avenue, Suite 900, Irvine, California 92612 and to [Tax Credit Partner] EXHIBIT "K" Page 6 of 12 C_AData \ LEG \NC-372.TOD Projecf,DDA v_6.6.11 s.x.doc 28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary, to furnish to Beneficiary a detailed statement in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the Property and their use as may be requested by Beneficiary. 29. The full principal amount outstanding plus accrued but unpaid interest thereon, shall be due and payable on the earlier to occur of the following: (a) As more particularly provided in the Commission Subordinate Loan Note, sale, transfer, assignment or refinancing of the Property as provided further in this paragraph 29; unless: (i) in the case of a sale in which the sale proceeds are insufficient to repay in full the Commission Subordinate Loan, the Beneficiary approves such sale and the purchaser assumes the balance of the Commission Subordinate Loan in accordance with the terms of the Commission Subordinate Loan Note; or (ii) in the case of a refinancing in which the refinancing proceeds are insufficient to repay in full the Commission Subordinate Loan, the Beneficiary approves such refinancing and the Borrower remains obligated pursuant to the terms of the Note. (b) In order to induce Beneficiary to make the loan evidenced hereby, Trustor agrees that in the event of any transfer of the Property without the prior written consent of Beneficiary (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), Beneficiary 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. Beneficiary may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this paragraph 29, 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 Trustor from any liability thereunder without the prior written consent of Beneficiary. (c) 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. (d) The term "Sale" means any transfer, assignment, conveyance or lease (other than to a tenant for occupancy) of the Property and/or the improvements thereon, or any portion thereof, or any interest therein by the Trustor, and (if Trustor is a partnership) includes any transfer, assignment or sale of any partnership interest in the Trustor (other than the removal of the general partner by a limited partner in Trustor in accordance with Trustor's partnership EXHIBIT "K" Page 7 of 12 C:\Data\LEG\NC-372.TOD Project\DDA.v.6.6. I 1 .s.x.doc agreement) by an individual or entity which is a general or limited partner in the Trustor, or any interest by any individual or entity which holds an interest in any such general or limited partner in the Trustor, which brings the cumulative total of all such direct and indirect transfers, assignments and sales during the term of this Deed of Trust to more than thirty-five percent (35%) of the ownership interests in the Trustor, 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 other than by Beneficiary. Sale does not include dedications and grants of easements to public and private utility companies of the kind customary in real estate development. ' Trustor, prior Notwithstanding anything to the contrary contained in this Deed of Trust, to any action to enforce this Deed of Trust, shall give and its successors and assigns (the "Tax Credit Partner") notice and opportunity to cure for a period of not less than (a) fifteen (15) days to cure a monetary default, and (b) thirty (30) days to cure a nonmonetary default; provided, however, if in order to cure such a default Tax Credit Partner reasonably determines that it must remove the general partner of Borrower, Tax Credit Partner shall so notify Trustor and so long as Tax Credit Partner is diligently and continuously attempting to so remove such general partner, Tax Credit Partner shall have until the date thirty (30) days after the effective date of the removal of the general partner or general partners to cure such default but in no event more than one (1) year. Notwithstanding the foregoing. the following shall not constitute a "Sale" under this Deed of Trust: (a) a Sale made pursuant to an option granted to a general partner of Trustor on or before the date of recordation of this Deed of Trust in the Official Records of San Diego County, California, or (b) any assignment of an interest as limited partner of Trustor by a limited liability company (" "), or a limited liability company (" "), to an entity whose general partner or managing member is controlled by or is under which assignment shall not require the consent of or as applicable, shall give written notice to Beneficiary of such assignment; or (ii) 's removal of the general partner of Trustor as general partner, and substitution of or an affiliate of as a general partner of Trustor, which removal shall not require Beneficiary approval, provided that shall give notice to Beneficiary of its intent to so remove such general partner not less than ten (10) days prior to such removal. Any proposed replacement of the general partner with an entity other than or an affiliate of will be subject to Beneficiary's prior reasonable approval. common control with Beneficiary, provided that 30. Trustor shall permit Beneficiary and its agents or representatives, to inspect the Property at any and all reasonable times, with or without advance notice. Inspections shall be conducted so as not to interfere with the tenants' use and enjoyment of the Property. 31. It is hereby expressly agreed and acknowledged by Trustor and Beneficiary that this Deed of Trust is a second and subordinate deed of trust, and that the Commission Subordinate Loan secured hereby, and the Commission Subordinate Loan Note are subject and subordinate only to the deed of trust securing a loan to Trustor in an approximate original principal amount not to exceed $ in which ("Senior EXHIBIT "K" Page 8 of 12 C:\Data\LEG\NC-372.TOD Project \DDA.v.6.6.1 Ls.x.doc Lender") is the Beneficiary, including any loan that refinances the balance of the Senior Loan or an assignment of the Senior Loan (collectively referred to as the "Senior Loan"). 32. For purposes of this Deed of Trust, "Hazardous Materials" mean and include any hazardous, toxic or dangerous waste, substance or material including, without limitation, flammable explosives, radioactive materials, asbestos, hazardous wastes, toxic substances and any materials or substances defined as hazardous materials, hazardous substances or toxic substances in (or for purposes of) the Comprehensive Environmental Response, Compensation and Liability Act of 1380 ("CERCLA"), as amended (42 U.S.C. §9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.) and those substances defined as hazardous wastes in §25117 of the California Health and Safety Code or as hazardous substances in §25316 of the California Health and Safety Code or in any regulations promulgated under either such law, any so-called "Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect. Hazardous Materials expressly exclude substances typically used in the construction, development, operation and maintenance of an apartment complex provided such substances are used in accordance with all applicable laws. 33. In addition to the general and specific representations, covenants and warranties set forth in the Deed of Trust or otherwise, Trustor represents, covenants and warrants, with respect to Hazardous Materials, as follows: (a) Other than as expressly disclosed to Trustor by Beneficiary, neither Trustor nor, to the best knowledge of Trustor, any other person, has ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located or disposed of on, under or at the Property or any part thereof, and neither the Property nor any part thereof, or any property adjacent thereto, has ever been used (whether by the Trustor or, to the best knowledge of the Trustor, by any other person) as a manufacturing site, dump site or storage site (whether permanent or temporary) for any Hazardous Materials; (b) Trustor hereby agrees to indemnify Beneficiary, its officers, employees, contractors and agents, and hold Beneficiary, its officers, employees, contractors and agents harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against Beneficiary, its officers. employees, contractors or agents for, with respect to, or as a direct or indirect result of, the presence or use, generation, storage, release, threatened release or disposal of Hazardous Materials on or under the Property or the escape, seepage, leakage, spillage, discharge, emission or release of any hazardous Materials from the Property (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Materials), caused by Trustor. EXHIBIT "K" Page 9 of 12 C:AData\LEG\NC372.TOD ProjectADDA.v.6.6.I I.s.x.doc (c) Trustor has not received any notice of (i) the happening of any event involving the use, spillage, discharge or cleanup of any Hazardous Materials ("Hazardous Discharge") affecting Trustor or the Property or (ii) any complaint, order, citation or notice with regard to air emissions, water discharges, noise emissions or any other environmental, health or safety matter affecting Tnistor or the Property ("Environmental Complaint") from any person or entity, including, without limitation, the United States Environmental Protection Agency ("EPA"). If Trustor receives any such notice after the date hereof, then Trustor will give, within seven (7) business days thereafter, oral and written notice of same to Beneficiary. (d) Without limitation of Beneficiary's rights under this Deed of Trust, but only to the extent Trustor is not effectuating a remediation of the Property, Beneficiary shall have the right, but not the obligation, to enter onto the Property or to take such other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the impact of, or otherwise deal with, any such Hazardous Materials or Environmental Complaint upon its receipt of any notice from any person or entity, including without limitation, the EPA, asserting the existence of any Hazardous Materials or an Environmental Complaint on or pertaining to the Property which, if true, could result in an order, suit or other action against Trustor affecting any part of the Property by any governmental agency or otherwise which, in the sole opinion of Beneficiary, could jeopardize its security under this Deed of Trust. All reasonable costs and expenses incurred by Beneficiary in the exercise of any such rights shall be secured by this Deed of Trust and shall be payable by Trustor upon demand together with interest thereon at a rate equal to the highest rate payable under the Commission Subordinate Loan Note secured hereby. 34. The following shall be an Event of Default: (a) Failure of Trustor to pay, when due, principal and interest and any other sums or charges on the Commission Subordinate Loan Note, in accordance with the provisions set forth in the Commission Subordinate Loan Note; (b) A violation of the terms, conditions or covenants of the Commission Subordinate Loan Note or this Deed of Trust; or (c) A default (after expiration of any cure period provided therein) under the Senior Loan Deed of Trust to which the lien of this Deed of Trust is subordinate. 35. Subject to the extensions of time set forth in paragraph 36, and subject to the further provisions of this paragraph 35 and of paragraph 37, failure or delay by the Trustor to perform any term or provision of this Deed of Trust constitutes a default under this Deed of Trust. The Trustor must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. (a) The Beneficiary shall give written notice of default to the Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (b) The Trustor 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 EXHIBIT "K" Page 10 of 12 C\Data\I.EG\NC-372.TOD Project\DDA.v.6.6.11.s.x.doc remedy is completed within thirty (30) days after receipt of written notice (or such additional time as may be deemed by the Beneficiary to be reasonably necessary to correct the cause). (c) Any failures or delays by the Beneficiary 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 Beneficiary in asserting any of its rights and remedies shall not deprive the Beneficiary 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. 36. Notwithstanding specific provisions of this Deed of Trust, performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the Beneficiary, or any other public or governmental agency or entity (except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary); 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 Deed of Trust may also be extended in writing by the Beneficiary and Trustor. 37. If a monetary event of default occurs under the terms of the Commission Subordinate Loan Note or this Deed of Trust, prior to exercising any remedies thereunder Beneficiary shall give Trustor written notice of such default. Trustor shall have a period of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary under the Commission Subordinate Loan Note and this Deed of Trust. 38. If a non -monetary event of default occurs under the terms of the Commission Subordinate Loan Note or this Deed of Trust, prior to exercising any remedies thereunder, Beneficiary shall give Trustor notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of remedies by the Beneficiary under the Commission Subordinate Loan Note and this Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (a) initiates corrective action within said period, and (b) diligently, continually, and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall Beneficiary 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 (180) days after the first notice of default is given. 39. Upon the occurrence of an Event of Default as described in paragraph 34, Trustor shall be obligated to repay the Commission Subordinate Loan and, subject to the nonrecourse provision of the Commission Subordinate Loan Note, Beneficiary may seek to enforce payment EXHIBIT "K" Page 11 of 12 C:\Data\LEG\NC-372.TOD Project\DDA.v.6.6.11 s.x.doc of any and all amounts due by Trustor pursuant to the terms of the Commission Subordinate Loan Note. 40. All expenses (including reasonable attorneys' fees and costs and allowances) incurred in connection with an action to foreclose, or the exercise of any other remedy provided by this Deed of Trust, including the curing of any Event of Default, shall be the responsibility of Trustor. Except as provided in paragraph 31, each successor owner of an interest in the Property, other than through foreclosure, deed in lieu of foreclosure or an owner who takes an interest in the Property after a foreclosure has occurred, shall take its interest subject to this Deed of Trust. "Trustor" PARADISE CREEK HOUSING PARTNERS, L.P.. a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member EXHIBIT "K" Page 12 of 12 By: Anne B. Wilson Senior Vice President C1DataALEG\NC-372.TOD Pro ject\DDA v.6.6.1 l.s.x doc EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY [To be recorded against Trustor's interest in the Property.] EXHIBIT "A" TO EXHIBIT "K" Page 1 of 1 C:AData1LEG1NC-372.TOD Project\DDA.v.6.6.11.s.x.doc EXHIBIT "I." SUBORDINATE COMPLETION GUARANTY ( Project/Phase j 1. Obligations Guaranteed. For valuable consideration, the adequacy and sufficiency of which is acknowledged, the undersigned ("Guarantor") unconditionally guarantees the timely completion of the construction required pursuant to Article [l0] of that certain Disposition and Development Agreement, dated as of June 21, 2011, by and between the Community Development Commission of the City of National City (the "Commission") and Paradise Creek Housing Partners, L.P. (" ") (the "Construction" required by the "DDA"). This Guaranty is in addition to and independent of any other guaranty previously, concurrently or hereafter given to Commission by Guarantor. 2. Completion of Improvements By Guarantor. Guarantor irrevocably and unconditionally agrees that if for any reason (a) fails to diligently proceed with or complete the Construction in the manner and within the time limits set forth in the DDA, (b) fails to pay all costs of the Construction, or (c) Commission takes possession of the Property and the Improvements prior to the completion of the Construction, then, in any such event, and upon demand by Commission, Guarantor shall diligently complete the Construction in accordance with the terms of the DDA, all at Guarantor's sole cost and expense. In addition, Guarantor shall defend, indemnify and hold Commission harmless from and against all claims, demands, causes of action, liabilities, losses, costs and expenses (including, without limitation, costs of suit and reasonable attorneys' fees) arising from or in connection with any such event. Commission hereby agrees that if demand is made hereunder for Guarantor to complete the Construction, Guarantor shall have the right to have any undisbursed portion of the Commission Subordinate Loan applied to the costs of that Construction. 3. Remedies of Commission. If Guarantor fails to perform its obligations hereunder, then Commission may, in its sole and absolute discretion and without any obligation to do so, (a) elect to complete the Construction (with such changes to the General Contract and the Plans as Commission reasonably deems necessary), in which event Guarantor shall, upon demand, reimburse Commission for all reasonable expenditures made and reasonable costs incurred by Commission in connection with such completion, together with interest thereon at Commission's option at either the per annum rate of interest (the "Note Rate") set forth in that certain Commission Subordinate Loan Note of even date herewith made by in favor of Commission (the "Note") or the default rate of interest provided for in the Note (the "Default Rate"), or (b) from time to time and without first requiring performance on the part of or being required to exhaust or proceed against any or all security held by Commission, enforce performance by Guarantor of any obligation on the part of Guarantor to be performed hereunder, by action at law or in equity or both, in which event Commission shall be entitled to recover from Guarantor all losses, costs, damages, liabilities and expenses (including attorneys' fees and costs) sustained or incurred by Commission as a result of Guarantor's failure to perform its obligations hereunder, together with interest thereon at Commission's option at either the Note Rate or the Default Rate. EXHIBIT "L" Page 1 of 4 S:\TRC-DEV1Projects\PROSPECT1National City Public Works Center \DDA \EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 4. Reinstatement. All of Commission's rights pursuant to this Guaranty continue with respect to amounts previously paid to Commission on account of any obligations which are thereafter restored or returned by Commission, whether in a bankruptcy, reorganization, insolvency, receivership or similar proceeding ("Insolvency Proceeding") of or for any other reason, all as though such amounts had not been paid to Commission, and Guarantor's liability under this Guaranty (and all its terms and provisions) shall be reinstated and revived, notwithstanding any surrender or cancellation of this Guaranty. Commission, in its sole discretion, may determine whether any amount paid to it must be restored or returned; provided, however, that if Commission elects to contest any claim for return or restoration, Guarantor agrees to indemnify and hold Commission harmless from and against all costs and expenses, including reasonable attorneys' fees, expended or incurred by Commission in connection with such contest. If any Insolvency Proceeding is commenced by or against or Guarantor, at Commission's election, Guarantor's obligations under this Guaranty shall immediately and without notice or demand become due and payable, whether or not then otherwise due and payable. 5. Authorization. Guarantor authorizes Commission, without notice and without affecting Guarantor's liability under this Guaranty, from time to time, whether before or after any revocation of this Guaranty, to alter, modify or amend the Plans, the General Contract or any of the relevant terms, covenants and conditions of the DDA. 6. Waivers. To the maximum extent permitted by law, Guarantor waives (a) all rights to require Commission to proceed against , or any other guarantor, or proceed against, enforce or exhaust any security for the Construction or to marshal assets or to pursue any other remedy in Commission's power whatsoever; (b) all defenses arising by reason of any disability or other defense of , the cessation for any reason of the liability of , any defense that any other indemnity, guaranty or security was to be obtained, any claim that Commission has made Guarantor's obligations more burdensome or more burdensome than 's obligations; (c) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, and all other notices or demands to which Guarantor might otherwise be entitled; (d) all conditions precedent to the effectiveness of this Guaranty; (e) all rights to file a claim in connection with the obligations in an Insolvency Proceeding filed by or against ; and (t) all rights to require Commission to enforce any of its remedies. 7. Guarantor to Keep Informed. Guarantor warrants having established with adequate means of obtaining, on an ongoing basis, such information as Guarantor may require concerning all matters bearing on the risk of nonperformance of the Construction. Guarantor assumes sole, continuing responsibility for obtaining such information from sources other than from Commission. Commission has no duty to provide any information to Guarantor until Commission receives Guarantor's written request for specific information in Commission's possession and has authorized Commission to disclose such information to Guarantor. 8. Authorization. Where is a corporation, partnership or other entity, Commission need not inquire into or verify the powers or authority of those acting or purporting EXHIBIT "1," Page 2 of 4 S:1TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc to act on behalf of , and this Guaranty shall be enforceable in reliance on the purported exercise of such powers or authority. 9. Assignments. Without notice to Guarantor, Commission may assign its rights with respect to the Construction and this Guaranty, in whole or in part, and may disclose to any prospective or actual purchaser any and all information Commission has or acquires concerning Guarantor and/or this Guaranty. 10. Counsel Fees and Costs. The prevailing party shall be entitled to attorneys' fees (including the allocated costs of Commission's in-house counsel and legal staff), and all other costs and expenses which it may incur in connection with the enforcement or preservation of its rights under, or defense of, this Guaranty or in connection with any other dispute or proceeding relating to this Guaranty, whether or not incurred in any Insolvency Proceeding, arbitration, litigation or other proceeding. l 1. Integration/Severability/Amendments. This Guaranty is intended by Guarantor and Commission as the complete, final expression of their agreement concerning its subject matter. It supersedes all prior understandings or agreements with respect thereto and may be changed only by a writing signed by Guarantor and Commission. No course of dealing, or parol or extrinsic evidence shall be used to modify or supplement the express terms of this Guaranty. If any provision of this Guaranty is found to be illegal, invalid or unenforceable, such provision shall be enforced to the maximum extent permitted, but if fully unenforceable, such provision shall be severable, and this Guaranty shall be construed as if such provision had never been a part of this Guaranty and the remaining provisions shall continue in full force and effect. 12. Notice. Any notice given by any party under this Guaranty shall be effective only upon its receipt by the other party and only if (a) given in writing and (b) personally delivered or sent by United States mail, postage prepaid, and addressed to Commission or Guarantor at their respective addresses for notices indicated below. Guarantor and Commission may change the place to which notices, requests, and other communications are to be sent to them by giving written notice of such change to the other. 13. California Law. This Guaranty shall be governed by and construed according to the laws of California, and Guarantor submits to the nonexclusive jurisdiction of the state or federal courts in California. 14. Subordinate Obligation. Notwithstanding anything contained in this Guaranty to the contrary, Commission acknowledges and agrees that this Guaranty in subject and subordinate to a prior and superior guaranty made by Guarantor in favor of 15. Termination. This Guaranty shall terminate and be of no further force or effect upon completion of the Construction and payment of all costs thereof. [INTENTIONALLY LEFT BLANK] EXHIBIT "L" Page 3 of 4 S:\i"RC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS IELECTRONIC VERSION OE FILESIDDA v 6 6 11 s x.doc Executed as of , 20 . Guarantor acknowledges having received a copy of this Guaranty and having made each waiver contained in this Guaranty with full knowledge of its consequences. Address for notices sent to Commission: National City Housing Commission 303 East "B" Street National City, California 91764 Attn: Executive Director APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER, Special Counsel By: Lance E. Garber "GUARANTOR" THE RELATED COMPANIES, L.P., a New York limited partnership By: Its: Address for notices sent to Guarantor: The Related Companies, L.P. 60 Columbus Circle New York, New York 10023 Attn: EXHIBIT "L" Page 4 of 4 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "M" ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND SPECIFICATIONS [ Project/Phase FOR VALUE RECEIVED, the undersigned, L.P., a California limited partnership ("Developer"), assigns to COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Commission"), all of its right, title and interest in and to: 4. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, "Architectural Agreements"), and 5. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively, "Plans and Specifications"), heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively, "Architect"), for or on behalf of Developer in connection with the construction of the Improvements on the Real Property described on Exhibit "A" attached hereto. The Plans and Specifications, as of the date hereof, are those which Developer has heretofore, or will hereafter deliver to Commission. The Architectural Agreements include, but are not limited to, the architectural agreement or contract between Developer and , dated This ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND SPECIFICATIONS ("Assignment") constitutes a present, absolute and unconditional assignment to Commission. Developer acknowledges that by accepting this Assignment, Commission does not assume any of Developer's obligations under the Architectural Agreements with respect to the Plans and Specifications. Developer represents and warrants to Commission that: (a) all Architectural Agreements entered into by Developer are in full force and effect and are enforceable in accordance with their terms and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to Commission are complete and correct; and (c) Developer has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications other than to [insert Construction Lender], which assignment shall be senior and superior to the assignment contemplated hereby in all respects. This Assignment shall be governed by the laws of the State of California, except to the extent that federal laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any federal or state court within the State of California having proper venue EXIIIBIT "M" Page 1 of 3 S:1TRC-DEV1Projects\PROSPECT \National City Public Works Center\DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action shall be entitled, in addition to any other recovery, to reasonable attorneys' fees and costs. This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors -in -interest of Developer and Commission. The attached Architect's/Engineer's Consent and Exhibit "A" are incorporated by reference. Executed by Developer on , 201_. "Trustor" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President EXHIBIT "M" Page 2 of 3 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I l s x.doc ARCHITECT'S/ENGINEER'S CONSENT [ Project] The undersigned architect and/or engineer (collectively referred to as "Architect") hereby consents to the foregoing Assignment to which this Architect's/Engineer's Consent ("Consent") is a part, and acknowledges that there presently exists no unpaid claims due to the Architect arising out of the preparation and delivery of the Plans and Specifications to Developer and/or the performance of the Architect's obligations under the Architectural Agreements described in the Assignment. Architect agrees that, by virtue of the foregoing Assignment, Commission has succeeded to all of Developer's right, title and interest in, to and under the Architectural Agreements and the Plans and Specifications and, therefore, so long as the Architect continues to receive the compensation called for under the Architectural Agreements, Commission and its successors and assigns may, at their option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligations under the Architectural Agreements for the benefit and account of Commission and its successors and assigns in the same manner as if performed for the benefit or account of Developer in the absence of the Assignment. Architect warrants and presents that it/he has no knowledge of any prior assignment(s) of any interest in either the Plans and Specifications and/or the Architectural Agreements. Except as otherwise defined herein, the terms used herein shall have the meanings given them in the Assignment. Executed on , 200 . "Architect" By: Name: Its: a Architect's Address: Phone No.: Fax No.: ( EXHIBIT "M" Page 3 of 3 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Ccntcr\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I 1 s x.doc EXHIBIT "A" PROPERTY DESCRIPTION Exhibit "A" to Assignment of Architectural Agreements and Plans and Specifications dated as of , 200 , between, , L.P., a California limited partnership, as Developer, and COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic. [attached] EXI IIBIT "A" TO EXHIBIT "M" Page 1 of I S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS \ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc EXHIBIT "N" LIST OF ENVIRONMENTAL DOCUMENTS Public Works Yard (APNs 560-391-08, 560-396-06, southern portion of 559-124-05) Report of Subsurface Activities (June 7, 2005) UST Removal Report (June 2006) Well Installation Report (March 12, 2007) Phase I Environmental Site Assessment (February 2009) Draft Phase II Site Investigation (February 2010) Risk Assessment Memorandum (June 2, 2009) 2011 Quarterly Groundwater Monitoring (In progress) Ille's Property (APNs 560-206-05 and 560-391-10) Phase I Environmental Site Assessment (January 10, 2010) Phase II Site Investigation (August 16, 2010) 1.5 Acre Property (APN 559-104-10) Phase I ESA (February 2009) Note that the Phase I was completed for both the 1.5 and 2.1-acre areas combined PEA (June 2006) Focused PEA (June 2009) 2.1 Acre Property (APNs 559-125-15 and northern portion of 559-124-05) Phase I ESA (February 2009) Combined with 1.5-acre Phase I report. PEA (June 2007) Areawide Environmental Inventory for Westside Specific Plan area dated November, 2007 EXHIBIT "N" Page 1ofI S1TRC-DEVWProjects \PROSPECPNational City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILESIDDA v 6 6 1 I s x.doc EXHIBIT "0" DISBURSEMENT REQUEST FOR APARTMENTS PROJECT PHASE [ ) PREDEVELOPMENT WORK LOAN DISBURSEMENT REQUEST Property Address: , National City, California Disbursement No. The undersigned, on behalf of PARADISE CREEK HOUSING PARTNERS, L.P., hereby requests a disbursement in the amount, and on the date, set forth below, pursuant to that certain Disposition and Development Agreement (the "Agreement") dated as of June 21, 2011, between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Commission"), and PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership ("Developer"). Capitalized terms used and not otherwise defined herein shall have the meanings set forth for them in the Agreement. REQUEST AMOUNT: REQUEST DATE: Developer hereby represents and warrants to Commission that: 1. The requested disbursement shall be applied to pay Phase [ 1 Predevelopment Work costs in accordance with the itemized Payment Request attached hereto. 2. All costs shown in all prior Disbursement Requests (and Payment Requests) have been paid in full, Developer has received valid lien releases or waivers from all contractors, subcontractors and materialmen with respect to all payments made for work and materials if the work or materials could give rise to a mechanic's or a materialmen's lien against the Property, and Developer has no knowledge of any mechanic's lien claims against the Property. 3. The Predevelopment Work is being performed in substantial conformance with the Phase [ 1 Prcdevelopment Plan and Budget, and all applicable governmental requirements, and the Phase I Predevelopment Work has progressed to the point indicated on the attached Payment Request. EXHIBIT "0" Page 1 of 2 S:\TRC-DEV\Projects\PROSPECT\ National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc 4. The attached Payment Request is an accurate and complete statement of all amounts previously paid or now due and all amounts expected to be incurred in connection with the completion of the Phase F 1 Predevelopment Work. 5. All representations and warranties in the Agreement and the other Project Documents are true and correct as of the date of this request as if made on and as of the date of this request. No Event of Default by Developer remains uncured, and no event has occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer. DATE: Designated Representative Contractor hereby certifies that Paragraphs 2 (with respect to costs covered by Contractor's Contract), 3 (with respect to work covered by Contractor's Contract), 4 (with respect to costs and work covered by Contractor's Contract) and 5, above, are true to the best of Contractor's knowledge. PAYMENT APPROVED: Contractor Commission Inspector Commission Officer APPROVED CHANGE ORDERS: Order No. Work Item Amount Approved Date EXHIBIT "0" Page 2 of 2 S:\TRC-DEVProjects \PROSPECT\National City Public Works Center\DDAIEXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DOA v 6 6 II s x-doc EXHIBIT "P" PRELIMINARY PHASE II PREDEVELOPMENT PLAN AND BUDGET PHASE a P9_f)EVELOPMENT PLAN AND SIAGET AM..... act Elgec.trg PEtm13 an. Fe. GRA, Legs{ CMnalnc:nnr stn Mtaaani COIAC C TLAC Fees TOTAL 2t Sequtes CampEte. bleerq Pna.and fua Evmt«oam Ran am lmag6t Pan111M Use Entitlement Total Pam t Prticwppnent PMn am Nudge( Plat And eueq l 50 51 `c.9W 1' SI SCIl9L1 5E 5125,7. 5125,5C9 s= rn:n. s,ac.9x to SE,C, 0 ;, SE99,9c9 SC 5115.500 S11S.uA w S2340.600 5x210.560 rea5}riecSU5ar 0c£fm:a LI.Tc a'1QLrenn se 'Ye &Escma. N owker to eanlr rwananie nP30Mnlly EXHIBIT "P" Page 1 of 1 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center'DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc EXIIIBIT "Q" EXHIBIT "Q" DRAFT TEXTUAL AMENDMENT to the REDEVELOPMENT PLAN for the NATIONAL CITY REDEVELOPMENT PROJECT AREA INTRODUCTION This Amendment to the Redevelopment Plan for the National City Redevelopment Project Area ("Amendment") accomplishes the following changes in the Existing Area: • increase the annual tax increment limit from $300 million to $475 million, • increase the amount of bonded indebtedness from $100 to $150 million, • increase by ten (10) years the timeframe to receive tax increment and the effectiveness of the redevelopment plan, • increase by ten (10) years the effectiveness of the redevelopment plan, • modify the duration of affordability for residential projects affordable to low- to moderate -income households, • reinstate the time frame to commence eminent domain on certain properties within the Existing Area for non-residential properties for twelve (12) years from the date of adoption of the ordinance approving the Amendment, and • modify Exhibit D delineating properties subject to eminent domain. The Amendment will enable the Agency to retain all tools available to the Agency in implementing the Redevelopment Plan. The changes by this Amendment are not to be construed to amend, modify, change or affect in any other provisions the text of the Plan and does not add or delete territory from the boundaries of the National City Redevelopment Project Area. The Plan is hereby amended as follows: EXHIBIT "Q" Page 1 of 5 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 l I s x.doc AMENDMENT to the REDEVELOPMENT PLAN for the NATIONAL CITY REDEVELOPMENT PROJECT AREA AMENDMENT That Section 603 of the Redevelopment Plan entitled "Acquisition of Real Property" is hereby amended to modify the 4th paragraph to read as follows (Changes are in redline and strikethrough): Except as otherwise provided herein, or otherwise provided by law, no eminent domain proceeding to acquire property within the Project Area shall be commenced within the Center City Area, the Downtown Original Area, the Downtown 1985 Amendment Area, and the Added Area after ten-(40) twelve (12) years following the date of adoption of the 200-7 2011 Ordinance amending this Plan. Such time limitation may be extended only by amendment of this Plan. That Section 638 of the Redevelopment Plan entitled "Duration of Affordability" is hereby amended to modify the 2nd and 3`d paragraphs to read as follows (Changes are in redline and strikethrough): "a. Fifteen Fifty -Five years for rental units. However, the CDC ..." "b. Ten Forty -Five years for owner -occupied units. However, the CDC may permit sales of owner -occupied units prior to the expiration of the 4-0 45-year period for a price in excess of that ..." That Section 802 of the Redevelopment Plan entitled "Tax Increment Revenue" is hereby amended to modify the 7th, 8th9i IOin 1 lin 12th and 13th paragraphs to read as follows (Changes are in redline and strikethrough): "The number of dollars of taxes which may be divided and allocated to the CDC pursuant to Section 33670 of the Redevelopment Law, inclusive of payments to taxing agencies, shall not exceed $300 475 million, ...." "With respect to the E.J. Christman) Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the EXHIBIT "Q" Page 2 of 5 S:\TRC-DEV1Projects\PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after Novernber-I8, 2019--December 18. 2030. These limitations ..." "With respect to the South Bay Town and Country Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to I-Iealth and Safety Code Section 33670 after June 24, 2025 July 25, 2036. These limitations ..." "With respect to the Center City Arca, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Ieeath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after it 13— ,-May 131 2037. These limitations ..." "With respect to the E.J, Christman2 Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after De mb,er-1-3; -7-January 13, 2039. These limitations ..." "With respect to the Downtown Original Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to [Iealth and Safety Code Section 33670 after December- I,-20-31--Januarry 1.2042. These limitations ..." "With respect to the Downtown 1985 Amendment Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after April 16, '1035 May 16, 2046. These limitations ..." That Section 803 of the Redevelopment Plan entitled "CDC Bonds" is hereby amended to modify the 4th paragraph to read as follows (Changes are in redline and strikethrough): EXHIBIT "Q" Page 3 of 5 S:\TRC-DEVwrojects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 I I s x.doc The amount of bonded indebtedness, to be repaid in whole or in part from the allocation of taxes pursuant to Section 33670 of the Redevelopment Law, which can be outstanding at one time shall not exceed $100.0 150.0 million, except by amendment to this Plan. That Section 1 100 of the Redevelopment Plan entitled "Duration of Plan" is hereby amended to modify the Ist 2"d 3`d. 4` , 5th and 6th paragraphs to read as follows (Changes are in redline and strikethrough): "With respect to the E.J. Christmanl Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on Nave-1-8,-2009 December 18, 2020. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the South Bay Town and Country Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on June-24, 2015 July 25, 2026. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the Center City Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on April 1-3-201-6May 13, 2027. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the E.J. Christman2 Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on Dece be*'-1-3 20-1-7 January 13, 2029. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the Downtown Original Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on December 1,-202-1 January 1, 2032. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the Downtown 1985 Amendment Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on April-;o, 2025 May 16, 2036. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." EXHIBIT "Q" Page 4 of 5 S:\TRC-DEV\Projects\PROSPEC 1\National City Public Works Center\DDA\EXECIJTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc That Exhibit D of the Redevelopment Plan entitled "Location of Real Property Potentially Subject to Acquisition by Eminent Domain" is hereby amended to add 1st and 2"d bullet points as follows: Existing Area (as defined in Section 300 of this Plan) • All parcels located between Highland Avenue and Interstate 805 on the north and south sides of Plaza Boulevard as indicated on the attached map. All parcels located between East 18th Street on the north Interstate 805 on the east Highway 54 on the south and "N" & Palm Avenues on the east as indicated on the attached map. • All parcels located immediately east and adjacent to National City Boulevard, between... EXHIBIT "Q" Page 5 of 5 S:\TRC-DEV\ProjectslPROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES MA v 6 6 II s x.doc EXHIBIT "R" HOME PROGRAM REQUIREMENTS A. Affordability. Developer shall ensure that the housing assisted with HOME funds meets the affordability requirements of 24 CFR 92 and 94, as applicable. B. Affirmative Marketing Procedures. Developer shall adopt affirmative marketing procedures and requirements for all HOME assisted housing in compliance with 24 CFR § 92.351, as well as City's affirmative marketing responsibilities. Affirmative marketing steps consists, at a minimum, of actions to provide information and otherwise attract eligible persons from all racial, ethnic, and gender groups in the housing market area to the available housing assistance program The procedures and requirements must include methods for informing the public and owners about fair housing laws and policies so as to ensure that all individuals, without regard to race, color, national origin, religion, or sex are given an equal opportunity to participate in the program. Developer shall be solely responsible for the effective marketing responsibilities necessary to achieve Developer's production goals set forth in Section 2. C. Environmental Review. The City has assessed the activities carried out under this agreement in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) and the related authorities listed in HUD's implementing regulations at 24 CFR parts 50 and 58. The City has determined that the activities described in the Scope of Work are exempt from environmental review as described at 24 CFR 58.35(b) 6. D. Displacement, Relocation, and Acquisition. Developer will comply with 24 CFR § 92.353 if any individual or business is displaced or relocated as a result of any predevelopment activities. E. Procurement. Unless specified otherwise within this agreement, Developer shall procure all materials, property, or services in accordance with the requirements of 24 CFR 84.40-48. Developer will follow their written policy for procurement. F. HOME Program Conflict of Interest. No member, officer or employee of City or its designees or agents; no member of the governing body of the locality in which the Program is situated; and no other public official of such locality or localities, who exercises any functions or responsibilities with respect to the program funded hereunder during their tenure or for one year thereafter, shall have any interest, direct or indirect, in any Contract or subcontract, or the proceeds thereof, for work to be performed hereunder. Developer agrees to incorporate, or cause to be incorporated, like language prohibiting such interest in all contracts and subcontracts hereunder. No officer, employee, member or program participant of Developer its contractors or its subcontractors shall have a financial interest, direct or indirect, in this Contract or the monies transferred hereunder or be financially interested, directly or indirectly, in the EXHIBIT "R" Page I of 5 S\TRC-DFV\Projects\PROSPEC1\National City Public Works Center\DDA\EXECUTED DOCIIMENTS\FI.ECTRONIC VERSION OF FILES\DDA v 66 II s x.doc sale to Developer of any land, materials, supplies or services purchased with any funds transferred hereunder, except on behalf of Developer, as an officer, employee, member or program participant. Any willful violation of this paragraph with the knowledge, expressed or implied, of Developer or its subcontractors shall render this Contract voidable by City. G. Lead -Based Paint Hazards. Developer agrees that any residential structures with assistance provided under this Agreement shall be subject to HUD Lead -Based Paint Regulations at 24 CFR Part 92.355. Such regulations pertain to all HOME -assisted housing and require that all owners, prospective owners, and tenants of properties constructed prior to 1978 be properly notified that such properties may include lead -based paint. Such notification shall point out the hazards of lead -based paint and explain the symptoms, treatment and precautions that should be taken when dealing with lead -based paint poisoning and the advisability and availability of blood lead level screening for children under seven. The notice should also point out that if lead - based paint is found on the property, abatement measures may be undertaken. The regulations further require that, depending on the amount of Federal funds applied to a property, paint testing, risk assessment, treatment and/or abatement may be conducted. H. Flood Disaster Protection. In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001), Developer shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation). I. Reversion of Assets. Upon the termination or expiration of the term of this Agreement, Developer must transfer to the City any HOME funds on hand at the time of expiration and any accounts receivable attributable to the use of HOME funds. J. Program Income. All program income produced or funds recaptured under this Contract Agreement and obtained by Developer shall be retained by Developer during the contract period for eligible uses on the Project. Developer shall refund any program income to the City attributable to the use of HOME funds under this agreement at the time of cancellation, expiration, or termination. K. Program Monitoring. In accordance with 24 CFR § 92.254, the City will monitor Developer, no less than one (1) time per year. Each review shall also include, but not be limited to on -site inspections to determine compliance with all HOME regulations and standards. Developer shall fully cooperate with the City in monitoring the effectiveness and work performed by Developer in compliance with the terms of the Agreement. City shall have access at a reasonable hour to all offices and records (dealing with the use of funds that are the basis of this Agreement) of Developer, it officers, directors, agents, employees, and subcontractors for the purposes of such monitoring. City shall give Developer reasonable notice for accessing offices and records. EXHIBIT "R" Page 2 of 5 S:YCRC-DEV\Projects\PROSPECT \National City Public Works Center\DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc L. Uniform Administrative Requirements. Developer agrees to comply with the HOME requirements 24 CFR § 92.505 and the requirements and standards of OMB Circular A-122, "Cost Principles for Non -Profit Organizations" and with the following Attachments to OMB Circular No. A-110 and any changes to either Circular. It is understood that certain items below may not be applicable to Developer's operations and to the performance of this contract: a) Attachment A, "Cash Depositories," except for Paragraph 4 concerning deposit insurance; b) Attachment B, "Bonding and Insurance"; c) Attachment C, "Retention and Custodial Requirements for Records"; d) Attachment F, "Standards for Financial Management Systems"; e) Attachment H, "Monitoring and Reporting Program Performance," paragraph 2; f) Attachment N, "Property Management Standards," except for paragraph 3 concerning the standards; g) Attachment 0, "Procurement Standards"; and h) Attachment P, "Audit Requirements." i) Audits must be conducted in accordance with 24 CFR Part 44 and OMB Circular A-133. M. Enforcement of the Agreement. If assisted housing does not meet the applicable requirements under 24 CFR § 92.252 the CHDO Predevelopment Funds provided to the assisted project must be repaid to Developer within 60 days of failure to comply. Specific property recapture provisions must be stated in a HOME Affordability Agreement between the City and Developer that sates how the applicable requirements of 24 CFR § 92.252 will be met. N. Hatch Act. Developer agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of the U.S.C. O. Conflict of Interest. Developer agrees to abide by the provisions of 24 CFR 84.42 and 570.611, which include (but are not limited to) the following: a. Developer shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds. b. No employee, officer or agent of Developer shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. EXHIBIT "R" Page 3 of 5 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Center \DDA\EXECUTED DOCUMENTS\ELECTRONIC VERSION OF FILES\DDA v 6 6 11 s x.doc c. No covered persons who exercise or have exercised any functions or responsibilities with respect to HOME -assisted activities, or who are in a position to participate in a decision -making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the HOME - assisted activity, or with respect to the proceeds from the HOME -assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a "covered person" includes any person who is an employee, agent, consultant, officer, or elected or appointed official of the Grantee, Developer, or any designated public agency. P. Lobbying. Developer hereby certifies that: a) No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; b) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and c) It will require that the language of paragraph (d) of this certification be included in the award documents for all sub awards at all tiers (including subcontracts, sub grants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients and contractors shall certify and disclose accordingly: d) Lobbying Certification. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure_ Q. Conditions for Religious Organizations. If applicable, Developer must meet the conditions in 24 CDF Part 92.257 regarding the use of HOME funds involving a primarily religious entity. EXHIBIT "R" Page 4 of 5 S:\TRC-DEV\Projects1PROSPECT\National City Public Works Center\DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 1 I s x.doc R. Closeout. HOME funds will be closed out in accordance with procedures established by HUD. EXHIBIT "R" Page 5 of 5 S:\TRC-DEV\Projects\PROSPECT\National City Public Works Ccntcr\DDA\EXECUTED DOCUMENTSIELECTRONIC VERSION OF FILES\DDA v 6 6 II s x.doc RESOLUTION NO. 2011 — 136 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AND PARADISE CREEK HOUSING PARTNERS, LP FOR THE DEVELOPMENT OF 201 UNITS OF AFFORDABLE HOUSING, PUBLIC FACILITIES, OPEN SPACES, AND COMMUNITY SERVICES ON 12.75 ACRES KNOWN AS THE NATIONAL CITY PUBLIC WORKS CENTER AND ILLES FAMILY TRUST SITE WHEREAS, as the result of a competitive request for qualifications process, the Community Development Commission of the City of National City ("CDC"), Related Companies of California, and Community Housing Works entered into an Exclusive Negotiation Agreement on March 3, 2009, to plan for an infill affordable housing project described in the Westside Specific Plan; and WHEREAS, the City of National City owns all of the sites needed to develop the project (APN Nos. 560-206-03, 05, 560-391-05, 10, 08, 560-396-06, 559-104-10, 559-124-05, 559-125-15); and WHEREAS, Related Companies of California and Community Housing Works formed the Limited Partnership called Paradise Creek Housing Partners, LP to complete the project; and WHEREAS, development of the proposed 201-unit infill affordable transit - oriented project is consistent with the Redevelopment Plan for the National City Redevelopment Project, the National City General Plan, and the Westside Specific Plan; and WHEREAS, the CDC pledges to fund: 1. Phase I of the project — 109 housing units and the expansion of Paradise Creek Education Park with $6,000 in Low Moderate Housing Fund reserves and $14,957,000 in 2011 Tax Allocation Bond proceeds; and 2. Phase II of the project — 92 housing units with $14,909,000 in future Tax Allocation Bond proceeds. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby approves a Disposition and Development Agreement by and between the Community Development Commission of the City of National City and Paradise Creek Housing Partners, LP for the development of 201 units of affordable housing, public facilities, open spaces, and community services on 12.75 acres known as the National City Public Works Center and Illes Family Trust site. Said Disposition and Development Agreement is on file in the office of the City Clerk. Resolution No. 2011 — 136 Page Two BE IT FURTHER RESOLVED that the environmental affects of the infill affordable housing project which is the subject of this DDA, have been fully assessed, analyzed, and addressed in the Final Environmental Impact Report SCH No. 2008071092 for the Westside Specific Plan, certified by the City Council on March 16, 2010, and there are no substantive changes to the project that would require further environmental review. BE IT FURTHER RESOLVED that the Community Development Commission Board has considered that the Final Environmental Impact Report SCH No. 2008071092 for the Westside Specific Plan serves as adequate environmental documentation, together with any comments received during the public review process, and finds on the basis of the whole record that that the project was adequately considered by the Final Environmental Impact Report, which reflects the Community Development Commission Board's independent judgment and analysis, and hereby authorizes the filing of a Notice of Determination. PASSED and ADOPTED this 21st day of June, 2011 on Morrison, Chairman ATTEST: A ROVED AS TFORM: VI ..�.. t . •aG.Silva General Co Passed and adopted by the Community Development Commission of the City of National City, California, on June 21, 2011, by the following vote, to -wit: Ayes: Commissioners Morrison, Natividad, Rios, Sotelo-Solis, Zarate. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Community Development Commission Secretary, Community Development Commission By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2011-136 of the Community Development Commission of the City of National City, California, passed and adopted on June 21, 2011. Secretary, Community Development Commission By: Deputy t. 11 - CITY OF NATIONAL CITY, CALIFORNIA COMMUNITY DEVELOPMENT COMMISSION AGENDA STATEMENT MEETING DATE: June 21, 2011 AGENDA ITEM NO. 133 ITEM TITLE: A resolution of the Community Development Commission of the City of National City approving a Disposition and Development Agreement with Paradise Creek Housing Partners LP providing for the development of 201 units of infill affordable housing, public facilities, open spaces and community services on 12.75 acres known as the National City Public Works Center (2200 Hoover Avenue) and former Illes Family Trust site (2020 Hoover). (Low Mod Housing funds.) (Companion items)., PREPARED BY: Patricia Beard PHONE: 4255 DEPARTMENT: jadeyelopment APPROVED BY. EXPLANATION: Following a 2008 community design process and competitive Request for Qualifications, a partnership of Related Companies of California and Community Housing Works — i.e. Paradise Creek Housing Partners LP, was selected on March 3, 2009 to work exclusively with the CDC to plan for an infill affordable housing project consistent with the Westside Specific Plan adjacent to Paradise Creek between 18th and 22nd Streets. After more than two years of effort together on this very complicated site and project, the attached Agreement will allow the CDC and developer to move into detailed planning, followed by construction. Please see the attached Background Report for a detailed explanation of the project and its terms. The project represents the largest financial commitment to a project in the history )f the CDC. FINANCIAL STATEMENT: ACCOUNT NO. 522-409-500-598-3934 APPROVED: Finance 522-409-500-598-3934. This Agreement would commit $6,000,000 in Low Mod Housing Funds reserves and $14,957,000 in 2011 Low Mod Bond funds for Phase I and, if the 2011 Redevelopment I Plan Amendment is successful, anticipates the commitment of $14,909,000 in Low Mod Bond funds for Phase II. A total of $35,866,000 is the necessary CDC assistance for the full project. Additionally the CDC would commit up to $6 million in Low Moderate Housing set aside funds for remediation and relocation of Public Works. ENVIRONMENTAL REVIEW: The certified Environmental Impact Report for the Westside Specific Plan analyzed a Transit Oriented Development for this site. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Adopt the resolution. BOARD I COMMISSION RECOMMENDATION: `TTACHMENTS: 1. Background Report 2. Proposed Agreement cc:� --c L. Ll�ICt- 1. c. . RESOLUTION NO. 2011 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AND PARADISE CREEK HOUSING PARTNERS, LP FOR THE DEVELOPMENT OF 201 UNITS OF AFFORDABLE HOUSING, PUBLIC FACILITIES, OPEN SPACES, AND COMMUNITY SERVICES ON 12.75 ACRES KNOWN AS THE NATIONAL CITY PUBLIC WORKS CENTER AND ILLES FAMILY TRUST SITE WHEREAS, as the result of a competitive request for qualifications process, the Community Development Commission of the City of National City ("CDC"), Related Companies of California, and Community Housing Works entered into an Exclusive Negotiation Agreement on March 3, 2009, to plan for an infill affordable housing project described in the Westside Specific Plan; and WHEREAS, the City of National City owns all of the sites needed to develop the project (APN Nos. 560-206-03, 05, 560-391-05, 10, 08, 560-396-06, 559-104-10, 559-124-05, 559-125-15); and WHEREAS, Related Companies of California and Community Housing Works formed the Limited Partnership called Paradise Creek Housing Partners, LP to complete the project; and WHEREAS, development of the proposed 201-unit infill affordable transit - oriented project is consistent with the Redevelopment Plan for the National City Redevelopment Project, the National City General Plan, and the Westside Specific Plan; and WHEREAS, the CDC pledges to fund: 1. Phase I of the project — 109 housing units and the expansion of Paradise Creek Education Park with $6,000 in Low Moderate Housing Fund reserves and $14,957,000 in 2011 Tax Allocation Bond proceeds; and 2. Phase II of the project — 92 housing units with $14,909,000 in future Tax Allocation Bond proceeds. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby approves a Disposition and Development Agreement by and between the Community Development Commission of the City of National City and Paradise Creek Housing Partners, LP for the development of 201 units of affordable housing, public facilities, open spaces, and community services on 12.75 acres known as the National City Public Works Center and Illes Family Trust site. Said Disposition and Development Agreement is on file in the office of the City Clerk. Resolution No. 2011 — Page Two BE IT FURTHER RESOLVED that the environmental affects of the infill affordable housing project which is the subject of this DDA, have been fully assessed, analyzed, and addressed in the Final Environmental Impact Report SCH No. 2008071092 for the Westside Specific Plan, certified by the City Council on March 16, 2010, and there are no substantive changes to the project that would require further environmental review. BE IT FURTHER RESOLVED that the Community Development Commission Board has considered that the Final Environmental Impact Report SCH No. 2008071092 for the Westside Specific Plan serves as adequate environmental documentation, together with any comments received during the public review process, and finds on the basis of the whole record that that the project was adequately considered by the Final Environmental Impact Report, which reflects the Community Development Commission Board's independent judgment and analysis, and hereby authorizes the filing of a Notice of Determination. PASSED and ADOPTED this 21st day of June, 2011. Ron Morrison, Chairman ATTEST: Brad Raulston, Secretary APPROVED AS TO FORM: Claudia G. Silva CDC General Council ATTACHMENT 1 BACKGROUND REPORT Project Background: This project seeks to meet the objectives of the Westside Specific Plan through developing a transit oriented affordable housing project near the 24th Street Trolley Station. • Goal 3.9 (page 30) of the Westside Specific Plan states "Actively pursue partnerships to construct 200 affordable housing units throughout the plan area and to concentrate efforts towards meeting affordable housing goals on parcels surrounding Paradise Creek." • Strategy 3.9 (page 31) states "Require dedication of open space easements for parkland adjacent to Paradise Creek, including passive and active recreation, trails and habitat restoration." • The Land Use section of the Plan (Chapter 3, page 37) calls for Transit Oriented Development on the larger underutilized lands north of the Trolley Station to be developed at a maximum height of five stories and 65-feet including ground level parking. A maximum density of 60 dwelling units per acre is specified. • "Development of the area immediately south of Kimball School will be primarily used for developing affordable housing and supportive services." The Plan, on page 38, reflects an early conceptual site plan prepared by the selected developers. Project Description: The project is a two-phase 201 affordable housing project, including Paradise Creek improvements, park improvements and community facilities, on 12.75 acres owned currently by the City of National City and within unimproved street rights of way. It will be three stories over at grade parking (a slight excavation for parking will take place at the extreme northwest of the project due to topography). The number of units in the project has been determined by the developer to achieve density levels necessary to leverage state funds for the project and still implement a development scale that is attractive to families. The total project cost will be $75,961,000 plus Public Works relocation and site remediation estimated at not -to -exceed $6 million. Phase I equals $42,911,000 including $4,664,000 in California Proposition 1C funds. Phase II equals $33,050,000 including $3,936,000 in California Proposition 1C funds. Phase I: $42,911,000 including $4,664,000 in California Proposition 1C funds, and $20,957,000 in local public subsidy. By acting to approve this DDA the CDC would commit to the local public subsidy as follows: Phase I • $14,957,000 in 2011 Tax Allocation Bond funds, • $5,404,508 in local low moderate housing fund reserve funds, Background report for WITOD DDA 6-21-11 • $500,000 in California Prop 1 C Catalyst Projects for California Funds, • $95,492 in locally issued HOME federal funds. The local low moderate housing fund reserve subsidy could be reduced by $756,000 if Project Based Section 8 Vouchers can be successful won for this phase*, • Phase I also includes relocation of Public Works and site remediation to be paid for from low moderate housing funds for Fiscal Year 2011-12. Phase II • $14,909,000 in Tax Allocation Bond funding. This subsidy could be reduced by $644,000 if Project Based Section 8 Vouchers can be successfully won for this phase*. Scope of Development: Phase I consists of 109-units primarily located on the current site of the National City Public Works Center. Phase II consists of 92- units primarily on the Illes Family Trust site and the west side of Paradise Creek. A concept plan is included as Exhibit B of the Disposition and Development Agreement ("DDA"). The expansion and improvement of Paradise Creek Education Park will be fully constructed as part of Phase I of the project. When completed, Paradise Creek Education Park will be fully accessible to the general public and not restricted to project residents. Common facilities anticipated include laundry facilities, a community room, office space, a swimming pool, barbeque area and tot lot. A community garden is also being considered. The project will also include an enhanced streetscape along 22nd Street to the 24th Street Trolley Station. Project Timing: The project benefits from an award of $8.6 in California Proposition 1C bond funds which must be expended by March, 2016. Accordingly, the Schedule of Performance provides certain generous time frames in the hopes of avoiding DDA amendments for schedule but require project completion by March, 2016. For the first 120 days, the developer will conduct due diligence activities such as geotechnical studies and the CDC will complete and seek approval of a Property Mitigation Plan ("PMP") for remediation of hazardous materials from the California Department of Toxic Substances Control. Following due diligence and approval of the PMP, the developer will prepare application and submit for land use entitlements for the project. During this phase the public will be included in final site design, aesthetic considerations and park and open space planning. At latest, the entitlements will be achieved for the project 13 months after execution of the DDA. Following entitlements and the completion of the CDC's portion of activities under the PMP, construction documents will be prepared, the project will be competitively bid and construction will commence. Background report for WITOD DDA 6-21-11 Paradise Creek: In response to requests from Paradise Creek Educational Park Incorporated, the current concept plan shows the project set back from Paradise Creek farther than was shown in the concept plan included in the Westside Specific Plan. Detailed planning for the open space around Paradise Creek, in conjunction with community, stakeholder and potential funder participation, will be completed as part of design development following the due diligence period in the DDA. As stated earlier in this report, although the open space expansion will be developed by the project, the improvements will be open to the public. Affordability and Unit Sizes: In order to achieve maximum affordability for this project staff and the developer intend to seek Project Based Section 8 Vouchers for 25-percent of the units. These Vouchers, which cannot be pre -committed in the DDA and which will be subject to an open competitive process, would reduce rents in 25-percent of the project to 30-percent of the residents income, with the balance being paid by the federal government. (Note — 25-percent is the maximum amount of Project Based Section 8 Vouchers allowed by HUD.) The rents currently shown in the project pro forma are set at levels required by California Redevelopment Law and the Low Income Housing Tax Credit ("TCAC") program. Forty-nine (49) percent of the units will be restricted by "redevelopment rents" and 51-percent by TCAC. The unit mix and affordability is as follows (AMI means "Area Median Income" — a formula for establishing affordable rents): Phase I Phase II TOTAL Units at 30% AMI 12 11 23 Units at 40% AMI 23 21 44 Units at 50% AMI 73 59 132 Manager Unit 1 1 2 TOTAL 109 92 201 The proposed unit sizes are as follows: Phase I Phase II TOTAL Studio 0 6 6 One bedroom 24 21 45 Two bedroom 49 36 85 Three bedroom 36 29 65 TOTAL 109 92 201 Basic Deal Terms: The Summary (or "33433") Report that is a companion item to the DDA explains the deal terms for the disposition of the Public Works Center Background report for WITOD DDA 6-21-11 and Illes Family Trust site for the project. A basic summary of those terms is as follows: • Once construction is complete and the project is occupied by tenants, the developer will lease the site for 99 years; • The project will remain affordable for at least 55 years; • Rents will be paid to the City of National City General Fund of $75,000 (plus escalation for Years 31 — 55) for 55 years, thereafter either negotiation or an appraisal will be used to establish rents for years 56 — 99*; • The lease -hold will exclude Paradise Creek open space and park; the parcel for this space will be defined during the entitlement process and the City will maintain this space consistent with its maintenance of other City parks; • There is no developer profit in the project. The developer will be paid the fee allowed by TCAC: $2.5 million for each phase or $5 million total; • $6 million in CDC low moderate housing funds reserves and non -local funds will be loaned to the developers for use in the project; • Tax exempt CDC bond funds will be granted to non-profit Community Housing Works, which will loan the funds to the for -profit developer. These funds amount to $14,957,000 for Phase I and $14,909,000 for Phase II (the grant agreement, including uses of repaid grant funds, is a companion item to the DDA on this evening's agenda); • The CDC will relocate the Public Works Center and remediate the site using funds additional to the subsidy. These funds — estimated at $4 — 6 million — are available in the existing Capital Improvement Budget and 2011-12 Low Mod Housing funds; • The developer will apply for 4-percent low income housing tax credits and Project Based Section 8 Vouchers for both phases; and • The final, actual project subsidy will only be the total necessary for the project. The amounts shown in this staff report are the highest amounts and can be reduced by grants and Project Based Section 8 Vouchers. Service Programming: Community Housing Works will provide bilingual, age appropriate services to residents of the project. Services will include: • After school computer access, tutoring; • Family education on sustainable ("green") practices, work readiness and vocational and leadership training; • Financial fitness training focused on sustainable financial goals; and • Homebuyer education — an incubator to provide education and counseling to assist residents in realizing the dream of home ownership. Residents will also have access to first-time homebuyer loans after completion of the educational program. Leveraging of Local Funds: City staff and the developers have been actively pursuing non -local funds to assist funding this project. Certain non -local funds Background report for W1TOD DDA 6-21-11 secured to date are included in the subsidy amount and future non -local funds secured may help to reduce the subsidy amount. Non -local funding secured to date: • $8.6 million — Prop 1C Infill Infrastructure funding; • $500,000 Proposition 1C Catalyst Projects for California Funding; • $95,492 in City -issued HOME federal funds; • $330,000 in pre-DDA environmental studies and technical support has been provided by the US Environmental Protection Agency that is not included in the financial documents for the project; and • $130,000 in pre-DDA due diligence environmental studies has been provided by the California Department of Toxic Substances Control. Non -local funding to be pursued in the future: • 27 Project Based Section 8 Vouchers for Phase 1 and 23 Project Based Section 8 Vouchers for Phase II. Each Section 8 Voucher has a value of $28,000 and could reduce the CDC subsidy*; • Potential EPA site clean-up funds for the Illes Trust site (value to be determined) which would reduce the CDC's remediation costs; • Other funding from the Department of Housing and Urban Development; • Potential state funding from the California Coastal Conservancy to assist with development of Paradise Creek Education Park valued at up to $1.6 million which would reduce the CDC subsidy; and • 4-percent low income housing tax credits already presumed in the subsidy. *Note: as stated in the DDA, should Project Based Section 8 Vouchers be awarded to the project the rents paid to the City's General Fund will be increased on a pro rata basis. Should all desired Vouchers be obtained for the project the annual rent will increase from $75,000 to $131,000 per year. Security of Funds: Although all real estate projects involve risk, the CDC has attempted to secure its funds in the event of a project failure. A pre -development loan, within the total amount of the subsidy, of not to exceed $3,741,600, will be made to cover the costs of developer due diligence and pre - development expenses. These funds are subject to a guaranty from the developer, which would pay the CDC back in the event of a default of the DDA or provide the CDC with the drawings and land use entitlements necessary to complete the project with an alternate developer. Should circumstances other than a default and beyond the control of the CDC and/or developer occur, the DDA could be terminated. The land for the project will be secure as it will not be subordinated to the loans for the project. Background report for WITOD DDA 6-21-11 • DISPOSITION AND DEVELOPMENT AGREEMENT [Transit -Oriented Infill Affordable Housing and Paradise Creek Enhancement Project] By and Between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY and PARADISE CREEK HOUSING PARTNERS, L.P. Dated as of June 21, 2011 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I .doc DISPOSITION AND DEVELOPMENT AGREEMENT [Transit Oriented Will Affordable Housing and Paradise Creek Enhancement Project I THIS DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") dated, for identification purposes only, as of June 21, 2011 (the "Effective Date"), is made and entered into by and between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY ("Commission"), a public body, corporate and politic (the "Commission"), and PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership (the "Developer"), with reference to the following: RECITALS A. WHEREAS, the administrative and managing general partners of Developer are experienced developers, owners and operators of affordable housing in California; B. WHEREAS, City owns approximately 12.75 acres of land located on either side of Paradise Creek and near the 24th Street Metropolitan Transit System Trolley Station, between Harding Avenue, 19th Street, Hoover Avenue, and West 22nd Street (the "Site") as shown on the Site Map attached hereto as Exhibit ["A"] (the "Site Map"). For purposes of reference, the Site includes the "Public Works Yard" and the "Illes Trust Property." The Public Works Yard contains an area of approximately 11.33 acres and is more particularly described on Exhibit "A- 1" attached hereto. The Illes Trust Property contains an area of approximately 1.42 acres and is more particularly described in Exhibit ["A-2;"] C. WHEREAS, a stretch of Paradise Creek and adjoining land area on each side thereof [the precise dimensions of which area will be determined during the Land Use Entitlement process] is not part of the Site (the "Paradise Creek Parcel"), but will be owned by the City of National City (the "City"), improved as open space by Developer as an off -site improvement in accordance with this Agreement, and thereafter maintained by City; D. WHEREAS, pursuant to the terms and conditions of this Agreement and as more particularly provided herein, the parties hereto desire: 1. for Developer, pursuant to a parcel map to be prepared by Developer and approved by City, to create out of the Site two (2) development parcels (the "Phase I Parcel," the "Phase II Parcel" and/or a "Parcel" or the "Parcels") and the Paradise Creek Parcel, which Parcels shall be generally consistent with the "Conceptual Development Program" attached hereto as Exhibit ["B,"] as such Conceptual Development Program may be modified in the course of the Land Use Entitlement process for the Site; 2. for Commission and Developer to enter into a ground lease for the Phase I Parcel for the development thereon of three (3) buildings containing a 109-unit affordable rental housing project for persons and families of very low and low-income ("Phase I"); 3. for Commission and Developer, subsequently, to enter into a ground lease for the Phase II Parcel for the development thereon of two (2) buildings containing an additional 92-unit affordable rental housing project for persons and families of very low and low-income ("Phase II"); • 1 1\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-I I.doc • 4. for Developer to make, concurrent with the development of Phase I and without limitation, the following off -site improvements: (a) improvement of the Paradise Creek Parcel, and (b) improvement and expansion, for the benefit of the entire community, of Paradise Creek Educational Park and the recreational area designated on Exhibit ["A"]; 5. for Phase I to include certain community facilities for the use of the residents of both Phase I and Phase II; and 6. for Developer to provide certain social services for the benefit of all of the residents of the Project. E. WHEREAS, in order to defray a portion of the Project Cost, Developer, as more particularly provided in Exhibit ["C"] attached hereto, has been awarded approximately $8,600,000 in certain financial assistance by the California Department of Housing and Community Development ("HCD") under its Multifamily Housing Program, with such funding coming from the Housing and Emergency Shelter Trust Fund Act of 2006 (Proposition 1C) (the "Proposition IC Financial Assistance"); and F. WHEREAS, in order to make the Project financially feasible, Commission will also make a subordinate loan to Developer for each Phase. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, Commission and Developer hereto agree as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. As used in this Agreement (including in the Recitals above), capitalized terms arc defined where first used or as set forth in this Section [1.1]. Capitalized terms used in an exhibit attached hereto and not defined therein shall also have the meanings set forth in this Section [1.1]. "AB 389" means the California Land Reuse and Revitalization Act of 2004. "Building Permit" means, for each Phase, all permits issued by City and required for commencement of construction of the Improvements for the subject Phase. "Business Days" means days on which City Hall of City is open to the public for business. "CDLAC" means the California Debt Limit Advisory Committee. "Certificate of Completion" has the meaning set forth in Article [19]. "CHW" means Community HousingWorks, a California nonprofit, public benefit corporation, or an affiliate thereof approved by the Executive Director. 2 1\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc "CHW Fourth Trust Deed Loan Documents for Phase I" means the documents and instruments required by CHW to evidence and secure the CHW Fourth Trust Deed Loan for Phase I. "CHW Fourth Trust Deed Loan for Phase I" has the meaning set forth in Section [9.2(e)]. "CHW Fourth Trust Deed Loan Security Documents for Phase I" means the documents and instruments required by the CHW to secure the CHW Fourth Trust Deed Loan for Phase II. "CHW/Commission Grant Agreement" means that certain Grant Agreement, dated as of even date with this Agreement, by and between CHW and Commission. "CHW Third Trust Deed Loan Documents for Phase I" means the documents and instruments required by CHW to evidence and secure the CHW Third Trust Deed Loan for Phase I. "CHW Third Trust Deed Loan Documents for Phase II" means the documents and instruments required by CHW to evidence and secure the CHW Third Trust Deed Loan for Phase II. "CHW Third Trust Deed Loan for Phase I" has the meaning set forth in Section [9.2(d)]. "CHW Third Trust Deed Loan for Phase II" has the meaning set forth in Section [10.2(d)]. "CHW Third Trust Deed Loan Security Documents for Phase I" means the documents and instruments required by the CHW to secure the CHW Third Trust Deed Loan for Phase I. "CHW Third Trust Deed Loan Security Documents for Phase II" means the documents and instruments required by the CHW to secure the CHW Third Trust Deed Loan for Phase II. "City" means the City of National City, California. "Close of Escrow" means, for each Phase, recordation of the Memorandum of Ground Lease, Senior Loan Security Documents, Commission Subordinate Loan Deed of Trust, Reciprocal Rights Documents, and Notice of Affordable Units, in the Official Records. "Commission Counsel" means Commission general or special counsel. "Commission Subordinate Loan" means, for Phase I, the loan to be made to Developer pursuant to Section [9.3] and, for Phase II, the loan to be made to Developer pursuant to Section [10.3]. • 3 \\edcnt\]atal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc • "Commission Subordinate Loan Closing" means, for each Phase, recordation of the Commission Subordinate Loan Deed of Trust for that Phase in the Official Records. "Commission Subordinate Loan Deed of Trust" means, for each Phase, the deed of trust encumbering Developer's leasehold interest in the Parcel for that Phase, in the form attached hereto as Exhibit ["K"], to be executed by Developer to secure the Commission Subordinate Loan Note for the subject Phase. "Commission Subordinate Loan Documents" means, collectively for each Phase, this Agreement, the Commission Subordinate Loan Note, the Commission Subordinate Loan Deed of Trust and any other agreement, document or instrument that Commission requires in connection with the Commission Subordinate Loan for the subject Phase. "Commission Subordinate Loan Note" means, for each Phase, that certain promissory note in the form attached hereto as Exhibit ["J"], to be executed by Developer in favor of Commission to evidence the obligation of Developer to repay the Commission Subordinate Loan for the subject Phase. "Commission Title Policy" has, for Phase I, the meaning set forth in Section [9.3.4(f)] and, for Phase II, the meaning set forth in Section [10.3.4(f)]. "Conceptual Development Program" has the meaning set forth in Recital ["D(1),"] above, and is attached hereto as Exhibit ["B"]. "Construction" means, for each Phase, construction, pursuant to this Agreement, of the Improvements for the subject Phase. "Construction Lender" means, for each Phase, the first trust deed lender that provides construction financing for the subject Phase. "Construction Lender/Commission Disbursement Agreement" has, for Phase I, the meaning set forth in Section [9.3.3(a)], and, for Phase II, the meaning set forth in Section [10.3.3(a)]. "Construction Loan" means, for each Phase, the construction loan secured by the Senior Loan Security Documents for the subject Phase. "Construction Loan Closing" means, for each Phase, recordation of the Senior Loan Security Documents and the Commission Subordinate Loan Deed of Trust for the subject Phase in the Official Records. "County" means the County of San Diego, California. "Developer" has the meaning set forth in the opening paragraph of this Agreement. "Developer Fee" has, for Phase I, the meaning set forth in Section [9.9], and, for Phase II, the meaning set forth in Section [10.9]. 4 \\cdcnt\datal\users\Pneard\pyatok\Fina1 DDA does\DDA v 6 6 II s x FINAL FINAL 6-8-1 Ldoc "Developer's Predevelopment Expense" has the meaning set forth in Section [7.9]. "Developer Title Policy" has, for Phase I, the meaning set forth in Section [11.6(c)] and, for Phase II, the meaning set forth in Section [12.6(c)]. "Draft PMP" means the form of the Preliminary PMP agreed upon by Commission and Developer to be submitted to DTSC for approval. "DTSC" means the California Department of Toxic Substance Control. "DTSC Partial Certificate" has the meaning set forth in Section [14.1(c)]. "Due Diligence" has the meaning set forth in Section [4.1]. "Due Diligence Period" has the meaning set forth in Section [4.1]. "Effective Date" has the meaning set forth in the opening paragraph of this Agreement. "Escrow" means, for each Phase, the escrow through which (a) the subject Parcel is ground leased to Developer, (b) the Construction Loan Closing for the subject Phase is conducted, (c) the Commission Subordinate Loan Closing for the subject Phase is conducted, and (d) the Proposition 1C Financial Assistance be fully and finally committed to construction of the Improvements by HCD (via the CHW Fourth Trust Deed Loan for Phase I and via the CHW Third Trust Deed Loan for Phase II). subject Phase. "Escrow Holder" means, for each Phase, the firm that holds the Escrow for the "Event of Default" has the meaning set forth in Section [22.1]. "Evidence of Financing" has, for Phase I, the meaning set forth in Section [11.4(c] and, for Phase II, the meaning set forth in Section [12.4(c)]. designee. "Executive Director" means the Executive Director of the Commission or his "Federal 4% Tax Credits" has the meaning set forth in Section [9.2(a)]. "Federal 9% Tax Credits" has the meaning set forth in Section [10.2(a)]. "Final Construction Documents" means, for each Phase, plans, drawings and specifications in sufficient detail to support issuance of a Building Permit for the Improvements of the subject Phase. "Final PMP" means the Property Mitigation Plan for the Site approved by the DTSC. • 5 \\cdcnt\datal\uscrs\PBcard\pyatok\Final DDA docs\DDA v 66 II s x FINAL FINAL 6-8-11.doc • Development. "Final Project Budget" has, for Phase I, the meaning set forth in Section [11.4(b)] and, for Phase II, the meaning set forth in Section [12.4(b)], as such Final Project Budgets may be amended from time -to -time by Agreement of the parties. "Final SPP" means the Site Preparation Plan entered into between Commission and Developer for each Parcel. "General Contractor" has, for Phase I, the meaning set forth in Section [11.4(d)] and, for Phase II, the meaning set forth in Section [12.4(d)]. "Ground Lease" means, for each Phase, the Ground Lease attached hereto in the form of Exhibit ["I,"] as customized for the terms and conditions of the subject Phase. "HCD" means the California Department of Housing and Community "HUD" means the U.S. Department of Housing and Community Development. "Isles Trust Property" has the meaning set forth in Recital ["B,"] above "Improvements" means, for each Phase, the improvements to be made to the subject Parcel in accordance with this Agreement, including, without limitation, in accordance with the Scope of Development and the Final Construction Documents. "Indemnitees" means the Commission, City, and their officers, employees, representatives, agents and volunteers. "Land Use Entitlements" has the meaning set forth in Section [5.1]. "No Further Action Letter" shall have the meaning ascribed in Section [14.1(c)]. "Notices" has the meaning set forth in Article [23]. "Official Records" means the Official Records of the County. "Paradise Creek Educational Park" is the public park located at Coolidge Avenue and West 19t1i Street, in the City of National City. "Paradise Creek Parcel" has the meaning set forth in Recital ["B,"] above "Parcel" means the Phase I Parcel or the Phase Il Parcel as the context requires. "Parcel Map" means the parcel map approved by City or Commission pursuant to Section [6.1]. "Permitted Encumbrances" means, for each Phase, the Senior Loan Security Documents and such other exceptions to title approved by the Executive Director. 6 1\cdcnt\datal\users\PBeard\pyatok1Fnal DDA docs\DDA v 6 6 1 I s x FINAL FINAL 6-8-11 doc "Phase" means either or both Phase I and Phase II as the context requires. "Phase I" means transfer and development of the Phase I Parcel in accordance with the terms and conditions of this Agreement. Phase I may also mean the housing project resulting from completion of Phase I. "Phase II" means transfer and development of the Phase II Parcel in accordance with the terms and conditions of this Agreement. Phase II may also mean the housing project resulting from completion of Phase II. "Phase I Escrow" means the Escrow for Phase I. "Phase I Improvements" means the improvements to be made to the Phase I Parcel pursuant to this Agreement. "Phase II Escrow" means the Escrow for Phase II. "Phase II Improvements" means the improvements to be made to the Phase II Parcel pursuant to this Agreement. "Phase I Parcel" has the meaning set forth in Recital ["D(1),"] above. "Phase II Parcel" has the meaning set forth in Recital ["D(1),"] above. "Phase I Predevelopment Work Loan" has the meaning set forth in Section [7.3]. "Phase I Project" means development of the Phase I Parcel in accordance with the terms and conditions of this Agreement. "Phase II Project" means development of the Phase II Parcel in accordance with the terms and conditions of this Agreement. "Polanco Act" means the Polanco Redevelopment Act (Health & Safety Code §§ 33459.1, et seq.), "Predevelopment Documents" means, for each Phase, any and all plans, studies, drawings, models, reports, permits and Land Use Entitlements for the subject Phase. "Predevelopment Work Loan" means the Phase I Predevelopment Work Loan, the Phase II Predevelopment Work Loan, or both, as the context requires. "Preliminary PMP" has the meaning set forth in Section [4.4(a)]. "Preliminary Project Budget" has, for Phase I, the meaning set forth in Section [9.1] and, for Phase II, the meaning set forth in Section [10.1]. "Preliminary SPP" has the meaning set forth in Section [4.4(b)]. 7 \\cdcnt\datal\users\YBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc • "Prime Rate" means the reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time. "Project" means the Phase I Project, the Phase II Project, or both, as the context reasonably requires. "Project Architect" means Pyatok Architects Inc or Studio E Architects, or such other architect as may be approved by the Executive Director. "Project Budget" means the final budget approved by Developer and the Executive Director for each Phase of the Project. "Project Costs" means, for each Phase, all costs of any nature incurred in connection with development of the subject Phase, including, without limitation, the cost of the Commercial PLL required pursuant to Sections [11.4(f) and 12.4(f)]. "Project Documents" means, collectively for each Phase, this Agreement, the Commission Subordinate Loan Note, the Commission Subordinate Loan Deed of Trust, the Reciprocal Rights Documents, and any other agreement, document or instrument that Developer and Commission enter into for the subject Phase pursuant to this Agreement or in order to effectuate the purposes of this Agreement. "Property" means either or both Parcels as the context may reasonably require. "Proposed Map" has the meaning set forth in Section [6.1]. "Proposition 1C Financial Assistance" has the meaning set forth in Recital ["E,"] above. "Public Works Yard" has the meaning set forth in Recital ["B,"] above "Reciprocal Rights Documents" has the meaning set forth in Section [11.4(y)]. "Redevelopment Plan Amendment" means an amendment to the Redevelopment Plan for the National City Redevelopment Project Area substantially in the form of the draft document attached hereto as Exhibit ["Q"]. "Request for Notice" has, for Phase I, the meaning set forth in Section [9.3.4(d)] and, for Phase II, the meaning set forth in Section [10.3.4(d)]. "Schedule of Performance" means the Schedule of Performance attached hereto as Exhibit ["D"]. "Schematic Design Documents" means the initial architectural design documents for the Improvements, including: refinement, if any, of the Conceptual Development Program; floor plans; exterior elevations; building sections of critical areas; and preliminary landscape plans. 8 \\cdcnt\datal \users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1-doe "Scope of Development" means the Scope of Development attached hereto as Exhibit ["F"], as such Scope of Development shall be amended from time -to -time by Commission and Developer. "Senior Lender" means, for each Phase, the Construction Lender or the Take - Out Lender for the subject Phase, as the context requires, and their successors and assigns. "Senior Loan" means, for each Phase, the respective Construction Loan or Take - Out Loan as the context requires. "Senior Loan Documents" means, for each Phase, the documents and instruments required by the Senior Lender to evidence and secure the Senior Loan for the subject Phase. "Senior Loan Security Documents" means, for each Phase, the documents and instruments required by the Senior Lender to secure the Senior Loan for the subject Phase. "Set -Aside Funds" means funds in Commission's Low and Moderate -Income Housing Fund maintained pursuant to the California Community Redevelopment Law. "Site" has the meaning set forth in Recital ["A,"] above. "Site Map" means the Site Map attached hereto as Exhibit ["A"J. "Site Plan" has the meaning set forth in Section [5.1]. "Take -Out Lender" means, for each Phase, the lending institution that makes the Take -Out Loan for the subject Phase and its successors and assigns. "Take -Out Loan" means, for each Phase, the long-term loan made by the Take - Out Lender to Developer in order to take out the Construction Loan for the subject Phase. "Tax Credits" means, for Phase I, the Federal 4% Tax Credits required to finance Phase I in the manner contemplated in the Preliminary Project Budget for Phase I and Article [9]; and, for Phase II, the Federal 4% Tax Credits required to finance Phase II in the manner contemplated in the Preliminary Project Budget for Phase II and Article [10]; "Tax Credit Funds" has, for Phase I, the meaning set forth in Subdivision [11.4(c)(ii)] and, for Phase II, the meaning set forth in Subdivision [12.4(c)(ii)] "Tax Credit Partner" means, for each Phase, the limited partner in Developer (or assignee) that supplies the Tax Credit Funds for the subject Phase. "TCAC" means the California Tax Credit Allocation Committee. "Title Company" means First American Title Insurance Company or such other title insurance company agreed to by Developer and the Executive Director. • 9 \\cdcnt\datal\usersWBeard\pyatok\Final DDA does\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc • 1.2 Singular 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 Accounting Principles. Any accounting term used and not specifically defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted under this Agreement shall be prepared in conformity with, generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to Commission. 1.4 References and Other Terms. 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 terms "including" and "include" mean "including (include) without limitation". 1.5 Exhibits Incorporated. All attachments to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference. 2. PARTIES 2.1 Commission. Commission is the Community Development Commission of the City of National City and any successor to its rights, powers and responsibilities. The principal offices of Commission are located at 1243 National City Boulevard, National City, California 91950. 2.2 Developer. Developer is Paradise Creek Housing Partners, L.P., a California limited partnership. The principal offices of Developer are located at (a) do The Related Companies of California, 18201 Von Karman Avenue, Suite 900, Irvine, California, 92612, and (b) Community HousingWorks, 4305 University Avenue, Suite 550, San Diego, California, 92105. 3. SCHEDULE OF PERFORMANCE A Schedule of Performance for each Phase of the Project is attached hereto as Exhibit ("D"]. The Schedule of Performance sets forth the times by which the parties are to perform certain obligations under this Agreement. The Schedule of Performance may be modified from time to time by written agreement of Developer and Executive Director. 4. DEVELOPER DUE DILIGENCE, TITLE REVIEW & APPROVAL, & PRELIMINARY PROPERTY MITIGATION & SITE PREPARATION PLANS 4.1 Due Diligence. Developer's obligation to perform its obligations under this Agreement is conditioned on its reasonable determination of its ability to perform this Agreement after an examination of the physical and environmental condition of the Site ("Due Diligence"). Developer shall have until one hundred twenty (120) days after the Effective Date 10 \\cdcnt\datal\users\Plieard\pyatok\Final DDA dots\DDA v 6 6 II s x FINAL FINAL 6-8-I I.doc (the "Due Diligence Period") to conduct such investigations as Developer may choose to determine if this contingency is met. On or before expiration of the Due Diligence Period, Developer shall deliver written notice to Commission of removal of this contingency or termination of this Agreement. Any such notice of termination shall include a reasonably detailed statement by Developer of those findings of Developer that caused it to determine that it could not perform its obligations under this Agreement based on the terms, conditions and assumptions hereof, including, most importantly, the assumptions contained in the Preliminary Project Budget attached hereto. Failure by Developer to notify Commission of termination of this Agreement in a timely manner shall be deemed removal of this contingency. 4.2 Access to Site. As part of its Due Diligence, Developer may conduct such inspections, tests and studies as it determines reasonably necessary. Developer and Developer's consultants, agents, engineers, inspectors, contractors and employees ("Developer's Representatives") shall be given reasonable access to the Site during regular business hours for the purpose of performing such Due Diligence. Except as expressly provided herein to the contrary, Developer shall undertake the Due Diligence at its sole cost and expense. Developer shall indemnify, defend with counsel reasonably satisfactory to the Executive Director, and hold Commission and City harmless from all claims (including claims of lien for work or labor performed or materials or supplies furnished), demands, liabilities, losses; damages, costs, fees, and expenses, including Commission's and/or City's reasonable attorney fees, costs and expenses, arising from the acts and/or activities of Developer and/or Developer's Representatives in, on, or about the Site during and/or arising in connection with Developer's inspections of the Site, other than diminution in value due to any condition at, on or under the Site prior to the Effective Date and discovered during such investigation. 4.3 Title and Survey. Developer's obligation to perform its obligations under this Agreement is conditioned on its approval of title to the Site and an ALTA survey (the "Survey") of the Site. On or prior to the expiration of the Due Diligence Period, Developer shall deliver to Commission written notice of Developer's objections, if any (the "Title Objections"), to any (a) monetary liens and/or encumbrances, and/or (b) other title exceptions revealed by a preliminary title report, underlying documents thereto or the Survey, if such title exception would either (i) materially increase the cost to develop the Project based on the Preliminary Project Budget attached hereto, or (b) be reasonably unacceptable to a Senior Lender and/or Tax Credit Partner. If Developer does not deliver any such objection notice on or prior to the expiration of the Due Diligence Period, Developer shall be deemed to have agreed to accept title to the Site in the condition. In addition, Developer shall have the right to object by delivery of written notice to Commission, on or prior to the earlier of (i) ten (10) Business Days after receipt of notice of a new exception or encumbrance (which was not revealed by the initial preliminary title report), and (ii) one (1) day prior to Close of Escrow for a particular Phase (but in all events no earlier than five (5) Business Days after receipt of notice thereof), to any new items of record; provided, however, if Developer does not deliver any such objection notice, Developer shall be deemed to have accepted such new exception or encumbrance. Within fifteen (15) Business Days of receipt of Developer's Title Objections, Commission shall notify Developer in writing (the "Response Notice") if it is willing to remove any such Title Objections. If (a) Commission fails to send the Response Notice within such fifteen (15)-Business Day period, and (b) Developer's Title Objection included notice that failure to respond within fifteen (15) Business Days will be deemed Commission's agreement to remove certain Title Objections, Commission • 11 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-3-I 1.doc • shall be deemed to have agreed to remove each of the Title Objections from the Site prior to the Close of Escrow for the Phase(s) to which such Title Objections relate. If Commission declines to remove any of the Title Objections, Developer may, within ten (10) Business Days and provided that it is not then in default under this Agreement, terminate this Agreement by notice to Commission; otherwise Developer shall proceed to the Close of Escrow for the applicable Phase and accept title to such Phase subject to such Title Objections remaining uncured by Commission. 4.4 Preliminary Property Mitigation & Site Preparation Plans. Commission, not later than July 21, 2011, shall prepare and submit to Developer for review and approval the following: (a) A preliminary "Property Mitigation Plan" for the Site, the final and completed form of which (following approval by Developer) will be submitted by Commission to the DTSC for approval as soon as reasonably possible (the "Preliminary PMP"); and (b) A preliminary "Site Preparation Plan," final and completed forms of which will be entered into by Commission and Developer for each Phase (the "Preliminary SPP"). The purpose of the Site Preparation Plan for each Phase is to govern the rights and obligations of Commission and Developer as to implementation of the Final PMP for the Project. The Site Preparation Plan for each Phase will acknowledge and/or recognize the following: (c) For purposes of implementation of the Final PMP, neither Developer nor Commission shall be deemed, construed or interpreted as the generator of the hazardous waste to be remediated. Developer and Commission are informed and believe that such designation will be borne by City. Accordingly, City would sign all manifests or other documents required under state or federal law to track such wastes removed from the Property, whether such removal is performed by a contractor under contract to City, Commission, or to Developer. That notwithstanding, Developer acknowledges and agrees that at such time as DTSC acknowledges in writing satisfactory completion of the mitigation measures described in the Final PMP, the obligation of City to sign such manifests or other documents as generator of the waste from the Property shall expire and be of no further force or effect. (d) All ground water monitoring and remediation required by the Final PMP, if any, will be the responsibility of Commission and be performed without cost or expense to Developer. (e) In no case shall Developer be required to perform any in situ remediation of hazardous waste for the Project. (f) The Final PMP may require measures such as installation of vapor barriers on building pads and/or paving over residual hazardous materials to prevent exposure. The reasonable cost of any such required work that would not 12 \\cdcnt\fatal\users \PBeard\pyatok nal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc otherwise independently be required in the ordinary course of construction of the Project (e.g., vapor barriers if required) shall be the obligation of Commission. Any such required work that would otherwise independently be required in the ordinary course of construction of the Project (e.g., paving over residual hazardous materials to prevent exposure if required) shall be the obligation of Developer to be paid for as a Project Cost. As of the date of this Agreement, it is the intention of the parties that the Site Preparation Plans will include, among other things: (g) That Commission, prior to the Close of Escrow for the subject Parcel and without cost or expense to Developer, first will perform certain of the remediation of all surficial expressions of hazardous waste to the extent necessary to achieve regulatory compliance, but not to a depth greater than ten (10) feet, except to the extent necessary to remediate groundwater contamination. (h) That Developer will, upon completion by Commission of the work described in (g) immediately above and by notice from the Executive Director, be given access to the subject Parcel for the purpose of performing, at the cost and expense of Commission but in conjunction with certain Developer regular site preparation work independently required for the Phase (to be paid for by Developer as a Project Cost and funded out of the Predevelopment Work Loan for the subject Phase), that portion of the remediation work (should any be required) most logically and cost-effectively performed with that site preparation work. Such work may include (a) removal of hazardous wastes exposed by Commission in performance of its obligation under (g) immediately above but residing at a depth greater than ten (10) feet, and (b) removal of hazardous wastes encountered in the course of the grading performed as part of the site preparation work independently required for the Phase. That notwithstanding, Developer's obligation to perform any such remediation work shall be subject to the following conditions: (i) City shall sign all transportation manifests required under state or federal law to track such wastes removed from the Property; (ii) City shall designate the proper offsite disposal site for such waste; (iii) If the cumulative sum for remediation under this subsection (h) reaches $50,000, Developer, by notice to Commission, may relinquish the Parcel to Commission which then shall promptly remediate the remaining waste in accordance with the Final PMP, after which Developer shall promptly be readmitted to the Parcel for the purpose of completing its regular site preparation work; (iv) Commission shall indemnify, defend and hold harmless Developer from all costs, losses, liabilities, claims, actions or expenses arising 13 \\cdcnt\datal\uscrs\PBcard\pyatok\Final DDA do s\DDA v 6 6 II s x FINAL FINAL 6-8-1 I .doc from or related to the pre-existing, historical hazardous wastes on the Site requiring remediation or removal from the Site pursuant to this subsection (h), any other provision of this Agreement, the Site Preparation Plan, or the Final PMP. The access necessary hereunder will be provided to Developer on a schedule designed to permit Developer to complete its portion of the work not less than sixty (60) days prior to the Close of Escrow for the subject Phase, so as to give DTSC time within which to issue the DTSC Partial Certificate prior to Close of Escrow. (i) That Developer, during the course of construction of the subject Phase, will complete certain of the remediation work required under the Final PMP but not part of the site preparation work, such as installation of vapor barriers on building pads and paving over residual hazardous materials to prevent exposure. (j) The method or methods by which the cost to be borne by Commission for remediation of the subject Parcel will be separated from Project Costs to be borne by Developer. The Site Preparation Plan will also provide for prompt payment by Commission to Developer of the cost to be borne by Commission and reimbursed to Developer. (k) The Site Preparation Plan for Phase I will provide that a default thereunder shall constitute an Event of Default under this Agreement. (1) The Site Preparation Plan for Phase II, if any, will provide that a default thereunder shall constitute an Event of Default under this Agreement. If, however, such default occurs after Close of Escrow for Phase I, then such Event of Default under this Agreement would be as to Phase II only. Developer, not later than twenty (20) Business Days after receipt from Commission of the Preliminary PMP and SPP, shall approve, conditionally approve or disapprove each document, which approval shall not be unreasonably withheld. If Developer reasonably disapproves either document, either Commission or Developer, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), shall have the right to terminate this Agreement by notice to the other party. If Developer conditionally approves either or both documents, Commission, within ten (10) Business Days, shall notify Developer either that (a) it accepts Developer's conditions in full, or (b) it desires to meet and confer with Developer about one or more conditions. If Commission selects option (b), the parties shall meet and confer for up to ten (10) Business Days to resolve their differences. If, at the end of such period, material differences remain between the parties, either party, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by notice to the other party. Further discussion of the Final PMP and the Final SPP for each Phase is set forth in Article [14,] below. 14 11cdcnt\data1\users\PBeardlpyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc 5. SITE PLAN/LAND USE ENTITLEMENTS 5.1 Application. Developer, by the time provided in the Schedule of Performance, shall submit to City an application, including a site plan consistent with the Conceptual Development Program, for any and all land use entitlements necessary to allow Developer to develop the Project (the "Land Use Entitlements"). Developer shall pay all of the costs and expenses connected with said application and the processing thereof including, without limitation, the application fee charged by City. Developer agrees that it shall be principally responsible for processing said application through City provided, however, Commission staff, without any out-of-pocket cost or expense to Commission, agrees to provide Developer with all appropriate assistance and cooperation in securing said Land Use Entitlements. The site plan approved for the Project in connection with the Land Use Entitlements shall hereinafter be referred to as the "Site Plan" for the Project. 5.2 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Commission if, despite having made all commercially reasonable efforts, Developer is unable, by the time provided in the Schedule of Performance, to secure the Land Use Entitlements. That notwithstanding, if Developer gives notice to Commission pursuant hereto, and if the Land Use Entitlements are secured during the thirty (30)-day notice period, Developer's notice of termination shall be deemed nullified thereby. 5.3 Commission Right to Terminate. Prior to the Close of Escrow for Phase I, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Developer if the Land Use Entitlements have not, by the time provided in the Schedule of Performance, been secured. That notwithstanding, if Developer is diligently and continuously pursing the Land Use Entitlements, then Commission may not give such notice unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal a denial of such Land Use Entitlements and/or the time to file any such appeal has expired. 6. PARCEL MAP/RIGHT-OF-WAY VACATION 6.1 Parcel Map. Commission and Developer acknowledge that, as of the Effective Date, the Phase I, Phase II, and Paradise Creek Parcels do not exist as separate legal parcels in compliance with the Subdivision Map Act (the "Map Act"). Accordingly, a parcel map must be prepared and processed through the City in order to create such parcels. Developer, (a) in accordance with the National City Municipal Code and the Subdivision Map Act, and (b) as soon as the Land Use Entitlement process permits, shall prepare and submit to City for approval such a parcel map consistent with the Site Plan (the "Proposed Map"). Developer, as part of Project Cost, shall pay all fees and costs payable to third parties (including City) to file and process the Proposed Map. Developer shall diligently process such parcel map to completion. Commission staff, without any out -of pocket cost or expense to Commission, shall provide Developer with all appropriate assistance with the processing of the Proposed Map. As an alternative and by agreement of Developer and Executive Director, the Proposed Map l5 \\edent\data)\users\PBeard\pyatok\Final DDA does \DDA v 6 6 11 s x FINAL FINAL 6-8-11.doe shall be submitted for approval to Commission by virtue of its exemption from the Map Act. In such event, Commission shall apply to the Proposed Map the same standards as would have been applied by City under the Map Act and the Municipal Code, with such deviations therefrom as Commission determines in the exercise of its sole and absolute discretion. 6.1.1 Termination by Developer. If Developer, by the time provided in the Schedule of Performance and despite its best efforts, fails to obtain a parcel map for the Project reasonably acceptable to Developer, then Developer, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may, prior to the Close of Escrow for Phase I, terminate this Agreement by notice to Commission. 6.1.2 Termination by Commission. If Developer, by the time provided in the Schedule of Performance, has not obtained a parcel map for the Project reasonably acceptable to Developer, then Commission, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may, prior to the Close of Escrow for Phase I, terminate this Agreement by notice to Developer. That notwithstanding, if Developer is diligently and continuously pursing approval of said parcel map, then Commission may not give such notice unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal any condition or conditions to approval or denial of such parcel map by the Planning Commission of City. 6.2 Street Vacations. If, in order to record a final parcel map, it is necessary that public right-of-way be vacated, Commission shall request City to conduct, in a timely manner, such hearings and legal proceedings as may be required by law. Developer acknowledges and agrees that any or all of such street vacations may not occur. Accordingly, if any such street vacation necessary for development of Phase I fails to occur by the time provided in the Schedule of Performance for Phase I Close of Escrow, then the parties shall meet and confer on revising the Site Plan for Phase I to account for the inability to vacate such public right-of-way. If, in the course of such meeting and conference, either party proposes such a revision that both (a) is reasonably feasible, and (b) will substantially allow the other party still to receive, at a not materially greater cost or expense, the benefits that it expected to obtain from this Agreement as to Phase I, the parties shall promptly negotiate in good faith an amendment to this Agreement. If, however, after so meeting and conferring for a reasonable period of time not to exceed sixty (60) days, the parties are unable to agree on such a revised Site Plan, then either party, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by notice to the other party. Additionally, if any such street vacation necessary for development of Phase II fails to occur by the time provided in the Schedule of Performance for Phase II Close of Escrow, then the parties shall meet and confer on revising the Site Plan for Phase II to account for the inability to vacate such public right-of-way. If, in the course of such meeting and conference, either party proposes such a revision that both (a) is reasonably feasible, and (b) will substantially allow the other party still to receive, at a not materially greater cost or expense, the benefits that it expected to obtain from this Agreement as to Phase II, the parties shall promptly negotiate in good faith an amendment to this Agreement. If, however, after so meeting and conferring for a reasonable period of time not to exceed sixty (60) days, the parties are unable to agree on such a revised Site 16 1\cdcnt\datallusers\PBcard\pyatok\final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I.doc Plan, then either party, provided that it is not then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement as to Phase II only by notice to the other party. 7. PREDEVELOPMENT WORK / PREDEVELOPMENT WORK LOANS 7.1 Predevelopment Work for Phase I. Attached hereto as Exhibit ["E"] is a scope of work, schedule and line -item budget for certain work (the "Phase I Predevelopment Work") to be performed by Developer prior to Close of Escrow for Phase I (the "Phase I Predevelopment Plan and Budget"). As set forth on Exhibit ["E,"] the Phase I Predevelopment Plan and Budget is divided into two (2) parts: (a) the "Pre -Land Use Entitlements Work" and (b) the "Post -Land Use Entitlements Work." Funds in the Phase I Predevelopment Plan and Budget may be shifted among the line -items by Developer with the prior written consent of the Executive Director, which consent shall not be unreasonably withheld. 7.2 [Intentionally Omitted] 7.3 Developer Performance of Phase I Predevelopment Work. Subject to the conditions set forth below, Developer shall perform the Phase I Predevelopment Work in accordance with the Phase I Predevelopment Plan and Budget. 7.3.1 Onsite Work. Developer's obligation to perform onsite Post -Land Use Entitlements Work shall be subject to the following conditions precedent: (a) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (b) Final SPP. Commission and Developer have entered into the Final SPP for Phase I and such agreement is in full force and effect. The Final SPP for each Phase will include, among other things, permission, on reasonable and customary terms and conditions (e.g., indemnification by Developer of the Indemnitees consistent with Section [21.2] and the provision of insurance by Developer consistent with Article [9] of the Ground Lease), for Developer and its contractors and agents to enter the subject Parcel for the purpose of performing the work required thereunder. (c) Access to the Site. Developer, pursuant to the Final SPP for the Phase I Parcel, shall have been given access to the Site (or so much thereof as provided in such Final SPP) by notice in writing from the Executive Director. 7.4 Competitive Bidding. Developer acknowledges and agrees that, as noted on the Phase I Predevelopment Plan and Budget, certain of the Phase I Predevelopment Work is to be competitively bid. For such work, Developer shall make a good faith effort to obtain at least two (2) competitive bids for such work and to award the contract to the lowest responsible bidder. Upon request of the Executive Director, Developer shall deliver to Commission true and complete copies of any and all bids received for such work by Developer. 7.5 Indemnification and Insurance. If a contract entered into by Developer after May 10, 2011 for Phase I Predevelopment Work includes provision for (a) Developer to be 17 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc defended, indemnified, and/or held harmless by the contractor, then Developer shall use (or have used) commercially reasonable efforts to cause such contract to also require that Commission, the City of National City, California and their officers, employees, agents and representatives similarly be defended, indemnified and/or held harmless, and/or (b) Developer to be named as an additional insured under any policy of insurance required to be supplied by the contractor, then Developer shall use (or have used) commercially reasonable efforts to cause such contract to also require that Commission and the City of National City, California be similarly named. 7.6 Predevelopment Work Loan. Subject to the terms and conditions of this Agreement, Commission agrees to make a loan to Developer (the "Phase I Predevelopment Work Loan") in the principal amount of up to Three Million Seven Hundred Forty -One Thousand and Six Hundred Dollars ($3,741,600) (which sum is subject to change by mutual agreement of the parties) to be used to finance the Phase I Predevelopment Work pursuant to the Phase I Predevelopment Plan and Budget. As more particularly provided in Section [7.7(c)], the Phase I Predevelopment Work Loan is subject to merger with the Commission Subordinate Loan for Phase I. 7.6.1 Schedule for Disbursement. Commission shall not be obligated to, but may at the sole and absolute discretion of the Executive Director, disburse the Phase I Predevelopment Work Loan for any line -item earlier than set forth in the Phase I Predevelopment Plan and Budget. 7.7 Predevelopment Work Loan Terms. The Predevelopment Work Loan shall be evidenced by a promissory note (the "Phase I Predevelopment Work Loan Note") in form and substance reasonably satisfactory to the Executive Director. The essential terms of the Phase I Predevelopment Work Loan shall be as follows: (a) Interest. Until a default, if any, thereunder, the Phase I Predevelopment Work Loan Note shall not bear interest. From and after a default thereunder, the Phase I Predevelopment Work Loan Note shall bear simple interest at the lesser of (i) the then Prime Rate plus three hundred (300) basis points, or (ii) the highest rate permitted by law. (b) Periodic Payment. There shall be no periodic payments required under the Phase I Predevelopment Work Loan Note. (c) Maturity. The Phase I Predevelopment Work Loan Note shall be all due and payable upon the earlier of (i) termination of this Agreement by Developer or Commission, (ii) an Event of Default by Developer under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), or (iii) December 31, 2014. If the Phase I Predevelopment Work Loan Note does not sooner become due and payable, it shall, at the Close of Escrow for Phase I, merge with the Commission Subordinate Loan Note for Phase I and, by such merger, be subject to extension of its maturity and modification of its other terms and conditions. (d) Payment. If the Phase I Predevelopment Work Loan Note becomes due and payable for other than an Event of Default by Developer (subject to the notice and cure provisions of Section [22.1(c)]), Developer may satisfy it in full by either (i) making 18 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc payment in full or (ii) delivering to Commission all of the following: (x) any and all plans, studies, drawings, reports, permits and Land Use Entitlements for the Project (collectively, the "Predevelopment Documents"), (y) an absolute and unconditional assignment to Commission of all of Developer's right, title and interest in and to said Predevelopment Documents (substantially in the form attached hereto as Exhibit ["M" ]), and (z) the written consent, in form reasonably satisfactory to the Executive Director, to such assignment of any architect, engineer or other person or firm that has any right, title or interest in or to said Predevelopment Documents; provided, however, Developer shall not be obligated to supply such consent with respect to a contract entered into prior to May 10, 2011 where the person or firm from whom such consent is sought is not obligated to provide such consent and so declines to do so, with an exception therefrom for work performed by such person or firm after such date at the voluntary election of Developer. 7.8 Conditions Precedent to First Disbursement for Pre -Land Use Entitlements Work. Commission's obligation to make the first disbursement of the Phase I Predevelopment Work Loan for Pre -Land Use Entitlements Work shall be subject to satisfaction of the following condition precedents: (a) Phase 1 Predevelopment Work Loan Note. Developer shall have duly executed and delivered to Commission the Phase I Predevelopment Work Loan Note. (b) Guaranty. Commission shall have received a duly executed guaranty (the "Predevelopment Loan Guaranty"), in form and content reasonably satisfactory to the Executive Director, of the Phase I Predevelopment Work Loan Note from The Related Companies, L.P., or another entity with the same or better creditworthiness ("Guarantor"), guarantying payment of the Phase I Predevelopment Work Loan Note upon termination of this Agreement by Commission as a result of an Event of Default by Developer (subject to the notice and cure provisions of Section 22.1(c)) under any of the following provisions of this Agreement: Sections 4.1, 4.4, 5.1, 6.1, 6.2, 7.5, 8.3, 8.5, 9.1, 9.6 or 11.5 (the "Guaranteed Provisions"); provided, however, that, at the election of Commission, in lieu of seeking payment under the Predevelopment Loan Guaranty, Commission may demand that Developer deliver to Commission, within thirty (30) days after written demand by Commission following Commission termination of this Agreement as a result of an Event of Default by Developer under one of the Guaranteed Provisions, (x) any and all Predevelopment Documents, (y) an absolute and unconditional assignment to Commission of all of Developer's right, title and interest in and to said Predevelopment Documents (substantially in the form attached hereto as Exhibit ["M" )), and (z) the written consent, in form reasonably satisfactory to the Executive Director, to such assignment of any architect, engineer or other person or firm that has any right, title or interest in or to said Predevelopment Documents; provided, however, Developer shall not be obligated to supply such consent with respect to a contract entered into prior to May 10, 2011 where the person or firm from whom such consent is sought is not obligated to provide such consent and so declines to do so, with an exception therefrom for work performed by such person or firm after such date at the voluntary election of Developer. To clarify the foregoing, upon termination of this Agreement by Commission as a result of an Event of Default by Developer under one of the Guaranteed Provisions, Commission may elect to either (A) seek performance under the Predevelopment Loan Guaranty, or (B) obtain the Predevelopment Documents in the manner described herein. 19 \\cdcnt\datal\uscrs\FBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doe • 7.9 Conditions Precedent to First Disbursement for Post -Land Use Entitlements Work. Commission's obligation to make the first disbursement of the Phase I Predevelopment Work Loan for Post -Land Use Entitlements Work shall be subject to satisfaction of the condition precedent that the Developer have secured the Land Use Entitlements. 7.10 Conditions Precedent to Any Disbursement. Commission's obligation to make any disbursement of the Phase I Predevelopment Work Loan (including the first disbursement) is subject to satisfaction of the following conditions: (a) Proposition 1C Financial Assistance. The Proposition 1C Financial Assistance remains committed to the Project by HCD. (b) No Litigation/Developer Right to Terminate. If and when any litigation is pending against Commission, Developer and/or the Project the adverse outcome of which, in the reasonable judgment of Commission general counsel, threatens the Close of Escrow for Phase I, (i) Commission, by notice to Developer, may suspend disbursement of the Phase I Predevelopment Work Loan except for Phase I Predevelopment Work (x) already completed by Developer as of the date of suspension and/or (y) to be performed by third -parties under contract to Developer, which work may not be suspended indefinitely by Developer without liability to Developer, or (z) expressly authorized by the Executive Director to continue notwithstanding the suspension, and (ii) in the event of such suspension, Developer shall be excused from any performance of the Phase I Predevelopment Work (except for such work expressly authorized by the Executive Director to continue) for the duration of such suspension. Developer, in any third -party contract for the performance of Phase I Predevelopment Work entered into on or after May 10, 2011, shall make all commercially reasonable efforts to obtain the right to suspend work without liability to Developer in the event funding of the Phase I Predevelopment Work Loan is suspended pursuant to this Agreement. In addition, if litigation of the type described in the paragraph above is pending and, notwithstanding such litigation, Commission elects to continue funding the Phase I Predevelopment Work Loan, Developer may, by written notice to the Commission not earlier than 45 days after the commencement of such litigation (the "Suspension Request"), request suspension of funding of the Phase I Predevelopment Work Loan and Developer's obligation to perform the Phase I Predevelopment Work. Upon receipt of the Suspension Request, Commission shall either (i) suspend the Phase I Predevelopment Work Loan in accordance with the provisions above, or (ii) schedule a meeting to confer with Developer regarding Developer's concerns with respect to the pending litigation. If Commission elects to meet pursuant to (ii), Developer and Commission shall meet within thirty (30) days of Commission's receipt of the Suspension Request and shall each use mutual good faith efforts to reasonably agree on the necessity for a suspension, taking into account the cost (including overhead) and potential risk of continuing the Phase I Predevelopment Work to both Commission and Developer." If, pursuant to this Subdivision (b), Commission suspends disbursement of the Phase I Predevelopment Work Loan, and if such suspension persists for a period sufficient to make it practically impossible to Close the Escrow for Phase I by the time provided in the Schedule of Performance, then Developer, by thirty (30) days' notice to Commission, shall have the right to terminate this Agreement. If, however, Commission resumes disbursement of the Phase I 20 1\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc Predevelopment Work Loan during said thirty (30)-day period, such notice of termination shall be deemed rescinded and of no further force and effect. (c) Competitive Bidding. If, pursuant to Section [7.4] and the Phase I Predevelopment Plan and Budget, the subject Phase I Predevelopment Work requires that Developer subject such work to competitive bidding, Developer shall have complied with such requirement. (d) Satisfactory Progress. The Executive Director shall be reasonably satisfied, based on his own inspections or other reliable information, that the Phase I Predevelopment Work is progressing satisfactorily. (e) Sufficient Funds. Sufficient funds remain available in the Phase I Predevelopment Work Loan to complete the Predevelopment Work for Phase I in accordance with the Phase I Predevelopment Plan and Budget. (g) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the date of the subject disbursement as though made on and as of that date and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. (h) No Default. No Event of Default by Developer (subject to the notice and cure provisions of Section [22.1(c)]) shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer and, if requested by Executive Director, Commission shall have received a certificate to that effect signed by Developer. 7.11 Waiver of Conditions. The conditions set forth in Sections [7.8, 7.9 and 7.10] are for Commission's benefit only and Executive Director may waive all or any part of such rights by notice to Developer. 7.12 Disbursement Requests. The Phase I Predevelopment Work Loan proceeds shall be disbursed on a line -item by line -item basis in accordance with the Phase I Predevelopment Plan and Budget and subject to the terms and conditions of this Article [7]. Subject to Developer's conditional right to shift funds among line -items as set forth in Section [7.1], in no event shall Commission have any obligation to disburse any amount for any item in excess of the amount allocated to such item in the Phase I Predevelopment Plan and Budget, unless approved by the Executive Director. Disbursement shall be made only upon Developer's written request in the form attached hereto as Exhibit ["O"] (a "Disbursement Request") showing all costs that Developer intends to fund with such disbursement, itemized in such detail as the Executive Director may reasonably require, provided that all such costs for which a disbursement is requested either (a) shall have theretofore been paid in full, and such payment by Developer shall be evidenced by cancelled checks and paid bills or invoices, or (b) shall have been incurred and be due and payable, and payment thereof by Developer shall be made prior to the next submission of a Disbursement Request, which payment shall be evidenced by cancelled checks, paid bills or invoices, or such other evidence reasonably satisfactory to the Executive Director, • 21 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • and (c) conditional lien releases executed by each contractor and subcontractor who has received any payment for work performed if the work is of the type for which a lien is available pursuant to the California Civil Code, and (d) all other documents and information reasonably required by the Executive Director, including, without limitation, a true and complete copy of the third party contract, if any, for the payment of which such disbursement is sought. Commission agrees to fund each Disbursement Request within thirty (30) days after receipt of the Disbursement Request in completed form with all required supporting documentation. Notwithstanding the foregoing, Commission may, at the discretion of the Executive Director, make disbursements from time to time, in the absence of a Disbursement Request, to make payments reasonably deemed advisable by the Executive Director to protect Commission's interest. 7.12 Manner of Disbursement. Unless and until an Event of Default by Developer, Commission shall make each disbursement to Developer or as reasonably directed by Developer. From and after any Event of Default by Developer, Commission may make any disbursement by check payable to Developer; on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or by any other means reasonably selected by the Executive Director. 7.13 Commission Right to Offset Against Phase I Predevelopment Work Loan. Notwithstanding anything to the contrary set forth in this Agreement, Commission shall have the right to require Developer to fund the Phase I Predevelopment Work in whole or in part with monies loaned or granted to CHW or an affiliate thereof by City or Commission for the purpose of such entity loaning such funds to Developer; provided that: (a) such funds will not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed on Developer pursuant to this Agreement; (b) the Executive Director has reasonably determined that such funds may not be used by Commission to fund directly the Commission Subordinate Loan for Phase I; and (c) any single source of such funds shall be in the amount of not less $25,000. 7.14 Sources of Funds for Phase I Predevelopment Work Loan. Commission shall have the right to fund the Phase I Predevelopment Work Loan with Set -Aside Funds and/or with any other funds (an "Alternate Source of Funds for the Phase I Predevelopment Work Loan") that do not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed upon Developer pursuant to this Agreement for Phase I. That notwithstanding, Commission shall only have the right to use any Alternate Source of Funds for the Phase I Predevelopment Work Loan if Commission first discloses to Developer in writing its intention to use such funds. Developer hereby acknowledges and agrees that the Phase I Predevelopment Work Loan will be funded, in part, with $95,492 of HOME CHDO funds originally allocated to Community HousingWorks, the managing member of the limited liability company that is the managing 22 \\cdcnt\data 1 \users \PBeard \pyatok \Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc general partner of Developer. Of that sum, $9,549 was allocated for the predevelopment of Phase I, and $85,943 was allocated as a set -aside development loan. In connection with these funds, Developer hereby agrees to comply with the requirements of the HOME Program as set forth in Exhibit ["R"] attached hereto (the "HOME Program Requirements"). With reference to Section "A" [Affordability] of those HOME Program Requirements, the parties acknowledge that Developer shall maintain one (1) dwelling unit in the Phase I Improvements as affordable under the HOME Program regulations for a term of not less than twenty (20) years. 7.15 Predevelopment Work Loan for Phase II. Sections [7.1 through and including Section 7.14] govern performance of and financing for the Phase I Predevelopment Work. Subject to the conditions set forth below, Commission and Developer agree to repeat the process for Phase II on the same terms and conditions only modified to reflect the fact that the work (the "Phase II Predevelopment Work") and the loan (the "Phase II Predevelopment Work Loan") will be for Phase II. Accordingly, attached hereto as Exhibit ["P"] is a "Phase II Preliminary Predevelopment Plan and Budget." Promptly after Close of Escrow for Phase I, Developer shall submit to the Executive Director for approval the following: (a) a proposed, updated "Phase II Predevelopment Plan and Budget" based on the Phase II Preliminary Predevelopment Plan and Budget, and (b) an updated Preliminary Project Budget for Phase II. The parties obligation to repeat the process for Phase II including, without limitation, Developer's obligation to perform the Phase II Predevelopment Work and Commission's obligation to make the Phase II Predevelopment Work Loan, shall be subject to satisfaction of the following conditions: (a) Close of Escrow for Phase I have occurred and neither party is then in default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]); (b) the Executive Director have approved the updated Preliminary Project Budget for Phase II, which approval the Executive Director shall grant if (i) it is substantially similar to the then prevailing Preliminary Project Budget for Phase II, and (ii) it shows that Phase II can be completed at a cost to Commission not greater than the cost contemplated by this Agreement including, without limitation, the provision of the Commission Subordinate Loan for Phase II in principal amount not greater than Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000); and (c) the Executive Director have approved the updated Phase II Predevelopment Plan and Budget submitted by Developer, which approval the Executive Director shall grant if (i) it is substantially similar to the Phase II Preliminary Predevelopment Plan and Budget, and (ii) it is consistent with the updated Phase II Preliminary Project Budget approved by the Executive Director pursuant to subdivision (b) immediately above. If and when the conditions set forth above have been satisfied, the parties agree to enter into an implementation agreement for the Phase II Predevelopment Work and the Phase II Predevelopment Work Loan, the terms and conditions of which shall be consistent with the contents of this Section [7.15]. Notwithstanding anything set forth above in this Section [7.15], Developer acknowledges and agrees that as to the Phase II Predevelopment Work Loan, the condition to disbursement set • 23 \\cdcnt\datal\users\PBeard\pyatok\Fnal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc forth in Section [7.10(e) [No Default]], shall be understood to mean no "Event of Default" as to both Phase I and Phase II under this Agreement. 8. DESIGN REVIEW, VALUE ENGINEERING AND CONSTRUCTION BIDS 8.1 Scope of Development. Developer shall develop each Phase substantially in conformance with the Conceptual Development Program and the Scope of Development attached hereto as Exhibit ["F"] and with the plans, drawings, specifications, and permits for each Phase approved by City and Commission. 8.2 Basic Concept Plans. The parties acknowledge and agree that Commission, at the time it approved this Agreement, approved certain "Basic Concept Plans" for the Project. 8.3 Design Development Documents. By the time provided in the Schedule of Performance for each Phase, Developer shall prepare and submit to the Executive Director for architectural review and reasonable approval, including aesthetic considerations, the following "Design Development Documents" for each Phase: plan and a site plan; landscaping; and (a) Architectural design development drawings, including a massing (b) Color and materials board for the Building exterior and (c) Schematic landscape plans, facilities and architectural elevations. The Design Development Documents shall be consistent with the Basic Concept Plans approved by the Executive Director and with the Scope of Development. 8.4 Value Engineering/Bid Package. In connection with preparation of the Schematic Design Documents, the design shall be subject to a round of value engineering in which Developer and Commission shall participate and cooperate. Both the Executive Director and Developer shall have the right to reasonably approve or disapprove the bid package resulting from this process (the "Approved Bid Package"), which approval shall not be unreasonably withheld, conditioned, or delayed. 8.5 Construction Bidding/Contracts. The work of all the major trades (e.g., plumbing, electrical, etc.) shall be subjected to a process of competitive bidding based on the Approved Bid Package. Promptly upon opening and reviewing the bids received, Developer shall deliver true and complete copies of all bids to the Executive Director and shall designate which bid(s) Developer proposes to accept. The Executive Director shall have the right to reasonably approve or disapprove the bid(s) to be accepted by Developer, which approval shall not be unreasonably withheld, conditioned or delayed. Failure by the Executive Director to disapprove the bid(s) within five (5) Business Days shall be deemed approved provided that the submission to the Executive Director so stated. 24 1\cdcnt\datal\users\PBeard\pyatok\Fina1 DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Promptly upon execution, Developer shall deliver to Commission true and complete copies of all construction contracts for the Improvements (the "Construction Contract"). 8.6 City Design Review. In addition to the design review process described above and concurrent therewith, Developer shall cause the Improvements to be designed substantially in accordance with the Conceptual Development Program and the Scope of Development and shall diligently cause the Improvements to be processed through City's site plan, design review and plan check process on a schedule reasonably calculated to permit a Building Permit for each Phase to issue by the time provided in the Schedule of Performance for Close of Escrow for that Phase. 8.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section 22.1(c)]), may terminate this Agreement by thirty (30) days' notice to Commission if it has, despite diligent efforts, been unable, by the time provided in the Schedule of Performance, to obtain any of the Executive Director and/or City approvals required in this Article [8]. Prior to the Close of Escrow for Phase II, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section 22.1(c)] may terminate this Agreement as to Phase H only by thirty (30) days' notice to Commission if it has, despite diligent efforts, been unable, by the time provided in the Schedule of Performance, to obtain any of the Executive Director and/or City approvals required in this Article [8] for Phase II. 8.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase 1, Commission, if it is not then in material default under this Agreement, may terminate this Agreement by thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance, Developer fails to obtain any approval of the Executive Director or City required by this Article [8]. That notwithstanding, Commission's right so to terminate shall be subject to the further condition that the approval at issue shall not have been unreasonably withheld or delayed by the Executive Director or City, as applicable. That notwithstanding, if Developer obtains the subject approval during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. Prior to the Close of Escrow for Phase II, Commission, if it is not then in material default under this Agreement, may terminate this Agreement as to Phase II only by thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance, Developer fails to obtain any approval of the Executive Director or City required by this Article [8] for Phase II. That notwithstanding, Commission's right so to terminate shall be subject to the further condition that the approval at issue shall not have been unreasonably withheld or delayed by the Executive Director or City, as applicable. That notwithstanding, if Developer obtains the subject approval during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. 25 \\cdcnt\data 1\users\PBeard\pyatok\Fina1 DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.duc 8.9 Project Architect. The Executive Director shall have the right to approve any replacement for the Project Architect. 9. FINANCING FOR PHASE I 9.1 Preliminary Project Budget for Phase I. Attached hereto as Exhibit ["G"] are the following preliminary budgetary materials for Phase I: (a) Preliminary Project Budget; (b) Sources and Uses of Funds Statement; (c) Cash Flow Projection; and (d) First Year Operating Budget; (collectively, the "Preliminary Project Budget for Phase I") Until the Close of Escrow for Phase I, Developer, if, as and when additional information becomes available, shall promptly revise the Preliminary Project Budget for Phase Ito reflect the best information then available to Developer, and shall submit the revised documents to the Executive Director for review and approval. 9.2 Financing Plan for Phase I. It is contemplated that Developer will finance Phase I through: (a) Tax-exempt multifamily housing mortgage revenue bonds to be issued by the California Statewide Communities Development Authority (or another entity selected by Developer and reasonably approved by the Executive Director) and purchased by a reputable institutional lender selected by Developer and approved by the Executive Director, which approval shall not be unreasonably withheld, conditioned or delayed (the "Tax -Exempt Bonds"); (b) Partnership equity, consisting of equity raised by the sale to reputable investors of the "four -percent (4%)" low-income housing credit consistent with the Tax -Exempt Bonds and obtained pursuant to 26 U.S.C. §42 (the "Federal 4% Tax Credits"); (c) As more particularly provided in Section [9.3], the Commission Subordinate Loan for Phase I; (d) A loan, subordinate to the Commission Subordinate Loan, from Community Housing Works or an affiliate thereof, in the principal amount of $14,957,000 (the "CHW Third Trust Deed Loan"); and (e) A loan, also subordinate to the Commission Subordinate Loan for Phase I, from Community Housing Works or an affiliate thereof, in principal amount equal to a 26 1\cdcnt\data)\users \PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc pro rata portion of the Proposition IC Financial Assistance (the "CHW Fourth Trust Deed Loan"); (collectively, the "Phase I Financing"). 9.3 Commission Subordinate Loan for Phase I. 9.3.1 Amount and Purpose. Subject to the terms and conditions of this Agreement, Commission agrees to make a loan to Developer for Phase I (the "Commission Subordinate Loan for Phase I") in the principal amount reasonably determined by the Executive Director to be the gap, if any, between the Final Project Budget for Phase I less the total of (a) equity generated by the Tax Credits, (b) the principal amount of the Take -Out Loan, (c) the principal amount of the CHW Third Trust Deed Loan, and (d) the principal amount of the CHW Fourth Trust Deed Loan, provided, however, in no event shall the original principal amount of the Commission Subordinate Loan for Phase I be less than Six Million Dollars ($6,000,000) nor more than Six Million Two Hundred Fifty Thousand Dollars ($6,250,000). As indicated in the Preliminary Project Budget for Phase I originally attached to this Agreement, the parties' original estimate is that the Commission Subordinate Loan for Phase I will be in the principal amount of Six Million Dollars ($6,000,000). Accordingly, the final amount of the Commission Subordinate Loan for Phase I shall be related to changes in the Preliminary Project Budget for Phase I from the Effective Date until the date such final principal amount is fixed. If, as and when the Executive Director has fixed the final principal amount of the Commission Subordinate Loan for Phase I and such amount has been approved by Developer, the Executive Director, on behalf of Commission, and Developer shall enter into a writing the purpose of which shall be to memorialize the agreement to such sum. Subject to the terms and conditions of this Agreement, the Commission Subordinate Loan for Phase I shall close (i.e., the Commission Subordinate Loan Deed of Trust for Phase I shall record in the Official Records) concurrently with the Construction Loan Closing for Phase I (the "Commission Subordinate Loan Closing for Phase I"). Developer acknowledges and agrees that the Commission Subordinate Loan for Phase I is inclusive of the Phase I Predevelopment Work Loan made to Developer pursuant to Article [7]. Accordingly, Commission and Developer agree that as part of the Close of Escrow for Phase I: (a) the Phase I Predevelopment Work Loan shall merge with the Commission Subordinate Loan for Phase I, and (b) the sum disbursed by Commission to Developer as the Phase I Predevelopment Work Loan shall (i) for the purposes of the Commission Subordinate Loan Note for Phase I, be deemed disbursed as of the date of the Close of Escrow for Phase 1, and (ii) be credited against the sum to be disbursed by Commission at the Close of Escrow for Phase I. The balance of the proceeds of the Commission Subordinate Loan for Phase I shall hereinafter be referred to as the "Construction Portion of the Commission Subordinate Loan for Phase I." Through the Escrow for Phase I, Commission shall return the Phase I Predevelopment Work Loan Note to Developer marked "Satisfied." 9.3.2 Project Based Section 8 Vouchers for Phase I. Commission and Developer acknowledge and agree that Project Based Section 8 vouchers would, on certain conditions, be mutually advantageous for Phase I. Accordingly, if such vouchers become available in time for a contract therefor to be entered into by Developer prior to Close of Escrow 27 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc for Phase I, then (a) Developer, subject to the conditions set forth below, shall timely file an application for as many such vouchers for Phase I as possible but not more than twenty-seven (27) or such greater number as may be agreed to by Developer and the Executive Director, and (b) Commission shall provide Developer, without out-of-pocket cost or expense to Commission, all appropriate assistance with such application. Developer's obligation to pursue such vouchers shall be subject to the following conditions: and (a) the term of the vouchers shall be for not less than fifteen (15) years; (b) Developer shall be reasonably able to secure a Take -Out Loan for Phase I in principal amount of not less than the sum of (i) the amount that had been expected for such Take -Out Loan without such vouchers as set forth in Preliminary Project Budget for Phase I, plus (ii) the product of $28,000 times the number of vouchers actually secured. If Developer secures such vouchers for Phase I, then (a) the Commission Subordinate Loan for Phase I shall be reduced by such sum of $28,000 per voucher, and (b) the annual ground rent under the Ground Lease for Phase I shall be increased by the sum of $2,000 per voucher for the duration of such voucher. 9.3.3 Sources of Funds for Commission Subordinate Loan for Phase I. Commission shall have the right to fund the Commission Subordinate Loan for Phase I with Set -Aside Funds and/or with any other funds (an "Alternate Source of Funds for the Commission Subordinate Loan for Phase I") that do not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed upon Developer pursuant to this Agreement for Phase I. That notwithstanding, Commission shall only have the right to use any Alternate Source of Funds for the Commission Subordinate Loan for Phase I if Commission first discloses to Developer in writing its intention to use such funds not later than thirty (30) days prior to Close of Escrow for Phase I. 9.3.4 Commission Subordinate Loan Note and Deed of Trust for Phase I. The Commission Subordinate Loan for Phase I shall be evidenced by the Commission Subordinate Loan Note for Phase I and shall be secured by the Commission Subordinate Loan Deed of Trust for Phase I. 9.3.5 Disbursement of Construction Portion of Commission Subordinate Loan for Phase I. The Construction Portion of the Commission Subordinate Loan for Phase I shall, subject to the conditions set forth below, be deposited by Commission into the Escrow for Phase I in time to permit the close thereof and shall be disbursed therefrom at Close of the Phase I Escrow (a) to pay closing costs and expenses shown on the closing statement for the Phase I Escrow, and (b) to the Construction Lender for Phase I for deposit into a construction account from which disbursements shall be made periodically by the Construction Lender only to pay Phase I Project Costs in accordance with the Final Project Budget for Phase I. Commission's obligation so to deposit the Construction Portion of the Commission Subordinate Loan for Phase I shall be subject to satisfaction of the following conditions precedent: 28 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I _doc (a) Conditions to Ground Lease of Property. All of the conditions precedent set forth in Section [11.4] to Commission's obligation to ground lease the Phase I Parcel to Developer shall have been satisfied or waived. (b) Commission Subordinate Loan Note. Developer shall have duly executed the Commission Subordinate Loan Note for Phase I and delivered it to Commission or the Escrow Holder. (c) Commission Subordinate Loan Deed of Trust. The Commission Subordinate Loan Deed of Trust for Phase I shall have been recorded in the Official Records subject only to the Permitted Encumbrances. (d) Construction Lender/Commission Disbursement Agreement. The Phase I Construction Lender and Commission have entered into the Construction Lender/Commission Disbursement Agreement for Phase I and such Agreement has been approved by Developer, the Tax Credit Partner for Phase I, and, if required, HCD. (e) Request for Notice of Default. Commission shall have recorded a request for notice of default pursuant to Civil Code Section 2924(b), requesting that the beneficiaries of liens senior to the Commission Subordinate Loan Deed of Trust for Phase I notify Commission of any default under the instrument creating the lien. (f) Title Policy. Title Company is prepared to issue its LP-10 loan policy of title insurance naming Commission as the insured, in a policy amount not less than the principal amount of the Commission Subordinate Loan for Phase I, showing Developer as holding leasehold title to the Phase I Parcel and insuring the Commission Subordinate Loan Deed of Trust for Phase I to be a valid lien on the Phase I Parcel subject only to the Permitted Encumbrances (the "Commission Title Policy for Phase I"). (g) Corporate Resolution. If Developer is a corporation, or if Developer is a partnership or limited liability company and its managing general partner or general manager is a corporation, Commission shall have received a copy of a resolution of the board of directors of said corporation authorizing the execution and delivery of the Commission Subordinate Loan Note and the Commission Subordinate Loan Deed of Trust for Phase I. (h) Closing Statement for Phase I. Commission, Developer, Senior Lender for Phase I, HCD, and the Tax Credit Partner for Phase I shall have approved the closing statement for the Phase I Escrow. 9.4 Final Project Budget for Phase I. Prior to the Close of Escrow for Phase I and as more particularly provided in Section [11.4(b)] Commission, Developer, Senior Lender for Phase I, HCD (if required), and the Tax Credit Partner for Phase I shall agree on the Final Project Budget for Phase I. 9.5 Best Effort to Minimize Commission Cost for Phase I. In order to minimize the principal amount of the Commission Subordinate Loan for Phase I, Developer agrees to use its best efforts to finance Phase I in the manner that yields the largest part possible • 29 \\cdcnt.data)\users\Pleard\pyatok\Fina1 DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc of the Project Cost for Phase I from sources other than the Commission Subordinate Loan for Phase I. Accordingly, Developer shall: (a) Make best efforts to obtain an allocation for the long-term Tax - Exempt Bonds in principal amount consistent with the Preliminary Project Budget for Phase I; (b) Make best efforts to obtain the Tax Credits for Phase I in principal amount consistent with the Preliminary Project Budget for Phase I and to sell such Tax Credits to a reputable institutional investor at the highest price and on the best terms reasonably possible; (c) Make best efforts to obtain the largest Take -Out Loan for Phase I reasonably supportable by Phase I based on a debt coverage ratio of not greater than 1.30:1; and (d) Make best efforts to obtain additional financing (including grant funds) for Phase I from any and all appropriate sources. Financing by: 9.6 Application to CDLAC for Phase I. Developer shall pursue the Phase I (a) Filing a complete application to CDLAC for an allocation for the Tax -Exempt Bonds for Phase I in accordance with the Schedule of Performance but not later than necessary to satisfy the conditions of the Proposition 1C Financial Assistance; and (b) Timely applying to reputable institutional lenders for the private placement of the Tax -Exempt Bonds for Phase I in order to provide Construction and Take -Out financing for Phase I. If the application to CDLAC fails to receive such allocation, then, upon agreement of the Executive Director and Developer, the parties shall thereafter file one or more applications within the time permitted by the Schedule of Performance. 9.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1]), may terminate this Agreement by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable to obtain the Phase I Financing on terms and conditions reasonably consistent with the economic assumptions contained in the Preliminary Project Budget for Phase I by the time provided in the Schedule of Performance therefor. 9.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase I and notwithstanding anything contained in this Agreement to the contrary, Commission, if it is not then in material default under this Agreement, may terminate this Agreement by giving thirty (30) days' notice to Developer if Developer fails to obtain the Phase I Financing by the time provided in the Schedule of Performance. That notwithstanding, if Developer obtains the Phase I Financing during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. 30 \\cdcnt\data!\users\PBeard\pyatok1Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 9.9 Developer Fee for Phase I. The fee payable to Developer for development of Phase I shall not exceed $2,500,000, of which $500,000 shall be delayed until not earlier than conversion of the Senior Loan for Phase I from construction to permanent status (the "Developer Fee for Phase I"). 10. FINANCING FOR PHASE II 10.1 Preliminary Project Budget for Phase II. Attached hereto as Exhibit ["H"] are the following preliminary budgetary materials for Phase II: (a) Preliminary Project Budget; (b) Sources and Uses of Funds Statement; (c) Cash Flow Projection; and (d) First Year Operating Budget; (collectively, the "Preliminary Project Budget for Phase II") Until the Close of Escrow for Phase II, Developer, if, as and when additional information becomes available, shall promptly revise the Preliminary Project Budget for Phase II to reflect the best information then available to Developer, and shall submit the revised documents to the Executive Director for review and approval. 10.2 Financing Plan for Phase II. It is contemplated that Developer will finance Phase lI through: (a) Tax-exempt multifamily housing mortgage revenue bonds to be issued by the California Statewide Communities Development Authority (or another entity selected by Developer and reasonably approved by the Executive Director) and purchased by a reputable institutional lender selected by Developer and approved by the Executive Director, which approval shall not be unreasonably withheld, conditioned or delayed (the "Tax -Exempt Bonds"); (b) Partnership equity, consisting of equity raised by the sale to reputable investors of the Federal 4% Tax Credits; (c) As more particularly provided in Section [10.3], the Commission Subordinate Loan for Phase II; and (d) A loan, subordinate to the Commission Subordinate Loan, from Community Housing Works or an affiliate thereof, in principal amount equal to a pro rata portion of the Proposition 1C Financial Assistance (the "CHW Third Trust Deed Loan for Phase II") (collectively, the "Phase II Financing"). 31 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 10.2.1 Developer Right to Propose Alternate Financing Plan for Phase II. Developer shall have the right to propose to Commission in writing and in reasonable detail, an alternate plan for the Phase II Financing (the "Developer's Proposed Alternate Plan for Phase II Financing"). If any Developer's Proposed Alternate Plan for Phase II Financing will result in construction of the Phase II Improvements in accordance with this Agreement (a) at a cost to Commission not greater than the cost contemplated by this Agreement including, without limitation, the provision of the Commission Subordinate Loan for Phase II in principal amount not greater than Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000), (b) at a risk of cost or expense to Commission not materially greater than that contemplated by this Agreement, and (c) to be completed not later than the time provided by the Schedule of Performance, Commission agrees to negotiate in good faith an amendment to this Agreement the effect of which shall be to substitute such Developer's Proposed Alternate Plan for Phase II Financing for the form of Phase II Financing set forth above. 10.2.2 Commission Right to Propose Alternate Financing Plan for Phase II. Commission shall have the right to propose to Developer in writing and in reasonable detail, an alternate plan for the Phase II Financing (the "Commission's Proposed Alternate Plan for Phase II Financing"). If any Commission's Proposed Alternate Plan for Phase II Financing will result in construction of the Phase II Improvements in accordance with this Agreement (a) at a financial return to Developer not less than that contemplated by the Preliminary Project Budget for Phase II, (b) at a risk of cost or expense to Developer not materially greater than that contemplated by this Agreement, and (c) to be completed not later than the time provided by the Schedule of Performance, Developer agrees to negotiate in good faith an amendment to this Agreement the effect of which shall be to substitute such Commission's Proposed Alternate Plan for Phase II Financing for the form of Phase II Financing set forth above. 10.3 Commission Subordinate Loan for Phase II. 10.3.1 Amount and Purpose. Subject to the terms and conditions of this Agreement, Commission agrees to make a loan to Developer for Phase II (the "Commission Subordinate Loan for Phase II") in the principal amount reasonably determined by the Executive Director to be the gap, if any, between the Final Project Budget for Phase II less the total of (a) equity generated by the Tax Credits, (b) the principal amount of the Take -Out Loan, and (c) the Proposition 1C Financial Assistance for Phase II, provided, however, in no event shall the original principal amount of the Commission Subordinate Loan for Phase II be less than Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000) nor more than Fifteen Million Eighty -Six Thousand Five Hundred Dollars ($15,086,500). As indicated in the Preliminary Project Budget for Phase II originally attached to this Agreement, the parties' original estimate is that the Commission Subordinate Loan for Phase II will be in the principal amount of Fourteen Million Nine Hundred Nine Thousand Dollars ($14,909,000). If, as and when the Executive Director has fixed the final principal amount of the Commission Subordinate Loan for Phase II and such amount has been approved by Developer, the Executive Director, on behalf of Commission, and Developer shall enter into a writing the purpose of which shall be to memorialize the agreement to such sum. Subject to the terms and conditions of this Agreement, the Commission Subordinate Loan for Phase II shall close (i.e., the Commission Subordinate Loan Deed of Trust for Phase II shall record in the Official Records) concurrently with the 32 \\;dent\data)\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Construction Loan Closing for Phase II (the "Commission Subordinate Loan Closing for Phase II"). Developer acknowledges and agrees that the Commission Subordinate Loan for Phase II is inclusive of the Phase II Predevelopment Work Loan, if any, made to Developer pursuant to Section [7.15]. Accordingly, Commission and Developer agree that as part of the Close of Escrow for Phase II: (a) the Phase II Predevelopment Work Loan shall merge with the Commission Subordinate Loan for Phase II, and (b) the sum disbursed by Commission to Developer as the Phase II Predevelopment Work Loan shall (i) for the purposes of the Commission Subordinate Loan Note for Phase II, be deemed disbursed as of the date of the Close of Escrow for Phase II, and (ii) be credited against the sum to be disbursed by Commission as the First Installment of the Commission Subordinate Loan for Phase II pursuant to Section [10.3.5(a)]. The balance of the proceeds of the Commission Subordinate Loan for Phase II shall hereinafter be referred to as the "Construction Portion of the Commission Subordinate Loan for Phase II." Through the Escrow for Phase II, Commission shall return the Phase II Predevelopment Work Loan Note, if any, to Developer marked "Satisfied." 10.3.2 Project Based Section 8 Vouchers for Phase II. Commission and Developer acknowledge and agree that Project Based Section 8 vouchers would, on certain conditions, be mutually advantageous for Phase II. Accordingly, if such vouchers become available in time for a contract therefor to be entered into by Developer prior to Close of Escrow for Phase II, then (a) Developer, subject to the conditions set forth below, shall timely file an application for as many such vouchers as possible but not more than twenty-three (23) or such greater number as may be agreed to by Developer and the Executive Director, and (b) Commission shall provide Developer, without out-of-pocket cost or expense to Commission, all appropriate assistance with such application. Developer's obligation to pursue such vouchers shall be subject to the following conditions: (a) the term of the vouchers shall be for not less than fifteen (15) years; (b) Developer and the Executive Director shall have reasonably agreed in writing on the per voucher amount by which, in the event such vouchers are secured, (i) the principal of the Commission Subordinate Loan for Phase II would be reduced (the "Agreed Section 8 Voucher Value for Phase II"), and (b) the annual ground rent under the Ground Lease for Phase II would be increased (the "Section 8 Ground Rent Adjustment for Phase II") (including the duration of such increase); and (c) Developer shall be reasonably able to secure a Take -Out Loan for Phase II in a principal amount of not less than the sum of (i) the amount that had been expected for such Take -Out Loan without such vouchers as set forth in the Preliminary Project Budget for Phase II, plus (ii) the product of the Agreed Section 8 Voucher Value for Phase II times the number of vouchers secured. If Developer actually secures such vouchers for Phase II, then (a) the Commission Subordinate Loan for Phase II shall be reduced by the Agreed Section 8 Voucher Value for Phase II, and (b) the Section 8 Ground Rent Adjustment for Phase II shall be implemented. 33 \\cdcnt\dalal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • • • 10.3.3 Sources of Funds for Commission Subordinate Loan for Phase II. Commission shall have the right to fund the Commission Subordinate Loan for Phase II with Set -Aside Funds and/or with any other funds (an "Alternate Source of Funds for the Commission Subordinate Loan for Phase II") that do not impose upon Developer any materially greater burden (other than administrative cost) than the burdens already imposed upon Developer pursuant to this Agreement for Phase II. That notwithstanding, Commission shall only have the right to use any Alternate Source of Funds for the Commission Subordinate Loan for Phase II if Commission first discloses to Developer in writing its intention to use such funds not later than thirty (30) days prior to Close of Escrow for Phase II. 10.3.4 Commission Subordinate Loan Note and Deed of Trust for Phase II. The Commission Subordinate Loan for Phase II shall be evidenced by the Commission Subordinate Loan Note for Phase II and shall be secured by the Commission Subordinate Loan Deed of Trust for Phase II. 10.3.5 Disbursement of Construction Portion of Commission Subordinate Loan for Phase II. The Construction Portion of the Commission Subordinate Loan for Phase II shall, subject to the conditions set forth below, be deposited by Commission into the Escrow for Phase II in time to permit the close thereof and shall be disbursed therefrom (a) to pay closing costs and expenses shown on the closing statement for the Phase II Escrow, and (b) to the Construction Lender for Phase II for deposit into a construction account from which disbursements shall be made periodically by the Construction Lender for Phase II only to pay Phase II Project Costs in accordance with the Final Project Budget for Phase II. Commission's obligation so to deposit the Construction Portion of the Commission Subordinate Loan for Phase II shall be subject to satisfaction of the following conditions precedent: (a) Conditions to Ground Lease of Property. All of the conditions precedent set forth in Section [12.4] to Commission's obligation to ground lease the Phase II Parcel to Developer shall have been satisfied or waived. (b) Commission Subordinate Loan Note. Developer shall have duly executed the Commission Subordinate Loan Note for Phase II and delivered it to Commission or the Escrow Holder. (c) Commission Subordinate Loan Deed of Trust. The Commission Subordinate Loan Deed of Trust for Phase II shall have been recorded in the Official Records subject only to the Permitted Encumbrances. (d) Construction Lender/Commission Disbursement Agreement. The Phase II Construction Lender and Commission have entered into the Construction Lender/Commission Disbursement Agreement for Phase II and such Agreement has been approved by Developer, the Tax Credit Partner for Phase II, and HCD. (e) Request for Notice of Default. Commission shall have recorded a request for notice of default pursuant to Civil Code Section 2924(b), requesting that 34 llcdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc the beneficiaries of liens senior to the Commission Subordinate Loan Deed of Trust for Phase II notify Commission of any default under the instrument creating the lien. (f) Title Policy. Title Company is prepared to issue its LP-10 loan policy of title insurance naming Commission as the insured, in a policy amount not less than the principal amount of the Commission Subordinate Loan for Phase II, showing Developer as holding leasehold title to the Phase II Parcel and insuring the Commission Subordinate Loan Deed of Trust for Phase II to be a valid lien on the Phase II Parcel subject only to the Permitted Encumbrances (the "Commission Title Policy for Phase II"). (g) Corporate Resolution. If Developer is a corporation, or if Developer is a partnership or limited liability company and its managing general partner or general manager is a corporation, Commission shall have received a copy of a resolution of the board of directors of said corporation authorizing the execution and delivery of the Commission Subordinate Loan Note for Phase II and the Commission Subordinate Loan Deed of Trust for Phase II. (h) Closing Statement for Phase IL Commission, Developer, Senior Lender for Phase II, HCD, and the Tax Credit Partner for Phase II shall have approved the closing statement for the Phase II Escrow. 10.4 Final Project Budget for Phase II. Prior to the Close of Escrow for Phase II and as more particularly provided in Section [12.4(b)], Commission, Developer, Senior Lender for Phase II, HCD (if required), and the Tax Credit Partner for Phase II shall agree on the Final Project Budget for Phase II. 10.5 Best Effort to Minimize Commission Cost for Phase II. In order to minimize the principal amount of the Commission Subordinate Loan for Phase II, Developer agrees to use its best efforts to finance Phase II in the manner that yields the largest part possible of the Project Cost for Phase II from sources other than the Commission Subordinate Loan for Phase II. Accordingly, Developer shall: (a) Make best efforts to obtain an allocation for the long-term Tax - Exempt Bonds in principal amount consistent with the Preliminary Project Budget for Phase II; (b) Make best efforts to obtain the Tax Credits for Phase II in principal amount consistent with the Preliminary Project Budget for Phase II and to sell such Tax Credits to a reputable institutional investor at the highest price and on the best terms reasonably possible; (c) Make best efforts to obtain the largest Take -Out Loan for Phase II reasonably supportable by Phase II based on a debt coverage ratio of not greater than 1.20:1; and (d) Make best efforts to obtain additional financing (including grant funds) for Phase II from any and all appropriate sources. 10.6 Application for Tax Credits for Phase II. Developer shall pursue the Phase II Financing by: 35 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • (a) Filing a complete application to CDLAC for an allocation for the Tax -Exempt Bonds for Phase II at the first application date not less than thirty (30) days following notice to Developer that the conditions set forth in Sections [12.4(u) and (v)] have been satisfied, if such ever be the case, but not later than necessary to satisfy the conditions of the Proposition 1C Financial Assistance for Phase II; and (b) Timely applying to reputable institutional lenders for the private placement of the Tax -Exempt Bonds for Phase II in order to provide Construction and Take -Out financing for Phase II. If the application to CDLAC fails to receive such allocation, then, upon agreement of the Executive Director and Developer, the parties shall file such an application in one or more succeeding rounds and, if necessary, the Schedule of Performance for Phase I shall be adjusted accordingly. 10.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase II, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1]), may terminate this Agreement as to Phase II only by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable to obtain the Phase II Financing on terms and conditions reasonably consistent with the economic assumptions contained in the Preliminary Project Budget for Phase II after not less than three (3) rounds of application; provided that the Executive Director agrees to the second and third rounds. 10.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase II and notwithstanding anything contained in this Agreement to the contrary, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1]), may terminate this Agreement as to Phase H only by giving thirty (30) days' notice to Developer if Developer fails to obtain the Phase II Financing by the time provided in the Schedule of Performance. That notwithstanding, if Developer obtains the Phase II Financing during said thirty (30)-day notice period, Commission's notice of termination shall be deemed nullified thereby. 10.9 Developer Fee for Phase II. The fee payable to Developer for development of Phase II shall not exceed $2,500,000, of which $500,000 shall be delayed until not earlier than conversion of the Senior Loan for Phase II from construction to permanent status (the "Developer Fee for Phase II"). 11. GROUND LEASE OF PHASE I PARCEL 11.1 Agreement. Commission, subject to the conditions set forth in Section [11.41, agrees to ground lease to Developer, and Developer, subject to the conditions set forth in Section [11.5], agrees to ground lease from Commission, the Phase I Parcel pursuant to the form of "Ground Lease" attached hereto as Exhibit ["I"]. 11.2 Escrow for Phase I. Conveyance of the Phase I Parcel pursuant to the Ground Lease for Phase I shall be made through the Escrow for Phase I. This Agreement shall 36 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs1DDA v 6 6 11 s x FINAL FINAL 6-8-I l.doc constitute escrow instructions to the Escrow Holder for Phase I. Commission and Developer shall execute such further escrow instructions as are consistent with this Agreement and as may be reasonably required by the Escrow Holder for Phase I. 11.3 Term of Escrow for Phase I. The Escrow for Phase I shall close concurrent with the Construction Loan Closing for Phase I. 11.4 Conditions for Commission's Benefit for Phase I. Commission's obligation to ground lease the Phase I Parcel to Developer shall be subject to satisfaction of the following conditions precedent: (a) Land Use Entitlements. Developer has secured and possesses the Land Use Entitlements for the Phase I Parcel. (b) Final Project Budget. The Executive Director, Developer, Construction Lender for Phase I, Tax Credit Partner for Phase I, and, HCD have approved (i) the final Project Budget for Phase I, including, without limitation, (i) the terms and conditions of the Developer Fee for Phase I, and (ii) the terms and conditions of any reserve funds to be established and maintained for the Phase I Project, (iii) the terms and conditions for the disbursement of the Phase I: Construction Loan, Commission Subordinate Loan, Tax Credit Funds, (iv) the terms and conditions of disbursement of the CHW Third Trust Deed Loan, and (v) the terms and conditions of disbursement of the Proposition 1C Financial Assistance for Phase I via the CHW Fourth Trust Deed Loan (the "Final Project Budget for Phase I"). The Final Project Budget for Phase I may be revised from time to time, subject to the approval of the Executive Director. (c) Evidence of Financing. The Executive Director has received and approved the following "Evidence of Phase I Financing:" (i) Construction Loan. True and complete copies of the Phase I Construction Loan documents evidencing the obligation of a reputable institutional lender, subject only to reasonable and customary conditions, to make the Construction Loan for Phase Ito Developer. (ii) Tax Credit Financing. Documentary evidence reasonably acceptable to the Executive Director that Developer has (a) either (x) obtained at least three (3) competitive bids for the Tax Credits for Phase I, or (y) if it has obtained less than three (3) such bids, made all commercially reasonable efforts to obtain such bids, and (b) committed, or caused to be committed, funds from the sale of the Tax Credits for Phase Ito construction of the Phase I Improvements, which commitment may be subject only to reasonable and customary conditions (the "Tax Credit Funds for Phase I"). (iii) CHW Third Trust Deed Loan. True and complete copies of the CHW Third Trust Deed Loan Documents evidencing the obligation of CHW to make the CHW Third Trust Deed Loan to Developer subject to only reasonable and customary conditions. 37 1\cdcnt\datal\users\PReard\pyatok\Final DDA docs DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • (iv) Proposition 1C Financial Assistance for Phase I and CHW Fourth Trust Deed Loan. Documentary evidence reasonably acceptable to the Executive Director that disbursement of the Proposition 1C Financial Assistance for Phase I is fully committed to construction of the Phase I Improvements subject only to HCD requirements, which requirements have been approved by the Executive Director, which approval shall not be unreasonably withheld. True and complete copies of the CHW Fourth Trust Deed Loan Documents evidencing the obligation of CHW to make the CHW Fourth Trust Deed Loan to Developer subject to only reasonable and customary conditions. (v) Gap Financing. Documentary evidence that Developer has committed, or caused to be committed, equity and/or financing to construction of the Phase I Improvements in the amount of the remainder, if any, of the Project Costs less the amount of the total of any Phase I: Construction Loan, Tax Credit Funds, Commission Subordinate Loan, and Proposition IC Financial Assistance for Phase I (to be introduced into Phase I via the CHW Fourth Trust Deed Loan); and the CHW Third Trust Deed Loan (the "Gap Financing for Phase P"). Gap Financing for Phase I, if any, shall be from sources, and subject only to conditions, reasonably acceptable to the Executive Director. (vi) Take -Out Loan Commitment. A commitment from a reputable institutional lender, subject only to reasonable and customary conditions, pursuant to which said lender agrees to make a Take -Out Loan to Developer for Phase I, with a term of not less than fifteen (15) years, in sum sufficient, when added to any Tax Credit Funds for Phase Ito be disbursed for such purpose, to take-out the Construction Loan for Phase I. (d) General Contractor. The general contractor for Phase I (the "General Contractor for Phase I") has been approved by the Executive Director. Commission hereby pre -approves as General Contractor for Phase I either Portrait Homes, Inc. and/or its affiliates, or Hensel Phelps and/or its affiliates. (e) Construction Contract. Commission has received a true and complete copy of a contract by and between Developer and the General Contractor for Phase I pursuant to which the General Contractor for Phase I has agreed to make the Phase I Improvements at a cost consistent with the Final Project Budget for Phase I (the "Construction Contract for Phase I"). (f) Final Construction Documents. City has approved the Final Construction Documents for the Phase I Improvements and Commission has received a full set thereof. (g) Completion Bond. If the Construction Lender for Phase I or the Tax Credit Partner for Phase I requires that a completion bond be posted by the General Contractor, then such completion bond shall name Commission as a co -obligee. 38 \\cdcnt \data I \users WI.Seard1pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc (h) Completion Guaranty. Commission shall have received a duly executed completion guaranty for the Phase I Improvements from The Related Companies, L.P., substantially in the form attached hereto as Exhibit ["L"]. (i) Organizational Documents. The Executive Director has received and approved a copy of such portions of the organizational documents (e.g., partnership agreement, limited liability company operating agreement) of Developer or Developer's successor -in -interest as the Executive Director deems reasonably necessary to document the power and authority of the organization to perform its obligations as to Phase I under this Agreement. Developer has also made full disclosure to Commission of the names and addresses of all persons and entities that have a beneficial interest in Developer as to Phase I, excluding, if Developer is a limited partnership, limited partners with less than a majority interest in Developer. (j) Loan to Close. All of the conditions to closing the Commission Subordinate Loan for Phase I set forth in Section [9.3.6] have been satisfied or waived. (k) Building Permit. The Building Permit for the Phase I Improvements has issued or is ready to issue upon only payment of a sum certain. (1) Work to Commence. The Executive Director shall be reasonably satisfied that the work of the Phase I Improvements will commence not later than ten (10) days after the Close of Escrow for Phase I and will thereafter be completed in a diligent and continuous manner by the time required in the Ground Lease for Phase I. (m) Assignment of Plans and Architect's Contract. Developer shall, by an instrument substantially in the form attached hereto as Exhibit ["M"], conditionally assign to Commission the Final Construction Documents for the Phase I Improvements and the Project Architect's contract for Phase I. Developer shall also deliver to Commission, in the form included as part of Exhibit ["M"], the written consent of said Project Architect to said assignment, including, without limitation, to the use by Commission of the Final Construction Documents for Phase I, as well as the ideas, designs, and concepts contained within them. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase I. (n) Assignment of Construction Contract. Developer shall conditionally assign to Commission, as additional security for the Commission Subordinate Loan Note for Phase I, the Construction Contract for Phase I. The form of such assignment shall be substantially similar to the form of the assignment made by Developer of the Construction Contract for Phase I to the Construction Lender for Phase I. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase I. (o) Notice of Affordability Restrictions. Developer shall have duly executed and deposited into the Phase I Escrow for recordation in the Official Records a "Notice 39 1\cdcut\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 I I s x FINAL FINAL 6-8-1 l.doc of Affordability Restrictions on Transfer of Property" for Phase I in form and substance sufficient to satisfy the requirements of Health & Safety Code Section 33334.3(f)(3)(B). (p) Insurance. Commission has received satisfactory evidence that the insurance required pursuant to Article [9] of the Ground Lease for Phase I is in full force and effect. (q) Management Plan. Executive Director has received from Developer and approved a comprehensive management plan for Phase I Improvements, including a fair housing component. (r) Management Agreement. Executive Director has received and approved an executed agreement by and between Developer and Related Management Company, L.P., or another reputable and experienced property manager for management of the Phase I Improvements (the "Management Agreement for Phase I"), which Management Agreement for Phase I shall be consistent with this Agreement, including, without limitation, Section [8.12] of the Ground Lease for Phase I. (s) Affirmative Marketing Plan. Developer shall prepare and submit to the Executive Director for reasonable approval an affirmative marketing plan for Phase I that satisfies the requirements of 24 CFR 92.351. (t) Documents Executed. Developer has duly executed the Ground Lease for Phase I and the Memorandum of Ground Lease for Phase I and such documents have been deposited into escrow. (u) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (v) Final SPP. Commission and Developer have entered into the Final SPP for Phase I, such agreement is in full force and effect, Developer shall have completed all work required by it to be completed thereunder prior to the Close of Escrow for Phase I, and Developer shall not otherwise be in default thereunder. (w) DTSC Partial Certificate. DTSC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP, prior to Close of Escrow for Phase I. (x) Reciprocal Rights Documents. Commission and Developer have entered into the Reciprocal Rights Documents to be recorded in the Official Records against the Phase I and Phase II Parcels. Commission and Developer agree that (i) if the Reciprocal Rights Documents record in the Official Records through the Escrow for Phase I, the Reciprocal Rights Documents shall include provision for termination thereof in the event that this Agreement is terminated prior to Close of Escrow for Phase II, and (ii) in the alternative, in lieu of recording the Reciprocal Rights Documents at the Close of Escrow for Phase I, the parties may agree to defer such recordation until the Close of Escrow for Phase II on the condition that Commission, 40 \\cdcntldatal\users WBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doe Developer, Senior Lender, HCD and the Tax Credit Partner all agree, in writing, (x) both as to such deferral and to cooperate fully therewith (i.e., to execute any and all necessary documents including, without limitation, subordination agreements), (y) on the form of the document(s) to record through the Escrow for Phase II, and (z) on the exact priority such documents will have at such time as they record. If Commission and Developer elect option (ii), above, they agree that if this Agreement terminates prior to the Close of Escrow for Phase II, such Reciprocal Rights Documents shall never record. (y) the Escrow for Phase I. Parcel Map. The Parcel Map has recorded or will record through (z) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Close of Escrow for Phase I as though made on and as of that date and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. (aa) No Default. No Event of Default by Developer with respect to Phase I shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer with respect to Phase I and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. 11.5 Covenants of Developer. Developer covenants and agrees to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.11]), any and all of the conditions set forth in Section [11.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy and (b) the satisfaction of which is entirely within the reasonable control of Developer. Developer covenants and agrees to make its best efforts to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.11]), any and all of the conditions set forth in Section [11.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy, (b) Developer has not elsewhere in this Agreement expressly covenanted and agreed to make best or commercially reasonable efforts to satisfy, and (c) the satisfaction of which is within the reasonable control of Developer. 11.6 Conditions for Developer's Benefit for Phase I. Developer's obligation to ground lease the Phase I Parcel from Commission shall be subject to satisfaction of the following conditions precedent: (a) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (b) Final SPP. Commission and Developer have entered into the Final SPP for Phase I, such agreement is in full force and effect, Commission shall have completed all work required by it to be completed thereunder prior to the Close of Escrow for Phase I, and Commission shall not otherwise be in default thereunder. 41 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc (c) AB 389 Agreement. Developer and DTSC have entered into an agreement under AB 389 for the Site and DTSC is not in default thereunder. (d) DTSC Partial Certificate. DTSC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP, prior to Close of Escrow for Phase I. (e) Title Insurance. Title Company is prepared to issue its ALTA leasehold form policy of title insurance, with liability in the amount of the total of the equity raised from the sale of the Tax Credits for Phase I plus the principal amounts of the Take -Out Loan for Phase I, Proposition 1C Financial Assistance for Phase I, and Commission Subordinate Loan for Phase I, showing leasehold title to the Phase I Parcel and fee title to the Phase I Improvements located thereon vested in Developer, subject only to the lien of the Senior Loan Security Documents for Phase I, the Commission Subordinate Loan Deed of Trust for Phase I, and such other exceptions as Developer has previously notified Commission were acceptable to Developer pursuant to Section [4.3] (the "Developer Title Policy for Phase I"). (f) Commercial Pollution Legal Liability Coverage. Developer shall have secured a policy of commercial pollution legal liability insurance (the "Commercial PLL") that will become effective not later than upon issuance of the No Further Action letter for Phase I from DTSC. Such policy shall: (i) name Developer as the primary insured and, at the election of Commission, City and/or Commission as additional insureds, and (ii) have terms and conditions substantially equivalent to the following: Each Loss Limit $10,000,000 Total All Losses $10,000,000 Deductible/Retention $100,000 Term 10 years Coverage Third Party Bodily Injury for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Third Party Bodily Injury for New Pollution Conditions Included Property Damage Claims for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Property Damage Claims for New Pollution Conditions Included Clean Up/Remediation Costs for Known Conditions / Pre -Existing Conditions / Historical Conditions Excluded Clean Up/Remediation Costs for New Pollution Conditions Included Third Party Claims related to transportation of cargo Included Waste Disposal — Non Owned Locations Coverage Included Emergency Response Costs Included Development Soft Cost Coverage Included 42 \\cdcnt\data)\users\PBeard\pyatoktFinal DDA docs'DDA v 6 6 II s x FINAL FINAL 6-8-1 l.doc The premium for such policy shall be paid in full as a Phase I Project Cost at Close of Escrow by the Escrow Holder; provided, however, the incremental cost of any coverage broader than that set forth in the schedule above shall be borne solely by Developer out of its own funds. Developer, not later than ten (10) Business Days prior to the Close of Escrow, shall submit a specimen copy of the proposed policy to the Executive Director for approval as to terms, coverage, exceptions and exclusions, which approval shall not be unreasonably withheld. (g) Documents Executed. Commission has duly executed the Ground Lease for Phase I and Memorandum of Ground Lease for Phase I, and such documents have been deposited into the Phase I Escrow. (h) Land Use Entitlements. The Land Use Entitlements for Phase I are in full force and effect. (i) Final Project Budget. The Executive Director, Developer, Construction Lender for Phase I, Tax Credit Partner for Phase I, and HCD have approved (i) the Final Project Budget for Phase I. The Final Project Budget for Phase I may be revised from time to time, subject to the approval of Developer. (j) Evidence of Phase I Financing. The Executive Director has approved the Evidence of Phase I Financing. (k) Final Construction Documents. City has approved the Final Construction Documents for the Phase I Improvements. (1) Building Permit. The Building Permit for the Phase I Improvements has issued or is ready to issue upon only payment of a sum certain. (m) the Escrow for Phase I. Parcel Map. The Parcel Map has recorded or will record through (n) Site Clearance. All improvements have been removed from the Phase I Parcel, including all subsurface elements that must be removed to permit construction of the Phase I Improvements. (o) CHW/Commission Grant Agreement. The CHW/Commission Grant Agreement is in full force and effect, and neither CHW nor Commission is in default thereunder. (p) No Default. No Event of Default by Commission with respect to Phase I shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Commission with respect to Phase I and, if requested by Developer, Developer shall have received a certificate to that effect signed by the Executive Director. 43 1\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 11.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase I, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)1), may terminate this Agreement by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable, by the time provided in the Schedule of Performance (subject to Section [27.11]), to satisfy any of the conditions set forth in Section [11.4]. 11.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase I, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement by giving thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance (subject to Section [27.11]), Developer has failed to satisfy any of the conditions set forth in Section [11.4]. That notwithstanding, (a) if Developer, during said thirty (30)-day notice period, satisfies said conditions or causes said conditions to be satisfied, then the Commission notice of termination shall be deemed nullified thereby, (b) with respect to the condition set forth in Subdivision [11.4(a)1, Commission shall have no such right to terminate this Agreement unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal a denial of the Land Use Entitlements and/or the time to file any such appeal has expired, (c) with respect to the condition set forth in Subdivision [11.4(f)], Commission shall have no such right to terminate this Agreement if approval of such Final Construction Documents for Phase I has been unreasonably withheld or delayed by City, and (d) with respect to the condition set forth in Subdivision [11.4(y)], Commission, if Developer is diligently and continuously pursing approval of said parcel map, shall have no such right to terminate this Agreement unless and until Developer has exhausted at the City Council any and all reasonable rights available to it to appeal any condition or conditions to approval or denial of such parcel map by the Planning Commission of City. 11.9 Waiver of Conditions. The conditions set forth in Section [11.4] are for Commission's benefit only and the Executive Director may waive all or any part of such rights by notice to Developer and the Escrow Holder for Phase I. The conditions set forth in Section [11.6] are for Developer's benefit only and Developer may waive all or any part of such rights by notice to Commission and the Escrow Holder for Phase I. 12. GROUND LEASE OF PHASE II PARCEL 12.1 Agreement. Commission, subject to the conditions set forth in Section [12.4], agrees to ground lease to Developer, and Developer, subject to the conditions set forth in Section [12.5], agrees to ground lease from Commission, the Phase II Parcel pursuant to the form of "Ground Lease" attached hereto as Exhibit [" I" ]. 12.2 Escrow for Phase II. Conveyance of the Phase II Parcel pursuant to the Ground Lease for Phase II shall be made through the Escrow for Phase II. This Agreement shall constitute escrow instructions to the Escrow Holder for Phase II. Commission and Developer shall execute such further escrow instructions as are consistent with this Agreement and as may be reasonably required by the Escrow Holder for Phase II. 44 1\cdcnt\datal\uscrs\PBcard1pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 1.doc 12.3 Term of Escrow for Phase II. The Escrow for Phase II shall close concurrent with the Construction Loan Closing for Phase II. 12.4 Conditions for Commission's Benefit for Phase II. Commission's obligation to ground lease the Phase II Parcel to Developer shall be subject to satisfaction of the following conditions precedent: (a) Land Use Entitlements. Developer has secured and possesses the Land Use Entitlements for the Phase II Parcel. (b) Final Project Budget. The Executive Director, Developer, Construction Lender for Phase II, Tax Credit Partner for Phase II, and HCD have approved the final Project Budget for Phase II, including, without limitation, (i) the terms and conditions of the Developer Fee for Phase II, (ii) the terms and conditions of any reserve funds to be established and maintained for the Phase II Project, and (iii) the terms and conditions for the disbursement of the Phase II: Construction Loan, Commission Subordinate Loan, Tax Credit Funds, and Proposition IC Grant (the "Final Project Budget for Phase II"). The Final Project Budget for Phase II may be revised from time to time, subject to the approval of the Executive Director. (c) Evidence of Financing. The Executive Director has received and approved the following "Evidence of Phase II Financing:" (i) Construction Loan. True and complete copies of the Phase II Construction Loan documents evidencing the obligation of a reputable institutional lender, subject only to reasonable and customary conditions, to make the Construction Loan for Phase II to Developer. (ii) Tax Credit Financing. Documentary evidence reasonably acceptable to the Executive Director that Developer has (a) either (x) obtained at least three (3) competitive bids for sale of the Tax Credits for Phase II, or (y) if it has obtained less than three (3) such bids, made all commercially reasonable efforts to obtain such bids, and (b) committed, or caused to be committed, funds from the sale of the Tax Credits for Phase II to construction of the Phase II Improvements, which commitment may be subject only to reasonable and customary conditions (the "Tax Credit Funds for Phase II"). (iii) Proposition 1C Financial Assistance for Phase II. Documentary evidence reasonably acceptable to the Executive Director that disbursement of the Proposition 1C Financial Assistance for Phase II is fully committed to construction of the Phase II Improvements subject only to HCD requirements, which requirements have been approved by the Executive Director, which approval shall not be unreasonably withheld. (iv) Gap Financing. Documentary evidence that Developer has committed, or caused to be committed, equity and/or financing to construction of the Phase II Improvements in the amount of the remainder, if any, of the Project Costs less the amount of the total of any Phase II: Construction Loan, Tax Credit Funds, Commission Subordinate Loan, and Proposition IC Financial Assistance (the "Gap Financing for Phase II"). Gap Financing for 45 \\cdent\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Phase II, if any, shall be from sources, and subject only to conditions, reasonably acceptable to the Executive Director. (v) Take -Out Loan Commitment. A commitment from a reputable institutional lender, subject only to reasonable and customary conditions, pursuant to which said lender agrees to make a Take -Out Loan to Developer for Phase II, with a term of not less than fifteen (15) years, in sum sufficient, when added to any Tax Credit Funds for Phase II to be disbursed for such purpose, to take-out the Construction Loan for Phase II. (d) General Contractor. The general contractor for Phase II (the "General Contractor for Phase II") has been approved by the Executive Director. Commission hereby pre -approves as General Contractor for Phase II either Portrait Homes, Inc. and/or its affiliates, or Hensel Phelps and/or its affiliates. (e) Construction Contract. Conunission has received a true and complete copy of a contract by and between Developer and the General Contractor for Phase II pursuant to which the General Contractor for Phase II has agreed to make the Phase II Improvements at a cost consistent with the Final Project Budget for Phase II (the Construction Contract for Phase II"). (f) Final Construction Documents. City has approved the Final Construction Documents for the Phase II Improvements and Commission has received a full set thereof. (g) Completion Bonds. If the Construction Lender for Phase II or the Tax Credit Partner for Phase H requires that a completion bond be posted by the General Contractor for Phase II, then such completion bond shall name Commission as a co -obligee. (h) Completion Guaranty. Commission shall have received a duly executed completion guaranty for the Phase II Improvements from The Related Companies, L.P., substantially in the form attached hereto as Exhibit ["L"]. (i) Organizational Documents. The Executive Director has received and approved a copy of such portions of the organizational documents (e.g., partnership agreement, limited liability company operating agreement) of Developer or Developer's successor -in -interest for Phase II as the Executive Director deems reasonably necessary to document the power and authority of the organization to perform its obligations as to Phase II under this Agreement. Developer has also made full disclosure to Commission of the names and addresses of all persons and entities that have a beneficial interest in Developer as to Phase II, excluding, if Developer is a limited partnership, limited partners with less than a majority interest in Developer. (j) Loan to Close. All of the conditions to closing the Commission Subordinate Loan for Phase II set forth in Section [10.3.6] have been satisfied or waived. 46 \\cdcnt\data 1\userslPBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (k) Building Permit. The Building Permit for the Phase II Improvements has issued or is ready to issue upon only payment of a sum certain. (1) Work to Commence. The Executive Director shall be reasonably satisfied that the work of the Phase II Improvements will commence not later than ten (10) days after the Close of Escrow for Phase II and will thereafter be completed in a diligent and continuous manner by the time required in the Ground Lease for Phase II. (m) Assignment of Plans and Architect's Contract. Developer shall, by an instrument substantially in the form attached hereto as Exhibit ["M"], conditionally assign to Commission the Final Construction Documents for the Phase II Improvements and the Project Architect's contract for Phase II. Developer shall also deliver to Commission, in the form included as part of Exhibit ["M"], the written consent of said Project Architect to said assignment, including, without limitation, to the use by Commission of the Final Construction Documents for Phase II, as well as the ideas, designs, and concepts contained within them. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase II. (n) Assignment of Construction Contract. Developer shall conditionally assign to Commission, as additional security for the Commission Subordinate Loan Note for Phase II, the Construction Contract for Phase II. The form of such assignment shall be substantially similar to the form of the assignment made by Developer of the Construction Contract for Phase II to the Construction Lender for Phase II. Commission acknowledges and agrees that its rights under such assignment shall be subordinate to any such rights assigned to the Construction Lender for Phase II. (o) Notice of Affordability Restrictions. Developer shall have duly executed and deposited into the Phase II Escrow for recordation in the Official Records a "Notice of Affordability Restrictions on Transfer of Property" for Phase II in form and substance sufficient to satisfy the requirements of Health & Safety Code Section 33334.3(f)(3)(B). (p) Insurance. Commission has received satisfactory evidence that the insurance required pursuant to Article [9] of the Ground Lease for Phase II is in full force and effect. (q) Management Plan. Executive Director has received from Developer and approved a comprehensive management plan for Phase II Improvements, including a fair housing component. (r) Management Agreement. Executive Director has received and approved an executed agreement by and between Developer and Related Management Company, L.P., or another reputable and experienced property manager for management of the Phase II Improvements (the "Management Agreement for Phase II"), which Management Agreement for Phase II shall be consistent with this Agreement, including, without limitation, Section [8.12] of the Ground Lease for Phase II. 47 1\cdcnt\datal\usets\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (s) Affirmative Marketing Plan. Developer shall prepare and submit to the Executive Director for reasonable approval an affirmative marketing plan for Phase II that satisfies the requirements of 24 CFR 92.351. (t) Documents Executed. Developer has duly executed the Ground Lease for Phase II and the Memorandum of Ground Lease for Phase II and such documents have been deposited into escrow. (u) Redevelopment Plan Amendment. The Redevelopment Plan Amendment shall have been adopted and be in full force and effect. Developer acknowledges and agrees (i) that Commission does not represent and/or warrant that the Redevelopment Plan Amendment can or will be adopted, and (ii) in any case, adoption of the Redevelopment Plan Amendment would be at the sole and absolute discretion of the Commission and the City Council. (v) Bond Issue. Commission, subsequent to the Effective Date of this Agreement, have been able to issue (a) at a reasonable interest rate and on reasonable and customary terms and conditions, and (b) based on the pledge of unencumbered Set -Aside Funds, new, tax allocation bonds the net proceeds of which are (i) equal to not less than $23,000,000, and (ii) not subject to the claim of any third party and, consequently, available to fund the Commission Subordinate Loan for Phase II (the "Bonds for Phase II"). Developer expressly acknowledges and agrees that Commission has no obligation to fund the Commission Subordinate Loan for Phase II with any of the proceeds of that certain "$39,660,000 Community Development Commission of the City of National City (San Diego County, California) (National City Redevelopment Project) 2011 Tax Allocation Bonds," or any funds now or hereafter pledged to the payment thereof, or any refunding or refinancing thereof (the "2011 Bonds"). (w) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (x) Final SPP. Commission and Developer have entered into the Final SPP for Phase IT, such agreement is in full force and effect, Developer shall have completed all work required by it to be completed thereunder prior to the Close of Escrow for Phase II, and Developer shall not otherwise be in default thereunder. (y) DTSC Partial Certificate/No Further Action Letter. DTSC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP, prior to Close of Escrow for Phase II. That notwithstanding, if by Close of Escrow for Phase II all of the work of the Final PMP has been completed, then DTSC shall have executed and delivered the No Further Action Letter. (z) Reciprocal Rights Documents. Commission and Developer have entered into the Reciprocal Rights Documents to be recorded in the Official Records against the Phase I and Phase II Parcels. 48 \\cdcnt\datal\uscrs\PBeard\pyatok\Final DDA docs\DDA v 66 II s x FINAL FINAL 6-8-11.doc (aa) Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Close of Escrow for Phase II as though made on and as of that date and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. (bb) No Default. No Event of Default by Developer with respect to Phase II shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer with respect to Phase II and, if requested by the Executive Director, Commission shall have received a certificate to that effect signed by Developer. 12.5 Covenants of Developer. Developer covenants and agrees to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.11]), any and all of the conditions set forth in Section [12.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy and (b) the satisfaction of which is entirely within the reasonable control of Developer. Developer covenants and agrees to make its best efforts to satisfy, by the time provided in the Schedule of Performance (subject to Section [27.11]), any and all of the conditions set forth in Section [12.4] that (a) Developer has not elsewhere in this Agreement expressly covenanted and agreed to satisfy, (b) Developer has not elsewhere in this Agreement expressly covenanted and agreed to make best or commercially reasonable efforts to satisfy, and (c) the satisfaction of which is within the reasonable control of Developer. 12.6 Conditions for Developer's Benefit for Phase II. Developer's obligation to ground lease the Phase II Parcel from Commission shall be subject to satisfaction of the following conditions precedent: (a) Final PMP. Commission and DTSC have entered into the Final PMP, which Final PMP has been approved by Developer and is in full force and effect. (b) Final SPP. Commission and Developer have entered into the Final SPP for Phase II, such agreement is in full force and effect, Commission shall have completed all work required by it thereunder to be completed prior to the Close of Escrow for Phase II, and Commission shall not otherwise be in default thereunder. (c) AB 389 Agreement. Developer and DTSC have entered into an agreement under AB 389 for the Site and DTSC is not in default thereunder. (d) DTSC Partial Certificate/No Further Action Letter. DTSC has executed and delivered a DTSC Partial Certificate for that portion of the remediation work to be completed, pursuant to the Final PMP, prior to Close of Escrow for Phase II. That notwithstanding, if by Close of Escrow for Phase II all of the work of the Final PMP has been completed, then DTSC shall have executed and delivered the No Further Action Letter. (e) Title Insurance. Title Company is prepared to issue its ALTA leasehold form policy of title insurance, with liability in the amount of the total of the equity raised from the sale of the Tax Credits for Phase II plus the principal amounts of the Take -Out 49 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Loan for Phase II, Proposition 1C Financial Assistance for Phase II, and Commission Subordinate Loan for Phase II, showing leasehold title to the Phase II Parcel and fee title to the Phase II Improvements located thereon vested in Developer, subject only to the lien of the Senior Loan Security Documents for Phase II, the Commission Subordinate Loan Deed of Trust for Phase II, and such other exceptions as Developer has previously notified Commission were acceptable to Developer pursuant to Section [4.3] (the "Developer Title Policy for Phase II"). (f) Commercial Pollution Legal Liability Coverage. Developer shall have secured a policy of commercial pollution legal liability insurance (the "Commercial PLL") that will become effective not later than upon issuance of the No Further Action letter for Phase II from DTSC. Such policy shall: (i) name Developer as the primary insured and, at the election of Commission, City and/or Commission as additional insureds, and (ii) have terms and conditions substantially equivalent to the following: Each Loss Limit $10,000,000 Total All Losses $10,000,000 Deductible/Retention $100,000 Term 10 years Coverage Third Party Bodily Injury for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Third Party Bodily Injury for New Pollution Conditions Included Property Damage Claims for Known Conditions / Pre -Existing Conditions / Historical Conditions Included Property Damage Claims for New Pollution Conditions Included Clean Up/Remediation Costs for Known Conditions / Pre -Existing Conditions / Historical Conditions Excluded Clean Up/Remediation Costs for New Pollution Conditions Included Third Party Claims related to transportation of cargo Included Waste Disposal — Non Owned Locations Coverage Included Emergency Response Costs Included Development Soft Cost Coverage Included The premium for such policy shall be paid in full as a Phase II Project Cost at Close of Escrow by the Escrow Holder; provided, however, the incremental cost of any coverage broader than that set forth in the schedule above shall be borne solely by Developer out of its own funds. Developer, not later than ten (10) Business Days prior to the Close of Escrow, shall submit a specimen copy of the proposed policy to the Executive Director for approval as to terms, coverage, exceptions and exclusions, which approval shall not be unreasonably withheld. (g) Documents Executed. Commission has duly executed the Ground Lease for Phase II and Memorandum of Ground Lease for Phase II, and such documents have been deposited into the Phase II Escrow. 50 \\cdcnt dataI\users\PBeard\pyatok\Final DDA docs.DDA v 66 II s x FINAL FINAL 6-8-I I.doc (h) Land Use Entitlements. The Land Use Entitlements for Phase II are in full force and effect. (i) Final Protect Budget. The Executive Director, Developer, Construction Lender for Phase II, Tax Credit Partner for Phase I, and HCD have approved (i) the Final Project Budget for Phase II. The Final Project Budget for Phase II may be revised from time to time, subject to the approval of Developer. (j) Evidence of Phase II Financing. The Executive Director has approved the Evidence of Phase II Financing. (k) Final Construction Documents. City has approved the Final Construction Documents for the Phase II Improvements. (1) Building Permit. The Building Permit for the Phase II Improvements has issued or is ready to issue upon only payment of a sum certain. (m) Site Clearance. All improvements have been removed from the Phase II Parcel, including all subsurface elements that must be removed to permit construction of the Phase II Improvements. (n) No Default. No Event of Default by Commission with respect to Phase 11 shall then exist, and no event shall then exist which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Commission with respect to Phase II and, if requested by Developer, Developer shall have received a certificate to that effect signed by the Executive Director. 12.7 Developer Right to Terminate. Prior to the Close of Escrow for Phase II, Developer, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement as to Phase II only by giving thirty (30) days' notice to Commission if, despite having made its best efforts, it has been unable, by the time provided in the Schedule of Performance (subject to Section [27.11]), to satisfy any of the conditions set forth in Section [12.4]. Additionally, if, following the Close of Escrow for Phase I but prior to the Close of Escrow for Phase II, Developer (a) (i) reasonably determines that one or more of the conditions set forth in Section [12.6] cannot be satisfied by the time provided in the Schedule of Performance, and (ii) is unwilling or unable to waive that condition and, (b) consequently, desires to terminate this Agreement as to Phase II only, it shall notify Commission thereof. Promptly upon the giving of such notice, Commission and Developer shall_ meet and confer about the situation without, however, the obligation on the part of either party to agree to any modification to this Agreement. If, at the earlier of (a) the conclusion of the meeting and conference or (b) thirty (30) days following the giving of the notice, Developer still desires to terminate this Agreement as to Phase II only, Developer, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may so terminate this Agreement as to Phase II only by notice to Commission. 51 \\edcnt\datal\users\PBeardlpyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 12.8 Commission Right to Terminate. Prior to the Close of Escrow for Phase II, Commission, if it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may terminate this Agreement as to Phase II only by giving thirty (30) days' notice to Developer if, by the time provided in the Schedule of Performance (subject to Section [27.11]), any of the conditions set forth in Section [12.4] have not been satisfied. That notwithstanding, (a) if Developer, during said thirty (30)-day notice period, satisfies said conditions or causes said conditions to be satisfied, then the Commission notice of termination shall be deemed nullified thereby, (b) with respect to the condition set forth in Subdivision [12.4(a)], Commission shall have no such right to terminate this Agreement unless and until' Developer has exhausted at the City Council any and all reasonable rights available to it to appeal a denial of the Land Use Entitlements and/or the time to file any such appeal has expired, and (c) with respect to the condition set forth in Subdivision [12.4(f)], Commission shall have no such right to terminate this Agreement if approval of such Final Construction Documents for Phase I has been unreasonably withheld or delayed by City. Additionally, if, following the Close of Escrow for Phase I but prior to the Close of Escrow for Phase II, Commission (a) (i) reasonably determines that one or more of the conditions set forth in Section [12.4] cannot be satisfied by the time provided in the Schedule of Performance, and (ii) is unwilling or unable to waive that condition, and (b) consequently, desires to terminate this Agreement as to Phase II only, it shall notify Developer thereof. Promptly upon the giving of such notice, Commission and Developer shall meet and confer about the situation without, however, the obligation on the part of either party to agree to any modification to this Agreement. If, at the earlier of (a) the conclusion of the meeting and conference or (b) thirty (30) days following the giving of the notice, Commission still desires to terminate this Agreement as to Phase II only, Commission, provided that it is not then in material default under this Agreement (subject to the notice and cure provisions of Section [22.1(c)]), may so terminate this Agreement as to Phase II only by notice to Developer. 12.9 Waiver of Conditions. The conditions set forth in Section [12.4] are for Commission's benefit only and the Executive Director may waive all or any part of such rights by notice to Developer and the Escrow Holder for Phase II. The conditions set forth in Section [12.6] are for Developer's benefit only and Developer may waive all or any part of such rights by notice to Commission and the Escrow Holder for Phase II. 13. AFFORDABILITY COVENANTS 13.1 Phase I. As more particularly provided in the Ground Lease for Phase I, for a period of ninety-nine (99) years the dwelling units in Phase I shall be rented as follows: (a) Twelve (12) of the dwelling units in the Phase I Improvements shall be rented to persons and families whose incomes do not exceed thirty percent (30%) of area median at rents affordable to said persons and families, of which three (3) of said units shall be one (1)-bedroom units, five (5) shall be two (2)-bedroom units, and four (4) shall be three (3)- bedroom units; 52 \\cdcnt\datal\users\PBcard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I.doc (b) Twenty-three (23) of the dwelling units in the Phase I Improvements shall be rented to persons and families whose incomes do not exceed forty percent (40%) of area median at rents affordable to said persons and families, of which five (5) of said units shall be one (1)-bedroom units, ten (10) shall be two (2)-bedroom units, and eight (8) shall be three (3)-bedroom units; (c) Eighteen (18) of the dwellings units in the Phase I Improvements shall be rented to persons and families whose incomes do not exceed fifty percent (50%) of area median at rents affordable to said persons and families, of which three (3) of said units shall be one (1)-bedroom units, nine (9) shall be two (2)-bedroom units, and six (6) shall be three (3)- bedroom units; and (d) The remaining dwelling units in the Phase I Improvements (save for one (1) manager's unit) shall be rented to persons and families whose incomes do not exceed one hundred ten percent (110%) of area median at rents affordable to said persons and families. 13.2 Phase II. As more particularly provided in the Ground Lease for Phase II, for a period of ninety-nine (99) years the dwelling units in Phase II shall be rented as follows: (a) Eleven (11) of the dwelling units in the Phase II Improvements shall be rented to persons and families whose incomes do not exceed thirty percent (30%) of area median at rents affordable to said persons and families, of which one (1) of said units shall be a studio apartment, three (3) of said units shall be one (1)-bedroom units, four (4) shall be two (2)- bedroom units, and three (3) shall be three (3)-bedroom units; (b) Twenty-one (21) of the dwelling units in the Phase II Improvements shall be rented to persons and families whose incomes do not exceed forty percent (40%) of area median at rents affordable to said persons and families, of which two (2) of said units shall be studio apartments, five (5) of said units shall be one (1)-bedroom units, eight (8) shall be two (2)-bedroom units, and six (6) shall be three (3)-bedroom units; (c) Thirteen (13) of the dwellings units in the Phase II Improvements shall be rented to persons and families whose incomes do not exceed fifty percent (50%) of area median at rents affordable to said persons and families, of which two (2) of said units shall be one (1)-bedroom units, five (5) shall be two (2)-bedroom units, and six (6) shall be three (3)- bedroom units; and (d) The remaining dwelling units in the Phase II Improvements (save for one (1) manager's unit) shall be rented to persons and families whose incomes do not exceed one hundred ten percent (110%) of area median at rents affordable to said persons and families. 14. ENVIRONMENTAL CONDITIONS 14.1 Commission Obligations. (a) Disclosures. The Site has been studied by Commission, which has commissioned environmental review of all or parts of the Site in the form of a "Phase I" report, in conformance with U.S. EPA rules requiring "All Appropriate Inquiry" and has further 53 \\cdcnt\data]\users\PBeardlpyatok\Fnal DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc commissioned "Phase II" reports in which samples of the subsurface condition have been taken and analyzed. A list of all reports in the possession of Commission, which is believed to be but which is not represented to be a comprehensive list of all reports that exist regarding the Site, is attached hereto as Exhibit ["N"] and has been made available to Developer for its review. As a result of the historic uses at the Site, the Site has been found to have been impacted by substances that are regulated and listed under laws pertaining to hazardous substances and materials, and some of such substances located on the Site are listed as "hazardous." Except as disclosed in the reports set forth on Exhibit ["N,"] Commission represents to Developer that it is not aware of, and it has not received any additional notice or communication from any governmental agency having jurisdiction over the Site, notifying it of the presence of hazardous substances in, on, or under the Site, or any portion thereof. (b) Remediation. With respect to each Phase/Parcel of the Project and taking into account the fact that the project will be built in two (2) Phases: (i) Property Mitigation Plan. Commission has entered into or will enter into a voluntary contract with DTSC for the review of historic site conditions and approval of remedial steps that will mitigate those conditions. Commission will continue to stay in contractual privity with DTSC and will (in accordance with Section [4.4]) develop the Final PMP(s) or similar document(s) that will: (A) identify known environmental conditions on the Site that require remediation, (B) propose and describe methods to remediate conditions that might impact the residential use of the Site contemplated by this Agreement, (C) identify those tasks that must be completed prior to achieving closure of the Site, (D) allow Developer to receive the benefits available under the Polanco Act, and (E) provide for DTSC to indicate that the Site is safe for its intended use by issuing a "Certificate of Completion," or a "No Further Action" letter, or some other written statement indicating that all remedial work necessary for the safe use of the Site has been completed. After the Preliminary PMP has been approved by Developer pursuant to Section [4.4], Developer shall have the right to review and approve all subsequent drafts thereof including, without limitation, those drafts to be submitted to DTSC for interim or final approval. Approval by Developer of each such draft shall not be unreasonably withheld or delayed. If Developer reasonably disapproves any draft submitted by Commission and Commission fails promptly to overcome Developer's reasonable objection(s), either party may terminate this Agreement by notice in writing. Developer agrees to cooperate fully with Commission in the development and processing of the Final PMP(s) by, among other things, timely supplying to Commission such information as Commission reasonably requires (and as would be typically generated by a developer at that stage of the development process) including, without limitation, preliminary grading and development plans for the Site. (ii) Site Preparation Plan. After the Preliminary SPP has been approved by Developer pursuant to Section [4.4], Commission shall, concurrent with preparation of the Final PMP, revise that Preliminary SPP to reflect development of the Final PMP, including DTSC review, comment and approval of that Final PMP. Commission shall submit progressive drafts of the Final SPP to Developer for review and approval, which approval shall not be unreasonably withheld or delayed. If, (A) Developer reasonably disapproves any draft of the Final SPP submitted by Commission and Commission fails promptly to overcome Developer's reasonable objection(s), or (b) at such time as DTSC approves the Final PMP, 54 \\edent\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1t.doc Developer reasonably disapproves the Final SPP submitted by Commission and Commission fails promptly to overcome Developer's reasonable objection(s), either party may terminate this Agreement by notice in writing. (iii) Extension of Schedule of Performance Dates. If, following receipt of the Final PMP and Final SPP, either Developer or Commission determines that tasks required thereunder will necessitate the extension of times for performance under the Schedule of Performance beyond the times set forth therein, then the parties will meet and confer to reasonably agree on an extension of time in the Schedule of Performance to complete such tasks. (c) No Further Action. The Final SPP for each Phase shall provide for the process by which the parties will pursue at the earliest reasonable opportunity for each Phase/Parcel a 'No Further Action Letter' from DTSC or such other written evidence reasonably acceptable to Developer confirming that the remediation work has been completed for the subject Phase/Parcel in accordance with the Final PMP for that Phase/Parcel (the "No Further Action Letter"). Commission agrees to seek in the Final PMP for each Phase/Parcel an interim action by DTSC whereby DTSC indicates, in writing and prior to the Close of Escrow for each Phase/Parcel, that remediation measures taken to date have been completed satisfactorily (the "DTSC Partial Certificate"). (d) Immunities. Once a No Further Action Letter has been issued for each Phase/Parcel by DTSC or other appropriate regulatory agency pursuant to the Final PMP for each Phase/Parcel, all benefits and immunities established under the Polanco Act shall attach and inure to the benefit of Developer, its lenders, tenants, successors and assigns as provided by law. 14.2 Limitation of Commission Obligations. (a) "As Is" Conveyance. Except as otherwise provided in this Agreement including, without limitation, the provisions of Section [14.1(b)], each Parcel shall be conveyed to Developer in "as is" physical condition. Except for Commission's obligation to remediate hazardous materials as expressly provided in this Agreement, including without limitation, the Commission's obligations to remediate pre-existing, historical hazardous materials under Sections [4.4 (g) and (h)(i) through (iv)], the Final PMP or the Final SPP, Commission shall have no responsibility for the suitability of each Parcel or portions thereof for the development of the Improvements to be made to that Parcel, and if the conditions of a Parcel or portions thereof are not entirely suitable for such development and Developer or Commission do not otherwise terminate this Agreement in accordance with the terms of this Agreement, then Developer shall put that Parcel in a condition suitable for that development. Subject to Commission's performance of its obligations under this Agreement, including, without limitation, the Final SPP for each Parcel, Developer waives any right of reimbursement or indemnification from Commission for Developer's costs related to any physical conditions on each Parcel unless such condition was known to Commission and not disclosed to Developer and such condition was not readily discoverable by Developer upon reasonable inspection of the subject Parcel. This waiver shall survive termination of this Agreement. 55 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (b) Disclosure. In anticipation of Developer's acquiring the Site and in fulfillment of the requirements of Health and Safety Code Section 25359.7(a), Commission has no knowledge of any hazardous materials or substances in or on the Site other than the Hazardous Materials investigation reports listed in Exhibit ["N"] and the additional information provided to Developer as part of the Preliminary and Final PMP and the information, if any, provided to Commission by Developer pursuant to Developer's due diligence activities related to the Site. (c) Limit of Commission Liability. Developer accepts that not all contamination may be removed from each Parcel following completion of activities described in the Final PMP, even after issuance of a "No Further Action Letter" for a Parcel. However, notwithstanding anything contained in this Agreement to the contrary, Commission obligation for environmental assessment, remediation and/or transportation of regulated materials terminates upon DTSC's agreement that the Final PMP has been fully implemented as evidenced by issuance of the No Further Action Letter. Developer understands that although each Parcel will be prepared to a condition in which impacts have been mitigated to a level where it meets applicable human health risk assessment criteria, and construction -related nuisance impacts have been abated (or will be abated simultaneous with construction activities), some substances may remain at the Site, at or below concentrations consistent with regulatory guidelines and the Final PMP. As a result of the immunities and protections described above in Section [14.1(d)], Developer, its lender, successors and assigns should have no liability for future remediation of these substances, and they will be held harmless and immune from such liability by operation of California law. However, should Developer, its successors or assigns determine or desire to undertake future construction or additional redevelopment activities at the Site following completion of the Improvements, any increased costs related to said redevelopment by reason of residual impacts shall be borne solely by Developer, its successors and assigns, and Commission will assume no responsibility for such costs. In addition, Developer, and its successors and assigns, accept that the immunities described in Section [14.1(d)] do not shield or protect against liability as a result of new releases of hazardous materials that may occur during or after the construction and operation of the Improvements or against third -party liability suits brought by residents or other users of the Site. Commission will accept no responsibility for such new releases, and Developer waives and abandons any such claims for liability against Commission for such new releases, except to the extent that Commission was an active discharger or actively participated in such post -conveyance discharge or release of hazardous substance. 15. CONDITION PRECEDENT TO PHASE II OBLIGATIONS Notwithstanding anything contained in this Agreement to the contrary, neither Commission nor Developer is required to perform any material obligation hereunder with respect to Phase II, other than an obligation the performance of which is incidental to the development of Phase I or that is reasonably necessary in order to permit the development of Phase I as required by this Agreement, unless and until the condition set forth in Section 12.4[v] has been satisfied or has been waived by Commission, and Commission has given notice thereof to Developer (the "Phase II Notice"). 56 1\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I l.doc 16. LABOR STANDARDS Developer shall carry out the construction of the Improvements on the Site in conformance with all applicable federal and state labor standards, including, without limitation, the payment of prevailing wages. 17. CLOSE OF ESCROW; EXPENSES Phase of: Phase; 17.1 Documents to be Delivered. Upon receipt by the Escrow Holder for each (a) The Commission Subordinate Loan Note for the subject Phase; (b) The Commission Subordinate Loan Deed of Trust for the subject (c) The Memorandum of Ground Lease Phase for the subject Phase; (d) The Notice of Affordability Restrictions on Transfer of Property for the subject Phase; (e) The Reciprocal Rights Documents (unless, as to the Close of Escrow for Phase I, Commission and Developer, pursuant to Section [11.6(x)], elect to defer recordation until the Close of Escrow for Phase II; and (f) All other funds and documents required to close the Escrow for the subject Phase in accordance with this Agreement; and (x) as to Phase I, (i) when the conditions precedent described in Section [11.4] been satisfied or waived in writing by the Executive Director, and (ii) when the conditions precedent described in Section [11.6] have been satisfied or waived in writing by Developer; and (y) as to Phase II, (i) when the conditions precedent described in Section [12.4] been satisfied or waived in writing by the Executive Director, and (ii) when the conditions precedent described in Section [12.6] have been satisfied or waived in writing by Developer, the Escrow Holder for the subject Phase shall, in the following order, record in the Official Records: (a) The Reciprocal Rights Documents (subject to the possible deferral of recordation described above); (b) The Memorandum of Lease for the subject Phase; (c) The Senior Loan Security Documents for the subject Phase; (d) The Commission Subordinate Loan Deed of Trust for the subject Phase I; 57 1\cdcnt\datallusers\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc (e) As to Phase I only: (i) The CHW Third Trust Deed Loan Security Documents for Phase I; and (ii) The CHW Fourth Trust Deed Loan Security Documents for Phase I; (f) As to Phase II only: The CHW Third Trust Deed Loan Security Documents for Phase II; (g) Notice of Affordability Restrictions on Transfer of Property for the subject Phase; and (h) Such other documents required to close the Escrow for the subject Phase in accordance with this Agreement; and shall deliver to Commission: (a) The Commission Subordinate Loan Note for the subject Phase; (b) Conformed copies of all of the documents and instruments that recorded in the Official Records for the subject Phase; and (c) The Commission Title Policy for the subject Phase; and shall deliver to Developer: (a) A copy of the Commission Subordinate Loan Note for the subject Phase; (b) Conformed copies of all of the documents and instruments that recorded in the Official Records for the subject Phase; and (c) The Developer Title Policy. 17.2 Expenses of Developer. For each Phase, Developer shall pay: (a) any and all documentary transfer taxes and recording fees arising from leasehold conveyance of the subject Parcel from Commission to Developer by the Ground Lease for the subject Phase, (b) the Escrow fee for the subject Phase, (c) the premium for the Commission Title Policy for the subject Phase, and (d) all such other costs and expenses related to such Escrow and not expressly provided for herein. 17.3 Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and Recording Fees. The Escrow Holder for each Phase is hereby instructed to seek such 58 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 1 I s x FINAL FINAL 6-8-11.doc waivers and exemptions from transfer taxes and recording fees as are available pursuant to Revenue and Taxation Code Section 11922 and Government Code Section 6103, respectively. 17.4 Broker's Commissions. Developer represents and warrants that it has not engaged any broker, agent or finder in connection with this Agreement, and Developer agrees to indemnify, protect, hold harmless, and defend the Indemnitees from any claim by any brokers, agents or finders retained by Developer. 18. OTHER ESCROW INSTRUCTIONS 18.1 Funds in Escrow. All funds received in an Escrow shall be deposited by the Escrow Holder in a general escrow account with any state or national bank doing business in the State of California and reasonably approved by the Executive Director and Developer, and such funds may be combined with other escrow funds of the Escrow Holder. All disbursements shall be made on the basis of a thirty (30) day month. 18.2 Failure to Close. If an Escrow is not in condition to close on or before the time established in the Schedule of Performance therefor, any party who then shall have fully performed the acts to be performed before the conveyance of title may, in writing, demand the return of its money, papers, or documents from the Escrow Holder. No demand for return shall be recognized until fifteen (15) days after the Escrow Holder (or the party making such demand) shall have mailed copies of such demand to the other party. Objections, if any, shall be raised by written notice to the Escrow Holder and to the other party within the 15-day period, in which event the Escrow Holder is authorized to hold all money, papers and documents until instructed by mutual agreement of the parties or, upon failure thereof, by a court of competent jurisdiction. If no such demands are made, such Escrow shall be closed as soon as possible. If objections are raised in the manner provided above, the Escrow Holder shall not be obligated to return any such money, papers or documents except upon the written instructions of both the Executive Director and Developer, or until the party entitled thereto has been determined by a final decision of a court of competent jurisdiction. If no such objections are made within said 15-day period, the Escrow Holder shall immediately return the demanded money, papers or documents. 18.3 Amendments. Any amendment to these Escrow instructions shall be in writing and signed by the Executive Director or Commission Counsel and Developer. At the time of any amendment, the Escrow Holder shall agree to carry out its duties as the Escrow Holder under such amendment. 18.4 Notices. All Notices from the Escrow Holder to Commission or Developer shall be given in the manner provided in Article [23]. 18.5 Liability. The liability of the Escrow Holder under this Agreement is limited to performance of the obligations imposed upon it under Sections [17.1], [17.3], and [18.1]. 59 \\cdcnt\datal\users\PReard\pyatok\Fival DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc 19. CERTIFICATE OF COMPLETION Promptly after completion of all construction and development of the Improvements for a Phase in conformity with the Final Construction Documents and the Scope of Development for such Phase, and after written request therefor from Developer, Commission shall furnish Developer with a final Certificate of Completion for the subject Phase. Such final Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction and development required by this Agreement for the subject Phase. The Certificate of Completion shall be in such form as to permit it to be recorded in the Official Records of the County. If, after written request therefor from Developer, Commission refuses or fails to furnish the applicable Certificate of Completion, Commission shall, within sixty (60) days after the written request, provide Developer with a written statement of the reasons Commission refused or failed to furnish the Certificate of Completion. The statement shall also contain Commission's opinion of the action Developer must take to obtain the Certificate of Completion. If the reason for such refusal is confined to either (a) the immediate unavailability of specific items or materials for landscaping or (b) the need only to complete "punch list" items, Commission will issue the Certificate of Completion upon the posting of a bond by Developer with Commission in an amount representing the fair value of the work not yet completed. If Commission shall have failed to provide such written statement within said (sixty) 60-day period, Developer shall be deemed entitled to the Certificate of Completion. Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage or any insurer of a mortgage securing money loaned to finance the Improvements. Such Certificate of Completion shall not be notice of completion as referred to in Section 3093 of the California Civil Code, nor shall such Certificate of Completion serve as a certificate of occupancy for the subject Phase. 20. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS 20.1 Developer's Formation, Qualification and Compliance. Developer (a) is validly existing and in good standing under the laws of the State of California, (b) has all requisite authority to conduct its business and own and lease its properties, and (c) has all requisite authority to execute and perform its obligations under this Agreement. 20.2 Litigation. Developer represents and warrants that there are no material actions, lawsuits or proceedings pending or, to the best of Developer's knowledge, threatened against or affecting Developer, the adverse outcome of which could have a material adverse affect on Developer's ability to perform its obligations under this Agreement. 60 1\cdcnt\data1\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I duc 21. INDEMNIFICATION AND INSURANCE 21.1 Nonliability of Commission. Developer acknowledges and agrees that: (a) Commission 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 Project, including matters relating to: (i) the Final Construction Documents, (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them, or (iii) the progress of the Project and its conformity with the Final Construction Documents; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledge that any review, inspection, supervision, approval or information supplied to Developer by Commission in connection with such matters is solely for the protection of Commission and that neither Developer nor any third party is entitled to rely on it; (b) Notwithstanding any other provision of this Agreement: (i) Commission is not a partner, joint venturer, alter -ego, manager, controlling person or other business associate or participant of any kind of Developer and Commission does not intend to ever assume any such status; (ii) Commission shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) Except to the extent, if any, expressly set forth in the Final SPP for a Phase as to work to be performed by Commission, Commission 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, contractors, licensees or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon not caused by the sole and willful negligence of the Indemnitees; and (d) By accepting or approving anything required to be performed or given to under this Agreement, including any certificate, financial statement, survey, appraisal or insurance policy, Commission 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 Commission to anyone. 21.2 Indemnity. Developer shall indemnify, protect, hold harmless and defend (with counsel reasonably satisfactory to the Executive Director and Commission General Counsel) the Indemnitees from and against any and all losses, costs, claims, expenses, damages (including, without limitation, foreseeable or unforeseeable consequential damages) and liabilities (including, without limitation, reasonable attorneys' fees and court costs) directly or indirectly arising from, related to, or as the result of (a) the death of any person at the Site after Developer takes possession of the Phase applicable thereto, (b) damage, injury or loss to any person at the Site after Developer takes possession of the Phase applicable thereto, (c) damage or injury to any property occurring or resulting directly or indirectly from the use, occupancy or development of the Property by Developer, its agents or invitees pursuant to this Agreement, the activities of Developer or its officers, directors, employees, agents, servants or contractors, or 61 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc from any other cause, except to the extent caused by the Indemnitees' gross negligence or willful misconduct. This indemnity shall survive termination of this Agreement and issuance of the Certificate of Completion for each Phase. Notwithstanding anything in this Agreement, the foregoing shall not apply to and nothing in this Section [21.2] shall affect or excuse the Commission's obligations under this Agreement to remediate hazardous wastes, including without limitation Commission's obligation to remediate pre-existing, historical hazardous materials pursuant to Sections [4.4 (g) and (h)(i) through (iv)]. 21.3 Reimbursement of Commission. Developer shall, within fifteen (15) days after written demand, reimburse Commission for all costs reasonably incurred by Commission (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants) in connection with Commission enforcement of the Project Documents and all related matters, including, without limitation, the following: (a) Commission's commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any Project Document; and (b) all claims, demands, causes of action, liabilities, losses, and other costs against which Commission is indemnified under the Project Documents. Such reimbursement obligations shall bear interest from the date occurring fifteen (15) days after Commission makes written demand to Developer at the rate of ten percent (10%) per annum. Such reimbursement obligations shall survive cancellation of the Commission Subordinate Loan Note, and the release and reconveyance of the Commission Subordinate Loan Deed of Trust. 22. DEFAULTS AND REMEDIES 22.1 Event of Default. Any of the following events or occurrences with respect to either party shall constitute a material breach of this Agreement and, after the expiration of any applicable cure period, shall constitute an "Event of Default" by such party: (a) The failure by either party to pay any amount in full when it is due under this Agreement, if the failure has continued for a period of fifteen (15) days after the party entitled to payment demands in writing that the other party cure that failure. (b) The failure by either party to perform any material obligation under this Agreement, which by its nature such party has no capacity to cure. (c) The failure by either party to perform any other obligation under this Agreement, including, without limitation, the other Project Documents, if the failure has continued for a period of thirty (30) days after demand in writing that such party cure the failure. If, however, by its nature the failure cannot reasonably be cured within thirty (30) days, such party may have such longer period of time as is reasonably necessary to cure the failure, provided, however, that such party commence said cure within said thirty (30)-day period, and thereafter diligently prosecute said cure to completion within one hundred eighty (180) days. Notwithstanding anything to the contrary contained in this Agreement, there shall be no cross -default between Developer's obligations with respect to Phase I under this Agreement and Developer's obligations with respect to Phase II under this Agreement. If Developer shall 62 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc commit an Event of Default in any obligation hereunder with respect to a particular Phase, Commission's sole and exclusive right shall be to pursue remedies permitted hereunder with respect to the Event of Default on such Phase, and Commission expressly acknowledges that it has and retains no rights or remedies with respect to any other Phase unless an Event of Default separately occurs with respect thereto. 22.2 No Waiver. Except as otherwise expressly provided in this Agreement, any failure or delay by any party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default, or of any such rights or remedies, or deprive any such party 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. 22.3 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of such rights or remedies shall not preclude the exercise by it, at the same time or different times, of any other rights or remedies for the same default or any other default by another party. 23. NOTICES All notices, consents, demands, approvals and other communications (the "Notices") that are given pursuant to this Agreement shall be in writing to the appropriate party and shall be deemed to have been fully given when delivered, including delivery by commercial delivery service, or if deposited in the United States mail, certified or registered, postage prepaid, when received or refused. All Notices shall be addressed as follows: If to Developer: and to: If to Commission: Paradise Creek Housing Partners, L.P. do The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Community HousingWorks 4305 University Avenue, Suite 550 San Diego, California 92105 Community Development Commission of the City of National City 1243 National City Blvd. National City, California 91950 Attn: Executive Director Addresses for notice may be changed from time to time by notice to all other parties. Notwithstanding that Notices shall be deemed given when delivered, the nonreceipt of any Notice as the result of a change of address of which the sending party was not notified shall be deemed receipt of such Notice. 63 \\cdentklatal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 24 PROJECT SIGN Developer agrees to construct, erect and maintain upon the Property during the course of construction a sign that identifies the Project as a Commission -assisted activity. The design, content and dimensions of such signs shall be subject to the prior approval of the Executive Director, which approval shall not be unreasonably withheld or delayed. 25. ASSIGNMENT Except as otherwise expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of Commission, which consent may be withheld in its sole and absolute discretion. Any such assignment or delegation without such consent shall, at Commission's option, be void. Notwithstanding the foregoing, Developer, prior to Close of Escrow for Phase I and without the prior consent of Commission, may, subject to the condition set forth immediately below, assign all of its right, title and interest hereunder with respect to Phase II to a limited partnership in which affiliates of The Related Companies of California, LLC, and Community HousingWorks act as general partners (the "Phase II Developer"). The effectiveness of such assignment shall be subject to the condition that the original Developer and the Phase II Developer deliver to Commission, in form and substance reasonably acceptable to the Executive Director, the assignment in writing, including assumption by the Phase II Developer of all of the duties and obligations of the original Developer under this Agreement with respect to Phase II. From and after the occurrence of such assignment by original Developer hereunder, (a) the original Developer hereunder shall only be obligated under this Agreement with respect to Phase I, and shall have no obligation, past or present, with respect to Phase II and shall be released and forever discharged from any obligation, past or present, with respect to Phase II, and (b) the Phase II Developer hereunder shall only be obligated under this Agreement with respect to Phase II, and shall have no obligation, past or present, with respect to Phase I and shall be released and forever discharged from any obligation, past or present, with respect to Phase I. 26. ADMINISTRATION Following approval of this Agreement by Commission, this Agreement shall be administered and executed on behalf of Commission by the Executive Director. The Executive Director shall have the authority to issue interpretations, waive terms and conditions, and enter into amendments of this Agreement (including, without limitation, to the Schedule of Performance) on behalf of Commission provided that such actions do not substantially change the uses or development permitted of the Property or materially add to the costs of Commission provided herein. All other waivers or amendments shall require the formal consent of Commission. 27. MISCELLANEOUS 64 \\edcnt\datal\usersV'Beard\pyatok1Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 27.1 Counterparts. This Agreement may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document. 27.2 Prior Agreements; Amendments; Consents. This Agreement contains the entire agreement between Commission and Developer with respect to the Property, and all prior negotiations, understandings and agreements are superseded by this Agreement. No modification of this Agreement (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. 27.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. Assuming proper service of process, Developer and Commission waive any objection regarding personal or in rem jurisdiction and agree that venue shall be proper in the County of San Diego, California. 27.4 Severability of Provisions. No provision of this Agreement that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of this Agreement are hereby declared to be severable. 27.5 Headings. Article and section headings are included in this Agreement for convenience of reference only and shall not be used in construing this Agreement. 27.6 Time of the Essence. Time is of the essence of this Agreement. 27.7 Conflict of Interest. No member, official or employee of Commission shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to this Agreement which is prohibited by law. 27.8 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. 27.9 Nonliability of Commission Officials and Employees. No member, official or employee of Commission shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by Commission or for any amount which may become due to Developer or successor, or on any obligation under the terms of this Agreement. 65 \\cdcnt\datal\users\PBcard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc 27.10 Submission of Documents and Other Matters for Approval. Whenever this Agreement requires either party to submit plans, drawings, documents or other matters to the other party for approval, and there is no time specified herein for such approval, the submitting party may submit a letter requiring approval or rejection by the other party of the documents or matter submitted within thirty (30) days after submission, and unless rejected within the stated time such documents or matter shall be deemed approved. Except where such approval is expressly reserved to the sole discretion of. the approving party, or requires the discretion of the Commission, all approvals required hereunder by either party shall be reasonable and not unreasonably withheld or delayed. Developer expressly acknowledges and agrees that inasmuch as City is not a party to this Agreement, neither this Section, nor any other term or condition of this Agreement is applicable to or binding on City. 27.11 Force Majeure. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; litigation beyond the reasonable control of a party and pursuant to which performance under this Agreement is enjoined; unusually severe weather; inability, despite best efforts, to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier beyond the reasonable control of a party; acts of the other party; acts or the failure to act of any public or governmental entity (except that acts or the failure to act of Commission shall not excuse performance by Commission); or any other acts or causes beyond the reasonable control 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 of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Force Majeure shall serve also to extend the time by which any condition, for the benefit of either party, shall be satisfied under this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date set forth above. 66 \\cdcntldatal\users \PBeard\pyatok\Final DDA ducs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I .doc "Developer" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: lyt.4.414 % D nst,e_._ Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member [Signatures Continue Next Page] 67 C:\Data1LEG\NC-372.TOD Project\DDA.v.6.6.1 l.s.x.doc By: Anne B. Wilson Senior Vice President "Developer" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member Senior Vice President. [Signatures Continue Next Page] 67 S:\TRC-DEV1Projects\PROSPECTNational City Public Works CenterlDDA\EXECUTFD DOCUMENrS\ELECTRONIC VERSION OF FU.ESIDDA v 6 6 I I s x.doc "Commission" COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER, Commission Special Counsel By - Lance E. Garber 68 (' I)al all.l (i\NC-372:101) Project\DDAv.6.6.I Is.x.doc , Chairman "Commission" COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER, Commission Special Counsel By: Lance E. Garber , Chairman 68 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc LIST OF EXHIBITS EXHIBIT DESCRIPTION "Q" - Site Map "A-1" - Legal Description of Public Works Yard "A-2" - Legal Description of Illes Trust Property - Conceptual Development Program - Proposition 1C Financial Assistance Schedule of Performance Phase I Predevelopment Plan and Budget Scope of Development Preliminary Project Budget for Phase I Preliminary Project Budget for Phase II Form of Ground Lease Form of Commission Subordinate Loan Note Form of Commission Subordinate Loan Deed of Trust - Form of Completion Guaranty Form of Assignment of Plans and Architect's Contract - List of Environmental Reports - Form of Disbursement Request Preliminary Phase II Predevelopment Plan and Budget Draft Redevelopment Plan Amendment HOME Program Requirements 69 \\cdcntklata l\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc EXHIBIT "A" SITE MAP EXHIBIT "A" 1\cdcnt\datallusers\PBeard\pyatok\Final DDA docs\DDA v 6 6 I l s x FINAL FINAL 6-8-1 EXHIBIT "A-1" LEGAL DESCRIPTION OF PUBLIC WORKS YARD LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: Lots 7 to 16 inclusive of Block 85 of National City, in the City of National City, County of San Diego, State of California according to map thereof no. 348 filed in the Office of the County Recorder of San Diego County October 2, 1.882, excepting therefrom that portion of land as set forth in that certain Corporation Grant Deed recorded November 20,1964 as file no. 211364 of Official Records. In addition, that portion of Coolidge Avenue between 20th Street and 22 Strc et, and 21st Stxaet between Harding Avenue and Hoover Avenue as set forth in that certain Order of Vacation (Resolution No. 8338 of the City Council of the City of National City) recorded Apri18, 1963 as file no. 59590 of Official Records; And those portions of the Unnamed Alley lying within Block 85 of said map no. 348 as set forth in the certain Order of Vacation (Resolution No. 9816 of the City Council of the City of National City) recorded May 12, 1969 as file no. 82961 of Official Records. (End of Legal Description) EXHIBIT "A-1" Page 1 of 3 \\cdcnt\data!\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc • LEGAL DESC I is ON The laud referred to herein is situated in the State of California, County of San Diego, and described as follows: Lots 1 to 22 inclusive of Block 86 of National City, in the City of National City, County of San Diego, State of California according to map thereof no. 348 filed in the Office of the County Recorder of San Diego County October 2, 1882. In addition, that portion of Coolidge Avenue between 20th Street and 22nd Street, and 21st Street between Harding Avenue and Hoover Avenue as set forth in that certain Order of Vacation (Resolution No. 8338 of the City Council of the City of National City) recorded April 8,1963 as file no. 59590 of Official Records; And the Unnamed Alley lying within Block 86 of said map no. 348 as set forth in the certain Order of Vacation (Resolution No. 9816 of the City Council of the City of National City) recorded May 12, 1969 as file no. 82961 of Official Records (End of Legal Description) EXHIBIT "A-1" Page 2 of 3 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11-doc LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: Lots 1 to 22 inclusive of Block 107; and Lots 1 to 22 inclusive of Block 108 of National City, in the City of National City, County of San Diego, State of California according to map thereof no. 348 filed in the Office of the County Recorder of San Diego County October 2, 1882; Together with that portion of Coolidge Avenue between 20th Street and 2204 Street, and 21 St Street between Harding Avenue and Hoover Avenue as set forth in that certain Order of Vacation (Resolution No. 8338 of the City Council of the City of National City) recorded April 8,1963 as file no. 59590 of Official Records; And those portions of the Unnamed Alley lying within Blocks 107 and 108 of said map no. 348 as set forth in the certain Order of Vacation (Resolution No. 9816 of the City Council of the City of National City)recorded May 12,1969 as file no. 82961 of Official Records (led of Legal Description) EXHIBIT "A-1" Page 3 of 3 \\cdcnt\data t\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-S-I I .doc EXHIBIT "A-2" LEGAL DESCRIPTION OF ILLES TRUST PROPERTY LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, City of National City, ilia' described as follows: PARCEL 1: BLOCK 84 AND THAT PORTION OF BLOCK 85 IN NATIONAL CITY, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALLFORNIA, ACCORDING TO MAP THEREOF NO. 348, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY, OCTOBER 2,1882, TOGETHER WITH PORTIONS OF 20TH STREET,, LYING BETWEEN SAID BLOCKS 84 AND 85 AND OF COOLIDGE AVENUE ADJOINING SAID BLOCKS ON THE SOUTHWEST AS SAID STREET AND AVENUE ARE CLOSED AND VACATED TO PUBLIC USE, ALL LYING NORTHWESTERLY OF A LINE DRAWN PARALLEL WITH AND 130 FEET NORTHWESTERLY OF THE CENTER LINE OF 21ST STREET ADJOINING SAID BLOCK 85 OF THE SOUTHEAST. EXCEPTING THEREFROM THE ABOVE DESCRIBED PARCFT OF LAND ALL THAT PORTION LYING WESTERLY OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF BLOCK 151 OF SAID MAP 348, DISTANT THEREON 200 FEET NORTHEASTERLY FROM •THE MOST WESTERLY CORNER OF LOT 1 IN SAID BLOCK 151; THENCE NORTHERLY INA STRAIGHT LINE TO THE MOST WESTERLY CORNER OF LOT 1 IN BLOCK 45 OF SAID MAP 348. ALSO EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND, ALL THAT PORTION LYING SOUTHERLY OF A LINE PARALLEL WITIT THE SOUTHERLY LINE OF SAID PARCEL AND 214.00 FEET NORTHERLY OF SAID SOUTHERLY LINE AS MEASURED ALONG THE EASTERLY LINE OF SAID PARCEL. PARCI T, 2: BLOCK 85 IN NATIONAL CITY, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 348, FILED IN THIN OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON OCTOBER. 2, I :•:2; TOGETHER. WITH PORTIONS OF 20TH STREET LYING NORTHWESTERLY OF SAID BLOCK 85, AND OF COOLIDGE AVENUE ADJOINING SAID BLOCK ON THE SOUTHWEST AS SAID STREET AND AVENUE ARE CLOSED AND VACATED TO PUBIC USE, ALL LYING NORTHWESTERLY OF A LINE DRAWN PARALLEL WITH AND 130.00 FEET NORTHWESTERLY OF THE CENTERLINE OF 21ST STREET ADJOINING SAID BLOCK 85 ON THE SOUTHEAST. EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND AL L THAT PORTION LYING WESTERLY OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF BLOCK 151 OF SAID MAP 348, DISTANT THEREON 200 k tiei NORTHEASTERLY FROM THE MOST WESTERLY CORNER OF LOT 1 IN SAID BLOCK 151; THENCE NORTHERLY IN A STRAIGHT LINE TO THE MOST WESTERLY CORNER. OF LOT 2 IN BLOCK 45 OF SAID MAP.348. EXHIBIT "A-2" Page 1 of 2 \\cdcnt\datal lusers\PBeard\pyatokWinal DDA dots\DDA v 6 6 II s x FINAL FINAL 6-8-1 l.doc ALSO EXCEPTING FROM THE ABOVE DESCRIBED FARM OF LAND, ALL THAT PORTION LYING NORTHERLY OF A LINE PARALLEL WITH AND SOUTHERLY LINE OF SAID PARCEL AND 214.00 FEET NORTHERLY OF SAID SOUTHERLY LINE AS MEASURED ALONG THE EASTERLY LINE OF SAID FARM . (End of Legal Description) EXHIBIT "A-2" Page 2 of 2 \\cdcnt\datal\users\PReard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "B" CONCEPTUAL DEVELOPMENT PROGRAM EXHIBIT "B° Page 1 of 2 1\cdcntldataI\users\PBeard\pyatok\Fina1 DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc CONCEPTUAL PARADISE CREEK HOUSING STUDY NATIONAL CITY, CALIFORNIA THE RELATED COMPANIES OF CALIFORNIA nn � tnt t . J.a.J J.ww.. 51it ♦ v/JY./f.Yu..FVJ�w.v� �R.� frtTW/JO PVCIAC r.WA- ,ev uwslIV:VOW. �+r4uwy,rtinra�.-zrc .v n®v�vwy¢ q H/eWces, 0L, 6"I7' EXHIBIT "C" PROPOSITION 1C FINANCIAL ASSISTANCE STATF OF CAI IFnRNIA - et ISINFIn_TRaISL'ORTATIQN AND HOI ICIN(: A(;FN(-Y DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF FINANCIAL ASSISTANCE 1800 Third Street. Suite 390 Sacramento, CA 95811 (916) 322-1560 FAX (916) 327-6660 May 20, 2010 William Witte, President The Related Companies of California, LLC 18201 Von Karman Avenue, Suite 900 Irvine, CA 92612 Sue Reynolds, President Community HousingWorks 4305 University Avenue, Suite 550 San Diego, CA 92105 RE: National City Westside Infill TOD Buildings Contract No. 09-IIG-6009 RECEIVED JUN d' 1 2910 neilner Dov m Dear Mr. Witte and Ms. Reynolds: I am pleased to inform you that the Department of Housing and Community Development (Department) has awarded a grant from the Infill Infrastructure Grant Program (IIG) to The Related Companies of California, LLC and Community HousingWorks. This letter constitutes a notice of conditional award of IIG Program funds in the amount of $11,238,516 for National City Westside Infill TOD Buildings project in the city of National City, San Diego County. • This notice of conditional award letter amends the Award Letter dated July 1, 2009 to delete in its entirety the "Conditions Related to Availability of Funds". All other conditions remain in effect. This commitment is conditioned on compliance with the requirements of all applicable statutes and guidelines of the IIG Program, as well as any project agreements stipulated in the commitment letter and contract documents, which will be forwarded to the awardees. Please note that the Department does not have authority to disburse any funds until all required agreements are fully executed. The mission of the Department is to preserve and expand safe and affordable housing opportunities and promote strong communities for all Californians. The 11G Program provides grants for infrastructure costs related to high density infill housing and mixed use development. Awards are being widely distributed throughout the State. EXHIBIT "C" Page 1 of 4 \\cdcnt\datal\users\PBcardlpyatok\Final DDA docs\ODA v 6 6 11 s x FINAL FINAL 6-8-11.doc William Witte Sue Reynolds Page 2 of 3 We look forward to working with you on this project. If you have any questions, please contact Nadine Ford, Infrastructure and Rental Housing Branch Chief at (916) 327-3942. Sincerely, f AZA Chris Westlake Deputy Director EXHIBIT "C" Page 2 of 4 \\cdcntkdata1\users\PBeard\pyatok\Fina1 DDA does\DOA v 6 6 II s x FINAL FINAL 6-8-11.doc • William Witte Sue Reynolds Page 3 of 3 ACCEPTANCE OF CONDITIONAL AWARD The conditions of this award may differ from those contemplated at the time of application. To indicate acknowledgement and acceptance of this Conditional Award, an authorized representative of the Awardee must sign and date where indicated below. Please send a facsimile or pdf email of the executed Acceptance to the attention of Patricia Jones, Office Technician. • Facsimile — (916) 445-0117 • Email pjones@hcd.ca.gov Please return the executed original to the address in the letterhead of the Conditional Award no later than 14 days from the date of this letter. THE FOREGOING CONDITIONAL AWARD IS ACKNOWLEDGED AND ACCEPTED. ?ift=sit]5r b' 11'/0 Authorized Signatory, Title (per resolution) Date Authorized Signatory, Title (per resolution) Date National City Westside Infitl TOO Buildings Contract No. 09-110-6009 EXHIBIT "C" Page 3 of 4 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docslDDA v 6 6 11 s x FINAL FINAL 6-8-11.doc William Witte Sue Reynolds Page 3 of 3 ACCEPTANCE OF CONDITIONAL AWARD The conditions of this award may differ from those contemplated at the time of application. To indicate acknowledgement and acceptance of this Conditional Award, an authorized representative of the Awardee must sign and date where indicated below. Please send a facsimile or pdf email of the executed Acceptance to the attention of Patricia Jones, Office Technician. • Facsimile — (916) 445-0117 • Email pjones@hcd.ca.gov Please return the executed original to the address in the letterhead of the Conditional Award no later than 14 days from the date of this letter. THE FOREGOING CONDITIONAL AWARD IS ACKNOWLEDGED AND ACCEPTED. PR,Gs -r 8-wto orized Signatory, Title per resolution . %1 t'( tiniAlL16 S Date Authorized Signatory, Title (per resolution) Date National City Westside Infill TOO Buildings Contract No. 09-11G-6009 EXHIBIT "C" Page 4 of 4 \\cdcntlrlatai\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • EXHIBIT "D" SCHEDULE OF PERFORMANCE FOR PHASE I Responsible Party/Milestone Time for Performance 1. Commission / Submission of Not later than 30 days after the Effective Date, Preliminary PMP and Preliminary SPP. Per Section [4.4], Commission shall submit to the Developer the Preliminary PMP and Preliminary SPP. 2. Developer / Response to Preliminary Not later than 20 Business Days after receipt of PMP and SPP. Per Section [4.4], Developer Commission's Preliminary PMP and shall approve, conditionally approve, or Preliminary SPP. disapprove the Commission's Preliminary PMP and Preliminary SPP. 3. Developer / Due Diligence Period. Not later than [120] days after the Effective Per Section [4.1], Developer shall deliver Date. notice to Commission to approve, conditionally approve, or disapprove of the physical and environmental condition of the Site. 4. Developer / Submit Application for Not later than [240] days after the Effective Land Use Entitlements. Per Section 5.1, Date. Developer shall submit an application to City for the Land Use Entitlements. 5. Commission / Submission of Draft As soon as the parties agree on the Draft PMP, PMP to DTSC. Per Section [4.4], but not later than [315] days after the Effective Commission shall submit the Draft PMP to Date. DTSC for approval. 6. DTSC Approval of Final PMP. Per Not later than [390] days after the Effective Section [4.4], DTSC approval of the Final Date. PMP shall be obtained and a copy thereof delivered to Developer 7. Developer / Commission Agreement Not later than [20] days after DTSC approval on Final SPP. Per Section [4.4], Developer of the Final PMP. and Commission shall agree on the Final SPP for Phase I. EXHIBIT "D" Page 1 of 5 \\cdcnt\data) \users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doe 8. Secure Land Use Entitlements. Date by which the Land Use Entitlements shall have been secured (per Section [5.1]) or the rights set forth in Sections [5.2 and 5.3] become effective (subject to their terms). 9. Developer / Prepare and Submit Proposed Map to City. Per Section [6.1], Developer shall prepare and submit the Proposed Map to City for approval. 10. Secure Acceptable Parcel Map. Date by which a parcel map reasonably acceptable to Developer shall have been secured (per Section [6.1]) or the rights set forth in Sections [6.1.1 and 6.1.2] become effective (subject to their terms). 11. City / Street Vacations. Per Section [6.2], City Council approval of vacation of such public right-of-way as required by the Parcel Map shall have occurred. 12. Developer / Submission of Phase I Design Development Documents. Per Section [8.3], Developer shall submit the Design Development Documents to the Executive Director for approval. 13. Executive Director / Phase I Design Development Documents. Per Section [8.3], the Executive Director shall approve, conditionally approve or disapprove the Design Development Documents submitted by Developer. 14. Approval of Plans, Drawings, Etc. Developer shall have secured all of the approvals required under Article [8]. 15. Commission / Completion of Commission's Portion of Final SPP for Phase I. Per the Final SPP for Phase I, the Commission shall have completed the Commission's portion of the work under the Final SPP for Phase I. Not later than [390] days after the Effective Date. As soon as the Land Use Entitlement process reasonably permits. Not later than [180] days after Developer submits the Proposed Map to City for approval. Not later than reasonably necessary to permit the Parcel Map to record in time to permit the Close of Escrow for Phase I to occur at the earliest reasonable opportunity. Not later than reasonably necessary to permit the Close of Escrow for Phase I to occur at the earliest reasonable opportunity. Not later than [14] days after Developer submission of the Design Development Documents to the Executive Director. Not later than reasonably necessary to permit the Close of Escrow for Phase I to occur at the earliest reasonable opportunity. After (a) DTSC approval of the Final PMP for Phase I, and (b) execution of the Final SPP for Phase I and on a schedule reasonably calculated to permit all of the conditions set forth in Sections [11.4] and [11.6] to be satisfied in time to permit the Close of Escrow EXHIBIT "D" Page 2of5 \\cdcnt\datai\users TBeard\pyatok\Final DDA does\DDA v 6 6 II s x FINAL FINAL 6-8-11 _doc • 16. Developer / Submission of Phase I Construction Documents for Building Permits. Per Section [8.6], Developer shall submit the Phase I Construction Documents to City for Building Permits. 17. Developer / Application to CDLAC for Allocation. Per Section [9.6], Developer shall make an application to CDLAC for the Tax -Exempt Bonds for Phase I. 18. Developer / Secure Phase I Financing. Date by which the Phase I Financing shall have been secured (per Section [9.6]) or the rights set forth in Sections [9.7 and 9.8] become effective (subject to their terms). 19. Developer / Satisfaction of Conditions to Close of Escrow. Date by which the conditions set forth in Section [11.4] shall have been satisfied or the rights set forth in Sections [11.7 and 11.8] become effective (subject to their terms). for Phase I to occur at the earliest reasonable opportunity, but not later than December 31, 2014. Commission and Developer hereby agree that the Final SPP for each Phase shall contain a refined schedule for performance of the work required thereunder. On a schedule reasonably calculated to permit such Building Permits to issue in time to permit the Close of Escrow for Phase I at the earliest reasonable opportunity. As soon as Developer and the Executive Director reasonably agree that all of the conditions set forth in Sections [11.4] and [11.6] can and will be satisfied in time to permit the Close of Escrow for Phase Ito occur within the time permitted by CDLAC to issue the Tax -Exempt Bonds for Phase I. That notwithstanding, such application shall be made not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. As soon as reasonably possible after an allocation from CDLAC for the issuance of the Tax -Exempt Bonds for Phase I in order to permit Close of Escrow for Phase I to occur within the time permitted by CDLAC to issue such Tax -Exempt Bonds. That notwithstanding, Developer shall secure the Phase I Financing not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. As soon as reasonably possible after an allocation from CDLAC for the issuance of the Tax -Exempt Bonds for Phase I in order to permit Close of Escrow for Phase I to occur within the time permitted by CDLAC to issue such Tax -Exempt Bonds. That notwithstanding, Developer shall cause such conditions to be satisfied not later than in time to permit Close of Escrow for Phase Ito occur not later than December 31, 2014. EXHIBIT "D" Page 3 of 5 lkdcut\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 20. Developer / Submit Phase I Construction Bidding and Contracts. Developer shall comply with the requirements of Section [8.5] by submitting certain construction bid information and materials to the Executive Director for approval. 21. Executive Director / Approval of Phase I Construction Bidding and Contracts. The Executive Director shall approve, conditionally approve, or disapprove the information and materials submitted by Developer pursuant to No. 20, immediately above. 22. Close of Escrow for Phase I. The Escrow for Phase I shall close. 23. Developer / Complete Construction of Phase I Improvements. Developer shall complete construction of the Phase I Improvements. As soon as reasonably possible after an allocation from CDLAC for the issuance of the Tax -Exempt Bonds for Phase I in order to permit Close of Escrow for Phase I to occur within the time permitted by CDLAC to issue such Tax -Exempt Bonds. That notwithstanding, Developer shall cause such submission to occur not later than in time to permit Close of Escrow for Phase I to occur not later than December 31, 2014. Not later than 5 Business Days after receipt. Promptly upon satisfaction of the conditions set forth in Sections [11.4] and [11.6], but in no event later than December 31, 2014. Not later than the earlier of: (a) [720] days after Close of Escrow for Phase I or (b) the time required to satisfy the requirements of the Proposition 1C Financial Assistance. Pursuant to Section [7.6] of the Ground Lease for Phase I, the Executive Director may, at his sole and absolute discretion, grant one or more extensions of the date by which such construction must be completed of, in the aggregate, not more than ninety (90) days. If Developer fails to satisfy any obligation by the deadline set forth above, Developer shall not be in default under this Agreement unless Developer has first been given written notice of such failure and an opportunity to cure pursuant to Section [22.1(c)]. Any cure by Developer within the period set forth by Section [22.1(c)] shall constitute a full and complete cure of the failure, notwithstanding the fact that the deadline established herein was not first met by Developer. Additionally, if, pursuant to the Agreement, a party has an express right to terminate the Agreement provided that it is not then in material default under the Agreement, but such party is not then in compliance with this Schedule of Performance with respect to the basis for such right of termination, such non-compliance shall neither constitute a material default under this EXIIIBIT "D" Page 4 of 5 1\cdcut\latal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc • Agreement, nor shall it be deemed, construed or interpreted in any way so as to deprive such party of such right to terminate. SCHEDULE OF PERFORMANCE FOR PHASE II If and when Commission gives Developer the Phase II Notice pursuant to Article 15 of the Agreement, Commission and Developer shall promptly negotiate, in good faith, a Schedule of Performance for Phase II generally based on the Schedule of Performance for Phase I; provided, however, such Schedule of Performance for Phase II shall require the Close of Escrow for Phase II to occur not later than December 31, 2015. EXHIBIT "D" Page 5 of 5 \\cdcntkiatal\users\PBeard\pyatok\ Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1I.doc EXHIBIT "E" PHASE I PREDEVELOPMENT PLAN AND BUDGET PHASE I PREOEVEiOPMIENTPLAN .AND BUDGET Pre -Land Use Enitlend Plan ad Budget Post -Land Use Emmert ToGI Phase I Prede delqImer Ptah and Budget Pint and Budget Arditethae and Engiteeisg S052.5E0 $1,118I c71 320713.500 Penns ant Fees IT5.A00 3125,fm $200.000 GM / LKf1 1/61.500 1I0.000 $101,500 CmisbuiinuCosts (All e) SO St21a,000Gt $1250.0(10 GOLAL STCAGFees SO SI10,000 :ilium TOTAL S1.069.000 32.632.600 $3.T41.600 (t) these Cum d6 rot be sped eater that tuesmettlY necessay 10 pani a rill • alupiroa and [lose of Berme to mew at the eeriest reaserunle opportunity. 2) Regan'. mcrpethre Wring EXHIBIT "E" Page 1 of 1 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 1 I s x FINAL FINAL 6-8-11.doc • EXHIBIT "F" SCOPE OF DEVELOPMENT The development shall consist of a two phase 201-unit affordable housing community on approximately 12.75 acres in the City of National City. The property shall be developed in two phases, Phase I consisting of 109-units and Phase II consisting of 92-units. The property is bordered by residential and light industrial/commercial to the west, residential and Kimball Elementary School to the north, and light industrial/commercial to the east and south. The existing Paradise Creek intersects the site and generally runs from the northeast corner to southwest corner of the site. The recreational facility for Phase I shall include a community building, office areas, multi- purpose room and miscellaneous other uses. Laundry facilities will be included within the Phase I site. Outdoor amenities for Phase I may include barbeque pits, a tot lot and a swimming pool. The recreational facility for Phase II shall include a community room, office areas and miscellaneous other uses. Laundry facilities will be included within the Phase II site. Phase II shall have access to the recreational facilities and outdoor amenities located in Phase I. The development of the Project shall include the improvement of the Paradise Creek Parcel and expansion of the Paradise Creek Educational Park. The development of the Project shall also include enhanced streetscape along 22°d street connecting the development to the existing 24th Street Trolley Station located at 22°d Street and Wilson Avenue. EXHIBIT "F" Page 1 of 1 \\cdcnt\datal\users\PBeard\pyatokWinal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "G" PROJECT SUMMARY National City- Phase I - Bdgs 18:2&3 -Final DDA Proforma Development Profoa s 1.4 Related Companies of California Primed on 6 7/1I at 1:45 PM Project Data Project Type County Total Units Parking Spaces Land Area Net Residential Area Operating Economic Assumptions Residential Vacancy Rate Retail Vacancy Rate Income Inflator Expense Inflator CPI Stabilized Cast Flow Gross Scheduled Rent Laundry Income Other Income Vacancy & Collection Retail income Raail Vacancy Effective Gross Income Operating Expenses Net Operating Income (4 10.00% Family San Diego 109 183 3.46 Acres 102,520 SF 5.0% 10.0% 2.5% 3.5% 3.0% Year 1 $959,868 7,848 0 5.o0% (48,386) 0 0 919,330 (645,056) 274,274 Basis Calculations Total Eligible Basis Adjusted Threshold Basis Limit Total Eligible Basis as a %of Threshold Basis Limit Permanent Sources Tax Credit Equity Permanent Financing (Manche A) Commission Subodinata Loan for Phase 1 CHW Third Trust Deed Loan for Phase I (City Grant) Proposition IC Financial Assistance (Pro-mta) Sources and Uses $37,694,764 $67,087,838 56.19% Anronat Debt Service 14,508,783 ales $2,781,500 $210,972 $6,000,000 n/a 14,957,000 nla 4,663,682 n/a Total 542,910,964 $210,972 Total Permanent Sources Total Development Cost Over/(Under) $42,910,964 42,910,964 $0 EXHIBIT "G" Page 1 of 6 \\cdcntkhatal\users\PBcard\pyatok\Final DOA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc UNIT DISTRIBUTION National City - Phase I - Brigs 1&2&3-Final DDA Preforms Development Protoma 1.4 Related Companies of California Printed on 6t7/11 at 1:45 PM Total Number Income Gress Utility Net Nat Rant Monthly Annual Square Of Units Category SF Resat Allowance Rest Per SgFt ou• t Rent Unit % Footage Studio I Bedroom 2 Bedrooms 3 Bedroom. 4 Bedrooms 0 30%TC 0 0 35%TC 0 0 40%TC 0 0 45%TC 0 0 50% TC 0 0 60%TC 0 0 Market 0 0 Manager 0 0 8 g8 gg 3 30%TC FLAT 615 $441 0 35%TC 615 S0 5 40%TC FLAT 615 $589 0 45%TC 615 30 13 50% TC FLAT 615 $736 3 50% TC AND RDA FIAT 615 $736 0 Market 615 $0 0 Manager 615 S0 24 538 0 a/a 538 0 Ma 538 0 a/a 538 0 via 338 0. de 538 0 a/a SD 0 de $0 0 Ida 88888888 S0 30 30 30 S0 S0 S0 SO M2M; 0 0 0 0 0 0 0 0 553 5388 $0.63 $1,164 513,968 3% 1,845 353 0 da S0 S0 0% 0 353 $536 50.87 32,680 332,160 5% 3,075 $53 0 da $0 S0 0% 0 $53 S683 51.11 58,879 $106,548 12% 7,995 $53 $683 51.11 $2,049 $24,588 3% 1,845 SO 0 da SO 50 0% 0 80 0 u/a SO SO 0% 0 3 30%TC FLAT 825 5530 S69 5461 S0.56 31,383 $16,596 3% 2,475 2 30%TCTH 940 5530 $69 S461 $0.49 5922 $11,064 2% 1.880 5 40%TC FLAT 825 5707 569 $638 30.71 $3,190 S38,280 5% 4,125 5 40% TC TH 940 $707 369 $638 30.68 $3,190 338,260 5% 4,700 12 50% TC FLAT 825 $883 369 5814 30.99 59,768 $117,216 Il% 9,900 12 50%TCTH 940 S883 569 5814 $0.87 39,768 $117,216 II% 11,280 4 50% TC AND RDA FLAT 825 $849 S69 S780 S095 83,120 537.440 4% 3,300 5 50%TC AND RDA TH 940 8849 $69 5780 $0.83 53,900 846,800 5% 4,700 0 Marko 825 SO SO 0 a/a SO S0 0% 0 1 Manager 940 S0 SD 0 We S0 S0 I% 940 49 4 30%TCTH 1,235 $612 0 35%TC 1,235 30 8 40%TCTH 1,235 5816 0 45%TC 1,235 S0 18 50%TCTH 1,235 S1,020 6 50%TC AND RDA TH 1,235 $944 0 Market 1,235 S0 0 Manager 1,235 S0 36 O 30%TC 0 0 35%TC 0 O 40%TC 0 O 45% TC 0 O 50%TC 0 O 60%TC 0 O Maokct 0 O Manager 0 0 Unit Distribution Summary 88 8 8 8 g nsEVEEIE 5528 50.43 32,112 325,344 4% 4,940 0 oh S0 S0 0% 0 3732 30.59 35,856 S70,272 7% 9,880 0 der S0 S0 0% 0 $936 30.76 S16,848 3202,176 17% 22230 S860 30.70 35,160 361,920 6% 7,410 0 der S0 SO 0% 0 0 der So S0 0% 0 $107 0 da $107 0 da 5107 0 da $107 0 an 8107 0 da 5107 0 a/a S0 0 u/a S0 0 da gggggggg ggg8 8 nt;;;M 0 0 0 0 0 0 0 0 Summary Income Units Total % Unit Sim Units Total % Total SF . 102,520 30%TC 12 11% Studio 0 0% Avg. that SF 941 35%TC 0 0% I Bedroom 24 22% Monthly Rent 579,989 40%TC 23 21% 2 Bedrooms 49 45% Annual Rent 5959,868 45% TC 0 0% 3 Bedrooms 36 33% Avg Root (exel. manager's) 5741 50% TC & RDA 18 17% 4 Bedrooms D 0% 50%TC 55 51% Avg Rent PSF (end. manager's) $0.79 60% TC 0 0% Total 109 100% Bedrooms 230 Market 0 0% Subtotal 108 100% Manager 1 Total 109 EXHIBIT "G" Page 2 of 6 1\cdcnt\datal\users\PBcard\pyatok\Final DDA does DIM v 6 6 II s x FINAL FINAL 6-S-I i.doc DEVELOPMENT COSTS & ELIGIBLE BASIS DETERMINATION National Ciy - Phase 1- Bdgs 1&2&3 - Final DDA Proforma Development Protons& 1.4 Related Companies of California Printed on 6,7/11 at 1:45 PM 109 units TCAC TCAC Budget %Hirible Eligible Baas ACQUISITION COSTS Purchase Price SO 0% 0 Other Acquisition Costs 50,000 0% 0 TOTAL ACQUISITION COSTS 50,000 0% 0 PROFESSIONAL FEES Architecture & Engineering 1,962,000 100% 1,962 000 Other P,ofauimal / Consulting 500,000 100% 500,000 TOTAL PROFESSIONAL FEES 2,462,000 0% 2,462,000 FEES AND PERMITS 1,090,000 100% 1,090,000 CONSTRUCTION COSTS 0 0% 0 Demolition 355,000 0% 0 OMaite lmprnvements 2,100,436 0% 0 Nan-Residmuid Struenrres 0 0% 0 Site Improvements 2,112,400 t00% 2,112,400 Parking Facilities 6,449,124 10054 4,449.724 Landscaping /Common Ames 0 100% 0 Residential Smnctums 13,840,200 100% 11,840,200 (Aher Construction 610,000 100% 610,000 Retail Cote s-Shell 0 0% 0 Omni Conditions 1,540,066 100% 1,540,066 Contractor Overlord 770,033 100% 770,033 CanIramosPmfit 1,283,388 100% 1,283388 Comradar Iauaaom 433,919 100% 438,919 Construction Bind Premiums 445,502 100% 445,502 Compuctioa Contingency 1,507,283 100% 1,507,283 Residential Structures - Non GC 0 100% 0 Construction Manege:nem 0 100% 0 TOTAL CONSTRUCTION COSTS 11,652,950 0% 29,197,514 FINANCING COSTS Acquisition Loan Cocas 0 0% 0 Gap Loan Costa 103,000 100% 100,000 Construction Loan Costa 100,000 100% 100.000 Construction Loan Fees 217,000 100% 217.000 Canstn,ction Period Interest 667,000 100% 567,000 PoahCOnetmchon Interest 988,000 0% 0 Pennsom Linn Cab 50,000 0% 0 Permanent Loan Fes 42,000 0% 0 Band Lauanee Costs 200,000 0% 0 TCAC Fens 64,000 0% 0 Mist Finance Costs 0 0% 0 TOTAL FINANCINO COSTS 2628,000 0% 1,264,000 OTHER COSTS Furishings, Fixtures & Equipment 325,000 100% 325,000 Marketing Costs 175900 0% 0 Legal Fees 125,000 30% 37„500 Properly Taxes 25,000 75% 18,750 Soft Cost Contingency 100,000 100% 100„000 Relocation Espana 0 054 0 Environmental Bnanance Policy 150,000 80% 120900 Aawunting/Ault/ Other 3muance 700,000 80% 560,000 Developer Overhead 1,000,000 100% 1,000,000 Developer Fees 1,500,000 100% 1,500,000 Transition /Opeding Resolve 500,000 0% 0 Otter Costs # Reserves 428,014 0% 0 TOTAL OTHER COSTS 5.028,914 0% 3.661.250 TOTAL DEVELOPMENT CVSIS / TOTAL ELIGIBLE BASIS $42,910,964 S37,694,764 TOTAL BASIS REDUCTION (Amount over Adjusted Threshold Basis Limit) 0 TOTAL REQUESTED UNADJUSTED ELIGIBLE BASIS 37.694,764 High Cat Area Adjustment 130% TOTAL ADJUSTED ELIGIBLE BASIS 49,003,194 Applicable Fraction 100% TOTAL QUALIFIED BASIS 49,003,194 Total Credit Roduetioo 0% 0 TOTAL ADJUSTED QUALIFIED BASIS 49,003,194 EXHIBIT "G" Page 3 of 6 1\cdcnt\datal\uscrs\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc TAX CREDIT CALCULATION National City - Phase 1- Bdgs I &2&3 - Final DDA Proforma Development Pretense L4 Related Companies of California Printed on 6/7/11 at 1:45 PM Total Project Cost Total Permanent Sources Funding Shortfall Total Qualified Basis Annual Federal Credits - Calculated Annual Federal Credits - Awarded Total Federal Credits (10 Years) Federal Tax Credit Investor Equity Total Qualified Basis Total 4 -Year State Credits - Calculated Total 4 -Year State Credits -Awarded State Tax Credit Investor Equity Calculated Acquisition Basis Available Acquisition Basis Annual Acquisition Credits -Calculated Annual Acquisition Credits - Awarded Total Acquisition Credits (10 Years) Acquisition Tax Credit Investor Equity Total Tax Credit Investor Equity (Federal 4- State+ Acquisition) 542,910,964 (28,402,182) $14,508,783 $49,003,194 S1,612,205 $0 $16,122,051 S14,50/1,783 $49,003,194 $0 $0 So $0 $0 $0 $0 So SD S14,508,783 Threshold Basis Limits (Year2011) Limits Efficiency 1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms Special Features Threshold Basis Limit Increases Units 0 Limit 174,861 24 201,613 4,838,712 49 243,200 11,916,800 36 311,296 11,206,656 0 346,803 0 109 Total 0 27,962,I611 10% increase: 95% of the projects upper floor units are serviced by an elevator 20% Increase: State or Federal Prevailing Wage Requirement 5,592,434 7%►ncrease: New Construction with Parking beneath Residential Units 1,957,352 2%Increase: Day Care Center 0 2% Increase: Special Needs Populations 0 Total Percentage Increase to Unadjusted Eligible Basis ( Combined not to exceed 39%) 7,549,785 4% Increase: Incl. 3 energy efficiency/resource conservation/indoor air quality items Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis max.) Development hop ct Fees 5% Increase: Distributive Energy Technologies Bond Deals 0 0 0 817,500 0 1% Increase: Every 1% of the project's units between 35% and 50% AMI 24,606,708 2% Increase: Every 1% of the projecfs units at or below 35% AMI 6,151,677 Adjusted Threshold Basis Limit Total Unadjusted Eligible Basis Over /(Under) Basis Limit $67,087,838 $37,694,764 (529393,074) EXHIBIT "G" Page 4 of 6 1\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc ANNUAL OPERATING EXPENSE BUDGET National City - Phase I - Bdgs 1&2&3 - Final DDA Proforms Development Profoma 1.4 Related Companies of California Punted on 618/1 l at 2:01 PM Project Budget (109 units) RENTING Advertising $1,300 lvlisc. Renting 4,700 TOTAL RENTING 6,000 ADMIINISTRATION Office 6,275 Legal 2,650 Audit 15,300 Telephone/Computer 10,900 Tenant Relations 3,350 Misc. Administrative 6,575 TOTAL ADMINISTRATION 45,000 MANAGENIENT FEE Contract Management TOTAL MANAGEMENT 55.160 55,160 OPERATING Electricity 20,000 Water 65,000 Gas 14,000 Sewer 15,000 Exterminating 3,250 Rubbish Removal 20,000 Misc. Operating 3,946 TOTAL OPERATING 141,196 MAINTENANCE Security Grounds 19,150 Repairs 16,250 Elevator 0 Unit Turns 6,000 Misc. Maintenance 3,600 TOTAL MAINTENANCE 55.000 SALARIES AND BENEFITS Office Salaries 135,000 Maintenance Salaries 0 Payroll. Taxes and Benefits 0 TOTAL SALARIES AND BENEFITS 135,000 TAXES AND INSURANCE Real Estate Taxes 0 Business Taxes and Licenses 5,000 Insurance 35,000 Annual Ground Lease Payment 75,000 TOTAL TAXES AND INSURANCE 115,000 RESERVES AND OTHER EXPENSES Replacement Reserves 32.700 Operating Reserves 0 Social Programs 60000 TOTAL RESERVES AND OTHER COSTS 92,700 TOTAL OPERATING EXPENSES $645 056 Page 3 EXHIBIT "G" Page 5 of 6 \\cdentklatal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc SOURCES AND USES OF FUNDS National City - Phase 1- Bdgs 1&2&3 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Permanent Sources and Uses. Sources Tax Credit Equity 14,508,783 Permanent Financing (handle A) 2,781 500 Commission Subodinnte Lean for Phase I 6,000,000 CHW Third Trust Deed Loan for Phase I (City Grant) 14,957,000 Proposition IC Financial Assistance (Pro-rata) 4,663,682 Total Permanent Sources 42,910,964 Uses Total Development Cost 42,910,964 Amount Over/(Undo) 0 EXHIBIT "G" Page 6 of 6 1\cdcntldatal\users\PBeard\pyatok\Final DDA docs'DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "H" PROJECT SUMMARY National City - Phase II - Bldga 4&5 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Project Data Project Type County Total Units Parking Spaces Land Area Net Residential Area Operating Economic Assumptions Residential Vacancy Rate Retail Vacancy Rate Income Inflator Expense Inflator CPI Stabilised Cask Flow Gross Scheduled Rent Laundry Income Other Income Vacancy & Collection Retail Income Retail Vacancy Effective Gross Income Operating Expenses Net Operating lucerne Family San Diego 92 145 3.69 Acres 83,685 SF 5.0% 10.0% 2.5% 3.5% 3.0% Year 1 S789,696 6,624 0 Q 5.00% (39.816) 0 0 10.00% 756,504 (495,368) 261,136 Basis Calculations Total Eligible Basis Adjusted Threshold Basis Limit Total Eligible Basis as a% of Threshold Basis Limit Permanent Sources Tax Credit Equity Permanent Financing Commission Subordinate Loan for Phase II PropIC Financial Assistance (Pro-rata) Sources and Uses S30,026,714 S55,586,659 54.02% Amount Debt Service 11,556,253 n/a 52,648,000 $200,846 14,909,000 n/a 3,936,318 n/a Total S33,049,571 S200,846 Total Permanent Sources Total Development Cost Over/(Under) S33,049,571 33,049,571 $0 EXHIBIT "H" Page 1 of 6 Acdcnt\datal\users \PBeard\pyatok\Final DDA does DDA v 6 6 II s x FINAL FINAL 6-8-11.doc UNIT DISTRIBUTION National City - Phase U - Burgs 4&5 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed on 6/7/1l at 1:45 PM Total Number income Gross Utility Net Net Rent Monthly Annual Square Of Units Category SF Rent Allowance Rent Per SgFt Rent Resit Unit% Footage Studio 1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms I 30%TC 400 $412 $38 $374 S0.94 $374 $4,488 1% 400 0 35%TC 400 S0 $38 0 Ws S0 SD 0% 0 2 40%TC 400 $550 $38 $512 $1.28 $1,024 $12,288 2% 800 0 45% TC 400 S0 $38 0 oh SO SO 0% 0 3 50%TC 400 3687 538 $649 $1.62 $1,947 $23,364 3% 1,200 0 60%TC 400 $0 S38 0 der SD SO 0% 0 0 Market 400 SO S0 0 da S0 S0 0% 0 0 Manager 400 $0 SO 0 da S0 $0 0% 0 6 3 30%TC FLAT 625 $441 $53 $388 S0.62 L1,164 813,968 3% 1,675 0 35%TC 625 SO 553 0 da S0 S0 0% 0 5 40%TC FLAT 625 $589 $53 $536 S0.86 S2,680 $32,160 5% 3,125 0 45% IC 625 SO $53 0 da SO S0 0% 0 11 50%TC FLAT 625 $736 $53 $683 51.09 $7,513 S90,156 12% 6.875 2 50%TC AND RDA FLAT 625 $736 $53 $693 S1.09 $1,366 S16,392 2% 1,250 0 Market 625 S0 SO 0 Ws SO 80 0% 0 0 Manager 625 S0 SO 0 da SO 30 0% 0 21 1 30%TC FLAT 825 $530 869 $461 S0.56 $461 $5,532 1% 825 3 30%TCTH 940 S530 $69 8461 80.49 $1,383 S16,596 3% 2,820 3 40%TC FLAT 825 $707 369 S638 $0.77 $1,914 $22,968 3% 2,475 5 40%TCTH 940 5707 $69 S638 80.68 $3,190 S38,280 5% 4,700 7 50%TC FIAT 825 4883 369 $814 $0.99 $5,696 $68,376 8% 5,775 II 50%TCTH 940 8883 $69 8814 $0.87 $8,954 3107,448 12% 10,340 2 50%TC AND RDA FLAT 825 5849 $69 $780 $0.95 S1,560 818,720 2% 1,650 3 50%TC AND RDA TH 940 $849 $69 S790 $0.83 S2,340 S26,080 3% 2,820 0 Market 825 SO S0 0 a/a S0 SO 0% 0 1 Manager 940 S0 S0 0 da SO $0 1% 940 36 3 30%TCTH 1,235 S612 S84 $528 S0.43 $1,584 S19,008 3% 3,705 0 35%TC 1,235 S0 S84 0 der SO S0 0% 0 6 40%TCTH 1,235 S816 S84 $732 S0.59 $4,392 S52,704 7% 7,410 0 45%TC 1,235 S0 S84 0 da $0 $0 0% 0 14 50%TCTH 1,235 $1,020 $84 $936 S0.76 $13,104 $157,748 15% 17,290 6 50% TC AND RDA TH 1,235 $944 $84 $860 80,70 $5,160 S61,920 7% 7,410 0 Market 1,235 S0 S0 0 a/a S0 $0 0% 0 O Manager 1,235 $0 S0 0 da S0 S0 0% 0 29 O 30%TC 0 S0 $107 0 n/a 30 50 0% 0 D 35%TC 0 SO $107 0 der S0 SO 0% 0 0 40%TC 0 S0 $107 0 der S0 SO 0% 0 O 45%TC 0 S0 $107 0 der SO Sell 0% 0 0 50%TC 0 S0 S107 0 der S0 80 0% 0 O 60%TC 0 SO $107 0 n/a S0 SO 0% 0 O Market 0 S0 S0 0 de S0 $0 0% 0 O Manager 0 $0 S0 0 da SD 50 0% 0 0 Unit Distribution Summary Summary Income Units Total % Unit Size Units Total % Total SF 63,685 30%TC II 12% Studio 6 7% Avg. Unit SF 910 35%TC 0 0% 1 Bedroom 21 23% Monthly Rem S65,808 40%TC 21 23% 2 Bedrooms 36 39% Amoral Rent $789,696 45%TC 0 0% 3 Bedrooms 29 32% Avg. Rent (excl. manager's) 5723 50% IC & RDA 13 14% 4 Bedrooms 0 0% 50%TC 46 51% Avg. Rent PSF (eacL manager's) $0.80 60%TC 0 0% Total 92 100% Bedrooms 180 Market 0 0% Subtotal 91 l00% Manager t Total 92 EXHIBIT "H" Page 2 of 6 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc DEVELOPMENT COSTS & ELIGIBLE BASIS DETERMINATION National City- Phase I- BId8s 4&S - Final DDA Proforma Development Prefoma 1A Belated Companies of California Printed on 6/7/11 at1:45 PM 92 units TCAC TCAC Bedget 94 Eligible Eligihie Basis ACQUISITION COSTS Purchase Prix SO 0% 0 Other Acquisition Costs 50,000 0% 0 TOTAL ACQUISf170N COSTS 50,000 0% 0 PROFESSIONAL FEES Ar hitecture&Engineering 1656,000 100% 1,656,000 Other Professional! Consulting 100.000 N00e% 100,000 TOTAL PROFESSIONAL FEES 1,756,000 0% 1,756,000 FEES AND PERMITS 920.000 100% 920,000 CONSTRUCTION COSTS 0 0% 0 Demolition 105,000 0% 0 Offcite Improvements 1,000,000 0% 0 Non -Residential &mottoes 0 0% 0 Site Improvements 1,917,216 100% 1,917.216 Parking Feahlies 5,564,373 100% 5,564,373 Landscaping /Common Areas 0 100% 0 Residential Structures 10,301,093 100% 10,301.093 OOna Conou 366,990 1005E 366,990 Retail Core +Shell 0 0% 0 Clement Conditions 1,155,280 100% 1,155,280 Conn -suns Overhead 577,640 100% 577,640 Cenheoor Profit 962,734 100% 962,734 Contractor Insurance 329,255 100% 329,255 Construction Bond Premiums 334,194 100% 334,194 Co nmuotion Contingency 1,130.689 100% 1,130,689 Residential Structures - Non GC 0 100% 0 Construction Managerned 0 100% 0 TOTAL CONSTRUCTION COSTS 23,744,464 0% 22,639,464 FINANCING COSTS Acquisition Loan Coats 0 0% 0 Oap Loan Costs 100,000 100% 100.000 Construction Loan Coals 100,000 100% 100,030 Construction loan Pees 174,000 100% 174,000 Construction Period Interest 780,000 1005'i 780,000 Post -Construction Interest 764,000 0% 0 Penman Loan Costa 50,000 0% 0 Permanent Loan Pees 40000 0% 0 Band Issuance Costs 200,000 0% 0 TCAC Pas 53,000 0% 0 Misc. Finance Costs 0 0% 0 TOTAL FINANCING COSTS 2.261.000 0% 1,154,000 OTHER COSTS Furnishings, Fixtures & Equipment 325,000 100% 325,000 Mrketing Curls 175,000 0% 0 Legal Fes 125,000 30% 37,500 Property Taxes 25,000 75% 18,750 Soft Cost Contingency 100,000 100% 100,000 Rdoctnion Expenses 0 0% 0 Environmental Inatome Policy 150,000 80% 120,000 Accounting/ Audit (Other Insurance 570,000 80% 456,000 Developer Overhead 1,000.000 100% 1,000,000 Developer Fees 1,500,000 100% 1,500,000 Other Costs/Reserve 148,107 0% 0 TOTAL OTHER COSTS 4,318,107 0% 3,557,250 TOTAL DEVELOPMENT COSTS (TOTAL ELIGIBLE BASIS S33,049,371 S30,026,714 TOTAL BASLS REDUCTION (Amount over Adjusted Threshold Basis Limit) 0 TOTAL REQUESTED UNADJUSTED ELIGIBLE BASIS 30,026,714 High Cost Arca Adjustment 13054 TOTAL ADJUSTED ELIGIBLE BASIS 39,034,728 Applicable Fraction 100% TOTAL QUALIFIED BASIS 39,034,725 Total Credit Reduction 0% 0 TOTAL ADJUSTED QUALIFIED BASIS 39,034,728 EXHIBIT "H" Page 3 of 6 \\cdcnt\datal \users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc TAX CREDIT CALCULATION National City - Phase II - Bldgs 4&5 - Final DDA Proforma Development Prufoma 1.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Total Project Cost Total Permanent Sources Funding Shortfall Total Qualified Basis Annual Federal Credits - Calculated Annual Federal Credits - Awarded Total Federal Credits (l0 Years) Federal Tax Credit Investor Equity Total Qualified Basis Total 4 -Year State Credits - Calculated Total 4 -Year State Credits - Awarded State Tax Credit Investor Equity Calculated Acquisition Basis Available Acquisition Basis Annual Acquisition Credits - Calculated Annual Acquisition Credits - Awarded Total Acquisition Credits (10 Years) Acquisition Tax Credit Investor Equity Total Tax Credit Investor Equity (Federal + State+ Acquisition) $33,049,571 (21,493,3IS) $11,556,253 $39,034,728 $1,284,243 $D S12,842,426 $11,556,253 $39,034,728 $0 so So $0 $o $0 so so so SI1,556,253 Threshold Basis Limits (Year 2011) Limits Efficiency 1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms Units 6 21 Limit 174,861 201,613 36 243,200 29 311,296 0 346,803 Total 1,049,166 4,233,873 8,755,200 9,027,584 0 92 Special Features Threshold Basis Limit Increases 10% Increase: 95% of the project's upper floor units are serviced by an elevator 20% Increase: State or Federal Prevailing Wage Requirement 4,613,165 7% Increase: New Construction with Parking beneath Residential Units 1,614,608 2% Increase: Day Care Center 0 2% Increase: Special Needs Populations 0 Total Percentage Increase to Unadjusted Eligible Basis ( Combined not to exceed 39%) 6,237,772 4% Increase: Incl. 3 energy efficiency/resource conservation/indoor air quality items 0 Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis mar.) 0 Development Impact Fees 690,000 5% Increase: Distributive Energy Technologies 0 Bond Deals 23,065,823 1% Increase: Every 1% of the project's units between 35% and 50%AMI 2% Increase: Every 1% of the project's units ator below 35% AMI Adjusted Threshold Basis Limit Total Unadjusted Eligible Basis Over /(Under) Basis Limit 0 20,067,266 5,535,798 $55,586,659 S30,026,714 ($25,559,945) EXHIBIT "H" Page 4 of 6 \\edcnt\data l\users\PBeardlpyatok\Final DDA does \DDA v 6 6 I I s x FINAL FINAL 6-8-11.doc ANNUAL OPERATING EXPENSE BUDGET National City - Phase II - Bldgs 4&5 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed ou 6/8/11 at 2-02 PM Project Budget (92 units) RENTING Advertising $1,200 Misc. Renting 4,100 TOTAL RENTING 5,300 ADMINISTRATION Office 5,750 Legal 2,250 Audit 13,000 Telephone/Computer 10,800 Tenant Relations 3,000 Misc. Administrative 5,650 TOTAL ADMINISTRATION 40,450 MANAGEMENT FEE Contract Management 45,390 TOTAL MANAGEMENT 45,390 OPERATING Electricity 17,000 Water 55,000 Gas 12,000 Sewer 12,500 Exterminating 2,750 Rubbish Removal 17,000 Misc. Operating 3,703 TOTAL OPERATING 119,953 MAINTENANCE Security Grounds 16,650 Repairs 12.425 Elevator 0 Unit Turns 5,000 Misc. Maintenance 3,600 TOTAL MAINTENANCE 46,675 SALARIES AND BENEFITS Office Salaries Maintenance Salaries Payroll Taxes and Benefits TOTAL SALARIES AND BENEFITS 115,000 0 0 115,000 TAXES AND INSURANCE Real Estate Taxes 0 Business Taxes and Licenses 5,000 Insurance 30,000 Amoral Ground Lease Payment 0 TOTAL TAXES AND INSURANCE 35,000 RESERVES AND OTHER EXPENSES Replacement Reserves 27,600 Operating Reserves 0 Social Programs 60,000 TOTAL RESERVES AND OTHER COSTS 87,600 TOTAL OPERATING EXTENSES $495,368 Page 3 EXHIBIT "H" Page 5 of 6 \\cdcnt\ data l\users\PBeard\pyatok\Final DDA does DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc SOURCES AND USES OF FUNDS National City - Phase II - Bldgs 4&5 - Final DDA Proforma Development Profoma 1.4 Related Companies of California Printed on 6/7/11 at 1:45 PM Permanent Sources and Uses Sources Tax Credit Equity 11,556,253 Permanent Financing 2,648,000 Commission Subordinate Loan for Phase II 14,909,000 Prop IC Financial Assistance (Pro-rata) 3,936,318 Total Permanent Sources 33,049,571 Uses Total Development Cost 33,049,571 Amount Over!(Under) 0 EXHIBIT "H" Page 6 of 6 1\cdcnt\datal\users\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "I" FORM OF GROUND LEASE [FOLLOWING THIS PAGE] EXHIBIT "I" \\cdcnt\datal\uscrs\PBcard\pyatok\Final DDA docskDDA v 6 6 11 s x FINAL FINAL 6-8-I l.doc GROUND LEASE FOR PHASE _ [Transit -Oriented Infill Affordable Housing and Paradise Creek Enhancement Project] By and Between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY "Landlord" and , L.P. "Tenant" Dated as of , 201_ EXHIBIT "I" Page 1 of 67 \cdcnt\datal\users\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc GROUND LEASE FOR PHASE _ THIS GROUND LEASE (the "Lease"), dated, for identification purposes only, as of , 201_, is entered into by and between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Landlord" or "Commission"), and , L.P., a California limited partnership ("Tenant" or "Developer"). RECITALS A. WHEREAS, Commission is a California community development commission acting to implement the California Redevelopment Law, Part 1 of Division 24 of the Health and Safety Code; B. WHEREAS, Developer is controlled by an experienced owner, developer and manager of affordable housing for very -low and low-income families; C. WHEREAS, Commission is the owner of certain real property situated in the City of National City, County of San Diego, State of California, and legally described in Exhibit "A" (the "Property"); D. WHEREAS, Commission and Developer entered into that certain "Disposition and Development Agreement" dated as of June 21, 2011 (the "DDA"); E. WHEREAS, the DDA provided that upon the satisfaction of certain conditions, Commission would ground lease the Property to Developer; and F. WHEREAS, all conditions precedent to the parties entering into this Lease have been satisfied or waived. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, Commission and Developer agree as follows: ARTICLE 1. LEASE OF THE PROPERTY 1.1 Lease of the Property. Landlord leases to Tenant, and Tenant hires from Landlord, the Property on the terms and conditions as set forth in this Lease. 1.2 Purpose of Lease. The purpose of this Lease is to provide for the construction, maintenance, management and operation of a r„ -unit, multi -family, low- income rental housing project. Tenant will not occupy or use the Property, or permit the Property to be used or occupied, nor do or permit anything to be done in or on the Property, in whole or in part, for any other purpose. The foregoing notwithstanding, after EXHIBIT "I" Page 2of67 \\cdcnt\datallusers\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc the foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment or deed in lieu of foreclosure, the Property may be used for any lawful purpose. 1.3 Recorded Encumbrances. This Lease, the interests of Landlord and Tenant hereunder, and the Property, are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights -of -way and easements of record including, without limitation: 1.4 Memorandum of Lease. A short form Memorandum of Lease referring to this Lease is being executed by Landlord and Tenant concurrently herewith, and recorded in the Official Records of the County of San Diego, California (the "Official Records"). 1.5 Assignment of Utility Rights. Landlord, by virtue of its fee title to the Property, may hold certain rights, entitlements or credits with respect to utility capacity, connections, etc. (the "Utility Rights"). Landlord hereby assigns said Utility Rights to Tenant as an incidence of its leasehold interest in the Property. ARTICLE 2. DEFINITIONS All capitalized terms used herein may be defined where first used in this Lease and/or as set forth in this Article 2. Unless otherwise defined herein, all capitalized terms shall have the same meanings ascribed to them in the DDA. For the purpose of supplying such definitions, the DDA, notwithstanding anything contained therein or herein to the contrary, shall not merge with this Lease. "Award" means any compensation or payment made or paid for the Total, Partial or Temporary Taking of all of any part of or interest in the Property and/or the Improvements, whether pursuant to judgment, agreement or otherwise. "Capital Improvements" means all work and improvements with respect to the Property for which costs and expenses may be capitalized in accordance with GAAP. Note. "Cash Flow" has the meaning set forth in the Commission Subordinate Loan "Commencement Date" has the meaning set forth in Article 3 of this Lease. "Commission Subordinate Loan Note" means that certain promissory note, dated as of even date with this Lease, made by Tenant in favor of Landlord in the original principal amount of $ "Compliance Period" has the meaning set forth in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended. EXHIBIT "I" Page 3 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc "Construction" means the improvement of the Property pursuant to the Plans. "Construction Loan" refers to the loan from a lender (or consortium of lenders) acceptable to the Executive Director of Landlord, the proceeds of which are used to construct the Project. "Debt Service" has the meaning set forth in the Commission Subordinate Loan Note. "Environmental Law" means any federal, state or local environmental, health and/or safety -related law, rule, regulation, requirement, order, ordinance, directive, guideline, permit or permit condition, currently existing and as amended, enacted, issued or adopted in the future. The term Environmental Law includes, but is not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and similar state or local laws. "Event of Default" has the meaning set forth in Article [21']. "Executive Director" means the Executive Director of Landlord or his designee. "Fiscal Year" has the meaning set forth in the Commission Subordinate Loan Note. "Hazardous Materials" means any chemical, substance, object, condition, material, waste, or controlled substance which is or may be hazardous to human health or safety or to the environment, due to its radioactivity, ignitability, corrosiveness, explosivity, flammability, reactivity, toxicity, infectiousness, or other harmful or potentially harmful properties or effects, including, without limitation, all chemicals, substances, materials, or wastes that are now or hereafter may be listed, defined, or regulated in any manner by any federal, state, or local government agency or entity, or under any federal, state, or local law, regulation, ordinance, rule, policy or procedure due to such properties or effects. "Impositions" means all taxes (including, without limitation, sales and use taxes); assessments (including, without limitation, all assessments for public improvements or benefits whether or not commenced or completed prior to the Commencement Date and whether or not to be completed within the Term); water, sewer or other rents, rates and charges; excises; levies; license fees; permit fees; inspection fees and other authorization fees and other charges; in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interests and penalties thereon), which are attributable or applicable to any portion of the Term and may be assessed, levied, confirmed or imposed on or in respect of, or be a lien upon (a) the Property or the Improvements, or any part thereof, or any estate, right or interest therein, (b) any occupancy, use or possession of or activity conducted on the EXHIBIT "I" Page 4 of 67 \\cdcnt\data)\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc Property or the Improvements, or any part thereof, or (c) this Lease. The term "Impositions" shall also include any and all increases in the foregoing, whether foreseen or unforeseen, ordinary or extraordinary, including, without limitation, any increase in real property taxes resulting from a sale of the Property by Landlord. "Improvements" means all buildings, structures and other improvements, including the building fixtures thereon, now located on the Property or hereafter constructed on the Property; all landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas, roadways and similar site improvements now located or hereafter placed upon the Property. "Indemnitees" means Landlord, the Community Development Commission of the City of National City, the City of National City, California ("City") and their employees, agents, members and officials. "Index" means the Consumer Price Index -Urban Wage Earners and Clerical Workers (San Diego, All Items, Base 1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics. Should the Bureau discontinue the publication of the Index, or publish the same less frequently or on a different schedule, or alter the same in some other manner including, without limitation, changing the name of the Index or the geographic area covered by the Index, Landlord and Tenant shall adopt a substitute index or procedure which reasonably reflects and monitors consumer prices. "Institutional Lender" means any one or combination (including, without limitation, a consortium) of the following lending institutions: a commercial or savings bank; a trust company; an insurance company; a savings and loan association; a building and loan association; an educational institution; a pension, retirement or welfare fund; a charity; an endowment fund or foundation authorized to make loans in the State of California; a company engaged in the ordinary course of business as a lender with net unencumbered assets in the amount of not less than $50,000,000 which is duly licensed or registered with any regulatory agency having jurisdiction over its operation, if any, and is not under any order or judgment of any court or administrative agency restricting or impairing its operation as a lender where the restriction or impairment would be directly related to a proposed loan to Tenant, and which is regularly engaged in business in an office or location in the State of California; or any other entity having a net worth of $75,000,000 or more whether or not a so-called institution; or any division, subsidiary, parent or affiliate owned or controlled by, owning or in control of or in common control or ownership with any of the foregoing entities. "Insurance Requirements" means all terms of any insurance policy covering or applicable to the Property or the Improvements, or any part thereof, all requirements imposed by the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Property or the Improvements, or any part thereof, or any use or condition of the Property or the Improvements, or any part thereof. EXHIBIT "I" Page 5 of 67 \\cdcnt\fatal\users\PReard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc "Lease Year" means the year commencing on the first day of the first full calendar month following the Commencement Date, or anniversary thereof, and ending at midnight on the last day of the month in which an anniversary of the Commencement Date occurs. "Legal Requirements" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of and agreements with all governments, departments, commissions, boards, courts, authorities, agents, officials and officers, foreseen or unforeseen, ordinary or extraordinary, which now or at any time hereafter may be applicable to the Property or the Improvements, or any part thereof, or to any of the adjoining sidewalks, streets or ways, or to any use or condition of the Property or the Improvements, or any part thereof. "Memorandum of Lease" refers to the memorandum of lease which has been recorded as described in Section [ , ]. "Mortgage" has the meaning set forth in Section [y181 ] of this Lease. "Mortgagee" has the meaning set forth in Section [1a] of this Lease. "Net Operating Income" has the meaning set forth in the Commission Subordinate Loan Note. "Notice of Intended Taking" means any notice or notification on which a reasonably prudent person would rely and which said person would interpret as expressing an existing intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes, without limitation, the service of a condemnation summons and complaint on a party to this Lease. The notice is considered to have been received when a party to this Lease receives from the condemning agency or entity a notice of intent to take, in writing, containing a description or map of the taking which reasonably defines the extent of the taking. "Official Records" means the Official Records of San Diego County, California. "Operating Deficits" means, for the applicable period, the shortfall, if any, between Operating Income and Operating Expenses. "Operating Expenses" has the meaning set forth in the Commission Subordinate Loan Note. "Operating Income" has the meaning set forth in the Commission Subordinate Loan Note. EXHIBIT "I" Page 6 of 67 \\cdcnt\data l\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc "Partial Taking" means any taking of the fee title of the Property and/or the Improvements that is not either a Total, Substantial or Temporary Taking. "Plans" means the plans and specifications for the Construction, a set of which, initialed by Tenant, are on file in the offices of Landlord. "Potential Default" means any condition or event which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. "Project" refers to the Property and the Improvements constructed and maintained thereon. "Property" has the meaning set forth in Recital "C," above. "Substantial Taking" means the taking of so much of the Property and/or the Improvements that the portion of the Property and/or the Improvements not taken cannot be repaired or reconstructed, taking into consideration the amount of the Award available for repair or reconstruction, so as to constitute a complete, rentable structure, capable of producing a proportionately fair and reasonable net annual income after payment of all Operating Expenses, and all other charges payable under this Lease, and after performance of all covenants and conditions required by Tenant by law and under this Lease. "Taking" means a taking or damaging, including severance damage, by eminent domain or by inverse condemnation or for any public or quasi -public use under any statute. The taking may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a voluntary transfer or conveyance to the taking authority under threat of condemnation, or a transfer while condemnation proceedings are pending. Unless otherwise provided, the taking shall be deemed to occur as of the earlier of (a) the date actual physical possession is taken by the condemnor, or (b) the date on which the right to compensation and damages accrues under the law applicable to the Property and/or the Improvements. A taking as used in this Lease does not include the voluntary dedication of any portion of the Property necessary to obtain building permits or to comply with any other applicable governmental rule, regulation or statute; nor does it include the enactment of any law, ordinance or regulation which may affect the use or value of the Property but which does not involve an actual taking of any portion thereof. Eminent domain actions filed by Landlord against owners of portions of the Property and pending as of the Commencement Date shall not be deemed, construed or interpreted as a Taking under this Lease. "Tax Credit Partner" means a , and its successors and assigns. "Temporary Taking" means a taking of all or any part of the Property and/or the Improvements for a term certain which term is specified at the time of taking. Temporary EXHIBIT "I" Page 7 of 67 1\cdcntklatal\userslPBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc Taking does not include a taking which is to last for an indefinite period or a taking which will terminate only upon the happening of a specified event unless it can be determined at the time of the taking substantially when such event will occur. If a taking for an indefinite term should take place, it shall be treated as a Total, Substantial or Partial Taking in accordance with the definitions set forth herein. "Term" has the meaning set forth in Article [3] of this Lease. "Total Taking" means the taking of the fee title to all of the Property. "Unit" means a dwelling unit on the Property. ARTICLE 3. TERM The term of this Lease (the "Term") shall commence on the date the Memorandum of Lease records in the Official Records (the "Commencement Date"), and shall continue thereafter until the earlier of: (a) the fifty-fifth (55th) anniversary of the date on which a Notice of Completion records in the Official Records for the Construction or (b) June 30, 20_. [Note: Following are two (2) versions of Article 4, one (1) for Phase I and one (1) for Phase II. Only the appropriate version will be included in the final form of this Ground Lease for the subject Phase. Also note that the Annual Rent set forth in Section 4.1 would be subject to increase pursuant to Sections [9.3.2] and [10.3.2] of the DDA if Section 8 vouchers are secured.] ARTICLE 4. RENTAL [PHASE I] 4.1 Rent. Tenant shall pay, without abatement, deduction, or offset, the following sums (the "Annual Rent"): (a) Rent Commencement Date. Lease Year 1 shall commence on the Commencement Date of this Lease. That notwithstanding, Annual Rent shall not commence until the earlier of (the "Rent Commencement Date"): (i) the date that the Construction Loan converts from temporary construction to permanent status pursuant to its terms (the "Loan Conversion Date"), or (ii) the third (3rd) anniversary of the Commencement Date of this Lease. If the Loan Conversion Date, occurs prior to the third (3rd) anniversary of the Commencement Date of this Lease, Tenant shall promptly give notice of such loan conversion to Landlord. (h) First 30 Lease Years from Rent Commencement Date. For each of the first thirty (30) Lease Years commencing with the Rent Commencement Date (the "First 30 Rent Year Period"), the Annual Rent shall be the fixed sum of Seventy -Five Thousand Dollars ($75,000). For the first Lease Year of such First 30 Rent Year Period, the Annual Rent shall be prorated at the rate of Two Hundred Five Dollars ($205) per day EXHIBIT "I" Page 8 of 67 \\cdcnt\data1\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc to account for the number of days between the Rent Commencement Date and the first day of such Lease Year. (c) Next 25 Lease Years. For each of the next twenty-five (25) Lease Years following the First 30 Rent Year Period (the "Next 25 Rent Year Period), the Annual Rent shall be the sum of Seventy -Five Thousand Dollars ($75,000) as escalated at the fixed rate of two percent (2%) per Lease Year. Accordingly, the Annual Rent for such first Lease Year of the Next 25 Rent Year Period shall be Seventy -Six Thousand Five Hundred Dollars ($76,500). (d) Remainder of Term. For each of the Lease Years following the Next 25 Rent Year Period until the end of the Term (the "Appraisal/COLA Period"), Tenant shall pay Annual Rent at a rate determined by a two (2) part process, as follows: (i) Part 1. Periodic Appraisal. The Annual Rent for the first Lease Year of the Appraisal/COLA Period (the " First Appraisal/COLA Period Lease Year") through Lease Year 60, Lease Years 71 through 75, and 86 through 90 shall be the result of the following process: 1. Step 1: Meet and Confer. Not later than ten (10) days after the first day of each of the last Lease Year of the Next 25 Rent Year Period, Lease Year 70 and Lease Year 85, the parties shall meet and confer for the purpose of attempting to agree on the Annual Rent for, in each case (except only the very first case), the next succeeding "Five (5)-Lease Year Period" (i.e., First Appraisal/COLA Period Lease Year through Lease Year 60, 71 through 75, and 86 through 90, respectively). Landlord and Tenant acknowledge and agree that the first such Five (5)-Lease Year Period only will be truncated as a consequence of it commencing closer to the end of Lease Year 60 than a full five (5) years. In each case, agreement, if any, shall be confirmed in writing by Landlord and Tenant. If, in any case, the parties fail to agree within thirty (30) days of such meeting (the "Meet and Confer Period"), then the parties shall proceed to Step 2. 2. Step 2: Selection of Appraiser(s}. First the parties shall attempt to agree on a single MAI appraiser. If the parties have not so agreed in writing within fifteen (15) days after expiration of the Meet and Confer Period, then within fifteen (5) days thereafter each shall appoint an MAI appraiser (with an active practice in the appraisal of commercial real property in the County of San Diego) to participate in the appraisal process provided for in this section and shall give written notice thereof to the other party. Upon the failure of either party so to appoint, the nondefaulting party shall have the right to apply to the Superior Court for the County of San Diego, California, to appoint an appraiser to represent the defaulting party. Within ten (10) days of the parties' appointments, the two (2) appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord and Tenant, or if, within ten (10) days of the appointment of said appraisers, the two (2) appraisers shall fail to EXHIBIT "I" Page 9 of 67 \\cdcnt\datal\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-S-I 1.doc appoint a third, then either party hereto shall have the right to make application to said Superior Court to appoint such third appraiser. 3. Step 3: Appraisal Process. The appointed appraiser(s) shall be given the "Letter of Instruction" attached to this. Lease as Exhibit ["E"] and shall complete his/her/their appraisal(s) within sixty (60) days, and shall execute and acknowledge his/her/their determination of fair market ground rent in writing and cause a copy thereof to be delivered to each of the parties hereto. 4. Step 4: Establishment of Annual Rent. If the parties agreed on a single appraiser, then the determination of that appraiser shall fix the Annual Rent for the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods). If three (3) appraisers made such determinations, then the three (3) determinations shall be added together and divided by three (3). The resulting quotient shall be the fair market ground rent. If, however, the low determination and/or high determination is or are more than twenty-five percent (25%) lower and/or higher than the middle determination, the low and/or high determination shall be disregarded. If only one determination is disregarded, the remaining two (2) determinations shall be added together and their total divided by two (2). The resulting quotient shall be the Annual Rent for the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods). If both the low and the high appraisals are disregarded, the middle determination shall be the Annual Rent for the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods). If the determination of the appraisal process is not completed by the commencement of the subject Five (5)-Lease Year Period (or shorter period as to the very first of such Five (5)-Lease Year Periods), Tenant shall continue to pay rent at the then prevailing Annual Rent rate until the adjusted rate is determined, at which time Tenant shall pay any difference for the period affected by the adjustment. (ii) Part 2. Intermediate Cost of Living Adjustment. The Annual Rent for the Five (5)-Lease Year Periods 61 through 65, 66 through 70, 76 through 80, 81 through 85, 91 through 95, and 95 through 99 shall be set in accordance with the following cost of living process: 1. Step 1. For each of the subject Five (5)-Lease Year Periods, the Annual Rent in effect for the immediately preceding Five (5)-Lease Year Period shall be adjusted upward, but never downward. 2. Step 2. For each of the subject Five (5)-Lease Year Periods, the index shall be the then most recently published monthly figure as shown in the Consumer Price Index (CPI) for All Urban Consumers for San Diego MSA based on the year 1982-1984=100 as published by the U.S. Department of Labor's Bureau of Labor Statistics (BLS) (the "Adjustment Index"). EXHIBIT "I„ Page 10 of 67 \\cdcnt\datal \users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc The base for computing the adjustment shall be the index figure for the same month as the Adjustment Index but twenty (20) years earlier (the "Base Index"). [For example, if the Adjustment Index is the month of March 2068, the base for that computation would be March 2048.] The Adjustment Index shall be, computed as a percentage of the Base Index and the percentage increase shall be divided by four (4) (the "Divisor"); provided, however, the Divisor for the first of such Five (5)-Lease Year Periods only shall be adjusted upward to reflect the extent to which the preceding Five (5)-Lease Year Period was truncated. For example, assuming the Base Figure is 110 and the Adjustment Index is 190, the percentage increase is 190/110=1.7272=173%, for a percentage increase of 73% for the subject twenty (20)-year period. That percentage increase is then divided by four (4) (or such larger Divisor for the first of such Five (5)-Lease Year Periods) to yield the percentage to be applied or 18.25%. So 118.25% shall be applied to the Annual Rent for the Five (5)-Lease Year Period then prevailing. If the index is changed so that the base year differs from that in effect on the Commencement Date, the index shall be converted in accordance with the conversion factor published by the BLS. If the index is discontinued or revised during the Term, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the index had not been discontinued or revised. The Annual Rent as adjusted above shall prevail for the subsequent five (5)-Lease Year Period. 4.2 Time for Payment of Annual Rent. The Annual Rent shall be due and payable in arrears not later than the last day of the Lease Year for which such Annual Rent is due. 4.3 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity and other utilities used by Tenant on the Property. 4.4 Taxes and Assessments. 4.4.1 Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property. In accordance with California Revenue and Taxation Code Section 107.6(a), Landlord states that by entering into this Lease, a possessory interest subject to property taxes may be created. Tenant or other party in whom the possessory interest is vested may be subject to the payment of property taxes levied on such interest. 4.4.2 Payment of Taxes. Subject to any applicable exemptions, Tenant shall pay the real property and/or possessory interest taxes applicable to the Property EXHIBIT "I" Page 11 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11 doc during the term of this Lease. All such payments shall be made prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid or that an exemption from such taxes has been obtained. If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord within ten (10) days after demand from Landlord together with interest at the rate set forth in Section [4.5]. 4.4.3 Definition. As used herein, the term "real property tax" shall include any form of real estate tax or assessment (including, without limitation, on possessory interests), general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes) imposed on the Property or any interest (including, without limitation, possessory interests) therein by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in the Property or in the real property of which the Property are a part, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Property. The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of "real property tax," or (ii) the nature of which was hereinbefore included within the definition of "real property tax," or (iii) which is imposed as a result of a transfer, either partial or total, of Landlord's interest in the Property or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (v) which is imposed by reason of this lease transaction, any modifications or changes hereto, or any transfers hereof. 4.4.4 Personal Property. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. 4.4.6 Apportionment. If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to the date said taxes are due and payable. 4.5 Overdue Interest. Any amount due to Landlord, if not paid when due and before expiration of the applicable grace period, if any, shall bear interest from the date EXHIBIT "I" Page 12 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc due until paid at the lower of: (a) the reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time plus three percent (3%); or (b) the highest rate of interest allowed under applicable usury law. ARTICLE 4. RENTAL [PHASE II] 4.1 Rent. The rent shall be the nominal sum of One Dollar ($1.00) per year payable in advance. 4.2 Right to Audit. Tenant shall keep full and accurate books of account, records and other pertinent data with respect to operations of the Project. Such books of account, records, and other pertinent data shall be kept for a period of three (3) years after the end of each Lease Year. Landlord shall be entitled within two (2) years after the end of each Lease Year to inspect and examine all Tenant's books of account, records, and other pertinent data. Tenant shall cooperate fully with Landlord in making the inspection. Landlord shall also be entitled, also within two (2) years after the end of each Lease Year, to an independent audit of Tenant's books of account, records, and other pertinent data. 4.3 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity and other utilities used by Tenant on the Property. 4.4 Taxes and Assessments. 4.4.1 Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property. In accordance with California Revenue and Taxation Code Section 107.6(a), Landlord states that by entering into this Lease, a possessory interest subject to property taxes may be created. Tenant or other party in whom the possessory interest is vested may be subject to the payment of property taxes levied on such interest. 4.4.2 Payment of Taxes. Subject to any applicable exemptions, Tenant shall pay the real property and/or possessory interest taxes applicable to the Property during the term of this Lease. All such payments shall be made prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid or that an exemption from such taxes has been obtained. If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord within ten (10) days after demand from Landlord together with interest at the rate set forth in Section [4.5]. EXHIBIT "I" Page 13 of 67 1\cdcnt\data l\users\FBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 4.4.3 Definition. As used herein, the term "real property tax" shall include any form of real estate tax or assessment (including, without limitation, on possessory interests), general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes) imposed on the Property or any interest (including, without limitation, possessory interests) therein by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in the Property or in the real property of which the Property are a part, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Property. The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of "real property tax," or (ii) the nature of which was hereinbefore included within the definition of "real property tax," or (iii) which is imposed as a result of a transfer, either partial or total, of Landlord's interest in the Property or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (v) which is imposed by reason of this lease transaction, any modifications or changes hereto, or any transfers hereof. 4.4.4 Personal Property. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. 4.4.6 Apportionment. If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to the date said taxes are due and payable. 4.5 Overdue Interest. Any amount due to Landlord, if not paid when due and before expiration of the applicable grace period, if any, shall bear interest from the date due until paid at the lower of: (a) the reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time plus three percent (3%); or (b) the highest rate of interest allowed under applicable usury law. ARTICLE 5. POSSESSION OF PROPERTY 5.1 Acceptance of Premises. Tenant hereby accepts the Property. 5.2 Ownership of Improvements. During the term of this Lease title to all Improvements, now existing or later made, on the Property are and shall be vested in EXHIBIT "I" Page 14 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Tenant. Tenant shall not, however, remove or demolish any Improvements from the Property except as permitted herein. 5.3 Surrender of Property. 5.3.1 Upon Expiration. Tenant agrees that on expiration or termination of the Term, the Improvements on the Property shall become the property of Landlord, free from any liens or claims whatsoever, without any further compensation therefor from Landlord to Tenant or any other person. 5.3.2 Condition. On expiration or termination of the Term, Tenant shall peaceably and quietly leave and surrender the Property and the Improvements to Landlord in good order, condition and repair, reasonable wear and tear and obsolescence excepted. Tenant shall leave in place and in good order, condition and repair, all fixtures and machinery; except (if Tenant is not then in default under this Lease) Tenant shall have the right to remove only Tenant -owned appliances, other unattached equipment, furniture and merchandise that Tenant shall have installed, which removal must be done without damage to the Property or Improvements. Landlord shall have the right to have the Property and the Improvements inspected at Tenant's cost to determine whether the Property and the Improvements have been properly maintained, repaired and restored in accordance with the terms of this Lease. That notwithstanding, Tenant shall not be responsible for the interior condition of individual occupied apartments on the termination or expiration of this Lease. 5.3.3 Delivery of Documents. Contemporaneous with the expiration or termination of the Tenn, Tenant shall immediately deliver to Landlord the following: (a) Such documents, instruments and conveyances as Landlord may reasonably request to enable Landlord's ownership of the Property and the Improvements to be reflected of record, including, without limitation, a quitclaim deed in recordable form to the Property and the Improvements. (b) If requested by Landlord, title insurance, surety bond, or other security reasonably acceptable to Landlord insuring against all claims and liens against the Property and the Improvements other than those incurred by Landlord or accepted by Landlord in writing. (c) All construction plans, surveys, permits and other documents relating to the Improvements as may be in the possession of Tenant at the time and from time to time thereafter. (d) All documents and instruments required to be delivered by Tenant to Landlord pursuant to this Section shall be in form reasonably satisfactory to Landlord. EXHIBIT "I" Page 15 of 67 \lcdcnt\datal\users\PBeard\pyatok\Ftnal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 5.4 Abandonment. Tenant shall not abandon or vacate the Property or the Improvements at any time during the Term. If Tenant shall abandon, vacate or otherwise surrender the Property or the Improvements, or be dispossessed (other than dispossession as the result of a Substantial Taking or a Taking) thereof by process of law or otherwise, the same shall constitute a default under this Lease on the part of Tenant and, in addition to any other remedy available on the part of Landlord, any of Tenant's property left in, upon or about the Property or the Improvements (except for underground storage tanks) shall, at Landlord's option, be deemed to be abandoned and shall become the property of Landlord. The appointment of a receiver pursuant to a Mortgagee's exercise of its rights under a Mortgage, or the foreclosure of a Mortgage, shall not be a default under this Section. ARTICLE 6. REPRESENTATIONS AND WARRANTIES 6.1 Landlord's Representations. Landlord represents and warrants to Tenant that it owns the Property in fee simple and has the power and authority to enter into this Lease and perform all obligations and agreements incidental or pertinent to the Lease. Landlord makes no representation or warranty with respect to the condition of the Property or its fitness or availability for any particular use, and Landlord shall not be liable for any latent or patent defect therein. 6.2 Tenant's Representations. Tenant represents and warrants to Landlord that it has examined the Property and acknowledges that it hereby accepts possession of the Property in its "AS IS" condition, with all faults and defects, including, without limitation, infestation of or damage to the Property caused by wood -destroying pests or organisms. ARTICLE 7. DEVELOPMENT OF THE PROPERTY 7.1 Construction. Within ten (10) days after the Construction Loan Closing, or such longer period as the Executive Director may approve, Tenant shall commence the Construction. All Improvements, together with all off -site improvements that may be made by reason of governmental requirements as a condition to the Construction upon the Property, shall be constructed in a good and workmanlike manner using materials of good quality and in substantial compliance with the Plans as modified pursuant to this Article [7], and shall comply with all applicable governmental permits, laws, ordinances and regulations. Any of the Plans, including, without limitation, landscaping plans, not approved by the Executive Director as of the Construction Loan Closing shall be subject to the prior approval of the Executive Director. 7.2 Construction Cost. Tenant shall bear the cost of the Construction, including all fees and mitigation measures. EXHIBIT "I" Page 16 of 67 \\edent\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 7.3 Changes; Landlord Consent. Except as otherwise provided in this Lease, Tenant shall not make any changes in the Plans without the Executive Director's prior written consent if such change (a) constitutes a material change in the building material or in the architectural design, value or quality of any of the Improvements, or (b) would result in an increase in construction costs in excess of Seventy -Five Thousand Dollars ($75,000.00) for any single change or in excess of Three Hundred Thousand Dollars ($300,000.00) for all such changes. Without limiting the above, Landlord agrees that Tenant may make minor changes which do not change the Projects aesthetics without the Executive Director's prior written consent, provided that such changes do not violate any of the conditions specified herein. 7.3.1 Submission Requirement; Consent Process. Tenant shall submit any proposed material changes in the Plans to the Executive Director at least ten (10) days prior to the commencement of construction relating to such proposed material change. Requests for any material change which requires consent shall be accompanied by working drawings and a written description of the proposed change, submitted on a change order form acceptable to the Executive Director, signed by Tenant and, if required by the Executive Director, also by the Project architect. If a proposed change is approved, then Tenant shall be notified in writing within ten (10) days after submission. If the Executive Director fails to disapprove a proposed change within said ten (10)-day period, and state the reason(s) for such disapproval with reasonable particularity, then the proposed change shall be deemed approved. 7.4 Landlord's Review. Landlord does not have, and by this Lease expressly disclaims, the right to or duty for any review of the Plans for the purpose of determining compliance with building codes, safety features or standards or for the purpose of deter- mining or approving engineering or structural design, sufficiency or integrity. Landlord's approval of a direction or request to change the plans, specifications or drawings submitted by Tenant is not and shall not be a review or approval of the quality, adequacy or suitability of such plans, specifications or drawings, nor of the labor, materials, services or equipment to be furnished or supplied in connection therewith. Landlord does not have and expressly disclaims any right of supervision or control over the architects, designers, engineers or other draft persons and professionals responsible for the drafting and formulation of the Plans, or any right of supervision or control of contractors, builders, trades and other persons engaged in constructing and fabricating the improvements pursuant to the Plans. Landlord further acknowledges that it shall not have any right to disapprove any plan, specification or drawing which logically evolves from any previously approved plan, specification or drawing or to request or require a change in any previously approved item. 7.5 Soil Conditions. Landlord makes no covenants or warranties respecting the condition of the soil or subsoil or any other condition of the Property, provided, however, that the foregoing shall not constitute a release of Landlord under any statute or common law theory. EXHIBIT "I" Page 17 of 67 \\cdcnt\datal\users\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 7.6 Diligent Prosecution to Completion. Once the work is begun, Tenant shall, with reasonable diligence, prosecute the Construction to completion. The Construction shall be completed and ready for use not later than the earlier of: (a) seven hundred twenty days (720) days after the Construction Loan Closing (subject to the right to notice and cure set forth in Section [21.1.5]), or (b) the time required to satisfy the requirements of the Proposition 1C Finanacing; provided, however, that the time for completion shall be extended for as long as Tenant shall be prevented from completing the Construction by delays beyond Tenant's control. Additionally, upon the written request of Tenant, the Executive Director may, at his sole and absolute discretion, grant one or more extensions of the date by which the Construction must be completed of, in the aggregate, not more than ninety (90) days. All work shall be performed in a good and workmanlike manner, shall substantially comply with the Plans, and shall comply with all applicable governmental permits, laws, ordinances, and regulations. 7.7 Right of Access. During normal construction hours, representatives of Landlord shall have the reasonable right of access to the Property without charges or fees for the purpose of inspecting the work of the Construction; provided, however, that such representatives shall present and identify themselves at Tenant's construction office, be accompanied by a representative of Tenant while on the Property and obey Tenant's, or its contractor's, safety rules and regulations. In addition, Landlord shall have the right to authorize the City and other public agencies to enter the Property, upon the same terms after reasonable prior written notice to Tenant, for the purpose of constructing, reconstructing, maintaining or repairing any public improvements or public facilities located on the Property. Landlord shall deliver written notice of the identity of its representatives to Tenant before such representatives enter the Property. Landlord hereby indemnifies and holds Tenant, and its contractors, subcontractors, agents, representatives and employees, and the Property, harmless from and against any loss, cost, damage or liability, including, without limitation, attorneys' fees, which results from the exercise by Landlord, or any party acting under Landlord's authority, of the rights granted by this Section. 7.8 Governmental Approvals. If requested by Landlord in writing, Tenant covenants and agrees to deliver to Landlord conformed copies (and certified copies of all recorded instruments) of all governmental approvals and permits obtained by Tenant for the construction, alteration or reconstruction of any Improvements upon the Property in accordance with the Plans. In no event shall Tenant commence construction of any Improvements pursuant to the provisions of this Article [7] until such time as Tenant shall have obtained all necessary governmental approvals and permits to so construct such Improvements. 7.9 Landlord's Right to Discharge Lien. If Tenant does not cause to be recorded the bond described in California Civil Code Section 3143 or otherwise protect the Property under any alternative or successor statute, and a final judgment has been entered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic's, materialman's, contractor's, or subcontractor's lien claim, and if Tenant fails EXHIBIT "I" Page 18 of 67 \\edcnt\datal\users\P6eardlpyatok\Fina1 USA docs\DDA v 6 6 I 1 s x FINAL FINAL 6-8-1 I.doc to stay the execution of the judgment by lawful means or to pay the judgment, Landlord shall have the right, but not the duty, subject to the notice and cure rights of Mortgagees and the Tax Credit Partner set forth elsewhere in this Lease, to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together with all Landlord's reasonable attorneys' fees and costs, plus interest on those sums, fees, and costs from the date of payment until the date of reimbursement at the rate set forth in Section [4.5]. 7.10 Force Majeure. All obligations of Tenant to promptly commence and thereafter diligently prosecute to completion the Construction shall be extended by such number of days as Tenant shall be delayed by reason of events of force majeure pursuant to Article [24]. 7.11 Notice of Non -Responsibility. After the recordation of the Certificate of Completion for the Improvements in the Official Records, Tenant shall provide Landlord with prior written notice of not less than fifteen (15) days before commencing construction of any structural alteration of the Improvements, or any non-structural alteration which will cost more than Twenty -Five Thousand Dollars ($25,000.00), and shall permit Landlord to record and post appropriate notices of non -responsibility on the Property. The foregoing Twenty -Five Thousand Dollar ($25,000.00) limitation shall be increased each calendar year by the corresponding percentage increase in the Index. 7.12 Notice of Completion. On completion of construction of the Improvements, Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as Tenant's attorney -in -fact to file the notice of completion on Tenant's failure to do so after the work of improvement has been substantially completed. 7.13 Subsequent Alterations. Following the Construction in substantial accordance with the Plans, Tenant may from time to time, at its sole expense, make improvements and other alterations to the Property which Tenant reasonably determines to be beneficial. Tenant shall not make any alteration or improvement to the Property the cost of which exceeds Fifty Thousand Dollars ($50,000.00) without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed. The foregoing dollar amount limitations shall be increased each calendar year by the corresponding increase in the Index. Tenant shall timely pay any obligation incurred by Tenant with respect to any such alterations or improvements that could become a lien against the Property and shall defend, indemnify and hold Landlord harmless in connection therewith. ARTICLE 8. USE OF THE PROPERTY, HAZARDOUS MATERIALS, AND NONDISCRIMINATION 8.1 Definitions Applicable to this Article. All capitalized terms used in this Article [8] and not elsewhere defined shall have the following meanings: EXHIBIT "I" Page 19 of 67 \\cdent\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11 dot: "Adjusted Income" means the adjusted income of a person (together with the adjusted income of all persons of the age of eighteen (18) years or older who intend to reside with such person in one residential unit) as calculated in the manner prescribed under Section 142(d)(2)(B) of the Code. "Affordable Rent for 30% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of thirty percent (30%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Affordable Rent for 40% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of forty percent (40%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Affordable Rent for 50% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of fifty percent (50%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Affordable Rent for 110% of Median Income Tenants" means monthly rent (including the Utility Allowance, and excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of thirty percent (30%) of one -twelfth (1/12th) of one hundred ten percent (110%) of the Median Income for the Area adjusted for family size appropriate for the Unit. "Certificate of Continuing Program Compliance" shall mean the Certificate to be filed annually (or quarterly at the written request of the Executive Director) by Grantee with the Executive Director which shall be substantially in the form attached to this Lease as Exhibit ["C"]. "Code" means the Internal Revenue Code of 1986, as amended, including the Regulations promulgated thereunder or under any predecessor statute. "30% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed thirty percent (30%) of the Median Income for the Area, adjusted for household size. EXHIBIT "I" Page 20 of 67 \�cdcntldata I users \PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc "40% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed forty percent (40%) of the Median Income for the Area, adjusted for household size. "50% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed fifty percent (50%) of the Median Income for the Area, adjusted for household size. "110% of Median Income Tenants" means persons or families with Adjusted Income that does not exceed one hundred ten percent (110%) of the Median Income for the Area, adjusted for household size. "Median Income for the Area" means the median income for the area as determined and published annually by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, median income for the Area determined under the method used by the Secretary of Housing and Urban Development prior to such termination. "Utility Allowance" means a monthly allowance for Utility Services based on a utility allowance schedule published annually by Landlord. "Utility Services" means all utility services included on the utility allowance schedule published annually by Landlord. [Note: Following are two (2) versions of Section [8.2], one (1) for Phase I and one (1) for Phase II. Only the appropriate version will be included in the final form of this Ground Lease for the subject Phase.] 8.2 Affordable Housing (Phase I Version). As hereinafter more particularly provided, Tenant shall use the Property and the Improvements as multi -family rental housing and ancillary purposes as follows: (a) twelve (12) of the Units shall be leased to 30% of Median Income Tenants at Affordable Rent for 30% of Median Income Tenants, of which three (3) of said Units shall be one (1)-bedroom Units, five (5) of said Units shall be two (2)-bedroom Units, and four (4) of said Units shall be three (3)-bedroom Units; (b) twenty-three (23) of the Units shall be leased to 40% of Median Income Tenants at Affordable Rent for 40% of Median Income Tenants, of which five (5) of said Units shall be one (1)-bedroom Units, ten (10) of said Units shall be two (2)-bedroom Units, and eight (8) of said Units shall be three (3)-bedroom Units; and (c) eighteen (18) of the Units shall be leased to 50% of Median Income Tenants at Affordable Rent for 50% of Median Income Tenants, of which three (3) of said Units shall be one (1)- bedroom Units of which nine (9) of said Units shall be two (2)-bedroom Units, and six (6) of said Units shall be three (3)-bedroom Units. The remaining Units (save for one (1) manager's unit) shall be leased to 110% of Median Income Tenants at Affordable Rent for 110% of Median Income Tenants. The one (1) manager's unit, if not so used, shall also be leased to 110% of Median Income Tenants at Affordable Rent for 110% of EXHIBIT "I" Page 21 of 67 \\cdcnt\dalat\users\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc Median Income Tenants. Except for such reasonable periods during which a Unit is, or Units are, being maintained, repaired or rehabilitated, Tenant shall actively market any vacant unit or units and lease it or them as soon as reasonably possible so as to satisfy the subleasing requirements immediately above. Tenant acknowledges and agrees that one (1) of the Units described above shall also coextensively be maintained as affordable under the HOME Program regulations for a term of not less than twenty (20) years. 8.2 Affordable Housing (Phase II Version). As hereinafter more particularly provided, Tenant shall use the Property and the Improvements as multi- family rental housing and ancillary purposes as follows: (a) eleven (11) of the Units shall be leased to 30% of Median Income Tenants at Affordable Rent for 30% of Median Income Tenants, of which one (1) of said Units shall be a studio apartment, three (3) of said Units shall be one (1)-bedroom Units, four (4) of said Units shall be two (2)- bedroom Units, and three (3) of said Units shall be three (3)-bedroom Units; (b) twenty- one (21) of the Units shall be leased to 40% of Median Income Tenants at Affordable Rent for 40% of Median Income Tenants, of which two (2) of said Units shall be studio apartments, five (5) of said Units shall be one (1)-bedroom Units, eight (8) of said Units shall be two (2)-bedroom Units, and six (6) of said Units shall be three (3)-bedroom Units; and (c) thirteen (13) of the Units shall be leased to 50% of Median Income Tenants at Affordable Rent for 50% of Median Income Tenants, of which two (2) of said Units shall be one (1)-bedroom Units, of which five (5) of said Units shall be two (2)-bedroom Units, and six (6) of said Units shall be three (3)-bedroom Units. The remaining Units (save for one (1) manager's unit) shall be leased to 110% of Median Income Tenants at Affordable Rent for 110% of Median Income Tenants. The one (1) manager's unit, if not so used, shall also be leased to 110% of Median Income Tenants at Affordable Rent for 110% of Median Income Tenants. Except for such reasonable periods during which a Unit is, or Units are, being maintained, repaired or rehabilitated, Tenant shall actively market any vacant unit or units and lease it or them as soon as reasonably possible so as to satisfy the subleasing requirements immediately above. 8.2.1 Subtenant Selection. In the selection of subtenants for occupancy of the Units, Tenant shall give priority to eligible persons and families displaced by Landlord or by the National City Redevelopment Agency. Any such priority shall be subject to the rules and regulations of the Tax Credit Program and to each such subtenant meeting screening criteria (pursuant to the management plan delivered by Tenant to Commission pursuant to Section {11.4(q) or 12.4(q) of the DDA) approved by the Executive Director, which approval shall not be unreasonably withheld. 8.3 Increase in Person's or Family's Income. For purposes of satisfying the obligation to rent the dwelling units as set forth in Section [8.2] above, a person or family who at the commencement of his, hers or its occupancy qualified as a 30%, 40%, 50% or 110% of Median Income Tenant shall continue to be treated as such Tenant irrespective of any later increase in his, her or their income. A Unit occupied by a 30%, 40%, 50% or EXHIBIT "I" Page 22 of 67 1\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc 110% of Median Income Tenant shall be deemed, upon the termination of such person's or family's occupancy, to be continuously occupied by such 30%, 40%, 50% or 110% of Median Income Tenant until reoccupied, provided that Owner actively, diligently and continuously markets such Unit for occupancy by a Tenant of the same income classification. 8.4 Section 8 Certificate Holders. Tenant shall accept as Low -Income Tenants, on the same basis as all other prospective Low -Income Tenants, persons and families that are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, as amended, or its successor, and shall not apply selection criteria to Section 8 certificate holders that are more burdensome than the criteria applied to all other prospective Low -Income Tenants. Tenant agrees to modify the subleases for the Units, as necessary, to allow the rental of Units to Section 8 certificate holders. 8.5 Rent Increases. Tenant may adjust the Affordable Rents in accordance with periodic revisions to the Median Income for the area by the U.S. Secretary of Housing and Urban Development; provided, however, that the Affordable Rent for any Unit may not be increased more often than one time per 12-month period, and only after at least thirty (30) days prior written notice to the affected Low -Income Tenant. 8.6 Initial Income Certification. Immediately prior to the initial occupancy of each subtenant, and at least annually thereafter, Tenant shall obtain, in substantially the form set forth on Exhibit ["B"], current income certification statements for each subtenant. Tenant shall make a good faith effort to verify each income certification statement provided by an applicant for subtenancy or a subtenant by taking one or more of the following steps as part of the verification process: (a) obtain a pay stub for the most recent pay period, (b) obtain an income tax return for the most recent tax year, (c) conduct a credit rating or similar search, (d) obtain an income verification form from the applicant's or subtenant's current employer, (e) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies, or (f) if the applicant is unemployed and has no such tax return, obtain another form of independent verification. Tenant shall maintain each such income certification statement on file for not less than three (3) years. 8.7 Annual Recertification. Not less than annually, Tenant shall obtain and maintain a file, again in substantially the form set forth in Exhibit ["B"J, of current income recertification statements for each subtenant. Tenant shall make a good faith effort to verify each income recertification statement in the manner described in Section [8.61 Tenant shall also maintain each such income recertification statement on file for not less than three (3) years. 8.8 Form of Sublease. The form of sublease or subrental agreement used by Tenant shall clearly notify subtenants that Tenant has relied on the income certification EXHIBIT "I" Page 23 of 67 \\cdcnt\data1\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11-doc supplied by the subtenant, and will rely on the annual income recertification to be supplied by the subtenant, in determining qualification for occupancy at Affordable Rent, and that any material misstatement in such certification or recertification will be cause for immediate termination of such sublease or subrental agreement. 8.9 Low -Income Housing Tax Credit Program. Notwithstanding anything contained in this Lease to the contrary, if and when the Property is subject to the requirements of the Federal Low -Income Housing Tax Credit Program under the provisions of Section 42 of the Code (the "Tax Credit Program"), and there is a conflict between the requirements of the Tax Credit Program, the HOME Program (as to the one (1) Unit required to be maintained as affordable thereunder) and the affordability provisions set forth in Sections [8.1] through [8.8] above, inclusive, then (a) as to the Units described in Section [8.2(a) and (b)1, above, the Tax Credit Program provisions shall prevail, and (b) as to the Units described in Section 8.2(c), above, the more restrictive terms and conditions provisions shall prevail. 8.10 Access and Reporting. Tenant shall permit the representatives of Landlord at any time or from time to time, upon one business day's notice, to inspect, audit and copy all of its properties, books, records and accounts. Tenant shall maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements which shall be in conformity with GAAP basis of accounting. Tenant shall furnish or cause to be furnished to Landlord the following: (a) Notice of Default. As soon as possible, and in any event not later than five (5) days after the occurrence of any Event of Default, a statement of an officer of Tenant describing the details of such Event of Default and any curative action Tenant proposes to take; (b) Annual Statements. As soon as available, and in any event not later than one hundred twenty (120) days after the close of each fiscal year of Tenant, financial statements of Tenant, including a profit and loss statement, reconciliation of capital accounts and a consolidated statement of changes in financial position of Tenant as at the close of and for such fiscal year, all in reasonable detail, certified as provided in clause (a) above by an officer or partner of Tenant and, upon request of Landlord, if total Operating Expenses for such year exceed the total amount set forth in the Approved Budget by more than five percent (5%), accompanied by a compilation report prepared by a firm of certified public accountants, and in a format, each reasonably acceptable to the Executive Director; (c) Pro Forma Budget. As soon as available and in any event not later than December 15 of each calendar year beginning with the year in which Construction is completed, Tenant shall provide Landlord, for the Executive Director's approval, with a detailed projection of Operating Income and budgets EXHIBIT "I" Page 24 of 67 \\cdentklatal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc • of estimated Operating Expenses for the immediately succeeding calendar year (the "Pro Forma Budget") and a detailed Cash Flow projection for the next succeeding year. Tenant shall also submit to Landlord on request additional detail, information and assumptions used in the preparation of the Pro Forma Budget. Within fifteen (15) days following its receipt of the Pro Forma Budget, Landlord shall deliver to Tenant its written approval or disapproval thereto, which approval shall not be unreasonably withheld. If Landlord disapproves the Pro Forma Budget, it shall set forth its reasons with reasonable specificity. If Landlord fails to indicate either its approval or disapproval of the Pro Forma Budget within such period, then Landlord shall be deemed to have approved the Pro Forma Budget as submitted by Tenant. Once the Pro Forma Budget is approved or deemed approved by Landlord, such approved Pro Forma Budget shall become the "Approved Budget" for the entire applicable calendar year. Tenant shall use commercially reasonable efforts to operate the Property during such calendar year within the Approved Budget; provided, however, that the Tenant shall not be required to obtain the approval of Landlord for any deviation from the Approved Budget so long as the total Operating Expenses and expenditures for Capital Improvements paid or incurred during such calendar year do not exceed the originally budgeted amount thereof in the Approved Budget by more than five percent (5%) in the aggregate. To the extent required hereunder, any request by Tenant to deviate from the Approved Budget shall be submitted to Landlord in writing with an explanation thereof and shall be accompanied by supporting information for the request. Landlord shall reasonably respond to any such request within fifteen (15) days of the receipt of same and if Landlord fails to do so, such request shall be deemed to be approved; (d) Tax Returns. As soon as available, and in any event not later than at the time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules, if any) of Tenant; (e) Certificate of Performance. Concurrently with delivery of each of the financial statements provided for in clause (b) above, a certificate of an officer or partner of Tenant stating that Tenant has, in all material respects, performed and observed each of its covenants contained in this Lease and that no Event of Default or Potential Default has occurred or, if any such event has occurred, specifying its nature; (f) Redevelopment Monitoring. Tenant shall submit to Landlord on an annual basis the annual report required by Section 33418 of the California Health and Safety Code. The annual report shall include for each dwelling unit the rental rate and the income and the family size of the occupants. EXHIBIT "I" Page 25 of 67 \\cdcut\data1\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (g) Rent Roll. As soon as possible and in any event not later than forty-five (45) days after the close of each calendar quarter, the rent roll as of the end of such calendar quarter setting forth such information, and in such format, as is reasonably acceptable to the Executive Director; (h) Audit Reports. Promptly upon receipt thereof, copies of all reports submitted to Tenant by independent certified public accountants in connection with each annual, interim or special audit of the financial statements of Tenant made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit; (i) Notices, Certificates or Communications. Immediately upon giving or receipt thereof, copies of any notices, certificates or other communications given by or on behalf of Tenant or received by or on behalf of Tenant from lenders pursuant to or in connection with any of the loan documents, as well as any notices and other communications delivered to the Property or to Tenant naming Landlord or the "Construction Lender" as addressee, or which could reasonably be deemed to affect the Construction or the ability of Tenant to perform its obligations to Landlord; (j) Monthly Leasing Report. As soon as available and in no event later than the twenty fifty (25th) day of every calendar month, a monthly property analysis report for the Property indicating the current leasing status for the Property; (k) Monthly Operating Statements. As soon as available and in no event later than the twenty-fifth (25th) day of every calendar month, commencing with the first full calendar month following commencement of lease -up of the Property, a "Monthly Operating Statement" showing all Operating Income, Operating Expenses, Debt Service and any other amounts taken into consideration in computing Net Operating Income, Operating Deficits, and/or Cash Flow, as applicable, for the prior month, in a form reasonably satisfactory to the Executive Director; (1) Certificate of Continuing Program Compliance. Tenant shall submit to Landlord on an annual basis the Certificate of Continuing Program Compliance. (m) Other Information. Such other documents and information relating to the affairs of Tenant and the Property as Landlord reasonably may request from time to time which Tenant can provide for a reasonable cost. 8.11 Onsite Manager. Tenant, through an onsite professional property manager or property management company, shall manage the Project or cause it to be managed. Any manager or management company retained to act as agent for Tenant in EXHIBIT "P" Page 26 of 67 \\cdcnt\datal\users\PBeard\pyatok Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-I I.doc meeting the obligation of providing an onsite manager shall be subject to prior written approval of the Executive Director, which approval shall not be unreasonably withheld or delayed. Related Management Company, L.P. ("RMC") is hereby approved by Landlord as the initial property manager. In exercising his/her approval rights hereunder, the Executive Director may require proof of ability and qualifications of the manager and/or management company based upon (i) prior experience, (ii) assets, and (iii) other factors determined by the Executive Director as necessary. Furthermore, upon sixty (60) days prior written demand from Landlord with cause, Tenant shall remove and replace a property manager and/or property management company. In any agreement with a property manager or property management company ("Management Agreement"), Tenant shall expressly reserve the right to terminate such agreement upon written demand of Landlord with cause. That notwithstanding, Landlord agrees that RMC shall be entitled to a thirty (30)-day notice of default and a reasonable opportunity to cure before any such termination. 8.12 No Use of Hazardous Materials on the Property. Tenant covenants and agrees that it shall not, and that it shall not permit any subtenant to, treat, use, store, dispose, release, handle or otherwise manage Hazardous Materials on the Property from and after the date hereof except in connection with any construction, operation, maintenance or repair of the Improvements or in the ordinary course of its business, and that such conduct shall be done in compliance with all applicable federal, state and local laws, including all Environmental Laws. Tenant's violation of the foregoing prohibition shall constitute a breach hereunder and Tenant shall indemnify, hold harmless and defend the Landlord for such violation as provided below. 8.13 Notice and Remediation by Tenant. Tenant shall promptly give the Landlord written notice of any significant release of any Hazardous Materials, and/or any notices, demands, claims or orders received by Tenant from any governmental agency pertaining to Hazardous Materials which may affect the Property. 8.14 Environmental Indemnity. Tenant agrees to indemnify, protect, hold harmless, and defend (with counsel reasonably satisfactory to Landlord) the Indemnitees from and against any and all losses, costs, claims, expenses, damages (including, without limitation, foreseeable or unforeseeable consequential damages), and liabilities directly or indirectly arising out of or in any way connected with (a) Tenant's breach or violation of any covenant, prohibition or warranty in this Lease concerning Hazardous Materials, or (b) the activities, acts or omissions of Tenant, its employees, contractors or agents on or affecting the Property from and after the Commencement Date, including but not limited to the release of any Hazardous Materials or other kinds of contamination or pollutants of any kind into the air, soil, groundwater or surface water on, in, under or from the Property. This indemnification supplements and in no way limits the scope of the indemnification set forth in Article [13]. 8.15 Termination; Subtenants. The agreements and obligations of Tenant under this Article [8] with regard to indemnification of Landlord shall survive the EXHIBIT "I" Page 27 of 67 \\cdcnt\data1\usets\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1l.doc scheduled termination or sooner expiration of the Term for any reason, for five (5) years and all claims relating thereto must be delivered in writing to Tenant within such period. That notwithstanding, the extension of time within which to deliver a claim to Tenant shall not extend, beyond the date of expiration or termination of this Lease, the period in which Claims may arise. No action by any subtenant in violation of its sublease shall constitute a cause to terminate this Lease provided that Tenant diligently pursues its available remedies against such subtenant. 8.16 Nondiscrimination. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property nor shall the Tenant itself, or any person claiming under or through Tenant, 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, sublessees, subtenants, or vendees in the Property. 8.17 Form of Nondiscrimination and Nonsegregation Clauses. Tenant covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that it shall refrain from restricting the lease, sublease, rental, transfer, use, occupancy, tenure, or enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All such leases, or contracts pertaining thereto shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 8.17.1 In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, religion, creed, national origin, or ancestry, in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, or occupancy of tenants, lessees, sublessees, tenants, or vendees in the land herein leased." 8.17.2 In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee 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 land." EXHIBIT "I" Page 28 of 67 lkdcnt\data lluscrs\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • 8.18 Social Services. From not later than six (6) months after the date of issuance of a temporary certificate of occupancy for the Project until expiration of the Term, Tenant shall provide, or cause to be provided by a reasonably qualified person or firm, services to the residents of the Project in accordance with the plan therefor attached hereto as Exhibit ["D,"] as such plan may be amended from time to time with the consent of the Executive Director. Community HousingWorks is hereby approved by Landlord as the initial provider of such social services 8.19 Effect and Duration of Covenants. Subject to Section [8.21] below, the covenants established in this Article shall, without regard to technical classification and designation, be binding on Tenant and any successor in interest to the Property, or Tenant's leasehold interest therein, or any part thereof, for the benefit and in favor of the Landlord, its successors and assigns, and the City until the expiration of the Term, except to the extent said covenant expressly provides that it shall survive the expiration of the Term. 8.20 Indemnification. Tenant hereby saves, defends, indemnifies and holds the Indemnitees harmless from and against any and all losses, costs, damages or liabilities, including, without limitation, attorneys' fees and costs, which result from the breach of any representations and warranties contained in this Article [8]. 8.21 Terminable Upon Foreclosure. Notwithstanding anything contained in this Lease to the contrary, upon foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment or deed in lieu of foreclosure, Section [8.1] through Section [8.16], inclusive, and Section [8.20] of this Lease shall be terminable by the purchaser at the foreclosure sale, or the assignee or grantee of a deed in lieu of foreclosure, by notice to Landlord. Termination of such Sections pursuant to this provision shall not affect the validity of the remaining provisions of this Lease and Tenant's rights hereunder. ARTICLE 9. INSURANCE 9.1 Landlord Not Liable. Except as the result of the sole or willful negligence or intentional acts or omissions by Landlord or its representatives, employees or agents, or as otherwise expressly set forth herein, Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom or for any damage or liability of any kind or for any injury to or death of persons or damage to property of Tenant, or to Tenant's agents, employees, servants, contractors, subtenants, licensees, concessionaires, customers or business invitees or any other person which occurs on the Property during the Term. 9.2 Indemnification. Except as the result of the sole or willful negligence or intentional acts or omissions by Landlord or its representatives, employees or agents, Tenant shall indemnify, defend and hold the Indemnitees harmless from and against all liability, loss, damage, cost or expense (including attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage EXHIBIT "I" Page 29 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-1 l.doc whatsoever caused to any person or to the property of any person caused by Tenant's performance of its obligations under this Lease or any errors or omissions of Tenant, whether such performance, errors or omissions of Tenant be made by Tenant, its contractors or subcontractors, or anyone directly or indirectly employed by Tenant, and whether such damage shall accrue or be discovered before or after the termination of this Lease. This indemnification provision supplements and in no way limits the scope of the indemnifications in Article [13]. The indemnity obligation of Tenant under this Article shall survive the expiration or termination, for any reason, of this Lease. This Section notwithstanding, indemnification with respect to Hazardous Materials shall be governed by Section [8.14]. 9.3 Insurance. From and after the Commencement Date until the termination of this Lease, Tenant shall take out and maintain the following types of insurance in the forms and amounts (as may be increased each calendar year by the corresponding increase in the Index) set forth below, at Tenant's sole expense. Notwithstanding the amounts of insurance set forth below, the Executive Director shall have the right, but not the obligation, to reduce the amounts required from time to time. 9.3.1 Comprehensive General Liability in an amount not less than Two Million Dollars ($2,000,000.00) combined single limit for each occurrence or Four Million Dollars ($4,000,000.00) general aggregate for bodily injury, personal injury and property damage including contractual liability. The limits of this insurance shall be increased to an amount not less than Five Million Dollars ($5,000,000.00) combined single limit upon the recordation of the Certificate of Completion for any of the Improvements in the Official Records. The Indemnitees shall be covered as additional insureds with respect to liability arising out of activities by or on behalf of Tenant or in connection with the use or occupancy of the Property. Coverage shall be in a form acceptable to the City Risk Manager and shall be primary and non-contributing with any insurance or self-insurance maintained by City or Commission. 9.3.2 Automobile Liability in an amount not less than One Million Dollars ($1,000,000.00) combined single limit per accident for bodily injury and property damage covering owned, non -owned and hired vehicles. 9.3.3 Workers' Compensation as required by the Labor Code of the State of California and Employers' Liability insurance in an amount not less than One Million Dollars ($1,000,000.00). 9.3.4 "All Risk" property including builder's risk protection during the course of construction, covering the full replacement value of the Improvements constructed on or about the Property by Tenant. Said insurance shall include debris removal, and, if typically carried upon similar affordable housing projects in San Diego County, California, coverage for earthquake and flood if this protection is required by the Senior Lender. Landlord shall be named as insured under a standard loss payable endorsement. EXHIBIT "I" Page 30 of 67 • 1\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I.doc 9.4 Other Insurance. Tenant shall also obtain and maintain such other insurance in forms and amounts reasonably required from time to time by Landlord or the City Risk Manager for protection against the same or other insurable hazards which are then typically insured against by similar properties in San Diego County, California, provided that such coverage is available at commercially reasonable rates. 9.5 Contractors. All contractors employed by Tenant with contracts of Fifty Thousand Dollars ($50,000.00) or more shall be required to furnish evidence of Comprehensive General Liability insurance subject to all the requirements stated herein with limits of not less than One Million Dollars ($1,000,000.00) combined single limit each occurrence. The Indemnitees shall have the right to receive evidence of compliance with the foregoing by contractors at any time upon written request therefor. 9.6 Acceptable Terms of Coverage. Acceptable insurance coverage shall be placed with carriers admitted to write insurance in California, or carriers with a rating of or equivalent to A-:VIII by A.M. Best & Company. Any deviation from this rule shall require specific approval in writing from the City's Risk Manager. Any deductibles in excess of Twenty -Five Thousand Dollars ($25,000.00) per occurrence or self -insured retentions must be declared to and approved by the City Risk Manager. At the option of the City Risk Manager, Tenant may be required to reduce or eliminate such deductibles or self -insured retentions or to procure a bond guaranteeing payment of losses and related investigations, claim administration and defense costs. In the event such insurance provides for deductibles or self -insured retention, Tenant agrees that it will fully protect the Indemnitees in the same manner as those interests would have been protected had the policy or policies not contained a deductible or retention. Coverage under each policy shall not be suspended, avoided or canceled by either party except after thirty (30) days' prior written notice to Landlord. Tenant shall furnish the Indemnitees with certificates of insurance and with original endorsements effecting coverage as required under this Article. The certificates and endorsements for each insurance policy shall be signed by a person authorized by the insurer to bind coverage on its behalf. The Indemnitees reserve the right to require complete certified copies of all insurance policies not previously provided at any time. 9.7 Blanket Coverage. Notwithstanding anything to the contrary set forth in this Article [9], Tenant's obligations to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Tenant; provided, however, (i) that the Indemnitees and other parties in interest to it shall be named as additional insureds as their interests may appear, and (ii) that the coverage afforded the Indemnitees will not be reduced or diminished by reason of the use of such blanket policy of insurance, and (iii) that the requirements set forth in this Article [9], are otherwise satisfied. 9.8 Waiver of Subrogation. Each policy of insurance procured pursuant to Article [9] shall contain, if obtainable upon commercially reasonable terms, either (i) a EXHIBIT "I" Page 31 of 67 \\edcntklatal\users\F13eard\pyatok\Final DDA docsDDDA v 6 6 II s x FINAL FINAL 6-6-11.doc waiver by the insurer of the right of subrogation against either party hereto for negligence of such party, or (ii) a statement that the insurance shall not be invalidated should any insured waive in writing prior to a loss any or all right of recovery against any party for loss accruing to the property described in the insurance policy. Each of the parties hereto waives any and all rights of recovery against the other, or against the officers, employees, agents and representatives of such other party, for loss or damage to such waiving party or its property orthe property of others under its control, arising from any cause insured against under the form of insurance policies required to be carried pursuant to Article [9] of this Lease or under any other policy of insurance carried by such waiving party. ARTICLE 10. MAINTENANCE; REPAIRS; ALTERATIONS; RECONSTRUCTION 10.1 General Maintenance. Throughout the Term, Tenant shall, at Tenant's sole cost and expense, maintain the Property and the Improvements in good condition and repair, ordinary wear and tear excepted, and in accordance with all applicable federal, state and local laws, ordinances and regulations of (a) governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, (b) insurance underwriting boards or insurance inspection bureaus having or claiming jurisdiction, and (c) all insurance companies insuring all or any part of the Property or the Improvements, or both. 10.2 Program Maintenance. In addition to the routine maintenance and repair required pursuant to Section [10.1], Tenant shall perform the following programmed maintenance on the Improvements: (a) Interior painting and window covering replacement at least every five (5) years; (b) Exterior painting at least every ten (10) years; (c) Repair and resurfacing of parking areas and walkways at least every five (5) years; and (d) Replacement of all deteriorated or worn landscaping and play equipment at least every five (5) years. Upon the request of Tenant, the Executive Director, at his sole and absolute discretion, may grant a waiver or deferral of any program maintenance requirement. Tenant shall keep such records of maintenance and repair as are necessary to prove performance of the program maintenance requirements. ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS EXHIBIT "I" Page 32 of 67 \\cdcnt\fatal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc • 11.1 Ownership During Term. 11.1.1 Improvements. All Improvements on the Property as permitted or required by this Lease shall, during the Term, be and remain the property of Tenant, and Landlord shall not have title thereto. Tenant shall not, however, demolish or remove any Improvements from the Property except as permitted herein. 11.1.2 Personal Property. All personal property, furnishings, fixtures and equipment, including, without limitation, Tenant -owned appliances, which are not so affixed to the Property or the buildings thereon as to require substantial damage to the buildings upon removal thereof shall constitute personal property including, but not limited to: (a) functional items related to the everyday operations of the Property; (b) personal property furnishings, fixtures and equipment of the nature or type deemed by law as permanently resting upon or attached to the buildings or land by any means, including, without limitation, cement, plaster, nails, bolts or screws, or essential to the ordinary and convenient use of the Property and the Improvements. At any time during the Term and at termination thereof, Tenant shall have the right to remove any and all such personal property, furnishings, fixtures and equipment; provided, that Tenant repairs any damage to the Property or the Improvements caused by such removal. 11.1.3 Basic Building Systems. For purposes of this Lease, the personal property, furnishings, fixtures and equipment described in this Section [11.1] shall not include those major building components or fixtures necessary for operation of the basic building systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central air-cooling system. 11.2 Ownership at Expiration or Termination. 11.2.1 Property of Landlord. At the expiration or earlier termination of the Term, except as provided in Section [11.2.2], all Improvements which constitute or are a part of the Property shall become (without the payment of compensation to Tenant or others) the property of Landlord free and clear of all claims and encumbrances on such Improvements by Tenant, and anyone claiming under or through Tenant, except for such title exceptions permitted or required during the Term. Tenant shall then quitclaim to Landlord any and all rights, interests and claims to the Improvements. Tenant agrees to and shall defend, indemnify and hold Landlord harmless from and against all liability and loss which may arise from the assertion of any such claims and any encumbrances on such Improvements (except claims arising due to Landlords actions) and except for such title exceptions permitted or required during the Term. 11.2.2 Removal by Tenant. Tenant shall not be required or permitted to remove the Improvements, or any of them, at the expiration or sooner termination of the Term; provided, however, that, within thirty (30) days following the expiration or sooner termination of the Term, Tenant may remove all personal property, furniture, and equipment. EXHIBIT "I" Page 33 of 67 1\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc 11.2.3 Unremoved Property. Any personal property, furnishings or equipment not removed by Tenant within thirty (30) days after the expiration or sooner termination of the Term, shall, without compensation to Tenant, become Landlords' property, free and clear of all claims to or against them by Tenant or any third person, firm or entity arising by, through or under Tenant. 11.2.4 Maintenance and Repair of Improvements. Subject to the provisions of this Lease concerning condemnation, alterations and damage and destruction, Tenant agrees to assume full responsibility for the operation and maintenance of the Property and the Improvements and all fixtures and furnishings thereon or therein throughout the Term hereof without expense to Landlord, and to perform all repairs and replacements necessary to maintain and preserve the Property, the Improvements, fixtures and furnishings in a decent, safe and sanitary condition consistent with good practices and in compliance with all applicable laws. Tenant agrees that Landlord shall not be required to perform any maintenance, repairs or services, or to assume any expense not specifically assumed herein in connection with the Property and the Improvements thereon unless specifically required under the terms of this Lease. Except as otherwise provided in this Section [11.2] and in Section [11.4], the condition of the Improvements required to be maintained hereunder upon completion of the work of maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. 11.3 Waste. Subject to the alteration rights of Tenant and damage and destruction or condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be committed any waste of the Property or the Improvements, or any part thereof. Tenant agrees to keep the Property and the Improvements clean and clear of refuse and obstructions, and to dispose properly of all garbage, trash and rubbish. 11.4 Alteration of Improvements. Except as provided in Section [7.1], Tenant shall not make or permit to be made any material, exterior alteration of, addition to or change in, the Improvements which would materially affect the exterior elevations (including materials selection and color) or the size, bulk and scale of the Property, other than routine maintenance and repairs, nor demolish all or any part of the Improvements, without the prior written consent of Landlord. Nothing herein shall prohibit interior alterations or decorations, or the removal and replacement of interior improvements consistent with the specified use of the Property. In requesting consent for such exterior improvements as required by the foregoing, Tenant shall submit to Landlord detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Tenant may make such other improvements, alterations, additions or changes to the Improvements which do not materially affect the exterior elevations (including EXHIBIT "I" Page 34 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc materials selection and color) or the size, bulk and scale thereof without Landlord's prior written consent. Notwithstanding the prohibition in this Section [11.4], Tenant may make such changes, repairs, alterations, improvements, renewals or replacements to the exterior elevations, materials, size, bulk or scale of the Improvements as are required (a) by reason of any law, ordinance, regulation or order of a competent government authority, (b) for the continued safe and orderly operation of the Property, or (c) to continue to receive the Low Income Housing Tax Credit. ARTICLE 12. SIGNS Tenant shall not place or suffer to be placed on the Property or upon the roof or any exterior door or wall or on the exterior or interior of any window of the Improvements, any sign, awning, canopy, marquee, advertising matter, decoration, lettering or other thing of any kind (exclusive of the signs, awnings and canopies, if any, which may be provided for in the Plans) without the written consent of the Executive Director first had and obtained. ARTICLE 13. INDEMNIFICATION Tenant will protect, indemnify and save the Indemnitees harmless from and against all liabilities, obligations, claims, damages, penalties, causes of action, judgments, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against Landlord, or the Property or the Improvements during the Term, unless caused solely by the willful act or gross negligence of Landlord, by reason of (a) any accident or injury to or death of persons or loss of or damage to property occurring on or about the Property or the Improvements, (b) any failure on the part of Tenant to perform or comply with any of the terms of this Lease, or (c) any negligence or tortious act on the part of Tenant or any of its agents, employees, contractors, subtenants, licensees or invitees. In the event that any action, suit or proceeding is brought against the Indemnitees by reason of any such occurrence, Tenant, upon Landlord's request, will, at Tenant's expense, defend such action, suit or proceeding with counsel approved by Landlord. This Section notwithstanding, indemnification with respect to Hazardous Materials shall be governed by Section [8.14]. ARTICLE 14. DAMAGE OR DESTRUCTION OF PROPERTY OR IMPROVEMENTS 14.1 Tenant's Repair Obligation. 14.1.1 In case of damage to or destruction of the Property or the Improvements, or any part thereof, by fire or other cause at any time during the Term of this Lease, Tenant, if and to the extent insurance proceeds are available, shall restore the same as nearly as possible to their value, condition and character immediately prior to such EXHIBIT "I" Page 35 of 67 1\cdcnt\datallusers\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc damage or destruction. Such restoration shall be commenced with due diligence and in good faith, and prosecuted with due diligence and in good faith, unavoidable delays excepted. 14.1.2 In case of damage to or destruction of the Improvements by fire or other cause resulting in a loss exceeding in the aggregate Ten Thousand Dollars ($10,000), Tenant shall promptly give written notice thereof to Landlord. 14.2 Tenant's Restoration of Premises. 14.2.1 If, during the Term, the Improvements are damaged or destroyed, and the total amount of loss does not exceed thirty-three percent (33%) of the replacement value of the Improvements, Tenant shall make the loss adjustment with the insurance company insuring the loss, with the approval of Landlord, which approval shall not be unreasonably withheld or delayed. The proceeds shall be paid directly to a Mortgagee, if any, and if there is not a Mortgagee, to Landlord and Tenant for the sole purpose of making the restoration of the Improvements in accordance with this Article [14]. 14.2.2 If, during the Term, the Improvements are damaged or destroyed, and the total amount of loss exceeds thirty-three percent (33%) of the replacement value of the Improvements, Tenant shall make the loss adjustment with the insurance company insuring the loss, with the approval of Landlord, which approval shall not be unreasonably withheld or delayed, and the insurance company shall immediately pay the proceeds to a bank or trust company designated by Landlord and approved by Tenant ("Insurance Trustee"), which approval shall not be unreasonably withheld or delayed. Any leasehold mortgagee shall be an acceptable Insurance Trustee. All sums deposited with the Insurance Trustee shall be held for the following purposes and the Insurance Trustee shall have the following powers and duties: (a) The sums shall be paid in installments by the Insurance Trustee to the contractor retained by Tenant and approved by Landlord as construction progresses, for payment of the cost of restoration. A ten percent (10%) retention fund shall be established that will be paid to the contractor on completion of restoration, payment of all costs, expiration of all applicable lien periods, and proof that the Property and the Improvements are free of all mechanics' liens and lienable claims; (b) Payments shall be made on presentation of certificates or vouchers from the architect or engineer retained by Tenant and approved by Landlord (which approval shall not be unreasonably withheld or delayed) showing the amount due. If the Insurance Trustee, in its reasonable discretion, determines that the certificates or vouchers are being improperly approved by the architect or engineer retained by Tenant, the Insurance Trustee shall have the right to appoint an architect or an engineer to supervise construction and to make EXHIBIT "I" Page 36 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc payments on certificates or vouchers approved by the architect or engineer retained by the Insurance Trustee. The reasonable expenses and charges of the architect or engineer retained by the Insurance Trustee shall be paid by the Insurance Trustee out of the trust fund; (c) If, after the work of restoration has commenced, the sums held by the Insurance Trustee are not sufficient to pay the actual cost of restoration, Tenant shall deposit the amount of the deficiency with the Insurance Trustee within ten (10) days after receipt of request for payment of such amount from the Insurance Trustee, which request shall be made by the Insurance Trustee promptly after it is determined there will be a deficiency; (d) If the Insurance Trustee has received notice from Landlord that the Tenant is in default under this Lease or under the Commission Subordinate Loan Note, then, subject to the lien of a Mortgagee's Mortgage and the Mortgagee's prior written consent, the Insurance Trustee shall pay to Landlord an amount sufficient to cure such default as specified in Landlord's notice to the Insurance Trustee; (e) Any amounts remaining after making the payments hereinabove referred to in clauses (a), (b) and (d), and after paying the reasonable costs and expenses of the Insurance Trustee, shall be paid to any leasehold Mortgagee to the extent (a) required by any Mortgage and (b) such leasehold Mortgagee makes written demand therefor to the Insurance Trustee; (f) Any undisbursed funds remaining after compliance with all of the provisions of this Section [14.2] shall, if and to the extent required by any Mortgage, be delivered to the Mortgagee, and if there is no leasehold Mortgagee, to Tenant; and (g) All actual costs and charges of the Insurance Trustee shall be paid by Tenant. If the Insurance Trustee resigns or for any reason is unwilling to act or continue to act, Landlord shall substitute a new Insurance Trustee in the manner described in this Section. 14.2.3 Both parties shall promptly execute all documents and perform all acts reasonably required by the Insurance Trustee to perform its obligations under this Section [14.2]. 14.3 Procedure for Restoring Improvements. 14.3.1 If and to the extent Tenant is obligated to restore the Improvements pursuant to this Article [14], Tenant shall restore the Improvements substantially in accordance with the Plans. Within forty-five (45) days after the date of such damage or destruction (as such time may be reasonably extended at the written request of Tenant), Tenant, at its cost, shall prepare and deliver to Landlord final plans and specifications and EXHIBIT "I" Page 37 of 67 \cdent\datallusers\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-I Ldoc working drawings complying with applicable laws that will be necessary for such restoration. Such plans and specifications shall specify differences from the Plans. The plans and specifications and working drawings are subject to the approval of Landlord only insofar as they vary from the Plans. Landlord shall have twenty (20) days after receipt of the plans and specifications and working drawings to either approve or disapprove the plans and specifications and working drawings and return them to Tenant. If Landlord disapproves the plans and specifications and working drawings, Landlord shall notify Tenant of its objections in writing, specifying the objections clearly and stating what modifications are required for Landlord's approval. Tenant acknowledges that the plans and specifications and working drawings shall be subject to approval of the appropriate government bodies and that they will be prepared in such a manner as to obtain that approval. 14.3.2 The restoration shall be accomplished as follows: (a) Tenant shall complete the restoration within fifteen (15) months after final plans and specifications and working drawings have been approved by the appropriate government bodies and all required permits have been obtained. (b) Tenant shall retain a licensed contractor that is bondable. The contractor shall be required to carry public liability and property damage insurance, builders risk insurance, standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, during the period of construction in accordance with Article [9]. Such insurance shall contain waiver of subrogation clauses in favor of Landlord and Tenant in accordance with the provisions of and to the extent required by Section [9.8]. (c) Tenant shall notify Landlord of the date of commencement of the restoration not later than ten (10) days before commencement of the restoration to enable Landlord to post and record notices of nonresponsibility. The contractor retained by Tenant shall not commence construction until a completion bond and a labor and materials bond have been delivered to Landlord to insure completion of the construction. (d) Tenant shall accomplish the restoration in a manner that will cause the least inconvenience, annoyance, and disruption to the Property and the Improvements. (e) On completion of the restoration Tenant shall immediately record a notice of completion. (f) If Section [14.2.2] is applicable, the restoration shall not be commenced until sums sufficient to cover the cost of restoration are placed with the Insurance Trustee as provided in said Section [14.2.2]. EXHIBIT "I" Page 38 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11 doe 14.4 Mortgagee Protection. The following provisions are for the protection of a Mortgagee and shall, notwithstanding anything contained in this Lease to the contrary, control: 14.4.1 Insurance. Any insurance proceeds payable from any policy of insurance (other than liability insurance) required by the Lease shall be paid to the.. Mortgagee, if any, to the extent required by the Mortgage. The Mortgagee, if any, shall have the right to participate in all adjustments, settlements, negotiations or actions with the insurance company regarding the amount and allocation of any such insurance proceeds. Any insurance policies permitted or required by this Lease shall name the Mortgagee, if any, as an additional insured or loss payee, as appropriate, if required by such Mortgage. 14.4.2 Restoration. Tenant shall have no obligation to restore or repair the Improvements following the occurrence of any casualty for which insurance is not required under this Lease. The Mortgagee, if any and if it exercises any of its remedies set forth in this Lease, shall have no obligation to restore or repair damage to the Improvements that cost in excess of available insurance proceeds. Tenant shall have no obligation to restore or repair damage to the Improvements if the casualty occurs during the last five (5) years of the Lease term. In the event such a loss occurs in the last five (5) years, then, at the election of Tenant, with the prior written consent of the Mortgagee, if any, insurance proceeds shall be used, first, to clear the Property of the damaged Improvements and any debris, and second, to reduce or pay in full the Mortgage, with any excess being payable as provided in this Lease. Article 15. EMINENT DOMAIN 15.1 Notice. The party receiving any notice of the kind specified in this Section [15.1] shall promptly give the other party notice of the receipt, contents and date of the notice received. For purposes of this Article [15], the term "Notice" shall include: (a) Notice of Intended Taking; (b) Service of any legal process relating to condemnation of the Property or the Improvements; (c) Notice in connection with any proceedings or negotiations with respect to such condemnation; or (d) Notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation. 15.2 Representation in Proceedings or Negotiations. Landlord and Tenant shall each have the right to represent their respective interests in each proceeding or EXHIBIT "P" Page 39 of 67 \\cdcnt\datal\users PBeard\pyatok\Fnal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc negotiation with respect to a Taking or intended Taking and to make full proof of their claims. No agreements or settlement with or sale or transfer to the condemning authority shall be made without the consent of Landlord, but, as to its reversionary interest only, Landlord may enter into such agreement, settlement, sale or transfer without the consent of Tenant. Landlord and Tenant each agree to execute and deliver to the other any instruments which may be required to effectuate or facilitate the provisions of this Lease relating to condemnation. 15.3 Total Taking. 15.3.1 In the event of a Total Taking, this Lease shall terminate as of the date of the Taking. 15.3.2 If this Lease is terminated pursuant to this Section [15.3], the Award for such Taking shall be apportioned and distributed as follows: 15.3.2.1 First, to the Mortgagee, if any, to the extent of the Mortgage; 15.3.2.2 Second, to Landlord, a sum equal to the fair market value of the Property (subject to the remaining Term and the Rent reserved) on the date immediately preceding the Taking as determined by the appraisal method set forth in Article [16] and determined as if there were no taking nor threat of condemnation. The parties shall commence said appraisal by the earlier of ten (10) days after Tenant's receipt of a copy of a Notice of Intended Taking or ten (10) days after the date of the Taking; 15.3.2.3 Third, to Tenant, a sum equal to the fair market value of the Improvements made by Tenant on the date immediately preceding the Taking as determined by the appraisal method set forth in Article [16] and determined as if there were no Taking, nor threat of condemnation; plus the residual value of the Term, subject to the Rent reserved; plus any part of the Award attributable to the Low Income Housing Tax Credit; and 15.3.2.4 Fourth, to Landlord, the remainder, if any. 15.4 Substantial Taking. 15.4.1 In the event of a Taking which, in Tenant's reasonable judgment is substantial, Tenant may, subject to the rights of the Mortgagee, if any, terminate this Lease. If Tenant elects to terminate this Lease under this provision, Tenant shall give written notice of its election to do so to Landlord within forty-five (45) days after receipt of a copy of a Notice of Intended Taking. In the event Landlord disputes the right of Tenant to terminate this Lease under this provision, Landlord shall give Tenant notice of this fact within forty-five (45) days after receiving the notice of Tenant's election to terminate, and the parties shall either raise this issue in the eminent domain proceeding, if EXHIBIT "I" Page 40 of 67 \\cdcnt\datal\users \PBeard\pyatok\Fival DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc any, as an issue with respect to the apportionment of the Award between Landlord and Tenant or, if there is no eminent domain proceeding, submit the issue to arbitration as provided in Article [23]. In the event it is determined that Tenant does not have the right to terminate this Lease, the apportionment of the Award for such Taking and the obligations of Tenant to restore shall be governed by the terms of Section [15.6] or Section [15.8], whichever is applicable. 15.4.2 In the event it is determined that Tenant has the right to terminate this Lease, or in the event Landlord does not dispute Tenant's right to terminate this Lease, such termination shall be as of the time when the Taking entity takes possession of the portion of the Property and the Improvements taken. In such event, the Award for such Substantial Taking (including any award for severance, consequential or other damages which will accrue to the portion of the Property and/or the Improvements not taken) shall be apportioned and distributed as follows: (a) First, to the Mortgagee, if any, to the extent of the Mortgage; (b) Second, to Landlord, a sum equal to the fair market value of the Property taken (subject to the remaining Term and the Rent reserved) immediately preceding the date of the Taking as determined by the appraisal process provided for in Article [16], commenced as provided in Section [15.3.2], and as modified by Section [15.6.3]; (c) Third, to Landlord, an amount equal to the portion of the award for severance, consequential or other damages which accrued to the portion of the Property and/or Improvements not taken; (d) Fourth, to Tenant a sum equal to the fair market value of the Improvements made by Tenant taken immediately preceding the date of the Taking as determined by the appraisal process provided for in Article [16], commenced as provided in Section [15.3.2], and as modified by Section [15.6.3]; plus the residual value of the Term, subject to the Rent reserved; plus any part of the Award attributable to the Low Income Housing Tax Credit; and (e) Fifth, to Landlord, the remainder, if any. 15.5 Tenant's Right to Revoke Notice of Termination. Notwithstanding anything to the contrary contained in Section [15.4], if Tenant has elected to terminate this Lease, and the taking authority abandons or revises the Taking, Tenant shall have forty-five (45) days from receipt of written notice of such abandonment or revision to revoke its notice of termination of this Lease. 15.6 Partial Taking. EXHIBIT "I" Page 41 of 67 1\cdcnt\datallusers\PBeard\pyatokFFinal DDA docs\DDA v 6 6 1 I s x FINAL FINAL 6-8-11.doc 15.6.1 In the event of a Partial Taking, this Lease shall continue in full force and effect and there shall be no abatement in or reduction of any of Tenant's obligations hereunder. 15.6.2 The Award for such Partial Taking shall be apportioned and distributed first to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord and Tenant in proportion to the fair market value of their respective interests in the Property and Improvements, as such interests existed immediately prior to such Partial Taking. Tenant's only interest in the Property and the Improvements for purposes of this Section [15.6.2] is in those Improvements constructed by Tenant. Notwithstanding anything contained herein to the contrary, any part of the Award attributable to the Low Income Housing Tax Credit shall belong to Tenant. 15.6.3 The fair market value of the parties' respective interests in the Property and the Improvements shall be determined by the appraisal process provided in Article [16], except that the assumptions listed in such Article shall not apply. Rather, the appraisal shall be based on the value of the Property as improved and encumbered by this Lease and on the value of the Improvements as they stand, but without regard to any Taking or threat of condemnation. 15.6.4 Any Award for severance, consequential or other damages which accrues by reason of the Partial Taking to the portion of the Property or the Improvements not taken shall be distributed first to the Mortgagee, if any, to the extent of the Mortgage, then shall be apportioned between Landlord and Tenant in accordance with the diminution in value of their respective interests. 15.7 Obligation to Repair on Partial Taking. Promptly after any Partial Taking and regardless of the amount of the Award for such Taking, Tenant shall, to the extent of the Award received by Tenant and in the manner specified in the provisions of this Lease, repair, alter, modify or reconstruct the Improvements and/or other improvements on the Property so as to make them usable for the designated purpose and capable of producing a fair and reasonable net income. 15.8 Temporary Taking. 15.8.1 In the event of a Temporary Taking of the whole or any part of the Property and/or Improvements, the Term shall not be reduced or affected in any way and Tenant shall continue to pay in full any sum or sums of money and charges herein reserved and provided to be paid by Tenant, and, subject to the other provisions of this Section [15.8], Tenant shall be entitled to any Award or payment for the temporary use of the Property and/or Improvements prior to the termination of this Lease, and Landlord shall be entitled to any Award or payment for such use after the termination of this Lease. 15.8.2 If possession of the Property and/or Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, unless at such time there remains EXHIBIT "I" Page 42 of 67 \\cdcnt\fatal\uscrs\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc less than five (5) years in the Term, restore the Property and/or Improvements whether or not the Taking authority has made any Award or payment for such restoration and regardless of the amount of any award or payment and in all other respects indemnify and hold Landlord harmless from the effects of such Taking so that the Property and/or Improvements in every respect shall upon completion of such restoration be in the same condition as they were prior to the taking thereof. 15.8.3 If possession of the Property shall revert to Landlord after expiration of the Term, any sums deposited pursuant to this Section [15.8] shall be paid over to Landlord in their entirety and without apportionment and Tenant shall be excused from its obligation to restore the Property and/or Improvements. 15.8.4 Any Award or payment for damages or cost of restoration made on or after the termination of this Lease shall be paid first to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord absolutely, together with the remaining balance of any other funds paid to Tenant for such damages or cost of restoration and Tenant shall thereupon be excused from any obligation to restore the Property and/or Improvements upon the termination of such Temporary Taking except that any obligation that may have accrued for Tenant to restore the Property and/or Improvements prior to the commencement of said Temporary Taking shall continue to be the obligation of Tenant. 15.9 Mortgagee Protection. Notwithstanding anything contained in this Lease to the contrary, any and all condemnation proceeds shall be paid first to the Mortgagee, if any, to be applied to reduce the Mortgage if required by the mortgage documents. ARTICLE 16. APPRAISAL Whenever an appraisal of the Property is called for under the terms of this Lease er t as;se n c fit 4 1 d i . ,the parties shall use the following procedure: 16.1 Appointment of Appraiser. Within ten (10) days after notice from Landlord to Tenant, Landlord and Tenant shall each appoint an MAI appraiser to participate in the appraisal process provided for in this Article [16] and shall give written notice thereof to the other party. Upon the failure of either party so to appoint, the nondefaulting party shall have the right to apply to the Superior Court of the County of San Diego, California, to appoint an appraiser to represent the defaulting party. Within ten (10) days of the parties' appointment, the two (2) appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord and Tenant, or if within ten (10) days of the appointment of said appraisers the two (2) appraisers shall fail to appoint a third, then either party hereto shall have the right to make application to said Superior Court to appoint such third appraiser. 16.2 Determination of Fair Market Value. EXHIBIT "I" Page 43 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 16.2.1 Within thirty (30) days after the appointment of the third appraiser, the appraisers shall determine the fair market value of the Property and the Improvements in accordance with the provisions hereof, and shall execute and acknowledge their determination of fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto. 16.2.2 The appraisers shall determine the fair market value of the Property and the Improvements as of the date of Landlord's notice referred to in Section [16.1] above, based on sales of comparable property in the area in which the Property is located. If, however, in the judgment of a majority of the appraisers, no such comparable sales are available, then the appraisal shall be based on the following assumptions: (i) that the Property is free and clear of this Lease, the Improvements and all other improvements, and all easements and encumbrances; and (ii) that the Property is available for immediate sale and development for the purposes and at the density and intensity of development permitted under the zoning, subdivision and land use planning ordinances and regulations applicable to the Property in effect on the Commencement Date of this Lease, and any changes or amendments thereto or modification or variance from the provisions thereof or conditional use permits which could reasonably be anticipated to have been granted or approved as of the date of this Lease. Notwithstanding anything contained herein to the contrary, if the appraisal, for the particular purposes for which it is being done, should reasonably reflect the rent restrictions imposed on the Property pursuant to Article [8] of this Lease, and such other covenants, conditions and restrictions to which the Property is subject pursuant to this Lease or to other documents recorded against the Property in the Official Records of the County of San Diego, California, then such covenants, conditions and restrictions shall be taken into consideration by the appraisers. 16.2.3 If a majority of the appraisers are unable to agree on fair market value within thirty (30) days of the appointment of the third appraiser, the three (3) appraisals shall be added together and their total divided by three (3). The resulting quotient shall be the fair market value of the Property and the Improvements. If, however, the low appraisal and/or high appraisal is or are more than ten percent (10%) lower and/or higher than the middle appraisal, the low and/or high appraisal shall be disregarded. If only one appraisal is disregarded, the remaining two appraisals shall be added together and their total divided by two (2). The resulting quotient shall be the fair market value of the Property and the Improvements. If both the low and high appraisals are disregarded, the middle appraisal shall be the fair market value of the Property. 16.4 Payment of Fees. Each of the parties hereto shall (a) pay for the services of its appointee, (b) pay one-half (1/2) of the fee charged by the appraiser selected by their appointees, and (c) pay one-half (1/2) of all other proper costs of the appraisal. ARTICLE 17. ASSIGNMENT/TRANSFER 17.1 Prohibition Against Transfer. EXHIBIT "I" Page 44 of 67 11cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 I 1 s x FINAL FINAL 6-8-11.doc 17.1.1 Prior to Recordation of the Certificate of Completion. Prior to recordation of the Certificate of Completion, but subject to Article [19] pursuant to which Tenant is permitted to sublease the Units for residential occupancy, Tenant shall not assign or attempt to assign this Lease or any right herein (other than to a general or limited partnership of which Tenant is the managing general partner) without the prior written consent of Landlord, which consent may be withheld in Landlord's absolute discretion. 17.1.2 Following Recordation of the Certificate of Completion. Following recordation of the Certificate of Completion, but subject to Article [19] pursuant to which Tenant is permitted to sublease the Units for residential occupancy, Tenant shall not assign or attempt to assign this Lease or any right herein, nor make any total or partial sublease, sale, transfer, conveyance or assignment of the whole or any part of the Property or the Improvements thereon, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. In the absence of specific written agreement by Landlord, no unauthorized sublease, sale, transfer, conveyance or assignment of the Property, or any portion thereof, or approval thereof by Landlord shall be deemed to relieve Tenant or any other party from any obligations under this Lease. 17.1.3 Qualifications of Tenant. In connection with the above prohibition and limitation on assignments, Tenant acknowledges that the qualifications, expertise and identities of Tenant are of particular concern to Landlord, and that Landlord continues to rely on such expertise to ensure the satisfactory completion of the construction and operation of the Improvements on the Property. Tenant further recognizes that it is because of such qualifications and identities that Landlord is entering into this Lease with Tenant. No voluntary or involuntary successor in interest of Tenant shall acquire any rights or powers under this Lease except as expressly set forth in the Lease. 17.1.4 Conditions. Tenant's right to make an assignment after the recordation of the Certificate of Completion shall be subject to compliance with the following further conditions: (a) No Default. At the time of such assignment, this Lease shall be in full force and effect and either no Event of Default (as defined in Section [21.1]) then exists or no Event of Default will exist upon consummation of the assignment. (b) Assumption. The assignee shall have executed an express assumption of the obligations and liabilities of Tenant under this Lease from and after the date of delivery and recording of the assignment and there shall have been delivered to Landlord at the time of the request for such assignment a conformed copy of such assumption. EXHIBIT "I" Page 45 of 67 \\cdcnt\fatal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc (c) Net Worth of Assignee. The assignee shall have a Net Worth equal to at least One Million Dollars ($1,000,000.00) ("Net Worth Minimum"), which Net Worth Minimum shall be increased on the date that is five (5) years after the first day of the first calendar year following the Commencement Date, and on the same date every fifth (5th) year thereafter ("Net Worth Adjustment Date"), by an amount equal to the percentage change in construction industry costs, from the first day of the calendar year following the Commencement Date until the applicable Net Worth Adjustment Date, as published by the Engineering News Record, or such similar construction industry index as the parties shall agree in the event such information is not available in the Engineering News Record or such publication is no longer published. Net Worth is to be evidenced by a statement of financial condition as of a date not more than three hundred sixty (360) days prior to the date of assignment which is accompanied either by an opinion of a certified or a chartered public accountant or by a certificate by the chief financial or accounting officer of the assignee that it fairly represents the financial condition of the assignee. In the event Tenant agrees to remain liable under this Lease from and after the effective date of such assignment and to guaranty the obligations of the assignee under this Lease, the Net Worth Minimum standard set forth in this Section [17.1] shall not apply to such assignee. Notwithstanding the foregoing, the Executive Director, at her sole and absolute discretion, shall be permitted to waive the Net Worth Minimum standard for a proposed assignee that is (a) a California nonprofit, public benefit corporation, and (b) has demonstrated experience and ability in owning, operating and managing similar affordable housing projects in the State of California. 17.1.5 Assignment Agreement. No assignment of any interest in the Lease made with Landlord's consent or as herein otherwise permitted shall be effective unless and until there shall have been delivered to Landlord an executed counterpart of such assignment or other transfer document containing an agreement, in recordable form, executed by the assignor and the proposed assignee, wherein and whereby such assignee assumes due performance of the obligations on the assignor's part to be performed under this Lease from the effective date of the assignment to the end of the Term. 17.1.6 Further Assignments. The consent by Landlord to an assignment shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment if required by the terms of this Lease. 17.2 Terminable Upon Foreclosure. Notwithstanding anything contained in this Lease to the contrary, upon foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment or deed in lieu of foreclosure, Article [17] of this Lease shall be terminable by the purchaser at the foreclosure sale, or the assignee or grantee of a deed in lieu of foreclosure, by notice to Landlord. EXHIBIT "I" Page 46 of 67 Ucdcnt\datal\users'PReard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.do; 17.3 Other Rights of Mortgagees. Landlord agrees that none of the restrictions or limitations on assignment or transfer by Tenant set forth in this Article 17 shall be construed to limit or abrogate the rights of a Mortgagee to (a) seek the appointment of a receiver, or (b) delegate or assign its rights under this Lease to any third party in connection with the exercise of said Mortgagee's rights and remedies under its Mortgage. 17.4 Limitation on Transfer by Landlord. Landlord agrees, during the Compliance Period, not to transfer its interest in the Property or under this Lease without the prior written approval of the Tax Credit Partner; provided, however, no such approval shall be required for such a transfer to another public body. 17.5 Transfer by Tax Credit Partner. Notwithstanding the foregoing limitations on transfer and assignment, nothing herein shall limit or condition a transfer, sale, assignment or other conveyance of all or a portion of the limited partner interests of the Tax Credit Partner to any affiliate of the Tax Credit Partner, and the interests of the Tax Credit Partner shall be freely transferable to any affiliate of the Tax Credit Partner without the consent or approval of but only with prior, written notice to Landlord; provided however that in the event of non-payment of capital contribution obligations by the transferee pursuant to the terms and conditions of the Tenant's Partnership Agreement, the Tax Credit Partner shall remain liable for the amount of such unpaid capital contribution obligations. ARTICLE 18. MORTGAGES 18.1 Leasehold Mortgages 18.1.1 General Provisions. At all times during the Term, Tenant shall have the right to mortgage, pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely for purposes of security if required by any lender) assign its interest in this Lease, or otherwise encumber this Lease, and/or the interest of Tenant hereunder, in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon and subject to each and all of the following terms and conditions: (a) Prior to the issuance of a Certificate of Completion, Mortgages entered into by Tenant shall be limited in purpose to and shall not exceed the amount necessary and appropriate to develop the Improvements, and to acquire and install equipment and fixtures thereon. Said amount shall include all hard and soft costs of acquisition, development, construction, lease -up and EXHIBIT "I" Page 47 of 67 \cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc operation of the Improvements. After the recordation of the Certificate of Completion, the limitation contained in this subsection shall no longer apply. (b) Any permitted Mortgages entered into by Tenant are to be originated only by lenders approved in writing by Landlord, which approval will not be unreasonably withheld. Landlord shall state the reasons for any such disapproval. Notwithstanding the forgoing, Landlord shall be deemed to have automatically approved (i) a commercial or savings bank, a trust company, an insurance company, a savings and loan association, a building and loan association, an educational institution, a pension, retirement or welfare fund, or other fund authorized to make loans in the State of California; (ii) any other entity having a net worth of $50,000,000 or more whether or not a so-called institution, or any division, subsidiary, parent or affiliate owned or controlled by, owning or in control of or in common control or ownership with any entities described in (i) or (ii); or (iii) a lender regularly engaged in business in an office or location in the State of California, or who has a registered agent for service of process in California. In addition, any lender must be duly licensed or registered with any regulatory agency having jurisdiction over its operation, if any; and any lender must not be under any order or judgment of any court or administrative agency restricting or impairing its operation as a lender where the restriction or impairment would be directly related to the proposed loan to Tenant. If the lender is other than a lender deemed automatically approved pursuant to subdivisions (i), (ii) or (iii) of this Section, then upon the reasonable request of Landlord, the beneficial owners of lender must be disclosed to Landlord. (c) All rights acquired by said Mortgagee shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of Landlord thereunder, none of which covenants, conditions and restrictions is or shall be waived by Landlord by reason of the giving of such Mortgage. If Tenant encumbers its leasehold estate by way of a Mortgage as permitted herein, and should Landlord be advised in writing of the name and address of the Mortgagee, then this Lease shall not be terminated or canceled on account of any Event of Default by Tenant in the performance of the terms, covenants or conditions hereof until Landlord shall have complied with the provisions of Section [18.2] as to the Mortgagee's rights to cure and to obtain a new lease. 18.1.2 Consent of Mortgagee Required. No cancellation, surrender, termination, or modification of this Lease shall be effective without the written consent of the holder of any Mortgage. EXHIBIT "I" Page 48 of 67 \\cdcnt\datal\users\PBeardlpyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc 18.2 Rights and Obligations of Leasehold Mortgagees. If Tenant or Tenant's successors or assigns shall mortgage the leasehold interest herein demised, then, as long as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply: 18.2.1 No Cancellation. Landlord will not cancel, accept a surrender of, terminate or modify this Lease in the absence of a default by Tenant without the prior consent in writing of the Mortgagee. 18.2.2 Notice of Defaults. Landlord agrees to give each Mortgagee immediate notice of all defaults by Tenant under the Lease, and to simultaneously give to each Mortgagee a written copy of all notices and demands that Landlord gives to Tenant. No notice or demand under the Lease shall be effective until after notice is received by Mortgagee. Any notices of default given by Landlord under the Lease shall describe the default(s) with reasonable detail. Each Mortgagee shall have the right to cure any breach or default within the time periods given below. 18.2.3 Mortgagee's Cure Rights. (a) Notice and Cure. After receipt by Tenant of a notice of default under the Lease and the expiration of any applicable period of cure given to Tenant under the Lease, Landlord shall deliver an additional notice ("Mortgagee's Notice") to each Mortgagee specifying the default and stating that Tenant's period of cure has expired. Each Mortgagee shall thereupon have the additional periods of time to cure any uncured default, as set forth below, without payment of default charges, fees, late charges or interest that might otherwise be payable by Tenant. Landlord shall not terminate the Lease or exercise its other remedies under the Lease if: (i) Within ninety (90) days after Mortgagee's receipt of the Mortgagee's Notice, any Mortgagee (i) cures the default, or (ii) if the default reasonably requires more than ninety (90) days to cure, commences to cure said default within such ninety (90)-day period and thereafter diligently prosecutes the same to completion; or (ii) Where the default cannot be cured by payment or expenditure of money or without possession of the Property or otherwise, Mortgagee initiates foreclosure or other appropriate proceedings within ninety (90) days after receipt of the Mortgagee's Notice, thereafter cures all other defaults reasonably capable of cure by the payment of money to Landlord, and thereafter continues to pay all rents, real property taxes and assessments, and insurance premiums to be paid by Tenant under the Lease. Mortgagee shall then have ninety (90) days following EXHIBIT "I - Page 49 of 67 Ucdcnt\data llusers\PBeardlpyatokTinal DDA docs\DDA v 6 6 I I s x FINAL FINAL 6-8-11.doc the later to occur of (i) the date of execution and delivery of a new lease of the Property pursuant to Section [18.2.4] of the Lease (a "New Lease"), or (ii) the date on which Mortgagee or its nominee is able to occupy the Property following foreclosure under such Mortgage and the eviction of or vacating by Tenant of the leased premises, to cure such default; provided, however, that if any such default, by its nature, is such that it cannot practicably be cured within ninety (90) days, then Mortgagee shall have such additional time as shall be reasonably necessary to cure the default provided that Mortgagee commences such cure within such ninety (90)-day period and thereafter diligently prosecutes the cure to completion. (b) Landlord agrees to accept performance by Mortgagee of all cures, conditions and covenants as though performed by Tenant, and agrees to permit Mortgagee access to the Property to take all such actions as may be necessary or useful to perform any condition or covenants of the Lease or to cure any default of Tenant. Mortgagee shall not be required to perform any act or cure any default which is not reasonably susceptible to performance or cure by Mortgagee. (c) Mortgagee elects any of the above -mentioned options, then upon Mortgagee's acquisition of the Lease by foreclosure, whether by power of sale or otherwise or by deed or assignment in lieu of foreclosure, or if a receiver be appointed, the Lease shall continue in full force and effect, provided that, if Mortgagee elects the option provided in Section [18.2.3(a)(ii)] above, then upon Mortgagee's acquisition of the Lease, Mortgagee shall cure all prior defaults of Tenant under the Lease that are reasonably capable of being cured by Mortgagee within the time set forth in said Section, and Landlord shall treat Mortgagee as Tenant under the Lease. If Mortgagee commences an action as set forth in Section [18.2.3(a)(ii)] above, and thereafter Tenant cures such defaults (which cure Landlord shall be obligated to accept) and Mortgagee then terminates all proceedings under the option in said Section, then the Lease shall remain in full force and effect between Landlord and Tenant. 18.2.4 New Lease. In the event the Lease is terminated for any reason prior to the end of the Lease Term, Landlord shall promptly give Mortgagee written notice of such termination and shall enter into a new lease ("New Lease") with Mortgagee or Mortgagee's nominee covering the Property, provided that Mortgagee (a) requests such New Lease by written notice to Landlord within sixty (60) days after Mortgagee's receipt of written notice by Landlord of termination of the Lease, and (b) cures all prior defaults of Tenant that are reasonably capable of being cured by Mortgagee. The New Lease shall be for the remainder of the Lease Tenn, effective at the date of such termination, and shall only include all the rents and all the covenants, agreements, conditions, provisions, restrictions and limitations contained in the Lease, except as otherwise provided in the Lease. In connection with a New Lease, Landlord shall assign to Mortgagee or its EXHIBIT "F' Page 50 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc nominee all of Landlord's interest in all existing subleases of all or any part of the Property and all attornments given by the sublessees. Landlord shall not terminate or agree to terminate any sublease or enter into any new lease or sublease for all or any portion of the Property without Mortgagee's prior written consent, unless Mortgagee fails to deliver its request for a New Lease under this Section. In connection with any such New Lease, Landlord shall, by grant deed, convey to Mortgagee or its nominee title to the Improvements, if any, which become vested in Landlord as a result of termination of the Lease. Landlord shall allow to the tenant under the New Lease a credit against rent equal to the net income derived by Landlord from the Property during the period from the date of termination of the Lease until the date of execution of the New Lease under this Section. 18.2.5 Security Deposits. Mortgagee or any other purchaser at a foreclosure sale of the Mortgage (or Mortgagee or its nominee if one of them enters into a New Lease with Landlord) shall succeed to all the interest of Tenant in any security or other deposits or other impound payments paid by Tenant to Landlord. 18.2.6 Permitted Delays. So long as Mortgagee is prevented by any process or injunction issued by any court or by any statutory stay, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant or any other person, from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, Mortgagee shall not be deemed for that reason to have failed to commence such proceedings or to have failed to diligently prosecute such proceedings, provided that Mortgagee uses reasonable efforts to contest and appeal the issuance or continuance of any such process, stay or injunction. 18.2.7 Defaults Deemed Cured. On transfer of the Lease at any foreclosure sale under the Mortgage or by deed or assignment in lieu of foreclosure, or upon creation of a New Lease, any or all of the following defaults relating to the prior owner of the Lease shall be deemed cured: Lease; (a) Attachment, execution or other judicial levy upon the (b) Assignment of the Lease for the direct or indirect benefit of creditors of the prior Tenant; (c) Judicial appointment of a receiver or similar officer to take possession of the Lease; EXHIBIT "I" Page 51 of 67 \lcdcnt\datal\users\FBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (d) Filing any petition by, for or against Tenant under any chapter of the federal Bankruptcy Act or any federal or state debtor relief statute, as amended; (e) Any failure by Tenant to make a disclosure of a hazardous substance release as required by the California Health and Safety Code, the Lease or otherwise; and (f) Any other defaults personal to Tenant and/or not otherwise reasonably curable by Mortgagee. 18.2.8 Anything herein contained to the contrary notwithstanding, the provisions of this Section shall inure only to the benefit of the holders of Mortgages. If the holders of more than one such Mortgage shall make written requests upon Landlord in accordance with this Lease, the new lease (as provided for in subsection [18.2.4] above) shall be entered into pursuant to the request of the holder whose Mortgage shall be prior in lien thereto and thereupon the written requests for a new lease of each holder of a Mortgage junior in lien shall be and be deemed to be void and of no force or effect. 18.3 Landlord's Forbearance and Right to Cure Defaults on Leasehold Mortgages 18.3.1 Notice. Landlord will give to Mortgagee, at such address as is specified by the Mortgagee in accordance with Section [26.1] hereof, a copy of each notice or other communication with respect to any claim that a default exists or is about to exist from Landlord to Tenant hereunder at the time of giving such notice or communication to Tenant, and Landlord will give to Mortgagee a copy of each notice of any rejection of this Lease by any trustee in bankruptcy of Tenant. Landlord will not exercise any right, power or remedy with respect to any Event of Default hereunder, and no notice to Tenant of any such Event of Default and no termination of this Lease in connection therewith shall be effective, unless Landlord has given to Mortgagee written notice or a copy of its notice to Tenant of such Event of Default or any such termination, as the case may be. 18.3.2 Mortgagee's Transferees, Etc. In the event the leasehold estate hereunder shall be acquired by foreclosure, trustee's sale or deed or assignment in lieu of foreclosure of a Mortgage, the purchaser at such sale or the transferee by such assignment and its successors as holders of the leasehold estate hereunder shall not be liable for any Rent, if any, or other obligations accruing after its or their subsequent sale or transfer of such leasehold estate and such purchaser or transferee and its successors shall be entitled to transfer such estate or interest without consent or approval of Landlord; provided that, the purchaser or transferee or successor as holder of the leasehold estate hereunder shall be liable for the payment of all Rent, if any, becoming due with respect to the period during which such purchaser, transferee or other successor is the holder of the leasehold estate hereunder. This Section shall also apply to the rights of a Mortgagee in connection EXHIBIT "I" Page 52 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc with the entry into a new lease under Section [18.2.4] and to the appointment of a receiver on behalf of a Mortgagee. 18.3.3 Insurance and Condemnation. In the event of any casualty to, or condemnation of, all or any part of the leased premises or any improvements now or hereafter located thereon, the provisions of the Mortgages relating thereto shall prevail over any provisions of this Lease relating thereto. 18.4 No Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee shall not be obligated to assume the liability of Tenant for any indemnities arising for a period prior to Mortgagee's acquiring the right to possession of the Property under this Lease. 18.5 Landlord Cooperation. Landlord covenants and agrees that it will act and fully cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee, Landlord shall promptly execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge and/or perfect the rights of Mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Tenant's interest herein and such matters as are reasonably requested by Tenant or such Mortgagees. Such estoppel certificate shall include, but not be limited to, certification by Landlord that (a) this Lease is unmodified and in full force and effect (or, if modified, state the nature of such modification and certify that this Lease, as so modified, is in full force and effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to Landlord's knowledge, any uncured Events of Default on the part of Tenant under the Lease or facts, acts or omissions which with the giving of notice or passing of time, or both, would constitute an Event of Default. Any such estoppel certificate may be conclusively relied upon by any proposed or existing leasehold Mortgagee or assignee of Tenant's interest in this Lease. 18.6 Priority. The Lease, and any extensions, renewals or replacements thereof, and any sublease entered into by Tenant as sublessor, and any Mortgage or other encumbrance recorded by any Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any lien right, if any, of Landlord on the buildings, and any furniture, fixtures, equipment or other personal property of Tenant upon the Property or any interest of Landlord in sublease rentals or similar agreements. 18.7 Claims. Landlord and Tenant shall deliver to Mortgagee notice of any litigation or arbitration proceedings between the parties or involving the Property or the Lease. Mortgagee shall have the right, at its option, to intervene and become a party to any such proceedings. If Mortgagee elects not to intervene or become a party, Landlord shall deliver to Mortgagee prompt notice of and a copy of any award, decision or settlement agreement made in connection with any such proceeding. EXHIBIT "I" Page 53 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 18.8 Further Amendments. Landlord and Tenant shall cooperate in including in the Lease by suitable amendment from time to time any provision which may be reasonably requested by any proposed Mortgagee for the purpose of implementing the mortgagee protection provisions contained in this Lease and allowing that Mortgagee reasonable means to protect or preserve the lien of its Mortgage upon the occurrence of a default under the terms of the Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge for recording purposes, if necessary) any agreement required to effect any such amendment. ARTICLE 19. SUBLEASING 19.1 Subleasing of Property. All subleases ("Subleases") made by Tenant shall be subject to the following provisions and restrictions: 19.1.1 Tenant may, without the consent of Landlord, let individual units of the Improvements to any person who qualifies. 19.1.2 Each Sublease shall contain a provision, satisfactory to Landlord, requiring the Subtenant to attorn to Landlord upon (a) an Event of Default by Tenant under this Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and instructions to make such Subtenant's rental payments to Landlord. 19.1.3 On any termination of this Lease prior to the expiration of the Term, all of Tenant's interest as sublessor under any and all existing valid and enforceable Subleases for which Landlord has issued a non -disturbance agreement shall be deemed automatically assigned, transferred and conveyed to Landlord and subtenants under such Subleases shall be deemed to have attorned to Landlord. Landlord shall thereafter be bound on such Subleases to the same extent Tenant, as sublessor, was bound thereunder and Landlord shall have all the rights under such Subleases that Tenant, as sublessor, had under such Subleases; provided, however, that any amendments to any such Sublease made after the issuance of a non -disturbance agreement to a subtenant shall not be binding on Landlord. 19.1.4 Any subtenant qualifying shall, upon written request, receive a non -disturbance agreement from Landlord. 19.1.5 Not later than thirty (30) days after each anniversary of the date of commencement of the term of this Lease, Tenant shall deliver to Landlord a current list of the name and mailing address of each Subtenant. 19.1.6 Tenant shall not accept, directly or indirectly, more than two (2) months prepaid rent plus a reasonable security deposit from any subtenant. EXHIBIT "I" Page 54 of 67 \\cdcnt\datal\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc 19.1.7 Each Sublease shall expressly provide that it is subject to each and all of the covenants, conditions, restrictions and provisions of this Lease. 19.2 Rights of Mortgagees. Notwithstanding anything contained in this Lease to the contrary, all attornment provisions applicable to the Landlord shall also be applicable to a Mortgagee and, as between Landlord and Mortgagee, the Mortgagee shall have priority in any attornment situation. ARTICLE 20. PERFORMANCE OF TENANT'S COVENANTS 20.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or other charge in accordance with Article [4] hereof, within the time period therein permitted, or shall fail to pay for or maintain any of the insurance policies provided for in Article [9] hereof, within the time therein permitted, or to make any other payment or perform any other act on its part to be made or performed hereunder, within the time permitted by this Lease, then Landlord, after thirty (30) days' written notice to Tenant (or, in case of an emergency, on such notice, or without notice, as may be reasonable under the circumstances) and without waiving or releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to): (a) pay such Imposition or other charge payable by Tenant pursuant to the provisions of Article [4] hereof, or (b) pay for and maintain such insurance policies provided for in Article [9] hereof, or (c) make such other payment or perform such other act on Tenant's part to be made or performed as in this Lease provided. 20.1.1 Rights of Mortgagees. Notwithstanding anything contained in this Lease to the contrary, all of the performance rights available to Landlord under Section [20.1] shall also be available to Mortgagee and, as between Landlord and Mortgagee, the rights of the Mortgagee shall take precedence over the rights of Landlord. 20.2 Reimbursement and Damages. All sums so paid by Landlord and all costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at the rate provided in Section [4.5] from the respective dates of Landlord's making of each such payment or incurring of each such cost or expense, shall be paid by Tenant to Landlord on demand. Landlord shall not be limited in the proof of any damages which Landlord may claim against Tenant arising out of or by reason of Tenant's failure to provide and keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not paid or incurred by Tenant and which would have been payable upon such insurance, but Landlord shall also be entitled to EXHIBIT "I" Page 55 of 67 \\cdcnt\datal\users\PBcard\pyatok\Fnal DDA docs\DDA v 6 6 1 I s x FINAL FINAL 6-8-11.doc recover as damages for such breach, the uninsured amount of any loss (to the extent of any deficiency in the insurance required by the provisions of this Lease), damages, costs and expenses of suit, including attorneys' fees, suffered or incurred by reason of damage to, or destruction of, the Improvements, occurring during any period in which Tenant shall have failed or neglected to provide insurance as aforesaid. ARTICLE 21. EVENTS OF DEFAULT; REMEDIES 21.2 Events of Default. Any one or all of the following events shall constitute an Event of Default hereunder: 21.1.1. If Tenant shall default in the payment of any Rent when and as the same becomes due and payable and such default shall continue for more than ten (10) days after Landlord shall have given written notice thereof to Tenant; or 21.1.2 Default or delinquency in the payment of any loan secured by a Mortgage permitted by this Lease to be placed by Tenant against its leasehold interest in the Property after expiration of any cure period provided therein; or 21.1.3 The abandonment or vacation of the Property by Tenant for a period of thirty (30) days; or 21.1.4 The entry of any decree or order for relief by any court with respect to Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case under the Federal Bankruptcy Code or any other applicable federal or state law; or the appointment of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any Assignee (unless such appointment is in connection with a Mortgagee's exercise of its remedies under its Mortgage), or of any substantial part of the property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a period of ninety (90) days or more (whether or not consecutive); or the commencement by Tenant or any such Assignee of a voluntary proceeding under the Federal Bankruptcy Code or any other applicable state or federal law or consent by Tenant or any such Assignee to the entry of any order for relief in an involuntary case under any such law, or consent by Tenant or any such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any such Assignee, or of any substantial property of any of the foregoing, or the making by Tenant or any such Assignee of any general assignment for the benefit of creditors; or Tenant or any such Assignee takes any other voluntary action related to the business of Tenant or any such Assignee or the winding up of the affairs of any of the foregoing. 21.1.5 If Tenant shall default in the performance of or compliance with any other term, covenant or condition of this Lease (other than as set forth in Paragraphs [21.1.1] and [21.1.2] of this Section [21.11) and such default shall continue for more than EXHIBIT "I" Page 56 of 67 \\cdcnt\datal\users\PBeard\pyatok\Finul DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-I1.doc thirty (30) days after Landlord shall have given written notice thereof to Tenant, provided, however, if cure of such default reasonably requires more than thirty (30) days, then, provided that Tenant commences to cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the cure to completion, Tenant shall not be in default during the cure period. 21.2 Remedies. 21.2.1 If an Event of Default shall occur and continue as aforesaid, then in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and bring suit against Tenant or submit the issue of Tenant's default to arbitration as provided in Article [23] and recover as an award in such suit or arbitration proceeding the following: (a) the worth at the time of award of the unpaid rent and all other sums due hereunder which had been earned at the time of termination; (b) the worth at the time of award of the amount by which the unpaid rent and all other sums due hereunder which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (c) the worth at the time of award of the amount by which the unpaid rent and all other sums due hereunder for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; (d) any other amount necessary to compensate Landlord for all the detriment proximately caused by the Tenant's failure to perform its obligations under this Lease -or which in the ordinary course of things could be likely to result therefrom; and (e) such amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law. 21.2.2 The "worth at the time of the award" of the amounts referred to in Subparagraphs [21.2.1(a)] and [21.2.1(b)] above shall be computed by allowing interest at the rate provided in Section [4.5] as of the date of the award. The "worth at the time of award" of the amount referred to in subparagraph [21.2.1(c)] above shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). 21.2.3 If an Event of Default occurs, Landlord shall also have the right, with or without terminating this Lease, but subject to any nondisturbance agreements EXHIBIT "I„ Page 57 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I.doc entered into with Subtenants, to reenter the Property and remove all persons and property from the Property; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant. 21.2.4 If an Event of Default occurs, Landlord shall also have the right, with or without terminating this Lease, to relet the Property. If Landlord so elects to exercise its right to relet the Property but without terminating this Lease, then rentals received by Landlord from such reletting shall be applied: First, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; Second, to the payment of any cost of such reletting; Third, to the payment of the cost of any alterations and repairs to the Property; Fourth, to the payment of rent due and unpaid hereunder; and Fifth, the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. Should the amount of rental received from such reletting during any month which is applied to the payment of rent hereunder be less than that agreed to be paid during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making alterations and repairs not covered by the rentals received from such reletting. 21.2.5 No reentry or taking possession of the Property by Landlord pursuant to Paragraphs [21.2.3] or [21.2.4] shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Tenant because of any default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such default. 21.3 Receipt of Rent, No Waiver of Default. The receipt by Landlord of the rents or any other charges due to Landlord, with knowledge of any breach of this Lease by Tenant or of any default on the part of Tenant in the observance or performance of any of the conditions or covenants of this Lease, shall not be deemed to be a waiver of any provisions of this Lease. No acceptance by Landlord of a lesser sum than the rents or any other charges then due shall be deemed to be other than on account of the earliest installment of the rents or other charges due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of rent or charges due be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such installment or pursue any other remedy provided in this Lease. The receipt by Landlord of any rent or any other sum of money or any other consideration paid by Tenant after the termination of this Lease, or after giving by Landlord of any notice hereunder to effect such termination, shall not, except as otherwise expressly set forth in this Lease, reinstate, continue, or extend the term of this Lease, or destroy, or in any manner impair the efficacy of any such notice of termination as may have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money or other consideration, unless so agreed to in EXHIBIT "I" Page 58 of 67 \\cdcnt\datal\users\FBeard\pyatok\Final DDA dots\DDA v 6 6 11 s x FINAL FINAL 6-8-1 t.doc writing and signed by Landlord. Neither acceptance of the keys nor any other act or thing done by Landlord or by its agents or employees during the Term shall be deemed to be an acceptance of a surrender of the Property or the Improvements, excepting only an agreement in writing signed by Landlord accepting or agreeing to accept such a surrender. 21.4 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in this Article [21] shall be construed to limit the Indemnitees' right to indemnification as otherwise provided in this Lease. 21.5 Limited Waiver of Right to Terminate Lease. Landlord hereby waives it right to terminate this Lease during the Compliance Period for a non -monetary default by Tenant. That notwithstanding, Landlord, during the Compliance Period, shall retain all other rights and remedies available hereunder or by law for such a non -monetary default, including, without limitation, an action to compel performance of the covenant or condition that is the subject of the alleged default. ARTICLE 22. PERMITTED CONTESTS Tenant, at no cost or expense to Landlord, may contest (after prior written notice to Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity or application, in whole or in part, of any Imposition or lien or any Legal Requirement or Insurance Requirement, provided that (a) in the case of liens of mechanics, materialmen, suppliers or vendors, or Impositions or liens therefor, such proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure against the Property and/or the Improvements, or any interest therein, or any Rent, if any, (b) neither the Property or the Improvements, nor any part thereof or interest therein, or the Rent, if any, or any portion thereof, would be in any danger of being sold, forfeited or lost by reason of such proceedings, (c) in the case of a Legal Requirement, Landlord would not be in any danger of any criminal liability or, unless Tenant shall have furnished a bond or other security therefor satisfactory to Landlord, any additional civil liability for failure to comply therewith and the Property and the Improvements would not be subject to the imposition of any lien as a result of such failure, and (d) Tenant shall have furnished to Landlord, if requested, a bond or other security, satisfactory to Landlord. If Tenant shall fail to contest any such matters, or to give Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, contest the matter or settle or compromise the same without inquiring into the validity or the reasonableness thereof. Landlord, at the sole cost and expense of Tenant, will cooperate with Tenant and execute any documents or pleadings legally required for any such contest. ARTICLE 23. ARBITRATION OF DISPUTES 23.1 Matters Subject to Arbitration. EXI 1T "I„ Page 59 of 67 \\cdcnt\datal\uscrs\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc All disputes arising under this Lease shall be submitted to arbitration prior to either party bringing suit based on such disputes, except that any dispute relating to the following rights and obligations shall not be subject to arbitration: 23.1.1 Tenant's obligation to: (a) pay Rent, if any, and other charges due under this Lease; (b) indemnify Landlord as provided herein; and (c) keep the Property and the Improvements free and clear of any mechanics' or other liens: 23.1.2 Landlord's right to: (a) pursue any of the remedies defined in Article [211; and (b) assign, transfer, sell or encumber its interest in the Property or this Lease; 23.1.3 Any right or obligation the exercise or performance of which is dependent on Landlord's approval, if the issue is the reasonableness of Landlord's action. 23.1.4 Any right of the Mortgagee to exercise its remedies under its Mortgage or in connection with the bankruptcy of the Tenant or Landlord. 23.2 Arbitration Process. Either party may refer a dispute subject to arbitration for settlement by arbitration in National City, California, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction. NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MAY POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO EXHIBIT "I" Page 60 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MA'1TRRS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Tenant's Initials Landlord's Initials ARTICLE 24. FORCE MAJEURE 24.1 Subject to Paragraph [24.2] below, any prevention, delay, nonperformance or stoppage by Tenant due to any of the following causes shall be excused: any regulation, order, act, restriction or requirement or limitation imposed by any federal, state, municipal or foreign government or any department or agency thereof, or civil or military authority; acts of God; acts or omissions of Landlord or its agents or employees; fire; explosion; floods and/or earthquakes; strikes, walkouts or inability to obtain materials; war, riots, sabotage or civil insurrection; or any other causes beyond the reasonable control of Tenant. 24.2 No prevention, delay, or stoppage of performance shall be excused unless: 24.2.1 Tenant notifies Landlord within thirty (30) days of such prevention, delay or stoppage that it is claiming excuse of its obligations under this Article [24]; and 24.2.2 Tenant diligently proceeds within thirty (30) days of the conclusion of such prevention, delay or stoppage to cure the condition causing the prevention, delay or stoppage; and 24.2.3 Tenant effects such cure within a reasonable time. ARTICLE 25. GENERAL PROVISIONS 25.1 Notices. All notices or demands shall be in writing and shall be served personally, by overnight courier, or by express or certified mail. Service shall be deemed conclusively made at the time of service if personally served; the next business day if sent by overnight courier and receipt is confirmed by the signature of an agent or employee of the party served; the next business day after deposit in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by express mail; and three (3) days after deposit thereof in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail. EXHIBIT " I" Page 61 of 67 \\cdcnt\datal\users\PBeard\pyatok\Final DOA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11 doe 25.1.1 Any notice to Landlord shall be given to: Community Development Commission of the City of National City 1243 National City Blvd. National City, California 91950 Attn: Executive Director 25.1.2 Any notice to Tenant shall be given to: , L.P. 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attn: William A. Witte and to: Community HousingWorks 4305 University Avenue, Suite 550 San Diego, California 92105 With copies to: Any party may, by virtue of written notice in compliance with this Section [25.1], alter or change the address or the identity of the person to whom any notice, or copy thereof, is to be sent. 25.2 Certificates. Landlord or Tenant, as the case may be, shall execute, acknowledge and deliver to the other, promptly upon request, a Certificate of Landlord or Tenant, as the case may be, certifying (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the Lease is in full force and effect, as modified, and stating the date of each instrument so modifying the Lease), (b) the date, if any, through which the Rent, if any, has been paid, (c) whether there are then existing any offsets or defenses against the enforcement of any term hereof on the part of Tenant to be performed or complied with (and, if so, specifying the same), and (d) whether any default exists hereunder and, if any such default exists, specifying the nature and period of existence thereof and what action Landlord or Tenant, as the case may be, is taking or proposes to take with respect thereto and whether notice thereof has been given to the EXHIBIT "I" Page 62 of 67 \\cdcnklata1\uscrs\PBeard\pyatok\Fival DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc party in default. Any Certificate may be relied upon by any prospective purchaser, transferee, mortgagee or trustee under a deed of trust of the fee or leasehold estate in the Property or any part thereof or of Landlord's or Tenant's interest under this Lease. Tenant will also deliver to Landlord, promptly upon request, such information with respect to the Property or any part thereof as from time to time may reasonably be requested. 25.3 No Merger of Title. There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate in the Property or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly: (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in any such leasehold estate, and (b) any other estate in the Property and the Improvements or any part thereof or any interest in such estate, and no such merger shall occur unless and until all persons, corporations, firms and other entities, including any leasehold mortgagee or leasehold mortgagees, having any interest (including a security interest) in (i) this Lease or the leasehold estate created by this Lease, and (ii) any other estate in the Property or the Improvements or any part thereof shall join in a written instrument effecting such merger and shall duly record the same. 25.4 Utility Services. Tenant shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Property or the Improvements, or any part thereof, and shall comply with all contracts existing on the date hereof or subsequently executed by Tenant relating to any such services, and will do all other things required for the maintenance and continuance of all such services. 25.5 Quiet Enjoyment. Tenant, upon paying the Rent, if any, and other charges herein provided for and upon performing and complying with all covenants, agreements, terms and conditions of this Lease to be performed or complied with by it, shall lawfully and quietly hold, occupy and enjoy the Property during the term of this Lease without hindrance or molestation by Landlord, or any person or persons claiming through Landlord. 25.6 No Claims Against Landlord. Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord or its interest in the Property in respect thereof. 25.7 Inspection. Landlord and its authorized representatives may enter the Property or any part thereof at all reasonable times for the purpose of inspecting, servicing or posting notices, protecting the Property or the Improvements, or for any EXHIBIT "I„ Page 63 of 67 1\cdcnt\data! \users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc other lawful purposes. That notwithstanding, Landlord may only enter residential units after giving Tenant three (3) days prior written notice. 25.8 No Waiver by Landlord. To the extent permitted by applicable law, no failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a default under this Lease, and no acceptance of rent during the continuance of any such default, shall constitute a waiver of any such default or of any such term. No waiver of any default shall affect or alter this Lease, which shall continue in full force and effect, or the rights of Landlord with respect to any other then existing or subsequent default. 25.9 Holding Over. In the event Tenant shall hold over or remain in possession of the Property or the Improvements with the consent of Landlord after the expiration of the Term, such holding over or continued possession shall create a tenancy for month to month only, upon the same terms and conditions as are herein set forth so far as the same are applicable. 25.10 Exculpation of Certain Personal Liability. Notwithstanding anything to the contrary provided in this Lease, including, without limitation, the remedies provisions set forth in Section [21.2] above, it is specifically understood and agreed that except as to: (a) the obligation to pay Annual Rent pursuant to Section [4.1]; (b) the obligation to pay any and all Impositions; (c) acts of fraud and/or criminal misconduct; (d) acts of gross negligence and/or willful misconduct; (e) any and all legal costs and expenses reasonably incurred by Landlord in the enforcement of this Lease; and/or (f) liability for risks required to be covered by insurance under this Lease but for which Tenant fails to maintain such coverage; there shall be no personal liability or obligation on the part of any partner in Tenant or any assignee or successor in interest of any such partner with respect to the provisions of this Lease. 25.11 No Partnership. Anything contained herein to the contrary notwithstanding, Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder. EXHIBIT "I" Page 64 of 67 Ucdcnt\data1\users\PDeard\pyatokWiina1 DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1I.doc • 25.12 Remedies Cumulative. The various rights, options, elections and remedies of Landlord and Tenant, respectively, contained in this Lease shall be cumulative and no one of them shall be construed as exclusive of any other, or of any right, priority or remedy allowed or provided for by law and not expressly waived in this Lease. 25.13 Attorney's Fees. In the event of a dispute between the parties arising out of or in connection with this Lease, whether or not such dispute results in arbitration or litigation, the prevailing party (whether resulting from settlement before or after arbitration or litigation is commenced) shall be entitled to have and recover from the losing party reasonable attorneys' fees and costs of suit incurred by the prevailing party. 25.14 Time Is Of The Essence. Time is of the essence of this Lease and all of the terms, provisions, covenants and conditions hereof. 25.15 Survival of Representations, Warranties and Covenants. The respective representations, warranties and covenants contained herein shall survive the Commencement Date and continue throughout the Term. 25.16 Construction of Agreement. This Lease shall be construed in accordance with the substantive laws of the State of California, without regard to the choice of law rules thereof. The rule of construction that a document be construed strictly against its drafter shall have no application to this Lease. 25.17 Severability. If one or more of the provisions of this Lease shall be held to be illegal or otherwise void or invalid, the remainder of this Lease shall not be affected thereby and shall remain in full force and effect to the maximum extent permitted under applicable laws and regulations. 25.18 Entire Agreement: Modification. This Lease contains the entire agreement of the parties with respect to the matters discussed herein. This Lease may be amended only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extensions or discharge is sought. 25.19 Binding Effect and Benefits. This Lease shall inure to the benefit of and be binding on the parties hereto and their respective successors and assigns. Except as otherwise set forth herein, nothing in this Lease, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Lease. 25.20 Further Assurances. Each party hereto will promptly execute and deliver without further consideration such additional agreement, assignments, endorsements and other documents as the other party hereto may reasonably request to carry out the purposes of this Lease. EXIIIBIT "I" Page 65 of 67 \\cdcntldataI\users\PReard\pyatok\Fina1 DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc 25.21 Counterparts. This Lease may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Lease. 25.22 Number and Gender. Whenever the singular number is used in this Lease and required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. 25.23 Incorporation by Reference. Every Exhibit attached to this Lease and referred to herein is hereby incorporated by reference. 25.24 Tax Credit Partner Rights. Notwithstanding anything to the contrary contained in this Lease, Landlord agrees to extend to Tax Credit Partner rights equal to those of the Mortgagee set forth in Sections [18.2 through 18.4, inclusive, 18.8, and 20.11 provided, however, any and all notices to be given by Landlord under said Sections shall be given concurrently with the giving of such notice to Tenant and the cure period, if any, for Tax Credit Partner associated with each such notice shall commence to run from the effective date of such notice. Additionally, Landlord hereby agrees that Tax Credit Partner shall be entitled to request and receive the Certificate of Landlord set forth in Section [25.2]. IN WITNESS WHEREOF, the undersigned have executed this Lease as of the date first above written. "Landlord" COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: , Chairman EXHIBIT "I" Page 66 of 67 \\cdcnt\datal\users\PBeard\ppyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER Commission Special Counsel By: Lance E. Garber "Tenant" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner EXHIBIT "I" Page 67 of 67 By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President \\cdcnt\data1\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11 doc EXHIBIT "I" Page 68 of 67 \\cdcnt\datal\users\PBeard\pyatok\Dnal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11 doc EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY Real property in the City of National City, County of San Diego, State of California, described as follows: [TO BE INSER I ED] EXHIBIT "A" TO EXHIBIT "I" Page 1 of 1 \kdcnt\datal\users\FBeard\pyatok\Final DDA docs\DDA v 6 6 1I s x FINAL FINAL 6-8-11.doc EXHIBIT "B" INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD") Regulations (24 CFR 813). You should make certain that this form is at all times up to date with the HUD Regulations. Re: Housing Project, National City, California UWe, the undersigned state that Uwe have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit: 1. Names of Members of Household 2. Relationship to Head of Household 3. Age 4. Social Security Number 5. Place/Source of Employment 6. Monthly Gross Income Amount (before deductions) HEAD SPOUSE Income Computation 6. The total anticipated income, calculated in accordance with the provisions of this paragraph 6, of all persons over the age of 18 years listed above for the 12-month period beginning the date that Uwe plan to move into a unit is $ Included in the total anticipated income listed above are: EXHIBIT "B" TO EXIIIBIT "I" Page 1 of 14 \\cdcnt\tlatai\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; (b) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets), (c) interest and dividends (including income from assets excluded below); (d) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts, including any lump sum payment for the delayed start of a periodic payment; (e) payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; (f) the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; (g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (i) any earned income tax credit to the extent that it exceeds income tax liability. Excluded from such anticipated income are: (a) casual, sporadic or irregular gifts; (b) amounts which are specifically for or in reimbursement of medical expenses; (c) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen ' s compensation), capital gains and settlement for personal or property losses; EXHIBIT "B" TO EXHIBIT "I" Page 2 of 14 \\cdent\data1\users\PBeard\pyatok1Fival DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc (d) amounts of educational scholarships paid directly to the student or the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans not used for the above purposes are to be included in income; (e) special pay to a household member who is away from home and exposed to hostile fire; (f) relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; (g) foster child care payments; (h) the value of coupon allotments for the purchase of foods pursuant to the Food Stamp Act of 1977; (i) 1973; payments to volunteers under the Domestic Volunteer Service Act of (j) payments received under the Alaska Native Claims Settlement Act; (k) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; (1) payments or allowances made under the Department of Health and Human Services' Low -Income Home Energy Assistance Program; (m) (n) payments received from the Job Training Partnership Act; income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and (o) the first $2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims. 7. Do the persons whose income or contributions are included in item 6 above: (a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as Yes No furniture and automobiles and interests in Indian trust land); or EXHIBIT "B" TO EXHIBIT "I" Page 3 of 14 \\cdcnt\datal\users \PBeard\pyatok\ Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I l.doc (b) have they disposed of any assets (other than at a foreclosure or Credit Bankruptcy sale) during the last two Yes No years at less than fair market value? (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed Yes No of by all such persons total more than $5,000? EXHIBIT "B" TO EXHIBIT "I" Page 4 of 14 1lcdcnt\Iatallusers \PBeard\pyatokTiina1 DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11doc (d) If the answer to (c) above is yes, state: (1) the amount of income expected to be derived from such assets in the 12-month period beginning on $ the date of initial occupancy in the unit that you propose to rent: (2) the amount of such income, if any, that $ was included in item 6 above: 8. (a) Are all of the individuals who propose to Yes No reside in the unit full-time students*? A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? Yes No 9. Neither myself nor any other occupant of the unit Uwe propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the "Owner"), has any family relationship to the Owner, or owns directly or indirectly any interest in the Owner. For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member, ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trustee held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual. 10. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit, and Uwe declare that all information set forth herein is true, correct and complete and based upon information Uwe deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. Uwe will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year. 12. Uwe acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our EXHIBIT "B" TO EXHIBIT "I" Page 5 of 14 \lcdcnt\datal\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I .doe agreement with the Owner to lease the unit and will entitle the Owner to my/our occupancy of the unit by institution of an action for ejection proceedings. 13. Housing Commission Statistical Information (Optional - will purposes only). prevent or terminate or other appropriate be used for reporting Race (Head of Household) White Black Asian Hispanic Native American Other Physical Disability: Yes No I/we declare under penalty of perjury that the foregoing is true and correct. Executed this day of in the County of California. Applicant Applicant [Signatures of all persons over the age of 18 years listed in number 2 above required.] EXHIBIT "B" TO EXHIBIT "P" Page 6 of 14 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs1DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc FOR COMPLETION BY APARTMENT OWNER ONLY: 1. Calculation of eligible income: a. Enter amount entered for entire household in 6 above: $ b. (1) If answer to 7(c) above is yes, enter the total amount entered in 7(d)(1), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ) (2) Multiply the amount entered in 7(c) times the current passbook savings rate to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook savings ($ ), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ) (3) Enter at right the greater of the amount calculated $ under (1) and (2) above: c. TOTAL ELIGIBLE INCOME (line l.a plus line l.b(3)): $ 2. The amount entered in l.c: Qualifies the applicant(s) as a Very Low -Income Tenant(s). Does not qualify the applicant(s) as a Very Low -Income Tenant(s). 3. Number of apartment unit assigned: Bedroom Size: Rent: $ Tenant -Paid Utilities: Water Gas Electric Trash Other (list Type) 4. Was this apartment unit last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the Yes No apartment unit qualified them as Very Low -Income Tenants? EXHIBIT "B" TO EXHIBIT "I" Page 7 of 14 1\cdcnt\datal\users\PBeard\pyatok\Fina1 DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc 5. Method used to verify applicant(s) income: Employer income verification. Social Security Administration verification Department of Social Services verification Copies of tax returns Other: ( ) Manager EXHIBIT "B" TO EXHIBIT "I" Page 8 of 14 \\cdcnt\datal\usersWBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Article I. INCOME VERIFICATION (For Employed Persons) The undersigned employee has applied for a rental unit located in a project financed under the Multifamily Housing Program for persons of low income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual Wages: Overtime: Bonuses: Commissions: Total Current Income: I hereby certify that the statements above are true and complete to the best of my knowledge. Dated: Signature Title: I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under Multifamily Housing Program. Dated: Please send form to: Signature EXHIBIT "B" TO EXHIBIT "I" Page 9 of 14 \\cdcnt\data 1 \users \PReard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "B" TO EXHIBIT "I" Page 10 of 14 1\cdcnt\dataliusers\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I Ldoc INCOME VERIFICATION (For Social Security Recipients) TO: SOCIAL SECURITY ADMINISTRATION Ladies and Gentlemen: I have applied for a rental unit located in a project financed under the Multifamily Housing Program for persons of low income. Every income statement of a prospective tenant must be stringently verified. In connection with my application for a rental unit, I hereby give my consent to release to the specific information requested below. Dated: Signature Social Security No.: Name (Print): Address (Print): Monthly Benefits Began/Will Begin: Social Security Benefit Amount: $ Other Benefit(s): Amount: $ Medicare Deduction: $ Are benefits expected to change? Yes No If yes, please state date and amount Date: of change: Amount: If recipient is not receiving full benefit amount, please indicate reason and date recipient will start receiving full benefit amount: Reason: Date of Resumption: Amount: $ Dated: Telephone: Please send form to: Signature Name (Print): Title: EXHIBIT "B" TO EXHIBIT "I" Page 11 of 14 l\cdcntklatal\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-1 I.doc INCOME VERIFICATION (For Department of Social Services Aid Recipients) TO: CALIFORNIA DEPARTMENT OF SOCIAL SERVICES Ladies and Gentlemen: I am receiving assistance through your office. I have applied for a rental unit located in a project financed under the Multifamily Housing Program for persons of very low income. Every income statement of a prospective tenant must be stringently verified. In connection with my application for a rental unit, I hereby authorize the Department of Social Services to release to the specific information requested below. Dated: Signature Caseload Number: Name (Print): Case Number: Case Worker: 1. Number of persons included in budget: 2. Total monthly budget: $ a. Amount of grant: $ Date aid last began: b. Other income and source: c. Is other income included in total budget? Yes No 3. Please specify type of aid (AFDC, FR, Food Stamps, ANB, MediCal, etc.) 4. If recipient is not receiving full grant, please indicate reason: Overpayment due to client ' s failure to report other income Computation error Other EXHIBIT "B" TO EXHIBIT "I" Page 12 of 14 \\cdcnl\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "B" TO EXHIBIT "I" Page 13 of 14 llcdcnftdataDusers\PBeardlpyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 I.doc 5. Date when full grant will resume: Dated: Case Worker's Signature Telephone: District Office Your very early response will be appreciated. Please return form to: EXHIBIT "B" TO EXHIBIT "I" Page 14 of 14 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc INCOME VERIFICATION (For Self -Employed Persons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Dated: Signature EXHIBIT "B" TO EXHIBIT "I" Page 15 of 14 \\cdcnt\natal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11 doc EXHIBIT "C" CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE [ Housing Project] With reference to that certain Lease Agreement by and between , L.P. ("Tenant") and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, dated as of L -- iw;' (the "Lease Agreement"), Tenant hereby certifies, as of the date of this Certificate, the following percentages of units at the Housing Project, National City, California are occupied or being held vacant for low-income tenants: 1. Occupied by 30%, 40%, and 50% of Median Income Tenants: %; Unit Nos. The undersigned hereby certifies that the information contained in this Certificate is true and complete and that Tenant is not in default under the Ground Lease. , L.P., a California limited partnership By: California a , its managing general partner By: , a California EXHIBIT "C" TO EXHIBIT "I" Page 1 of 1 \\cdcn6datal\uscrs\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc nonprofit corporation, its sole member and manager By: President Date: EXHIBIT "C" TO EXHIBIT "I" Page 1 of 1 \\cdcnt\datal\users\FBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I I.doc EXHIBIT "D" PLAN FOR SOCIAL SERVICES Community HousingWorks (CHW) will provide outcome -based, result -oriented services and programs for residents in the community building, starting no later than six (6) months after the date of issuance of a temporary certificate of occupancy for each phase of the affordable housing, until expiration of the Term. The services will be administered by on -site CHW staff. Programs will be tailored to the needs of the community and age - appropriate for the entire family. The services will include, but not be limited to: • Learning Communities — This program will provide access to computers and after -school tutoring and homework assistance designed to improve school performance. The Learning Center will be available to both children and adults, and will provide: family education on sustainable green practices through CHW's nationally -recognized Green Curriculum; accessibility to work readiness; and vocational and leadership empowerment opportunities; • Financial Fitness Training — Family Asset Building Programs (FAB), such as the nationally recognized Financial Fitness Education, will be provided in classes tailored to residents, and will focus on empowering residents to create and attain sustainable financial goals, including potential homeownership; and, • Homebuyer Education (HBE) — Programs will provide an incubator for homeownership with educational tools and counseling to assist residents in realizing the dream of homeownership. Qualified residents will also have access to first time homebuyer loans after completion of homebuyer education workshops. EXHIBIT "D" TO EXHIBIT "I" Page 1 of I \\cdcnt\datal\users\P13eard\pyatok\Final DDA docs'DDA v 6 6 II s x FINAL FINAL 6-8-11.doc EXHIBIT "E" LETTER OF INSTRUCTION TO APPRAISER(S) Dear Sir or Madam: The land legally described in Exhibit "A" hereto is subject to a certain Ground Lease dated as of , 201_ (the "Ground Lease"), a complete copy of which is enclosed. At this juncture, the Ground Lease requires that the ground rent be adjusted to fair market in accordance with an appraisal. Your duties in connection with the making of that appraisal are as follows: 1. Determine the fair market value of the land as of finsert first day of Lease Year 55 (for the Five (5)-Lease Year Period 56 through 60), Year 70 (for the Five (5)-Lease Year Period 71 through 75), Lease Year 85 (for the Five (5)-Lease Year Period 86 through 90) — See Section 4.1(d)(i) of the Ground Leasel for use as multifamily rental housing in accordance with and subject to (a) all of the terms, conditions, and restrictions set forth in the Ground Lease, including, without limitation, the restrictions on the rents that may be charged to residents of the dwelling units set forth in Article [8] of the Ground Lease, and (b) any other covenants, conditions, and/or restrictions to which the land is subject pursuant to a document recorded in the Official Records of the County of San Diego. You shall also take into account any property tax exemption or reduction to which the Tenant is entitled by virtue of the restricted use of the property as affordable multifamily rental housing, unless the Tenant is contractually committed not to avail itself of such exemption or reduction. Your appraisal is to be based upon approaches to value mandated by the Appraisal Standards Board of the Appraisal Foundation, or its successor organization. 2. For the purposes of such appraisal, disregard any depreciation of the improvements. 3. Once you have established the fair market value of the land, determine, based on rates prevailing in the market area, the percentage rate to be applied to that fair market value so as to produce the fair market ground rent. 4. State the fair market ground rent in annual terms. EXHIBIT "E" TO EXHIBIT "I" Page 1 of 1 \\cdcnt\datal \users TBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "J" FORM OF COMMISSION SUBORDINATE LOAN NOTE Project/Phase J As of , 201 National City, California RECITALS A. WHEREAS, PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership ("Borrower"), and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Lender"), entered into that certain Disposition and Development Agreement dated as of 2011 (the "DDA"); and B. WHEREAS, pursuant to the DDA, Lender has made the "Commission Subordinate Loan" to Borrower to finance up to Dollars ($ ) in Project Costs for Phase M. NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender, at 1243 National City Blvd., National City, California 91950, or at such other place as Lender may from time to time designate in writing, (a) the principal sum of Dollars ($ ), with interest from the Recordation Date until paid at the simple rate of one -quarter of one percent (0.25%) per annum, and (b) all fees, costs and expenses payable hereunder. 1. Definitions; Interpretation; Accounting. 1.1 Definitions. Initially capitalized words and terms used in this Note without definition shall have the meanings ascribed thereto in the DDA or the following definitions, unless the context or use clearly requires otherwise: "Appraisal Process" shall mean the parties shall first attempt to agree on the Fair Market Value of the subject property. If they are unable to come to an agreement within ten (10) Business Days, the Fair Market Value shall be determined by appraisal. Lender and Borrower shall each name one (1) M.A.I. appraiser within five (5) Business Days. If the two (2) appraisers cannot agree on the Fair Market Value within thirty (30) days after the date on which the second appraiser is named, they shall appoint a third M.A.I. appraiser. If the third appraiser agrees with either of the originally asserted appraisals of the first two (2) appraisers, then the agreed value shall be the Fair Market Value. If there is no such agreement, then the arithmetic average of the two (2) closest of the three (3) appraisals shall be the Fair Market Value. Each party shall bear the cost of its own appraiser. The cost of the third appraiser, if any, shall be borne equally by the parties. EXHIBIT "J" Page 1 of 13 \\cdent\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc "Area" means the Primary Metropolitan Statistical Area in which the Property is located, as promulgated by the U.S. Department of Housing and Urban Development. "Base Rate" means a fluctuating interest rate per annum as shall be in effect from time to time, which rate at all times shall be equal to the rate of interest announced publicly by Bank of America, N.A., from time to time as its base rate. "Capital Improvements" means all work and improvements with respect to the Property for which costs and expenses may be capitalized in accordance with GAAP. "Cash Flow" means, for the applicable period of time, the remainder of Net Operating Income less Debt Service. "CHW" means Community HousingWorks, its successors and assigns. "CHW Third Trust Deed Loan Note" means that certain promissory note, dated as of , 201_, made by Borrower in favor of CHW in the original principal amount of $14,957,000. "Commencement Date" shall mean the earlier of (a) when the Construction has been completed as evidenced by recordation in the Official Records of the Notice of Completion therefor, or (b) when the Improvements have been placed in service. "Commission Subordinate Loan Deed of Trust" means the Deed of Trust of even date herewith by which this Note is secured. "Construction" means the construction to be performed by Borrower pursuant to Article [10] of the DDA. "CPI" means the Consumer Price Index -Urban Wage Earners and Clerical Workers (San Diego, California, All Items, Base 1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics. Should the Bureau discontinue the publication of the Index, or publish the same less frequently or in a different schedule, or alter the same in some other manner including, without limitation, changing the name of the Index or the geographic area covered by the Index, Borrower and Lender shall adopt a substitute index or procedure which reasonably reflects and monitors consumer prices. "Debt Service" means scheduled debt service on the Senior Loan and any other loans approved by Lender which are senior to the Commission Subordinate Loan Deed of Trust. "Effective Gross Income" means Operating Income after allowance for vacancy and collection losses. "Executive Director" means the Executive Director of Lender or his designee. "Fair Market Value" shall have the meaning provided in Section 1263.320(a) of the California Code of Civil Procedure or any successor statute thereto. EXHIBIT "J" Page 2 of 13 \\cdcntklatal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-1 Ldoc "Fiscal Year" means the fiscal year of Borrower, which is the calendar year. "GAAP" has the meaning set forth in Section [1.3] of this Note. "Improvements" means the improvements to be made to the Property by Borrower in accordance with the DDA. "Median Income for the Area" means the median income for the Area as determined and published annually by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, median income for the Area determined under the method used by the Secretary prior to such termination. "Net Operating Income" means, for the applicable period of time, the amount, if any, by which Operating Income for such period exceeds Operating Expenses paid by Borrower during such period. The calculation of Net Operating Income for each Fiscal Year shall be computed based on GAAP (whether or not Operating Expenses are properly deductible or must be characterized as a capital expenditure under the Internal Revenue Code). "Net Refinancing Proceeds" means, from time to time, the proceeds of any Refinancing in excess of (a) the amount of any senior obligation or debt secured by the Property and satisfied out of such proceeds, and (b) the reasonable and customary costs and expenses incurred in connection with such Refinancing. "Net Sale Proceeds" means, from time to time, the gross proceeds of a Sale, irrespective of the form of said proceeds, less (a) payment in full of the Senior Loan and any other loans approved by Lender which are senior to the Commission Subordinate Loan Deed of Trust, (b) return of the cash equity invested in the Project by the partners in Borrower, (c) any reserve reasonably contemplated by Borrower's partnership agreement at the time this Note was executed by Borrower, and (d) the reasonable and customary costs and expenses incurred by Borrower in connection with the subject Sale. If Lender reasonably determines that any Sale is not made in an arm's length transaction, other than to a general partner in Borrower pursuant to an option or right of first refusal granted to such general partner (or its affiliate) on or before the date this Note was executed by Borrower, then instead of the Net Sale Proceeds being the result of the aforementioned deductions from the gross proceeds of the subject Sale, the Net Sale Proceeds shall be the result of the aforementioned deductions from the Fair Market Value of the Property. California. "Official Records" means the Official Records of the County of San Diego, "Operating Expenses" means, for the applicable period of time, all costs and expenses incurred by Borrower in the ordinary course of the management, ownership, and/or operation of the Property by Borrower, including, without limitation, (a) tax credit syndication, partnership management, guaranty, monitoring, asset management and other fees payable to the partners in Borrower in the aggregate amount of not more than Twenty -Five Thousand Dollars ($25,000.00) per year, as such sum shall be adjusted annually on January 1 by the change in the EXHIBIT "J" Page 3 of 13 \\cdcnt\data)\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc CPI from the previous January 1, (b) special limited partner fee (until such time, if any, that the special limited partner is no longer a partner in the partnership) in the aggregate amount of not more than Five Thousand Dollars ($5,000.00) per year, as such sum shall be adjusted annually on January 1 by the change in the CPI from the previous January 1, (c) all amounts deposited in the reserve fund of the Project for replacements, provided, however, such amounts shall not, without the prior approval of the Executive Director, which approval shall not be unreasonably withheld, exceed those amounts deposited as reserves for similar projects in California, (d) all amounts deposited in the operating reserve fund of the Project, provided, however, such amounts shall not, without the prior approval of the Executive Director, which approval shall not be unreasonably withheld, exceed those amounts deposited as operating reserves for similar projects in California, (e) any development fee payable to Developer and approved by the Executive Director, the payment of which has been deferred, (I) Sixty Thousand Dollars ($60,000.00) per year, as adjusted annually on January 1 by the change in the CPI from the previous January 1, to be used to provide social services to the residents of the Property (the "Social Services Fee"), and (g) a property management fee not to exceed six percent (6%) of Effective Gross Income. With reference to the reserve funds referred to in subdivisions (c) and (d), above, Lender agrees that any such reserve funds required by the Senior Lender and/or the Tax Credit Partner shall be deemed reasonable. Debt Service is not an Operating Expense. Operating Expenses shall not include any expenses for Capital Improvements, except for Capital Improvements approved by the Senior Lender and by the Executive Director for treatment as an Operating Expense. Operating Expenses shall be calculated on a cash basis. The first adjustment of the Social Services Fees shall be made on January 1 following the date on which the Certificate of Completion issues. "Operating Income" means, for the applicable period of time, all proceeds received by Borrower from the operation of the Property and from any and all sources resulting from or attributable to the operation of the Property, including, without limitation, all rentals, parking receipts, laundry receipts, forfeited Security Deposits, and all expense reimbursements paid to Borrower by tenants of the Property. Operating Income shall be calculated on a cash basis. Operating Income shall not include any Senior Loan funds, payments for tax credits or the sale of partnership interests in Borrower, or proceeds of a casualty loss or condemnation. Operating Income for the last year of the term of the Ground Lease shall include all amounts, if any, remaining in the reserve fund of the Project. Operating Income shall also include any funds on deposit in a reserve fund for the Project in excess of such amounts as are permitted to be included as Operating Expenses under this Note. "Project" means the improvements to be made to the Property pursuant to the "Property" has the meaning ascribed thereto in the Commission Subordinate Loan Deed of Trust. "Recordation Date" means the date on which the Commission Subordinate Loan Deed of Trust records in the Official Records. "Refinancing" means changing the existing financing on the Property, or relating to the Property, by increasing the amount of the existing mortgage(s), adding one or more mortgages to the existing mortgage(s), or paying off an existing mortgage or mortgages and EXHIBIT "J" Page 4 of 13 \\cdcntklataltuser \'Beard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-1 l.doc obtaining a new, larger mortgage or mortgages. A Refinancing may be in any form, including, without limitation, debt or a sale and leaseback. Notwithstanding anything contained herein to the contrary, the taking of the Take -Out Loan by Borrower shall not constitute a Refinancing under this Note. "Sale" has the meaning set forth in subparagraph [29(d)] of the Commission Subordinate Loan Deed of Trust. Property. and assigns. "Security Deposits" means all security deposits collected from tenants of the "Senior Lender" means or its successors "Senior Loan" means that certain construction loan made to Borrower by , for the Construction, and take-out financing therefor to be provided by or such other lender as may be approved by the Executive Director. Senior Loan. "Senior Loan Documents" means the documents evidencing and securing the "Tax Credit Partner" means or its successors and assigns. 1.2 Interpretation. In this Note, (a) the singular includes the plural and the plural the singular; (b) words and terms which include a number of constituent parts, things or elements, unless otherwise specified, shall be construed as referring separately to each constituent part, thing or element thereof, as well as to all of such constituent parts, things or elements as a whole; (c) words importing any gender include the other genders; (d) references to statutes are to be construed as including all rules and regulations adopted pursuant to the statute referred to and all statutory provisions consolidating, amending or replacing the statute referred to; (e) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms; (f) the words "hereto" or "herein" or "hereof' or "hereunder" or words of similar import refer to this Note in its entirety; (g) the words "include" or "including" or words of similar import, unless otherwise specified herein, shall be deemed to be followed by the words "without limitation"; (h) all references to Articles and Sections, unless otherwise specified, are to the Articles and Sections of this Note; and (i) headings of Articles and numberings and headings of Sections and paragraphs are inserted as a matter of convenience and shall not affect the construction of this Note. 1.3 Accounting Terms and Determinations. Unless otherwise specified herein, (a) all accounting terms used herein shall be interpreted, (b) all accounting determinations hereunder shall be made, and (c) all books, records and financial statements required to be delivered hereunder shall be prepared in accordance with generally accounting principles as in effect from time to time, consistently applied ("GAAP"), except for changes approved by Lender. EXHIBIT "J" Page 5 of 13 1\ dcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc 2. Disposition and Development Agreement. The principal sums hereunder are being loaned by Lender to Borrower in accordance with and pursuant to the DDA. The terms of the DDA are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. An Event of Default by Developer [Borrower] under the DDA shall be a default hereunder, and a default hereunder, after delivery of notice and expiration of the cure period described in Section [15] below, shall be an Event of Default by Developer [Borrower] under the DDA. 3. Ground Lease. The principal sums hereunder are being loaned by Lender to Borrower to finance development of the Property for use as affordable housing pursuant to the Ground Lease. An Event of Default by Tenant [Borrower] under the Ground Lease shall be a default hereunder, and a default hereunder shall be an Event of Default by Tenant [Borrower] under the Ground Lease. 4. jIntentionally Omitted] 5. Financial Reporting and Accounting Covenants. Borrower will permit the representatives of Lender at any time or from time to time, upon one (1) business day's notice and during normal business hours, to inspect, audit and copy all of Borrower's books, records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to Lender the following: 5.1 Quarterly Statements. As soon as available, and in no event later than forty-five (45) days after the close of each of the first three calendar quarters of each Fiscal Year, commencing with the calendar quarter ending, 201_, financial statements of Borrower, including a balance sheet and profit -and -loss statement, as at the close of and for such quarter, all in reasonable detail and prepared in accordance with GAAP; such statements to be accompanied by a certificate signed by a general partner of Borrower to the effect that such statements fairly present the financial condition of Borrower as at the date indicated and the results of operations for the period indicated, subject, however, to year-end audit adjustments; 5.2 Annual Statements. As soon as available, but in no event later than one hundred twenty (120) days after the close of each Fiscal Year, financial statements of Borrower, including a profit -and -loss statement, reconciliation of capital accounts and a consolidated statement of changes in financial position of Borrower as at the close of and for such Fiscal Year, all in reasonable detail, certified as provided in clause (a) above by a general partner of Borrower; 5.3 Annual Operating Statements. As soon as available but in no event later than one hundred twenty (120) days after the close of each Fiscal Year, an "Annual Operating Statement" showing all Operating Income, Operating Expenses, Debt Service and any other amounts taken into consideration in computing Net Operating Income and Cash Flow, if any, for the subject Fiscal Year, in a form reasonably satisfactory to the Executive Director; EXHIBIT "J" Page 6 of 13 \\cdcnt\datal\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc 5.4 Tax Returns. As soon as available, but in no event later than at the time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules, if any) of Borrower; 5.5 Audit Reports. Promptly upon receipt thereof, copies of all reports submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower, made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit; 5.6 Notices, Certificates or Communications. Immediately upon giving or receipt thereof, copies of any material notices, certificates or other communications given by or on behalf of Borrower or received by or on behalf of Borrower from Senior Lender pursuant to or in connection with any of the Senior Loan Documents, as well as any material notices and other communications delivered to the Property or to Borrower naming Lender or the "Construction Lender" as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Borrower to perform its obligations to Lender. 6. Payment. Borrower shall make payment on this Note in accordance with the following: 6.1 Annual Payment. If, when Borrower delivers each Annual Operating Statement to Lender pursuant to Subdivision [5.3], above, said Annual Operating Statement shows that there was Cash Flow for the subject Fiscal Year, or part thereof, Borrower shall make payment to Lender on account of this Note in the amount of fifty percent (50%) of such Cash Flow. That notwithstanding, Lender hereby agrees that as long as the CHW Third Trust Deed Loan Note is outstanding, this fifty percent (50%) of Cash Flow shall be paid to Lender on account of this Note and to CHW on account of the CHW Third Trust Deed Loan Note in pari passu. 6.2 Refinancing. As and when there is any Refinancing of the Property, Borrower shall pay the Net Refinancing Proceeds to Lender on account of this Note to the extent of the outstanding balance of principal and accrued interest. 6.3 Mandatory Prepayments. If, upon completion of construction and when an independent audit of the total cost of the development has been prepared as required by the Tax Credit Allocation Committee, the remainder of said total cost of the development less the sum of (a) the actual syndication proceeds of the State and Federal Low -Income Housing Tax Credits, and (b) the permanent loan proceeds (whether the product of a take-out or sale of the Senior Loan) for the Project is less than [ [Totalof the pnnet i principal 1 Dollars ($ , ,), then Borrower shall, in connection with the closing of the permanent loan, make a prepayment to Lender in the amount of such difference. That notwithstanding, Borrower shall not be obligated under this Section to make all or any part this payment if to do so would (a) violate any rule or regulation of the Tax Credit Allocation Committee in place as of the date on which the Commission Subordinate Loan Deed of Trust recorded in the Official Records of the County of San Diego, or (b) would jeopardize the Tax Credits for the Project. EXHIBIT "J" Page 7 of 13 \lcdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 6.4 Sale. As and when there is any Sale, Borrower shall pay the Net Sale Proceeds to Lender on account of this Note to the extent of the outstanding balance of principal and accrued interest. 6.4.1 Seller Financing. In the event that the Net Sale Proceeds include financing to be provided by Borrower as a purchase money lender, Lender shall not be obligated to accept any part of said financing. All or any part of the payment to Lender shall be made in cash. 6.4.2 In Kind Consideration. In the event that the Net Sale Proceeds include in kind consideration, Lender shall not be obligated to accept any part of such in kind consideration, but Borrower shall be entitled to substitute cash for the cash equivalent value of the in kind consideration. The cash equivalent value of the in kind consideration shall be its Fair Market Value as determined by the Appraisal Process. 7. Distribution of Profits. From and after the Commencement Date, Borrower covenants and agrees that, except for fees payable as Operating Expenses pursuant to this Note, Borrower shall not withdraw or distribute to the partners in Borrower any of the rents, issues and/or profits of the Project for any Fiscal Year unless payment is concurrently made to Lender of the percentage of such rents, issues and profits payable to Lender pursuant to Section [6.1]. 8. Maturity. This Note shall be all due and payable on 206 d e ite of the un t�da 9. Application of Payments. Any payments received by Lender pursuant to the terms hereof shall be applied first to sums, other than principal and interest, due Lender pursuant to this Note; next to the payment of all interest accrued to the date of such payment; and the balance, if any, to the payment of principal. 10. Form of Payment. All amounts due hereunder are payable in immediately available funds and lawful monies of the United States of America. 11. Dispute Regarding Annual Operating Statement. If Lender disputes any Annual Operating Statement, Lender shall notify Borrower of such dispute and the parties shall cause their representatives to meet and confer concerning the dispute and to use all reasonable efforts to reach a mutually acceptable resolution of the matter in question within thirty (30) days after Lender's notice of such dispute. If the parties are unable to achieve a mutually acceptable resolution within such 30-day period, then, within twenty (20) days after the expiration of such period, Borrower and Lender shall appoint a national firm of EXHIBIT "J" Page 8 of 13 \\cdcnt\datal\users\PBeard\pyatok\Final DDA dots\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc certified public accountants to review the dispute and to make a determination as to the matter in question within thirty (30) days after such appointment. If the parties cannot, within ten (10) days, agree on the firm to be appointed, then, upon the application of either party, such firm shall be appointed by the Presiding Judge of the Superior Court for the County of San Diego, California. Such firm's determination shall be final and binding upon the parties. Such firm shall have full access to the books, records and accounts of the Borrower and the Project. 11.1 Underpayment. If any audit by Lender reports an underpayment by Borrower on this Note, Borrower shall pay the amount of any such underpayment, together with the late charge specified in Section [14] of this Note, to Lender within five (5) days after notice thereof to Borrower or, in the event of a dispute, after notice to Borrower of the resolution of such dispute by the independent firm of certified public accountants, as the case may be, and, if such underpayment amounts to more than three percent (3%) of the disputed payment for the period audited, then, notwithstanding anything to the contrary in this Section, Borrower shall pay to Lender, within five (5) days after demand, Lender's reasonable costs and expenses in conducting such audit and exercising its rights under Section [11] of this Note (including a reasonable charge for the services of any employees of Lender conducting such audit and exercising its rights under this Section). 12. Prepayment. At any time, Borrower may prepay in whole or in part, without penalty, the outstanding principal balance under this Note, together with all accrued and unpaid interest, fees, costs and expenses payable hereunder. 13. Security. This Note and all amounts payable hereunder are secured by the Commission Subordinate Loan Deed of Trust. The terms of the Commission Subordinate Loan Deed of Trust are incorporated herein and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. A default under any of the provisions of the Commission Subordinate Loan Deed of Trust shall be a default hereunder, and a default hereunder shall be a default under the Commission Subordinate Loan Deed of Trust. 14. Late Payment. If any annual payment of accrued interest and principal is not received by the Lender within ten (10) calendar days after the installment is due, Borrower shall pay to the Lender a late charge of five percent (5%) of such payment, such late charge to be immediately due and payable without demand by Lender. 15. Acceleration and Other Remedies. If: (a) any payment under this Note is not made when due and Borrower fails to cure said default within fifteen (15) days after notice from Lender; EXHIBIT " J " Page 9 of 13 \\cdcnt\datal\users\P➢earl\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-5-I I .doc (b) Borrower defaults under any other provision of this Note and Borrower shall have failed to cure said default within thirty (30) days after notice from Lender, provided, however, if cure of such default reasonably requires more than thirty (30) days, then, provided that Borrower commences to cure within such thirty (30)- day period and thereafter diligently and continuously prosecutes the cure to completion, Borrower shall not be in default during the cure period; (c) Borrower, subject to force majeure (as defined in Section [25.11] of the DDA), fails to complete the Construction; (d) there is an event or occurrence which, pursuant to the Commission Subordinate Loan Deed of Trust, gives rise to acceleration of the indebtedness evidenced by this Note, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of Lender. 16. Remedies. Upon the occurrence of an event of default and the expiration of any cure period therefor as provided in this Note without such event of default having been cured, then, at the option of Lender, the entire balance of principal together with all accrued interest thereon shall, without demand or notice, but subject to the non -recourse provisions of Section [22] of this Note, immediately become due and payable. Upon the occurrence of an event of default (and so long as such event of default shall continue), the entire balance of principal together with all accrued interest shall thereafter bear interest at the lesser of (a) the maximum rate permitted by law, and (b) the Base Rate plus three percent (3%) per annum. No delay or omission on the part of Lender in exercising any right under this Note or under the Commission Subordinate Loan Deed of Trust shall operate as a waiver of such right. 17. Third Party Cure Rights. Notwithstanding anything to the contrary contained in this Note, Lender, prior to any action to enforce this Note, shall give "Tax and its successors and assigns (the Credit Partner") notice and opportunity to cure for a period of not less than (a) fifteen (15) days if a monetary default, and (b) thirty (30) days if a nonmonetary default; provided, however, if in order to cure such a default Tax Credit Partner reasonably determines that it must remove the general partner of Borrower, Tax Credit Partner shall so notify Lender and so long as Tax Credit Partner is diligently and continuously attempting to so remove such general partner, Tax Credit Partner shall have until the date thirty (30) days after the effective date of the removal of the general partner or general partners to cure such default but in no event more than one (1) year. 18. Waiver. Except as otherwise expressly provided herein, Borrower hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note, and EXHIBIT " J" Page 10 of 13 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc expressly agrees that, without in any way affecting the liability of Borrower hereunder, Lender may extend any maturity date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note. Borrower further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on any deed of trust, security agreement, lease assignment, guaranty or other agreement now or hereafter securing this Note. 19. Attorneys' Fees. If this 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 attorney's fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 20. Severability. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. 21. Interest Rate Limitation. Lender and Borrower stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California. In such event, if any holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of California, all such sums deemed to constitute interest in excess of such maximum rate shall, at the option of such holder, be credited to the payment of the sums due hereunder or returned to Borrower. 22. Non -Recourse. Notwithstanding anything to the contrary contained in this Note or in the Commission Subordinate Loan Deed of Trust referred to in this Note, but without in any manner affecting the validity of this Note or the lien or charge of the Commission Subordinate Loan Deed of Trust, in the event of any default under the terms of this Note or the Commission Subordinate Loan Deed of Trust, the sole recourse of the Lender for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, or such other appropriate means of enforcing the Commission Subordinate Loan Deed of Trust, and the undersigned, and the partners of the undersigned, shall not be personally liable for the payment of this Note or for any other default under the Commission Subordinate Loan Deed of Trust or for the payment of any deficiency established after judicial foreclosure or trustee's sale under the Commission Subordinate Loan Deed of Trust. Notwithstanding the limitations of liability set forth above, Borrower shall be fully liable for: EXHIBIT "J" Page 11of13 i\cdcnt\data!\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (a) Cash Flow payable to Lender pursuant to Section [6.1] but not applied to this Note; and (b) all legal costs and expenses reasonably incurred by Lender in the enforcement of this Note. 23. Headings. Headings at the beginning of each numbered Section of this Note are intended solely for convenience and are not to be deemed or construed to be a part of this Note. 24. Giving of Notice. Unless applicable law requires a different method, any notice that must be given to Borrower under this Note will be given by mailing it by first class mail to Borrower at the following address: Paradise Creek Housing Partners, L.P. c/o The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 or at a different address if Borrower gives Lender a notice of that different address. Any notice that must be given to Lender under this Note will be given by mailing it by first class mail to Lender at the following address: 1243 National City Blvd. National City, California 91950 Attention: Executive Director or at a different address if Lender gives Borrower a notice of that different address. EXHIBIT "J" Page 12 of 13 \\cdcnt\fatal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 25. Choice of Law. This Note shall be governed by and construed and enforced in accordance with the laws of the State of California. "Borrower" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President EXHIBIT "J" Page 13 of 13 \\cdcnt\data)\users\PBeard\pyatok\Final DDA docs\DDA v 66 II s x FINAL FINAL 6-8-11.doc EXHIBIT "K" RECORDING REQUESTED BY: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AND WHEN RECORDED RETURN TO: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY Records Management Department 1243 National City Blvd. National City, California 91950 [Free Recording Requested Government Code § 6103] SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS Project/Phase I [Commission Subordinate Loan Deed of Trust for Phase J This DEED OF TRUST is made as of , 200, by and between PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership ("Trustor"), _-' TITLE COMPANY, a California corporation ("Trustee"), and COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Beneficiary"). Trustor grants, transfers and assigns to Trustee in trust, upon the trusts, covenants, conditions and agreements and for the uses and purposes hereinafter contained, with power of sale, and right of entry and possession, all of its ground leasehold title and interest in that real property (the "Property") in the City of National City, County of San Diego, State of California, described in Exhibit A attached hereto and incorporated herein by this reference. Together with Beneficiary's interest in all buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Property; and Together with the rents, issues and profits thereof; and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, EXHIBIT "K" Page 1 of 12 \\cdcnt\data I \users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doe whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and Together with all building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and Together with all plans, drawings, specifications, and articles of personal property 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 completion 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 chattels and personal property as are ever used or furnished 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. To have and to hold the property hereinbefore described (including the Property and all appurtenances), all such property being referred to collectively herein as the "Property," to Trustee, its successors and assigns forever. FOR THE PURPOSE of securing (1) payment of indebtedness of Trustor to the Beneficiary in the principal sum of Dollars ($ ) (the "Commission Subordinate Loan"), evidenced by a promissory note of even date herewith between Trustor and Beneficiary (the "Commission Subordinate Loan Note"), together with all sums due thereunder including interest and other charges; and (2) the performance of each agreement of Trustor in this Deed of Trust and the Commission Subordinate Loan Note. Said Commission Subordinate Loan Note and all of its terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances of the Commission Subordinate Loan evidenced by any note reciting that it is secured hereby. AND TO PROTECT THE SECURITY OF THIS DFFD OF TRUST, TRUSTOR COVENANTS AND AGREES: 1. That it will pay the Commission Subordinate Loan Note at the time and in the manner provided therein; 2. That it will not permit or suffer the use of any of the Property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed, namely, as affordable rental housing; 3. That the Commission Subordinate Loan Note is incorporated herein and made a part of this Deed of Trust. Upon default under the Commission Subordinate Loan Note or this Deed of Trust (after expiration of any applicable cure rights), Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable; EXHIBIT "K" Page 2 of 12 \cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 4. That all rents, profits and income from the Property covered by this Deed of Trust are hereby assigned to Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder, to collect such rents, profits and income; 5. That upon default hereunder (after expiration of any applicable cure rights), Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the Property described herein and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the improvements now existing or hereafter erected on the Property insured against loss by fire and such other hazards, casualties and contingencies as may be required in writing from time to time by Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies, in the amount of the replacement value of the improvements. Such policies shall be endorsed with a standard mortgage clause with loss payable to Beneficiary subordinate to the rights and interest of the beneficiary of the Senior Loan Deed of Trust described in paragraph 31, below) and certificates thereof together with copies of original policies shall be deposited with Beneficiary; 7. To pay, before delinquency, any taxes and assessments affecting said Property when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto, all costs, fees and expenses of this Trust; 8. To keep said Property in good condition and repair, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor (unless contested in good faith if Trustor provides security satisfactory to Beneficiary that any amounts found to be due will be paid and no sale of the Property or other impairment of the security hereunder will occur); to comply with all laws affecting said Property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said Property in violation of law and/or covenants, conditions and/or restrictions affecting said Property; not to permit or suffer any alteration of or addition to the buildings or improvements hereafter constructed in or upon said Property without the consent of Beneficiary; 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 10. Should Trustor fail to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Beneficiary or Trustee, being authorized to enter upon said Property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or EXHIBIT "K" Page 3 of 12 \\cdcnt\datal\users\FBeard\pyatok\Final DDA does\DDA v 6 6 II s x FINAL FINAL 6-8-1 1.doc compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay counsel's reasonable fees; 11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by Beneficiary shall be added to the principal sum secured hereby; 12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the Commission Subordinate Loan Note; 13. That the Commission Subordinate Loan advanced hereunder is to be used in the development of the Property; and upon the failure of Trustor to keep and perform such covenants, the principal sum and all arrears of interest, and other charges provided for in the Commission Subordinate Loan Note shall, at the option of Beneficiary, become due and payable, anything contained herein to the contrary notwithstanding; 14. Trustor further covenants that it will not voluntarily create, suffer or permit to be created against the Property, subject to this Deed of Trust, any lien or liens except as authorized by Beneficiary and further that it will keep and maintain the Property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on the Property; 15. That any and all improvements made or about to be made upon the Property, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; 16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of Beneficiary a charge not to exceed that permitted by law for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2, Title 14, Division 3 of the California Civil Code. IT IS MUTUALLY AGREED THAT: 17. Subject to the additional cure rights in Section 17 of the Commission Subordinate Loan Note, if the construction of any improvements as herein referred to shall not be carried on with reasonable diligence, or shall be discontinued at any time for any reason other than events of Force Majeure pursuant to Paragraph 36 hereof, Beneficiary, after due notice to Trustor or any subsequent owner and the failure by same to exercise any cure rights, is hereby invested with full and complete authority to enter upon the Property, employ watchmen to protect such improvements from depredation or injury and to preserve and protect the personal property therein, and to continue any and all outstanding contracts for the erection and completion of said building or buildings, to make and enter into any contracts and obligations wherever necessary, either in its own name or in the name of Trustor, and to pay and discharge all debts, obligations EXHIBIT "K" Page 4 of 12 \\cdcnt\datallusers\PBeardlpyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc and liabilities incurred thereby. All such sums so advanced by Beneficiary (exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured hereby and shall be secured by this Deed of Trust and shall be due and payable on demand; 18. In the event of any fire or other casualty to the Project or eminent domain proceedings resulting in condemnation of the Project or any part thereof, Trustor shall have the right to rebuild the Project, and to use all available insurance or condemnation proceeds therefor, provided that (a) such proceeds are sufficient to rebuild the Project in a manner that provides adequate security to Beneficiary for repayment of the Commission Subordinate Loan or if such proceeds are insufficient then Trustor shall have funded any deficiency, (b) Beneficiary 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 uncured material default then exists under the Commission Subordinate Loan Note or this Deed of Trust. If the casualty or condemnation affects only part of the Project and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Commission Subordinate Loan in a manner that provides adequate security for repayment of the remaining balance of the Commission Subordinate Loan. The rights of the Beneficiary to any insurance proceeds or condemnation awards pursuant to this paragraph 18 are and shall be subject to the prior right to any insurance proceeds or condemnation awards of the beneficiary of the Senior Loan Deed of Trust described in paragraph 31; 19. Upon default by Trustor in making any payments provided for herein or in the Commission Subordinate Loan Note secured hereby, and if such default is not made good within fifteen (15) days after notice from Beneficiary, or if Trustor shall fail to perform any covenant or agreement in this Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Trustor fail to promptly commence such cure, and diligently prosecute same to completion), Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of 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 Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust, the Commission Subordinate Loan Note and all documents evidencing expenditures secured hereby; 20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said Property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or EXHIBIT "K" Page 5 of 12 \\cdent\datal\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attorneys' fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the Commission Subordinate Loan Note; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto; 21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee; 22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law; 23. Upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Commission Subordinate Loan Note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto"; 24. The trust created hereby is irrevocable by Trustor; 25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Beneficiary" shall include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the Commission Subordinate Loan Note secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of each Trustor hereunder are joint and several; 26. Trustee accepts this trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee; 27. The undersigned Trustor requests that copies of any notice of default and of any notice of sale hereunder be mailed to it c/o The Related Companies of California, 18201 Von Karman Avenue, Suite 900, Irvine, California 92612 and to [Tax Credit Partner] EXHIBIT "K" Page 6 of 12 \\cdcnt1datal\users\P6eard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc 28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary, to furnish to Beneficiary a detailed statement in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the Property and their use as may be requested by Beneficiary. 29. The full principal amount outstanding plus accrued but unpaid interest thereon, shall be due and payable on the earlier to occur of the following: (a) As more particularly provided in the Commission Subordinate Loan Note, sale, transfer, assignment or refinancing of the Property as provided further in this paragraph 29; unless: (i) in the case of a sale in which the sale proceeds are insufficient to repay in full the Commission Subordinate Loan, the Beneficiary approves such sale and the purchaser assumes the balance of the Commission Subordinate Loan in accordance with the terms of the Commission Subordinate Loan Note; or (ii) in the case of a refinancing in which the refinancing proceeds are insufficient to repay in full the Commission Subordinate Loan, the Beneficiary approves such refinancing and the Borrower remains obligated pursuant to the terms of the Note. (b) In order to induce Beneficiary to make the loan evidenced hereby, Trustor agrees that in the event of any transfer of the Property without the prior written consent of Beneficiary (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), Beneficiary 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. Beneficiary may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to this paragraph 29, 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 Trustor from any liability thereunder without the prior written consent of Beneficiary. (c) 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. (d) The term "Sale" means any transfer, assignment, conveyance or lease (other than to a tenant for occupancy) of the Property and/or the improvements thereon, or any portion thereof, or any interest therein by the Trustor, and (if Trustor is a partnership) includes any transfer, assignment or sale of any partnership interest in the Trustor (other than the removal of the general partner by a limited partner in Trustor in accordance with Trustor's partnership EXHIBIT "K" Page 7 of 12 \\cdcut\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc agreement) by an individual or entity which is a general or limited partner in the Trustor, or any interest by any individual or entity which holds an interest in any such general or limited partner in the Trustor, which brings the cumulative total of all such direct and indirect transfers, assignments and sales during the term of this Deed of Trust to more than thirty-five percent (35%) of the ownership interests in the Trustor, 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 other than by Beneficiary. Sale does not include dedications and grants of easements to public and private utility companies of the kind customary in real estate development. Trustor, Notwithstanding anything to the contrary contained in this Deed of Trust, prior to any action to enforce this Deed of Trust, shall give and its successors and assigns (the "Tax Credit Partner") notice and opportunity to cure for a period of not less than (a) fifteen (15) days to cure a monetary default, and (b) thirty (30) days to cure a nonmonetary default; provided, however, if in order to cure such a default Tax Credit Partner reasonably determines that it must remove the general partner of Borrower, Tax Credit Partner shall so notify Trustor and so long as Tax Credit Partner is diligently and continuously attempting to so remove such general partner, Tax Credit Partner shall have until the date thirty (30) days after the effective date of the removal of the general partner or general partners to cure such default but in no event more than one (1) year. Notwithstanding the foregoing, the following shall not constitute a "Sale" under this Deed of Trust: (a) a Sale made pursuant to an option granted to a general partner of Trustor on or before the date of recordation of this Deed of Trust in the Official Records of San Die:o County, California, or (b) any assignment of an interest as limited partner of Trustor by , a limited liability company (" ") or limited liability company (' "), to an entity whose general partner or managing member is controlled by or is under which assignment shall not require the consent of as applicable, shall give written notice to s removal of the general artner of Trustor or an affiliate of ; as a general partner of Trustor, which removal shall not require Beneficiary approval, provided that shall give notice to Beneficiary of its intent to so remove such general partner not less than ten (10) days prior to such removal. Any proposed replacement of the general partner with an entity other than ": or an affiliate of will be subject to Beneficiary's prior reasonable approval. 30. Trustor shall permit Beneficiary and its agents or representatives, to inspect the Property at any and all reasonable times, with or without advance notice. Inspections shall be conducted so as not to interfere with the tenants' use and enjoyment of the Property. 31. It is hereby expressly agreed and acknowledged by Trustor and Beneficiary that this Deed of Trust is a second and subordinate deed of trust, and that the Commission Subordinate Loan secured hereby, and the Commission Subordinate Loan Note are subject and subordinate only to the deed of trust securing a loan to Trustor in an a proximate original amount not to exceed $("Senior principal �, -:_�-: in which " ..�`a��=` EXHIBIT "K" Page 8 of 12 \\cdcnt\data)\users \PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc common control with Beneficiary, provided that Beneficiary of such assignment; or (ii) as general partner, and substitution of Lender") is the Beneficiary, including any loan that refinances the balance of the Senior Loan or an assignment of the Senior Loan (collectively referred to as the "Senior Loan"). 32. For purposes of this Deed of Trust, "Hazardous Materials" mean and include any hazardous, toxic or dangerous waste, substance or material including, without limitation, flammable explosives, radioactive materials, asbestos, hazardous wastes, toxic substances and any materials or substances defined as hazardous materials, hazardous substances or toxic substances in (or for purposes of) the Comprehensive Environmental Response, Compensation and Liability Act of 1380 ("CERCLA"), as amended (42 U.S.C. §9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.) and those substances defined as hazardous wastes in §25117 of the California Health and Safety Code or as hazardous substances in §25316 of the California Health and Safety Code or in any regulations promulgated under either such law, any so-called "Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect. Hazardous Materials expressly exclude substances typically used in the construction, development, operation and maintenance of an apartment complex provided such substances are used in accordance with all applicable laws. 33. In addition to the general and specific representations, covenants and warranties set forth in the Deed of Trust or otherwise, Trustor represents, covenants and warrants, with respect to Hazardous Materials, as follows: (a) Other than as expressly disclosed to Trustor by Beneficiary, neither Trustor nor, to the best knowledge of Trustor, any other person, has ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located or disposed of on, under or at the Property or any part thereof, and neither the Property nor any part thereof, or any property adjacent thereto, has ever been used (whether by the Trustor or, to the best knowledge of the Trustor, by any other person) as a manufacturing site, dump site or storage site (whether permanent or temporary) for any Hazardous Materials; (b) Trustor hereby agrees to indemnify Beneficiary, its officers, employees, contractors and agents, and hold Beneficiary, its officers, employees, contractors and agents harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against Beneficiary, its officers, employees, contractors or agents for, with respect to, or as a direct or indirect result of, the presence or use, generation, storage, release, threatened release or disposal of Hazardous Materials on or under the Property or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials from the Property (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Materials), caused by Trustor. EXHIBIT "K" Page 9 of 12 \\cdcnt\data I\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc (c) Trustor has not received any notice of (i) the happening of any event involving the use, spillage, discharge or cleanup of any Hazardous Materials ("Hazardous Discharge") affecting Trustor or the Property or (ii) any complaint, order, citation or notice with regard to air emissions, water discharges, noise emissions or any other environmental, health or safety matter affecting Trustor or the Property ("Environmental Complaint") from any person or entity, including, without limitation, the United States Environmental Protection Agency ("EPA"). If Trustor receives any such notice after the date hereof, then Trustor will give, within seven (7) business days thereafter, oral and written notice of same to Beneficiary. (d) Without limitation of Beneficiary's rights under this Deed of Trust, but only to the extent Trustor is not effectuating a remediation of the Property, Beneficiary shall have the right, but not the obligation, to enter onto the Property or to take such other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the impact of, or otherwise deal with, any such Hazardous Materials or Environmental Complaint upon its receipt of any notice from any person or entity, including without limitation, the EPA, asserting the existence of any Hazardous Materials or an Environmental Complaint on or pertaining to the Property which, if true, could result in an order, suit or other action against Trustor affecting any part of the Property by any governmental agency or otherwise which, in the sole opinion of Beneficiary, could jeopardize its security under this Deed of Trust. All reasonable costs and expenses incurred by Beneficiary in the exercise of ahy such rights shall be secured by this Deed of Trust and shall be payable by Trustor upon demand together with interest thereon at a rate equal to the highest rate payable under the Commission Subordinate Loan Note secured hereby. 34. The following shall be an Event of Default: (a) Failure of Trustor to pay, when due, principal and interest and any other sums or charges on the Commission Subordinate Loan Note, in accordance with the provisions set forth in the Commission Subordinate Loan Note; (b) A violation of the terms, conditions or covenants of the Commission Subordinate Loan Note or this Deed of Trust; or (c) A default (after expiration of any cure period provided therein) under the Senior Loan Deed of Trust to which the lien of this Deed of Trust is subordinate. 35. Subject to the extensions of time set forth in paragraph 36, and subject to the further provisions of this paragraph 35 and of paragraph 37, failure or delay by the Trustor to perform any term or provision of this Deed of Trust constitutes a default under this Deed of Trust. The Trustor must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. (a) The Beneficiary shall give written notice of default to the Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (b) The Trustor 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 EXHIBIT "K" Page 10 of 12 \\cdcnt\datal\users\PBeatd\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc remedy is completed within thirty (30) days after receipt of written notice (or such additional time as may be deemed by the Beneficiary to be reasonably necessary to correct the cause). (c) Any failures or delays by the Beneficiary in asserting any of its rights and remedies as to any default shalt not operate as a waiver of any default or of any such rights or remedies. Delays by the Beneficiary in asserting any of its rights and remedies shall not deprive the Beneficiary 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. 36. Notwithstanding specific provisions of this Deed of Trust, performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the Beneficiary, or any other public or governmental agency or entity (except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary); 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 Deed of Trust may also be extended in writing by the Beneficiary and Trustor. 37. If a monetary event of default occurs under the terms of the Commission Subordinate Loan Note or this Deed of Trust, prior to exercising any remedies thereunder Beneficiary shall give Trustor written notice of such default. Trustor shall have a period of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary under the Commission Subordinate Loan Note and this Deed of Trust. 38. If a non -monetary event of default occurs under the terms of the Commission Subordinate Loan Note or this Deed of Trust, prior to exercising any remedies thereunder, Beneficiary shall give Trustor notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of remedies by the Beneficiary under the Commission Subordinate Loan Note and this Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (a) initiates corrective action within said period, and (b) diligently, continually, and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall Beneficiary 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 (180) days after the first notice of default is given. 39. Upon the occurrence of an Event of Default as described in paragraph 34, Trustor shall be obligated to repay the Commission Subordinate Loan and, subject to the nonrecourse provision of the Commission Subordinate Loan Note, Beneficiary may seek to enforce payment EXHIBIT "K" Page 11 of 12 \\cdcnt\datal\users\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc of any and all amounts due by Trustor pursuant to the terms of the Commission Subordinate Loan Note. 40. All expenses (including reasonable attorneys' fees and costs and allowances) incurred in connection with an action to foreclose, or the exercise of any other remedy provided by this Deed of Trust, including the curing of any Event of Default, shall be the responsibility of Trustor. Except as provided in paragraph 31, each successor owner of an interest in the Property, other than through foreclosure, deed in lieu of foreclosure or an owner who takes an interest in the Property after a foreclosure has occurred, shall take its interest subject to this Deed of Trust. "Trustor" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President EXHIBIT "K" Page 12 of 12 \\cdcnt\datal users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-I I .doc EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY [To be recorded against Trustor's interest in the Property] EXHIBIT "A" TO EXHIBIT "K" Page 1 of 1 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc EXHIBIT "L" SUBORDINATE COMPLETION GUARANTY f Project/Phase 1. Obligations Guaranteed. For valuable consideration, the adequacy and sufficiency of which is acknowledged, the undersigned ("Guarantor") unconditionally guarantees the timely completion of the construction required pursuant to Article [10] of that certain Disposition and Development Agreement, dated as of June 21, 2011, by and between the Community Development Commission of the City of National City (the "Commission") and Paradise Creek Housing Partners, L.P. (" ") (the "Construction" required by the "DDA"). This Guaranty is in addition to and independent of any other guaranty previously, concurrently or hereafter given to Commission by Guarantor. 2. Completion of Improvements By Guarantor. Guarantor irrevocably and unconditionally agrees that if for any reason (a) fails to diligently proceed with or complete the Construction in the manner and within the time limits set forth in the DDA, (b) itZ,44 fails to pay all costs of the Construction, or (c) Commission takes possession of the Property and the Improvements prior to the completion of the Construction, then, in any such event, and upon demand by Commission, Guarantor shall diligently complete the Construction in accordance with the terms of the DDA, all at Guarantor's sole cost and expense. In addition, Guarantor shall defend, indemnify and hold Commission harmless from and against all claims, demands, causes of action, liabilities, losses, costs and expenses (including, without limitation, costs of suit and reasonable attorneys' fees) arising from or in connection with any such event. Commission hereby agrees that if demand is made hereunder for Guarantor to complete the Construction, Guarantor shall have the right to have any undisbursed portion of the Commission Subordinate Loan applied to the costs of that Construction. 3. Remedies of Commission. If Guarantor fails to perform its obligations hereunder, then Commission may, in its sole and absolute discretion and without any obligation to do so, (a) elect to complete the Construction (with such changes to the General Contract and the Plans as Commission reasonably deems necessary), in which event Guarantor shall, upon demand, reimburse Commission for all reasonable expenditures made and reasonable costs incurred by Commission in connection with such completion, together with interest thereon at Commission's option at either the per annum rate of interest (the "Note Rate") set forth in that certain Commission Subordinate Loan Note of even date herewith made by in favor of Commission (the "Note") or the default rate of interest provided for in the Note (the "Default Rate"), or (b) from time to time and without first requiring performance on the part of or being required to exhaust or proceed against any or all security held by Commission, enforce performance by Guarantor of any obligation on the part of Guarantor to be performed hereunder, by action at law or in equity or both, in which event Commission shall be entitled to recover from Guarantor all losses, costs, damages, liabilities and expenses (including attorneys' fees and costs) sustained or incurred by Commission as a result of Guarantor's failure to perform its obligations hereunder, together with interest thereon at Commission's option at either the Note Rate or the Default Rate. 4. Reinstatement. All of Commission's rights pursuant to this Guaranty continue with respect to amounts previously paid to Commission on account of any obligations which are EXHIBIT "L" Page 1 of 4 \\edcnt\data t\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11 doe thereafter restored or returned by Commission, whether in a bankruptcy, reorganization, insolvency, receivership or similar proceeding ("Insolvency Proceeding") of or for any other reason, all as though such amounts had not been paid to Commission, and Guarantor's liability under this Guaranty (and all its terms and provisions) shall be reinstated and revived, notwithstanding any surrender or cancellation of this Guaranty. Commission, in its sole discretion, may determine whether any amount paid to it must be restored or returned; provided, however, that if Commission elects to contest any claim for return or restoration, Guarantor agrees to indemnify and hold Commission harmless from and against all costs and expenses, including reasonable attorneys' fees, expended or incurred by Commission in connection with such contest. If any Insolvency Proceeding is commenced by or against or Guarantor, at Commission's election, Guarantor's obligations under this Guaranty shall immediately and without notice or demand become due and payable, whether or not then otherwise due and payable. 5. Authorization. Guarantor authorizes Commission, without notice and without affecting Guarantor's liability under this Guaranty, from time to time, whether before or after any revocation of this Guaranty, to alter, modify or amend the Plans, the General Contract or any of the relevant terms, covenants and conditions of the DDA. 6. Waivers. To the maximum extent permitted by law, Guarantor waives (a) all rights to require Commission to proceed against ; , or any other guarantor, or proceed against, enforce or exhaust any security for the Construction or to marshal assets or to pursue any other remedy in Commission's power whatsoever; (b) all defenses arising by reason of any disability or other defense of tv , the cessation for any reason of the liability of any defense that any other indemnity, guaranty or security was to be obtained, any claim that Commission has made Guarantor's obligations more burdensome or more burdensome than 's obligations; (c) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, and all other notices or demands to which Guarantor might otherwise be entitled; (d) all conditions precedent to the effectiveness of this Guaranty; (e) all rights to file a claim in connection with the obligations in an Insolvency Proceeding filed by or against ; and (f) all rights to require Commission to enforce any of its remedies. 7. Guarantor to Keep Informed. Guarantor warrants having established with adequate means of obtaining, on an ongoing basis, such information as Guarantor may require concerning all matters bearing on the risk of nonperformance of the Construction. Guarantor assumes sole, continuing responsibility for obtaining such information from sources other than from Commission. Commission has no duty to provide any information to Guarantor until Commission receives Guarantor's written request for specific information in Commission's possession and . has authorized Commission to disclose such information to Guarantor. 8. Authorization. Where is a corporation, partnership or other entity, Commission need not inquire into or verify the powers or authority of those acting or purporting to act on behalf of and this Guaranty shall be enforceable in reliance on the purported exercise of such powers or authority. EXHIBIT " L" Page 2 of 4 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs1DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc 9. Assignments. Without notice to Guarantor, Commission may assign its rights with respect to the Construction and this Guaranty, in whole or in part, and may disclose to any prospective or actual purchaser any and all information Commission has or acquires concerning Guarantor and/or this Guaranty. 10. Counsel Fees and Costs. The prevailing party shall be entitled to attorneys' fees (including the allocated costs of Commission's in-house counsel and legal staff), and all other costs and expenses which it may incur in connection with the enforcement or preservation of its rights under, or defense of, this Guaranty or in connection with any other dispute or proceeding relating to this Guaranty, whether or not incurred in any Insolvency Proceeding, arbitration, litigation or other proceeding. 11. Integration/Severability/Amendments. This Guaranty is intended by Guarantor and Commission as the complete, final expression of their agreement concerning its subject matter. It supersedes all prior understandings or agreements with respect thereto and may be changed only by a writing signed by Guarantor and Commission. No course of dealing, or parol or extrinsic evidence shall be used to modify or supplement the express terms of this Guaranty. If any provision of this Guaranty is found to be illegal, invalid or unenforceable, such provision shall be enforced to the maximum extent permitted, but if fully unenforceable, such provision shall be severable, and this Guaranty shall be construed as if such provision had never been a part of this Guaranty and the remaining provisions shall continue in full force and effect. 12. Notice. Any notice given by any party under this Guaranty shall be effective only upon its receipt by the other party and only if (a) given in writing and (b) personally delivered or sent by United States mail, postage prepaid, and addressed to Commission or Guarantor at their respective addresses for notices indicated below. Guarantor and Commission may change the place to which notices, requests, and other communications are to be sent to them by giving written notice of such change to the other. 13. California Law. This Guaranty shall be governed by and construed according to the laws of California, and Guarantor submits to the nonexclusive jurisdiction of the state or federal courts in California. 14. Subordinate Obligation. Notwithstanding anything contained in this Guaranty to the contrary, Commission acknowledges and agrees that this Guaranty in subject and subordinate to a .rior and superior guaranty made by Guarantor in favor of 15. Termination. This Guaranty shall terminate and be of no further force or effect upon completion of the Construction and payment of all costs thereof. [INTENTIONALLY LEFT BLANK] EXHIBIT "L" Page 3 of 4 \\cdcnt\datal \users\PBeard\pyatok \Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Executed as of , 20_. Guarantor acknowledges having received a copy of this Guaranty and having made each waiver contained in this Guaranty with full knowledge of its consequences. Address for notices sent to Commission: National City Housing Commission 303 East "B" Street National City, California 91764 Attn: Executive Director APPROVED AS TO FORM: LAW OFFICES OF LANCE E. GARBER, Special Counsel By: Lance E. Garber "GUARANTOR" THE RELATED COMPANIES, L.P., a New York limited partnership By: Its: Address for notices sent to Guarantor: The Related Companies, L.P. 60 Columbus Circle New York, New York 10023 Attn: EXHIBIT "L" Page 4 of 4 \\cdcnt\datal\users\ 'Bcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc EXHIBIT "M" ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND SPECIFICATIONS =' -4-: Project/Phase_] FOR VALUE RECEIVED, the undersigned, L.P., a California limited partnership ("Developer"), assigns to COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Commission"), all of its right, title and interest in and to: 4. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, "Architectural Agreements"), and 5. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively, "Plans and Specifications"), heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively, "Architect"), for or on behalf of Developer in connection with the construction of the Improvements on the Real Property described on Exhibit "A" attached hereto. The Plans and Specifications, as of the date hereof, are those which Developer has heretofore, or will hereafter deliver to Commission. The Architectural Agreements include, but are not limited to, the architectural agreement or contract between Developer and x =� ', dated r� -. This ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND SPECIFICATIONS ("Assignment") constitutes a present, absolute and unconditional assignment to Commission. Developer acknowledges that by accepting this Assignment, Commission does not assume any of Developer's obligations under the Architectural Agreements with respect to the Plans and Specifications. Developer represents and warrants to Commission that: (a) all Architectural Agreements entered into by Developer are in full force and effect and are enforceable in accordance with their terms and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to Commission are complete and correct; and (c) Developer has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications other than to [insert Construction Lender], which assignment shall be senior and superior to the assignment contemplated hereby in all respects. This Assignment shall be governed by the laws of the State of California, except to the extent that federal laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any federal or state court within the State of California having proper venue EXHIBIT "M" Page 1 of 3 \\edcnt\datal\users\PBeard\pyatok\Final DDA dots\DDA v 66 II s x FINAL FINAL 6-8-I I.doc for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action shall be entitled, in addition to any other recovery, to reasonable attorneys' fees and costs. This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors -in -interest of Developer and Commission. The attached Architect's/Engineer's Consent and Exhibit "A" are incorporated by reference. Executed by Developer on , 201_. "Trustor" PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership By: RELATED/PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Administrative General Partner By: Frank Cardone, Vice President By: CHW PARADISE CREEK DEVELOPMENT CO., LLC, a California limited liability company, its Managing General Partner By: COMMUNITY HOUSING WORKS, a California nonprofit public benefit corporation, its Managing Member By: Anne B. Wilson Senior Vice President EXHIBIT "M" Page 2 of 3 \\cdcnt\datal\users\PBeard\pyatok\Final DDA dots\DDA v 6 6 11 s x FINAL FINAL 6-8-I l.doc ARCHITECT'S/ENGINEER'S CONSENT [ Project] The undersigned architect and/or engineer (collectively referred to as "Architect") hereby consents to the foregoing Assignment to which this Architect's/Engineer's Consent ("Consent") is a part, and acknowledges that there presently exists no unpaid claims due to the Architect arising out of the preparation and delivery of the Plans and Specifications to Developer and/or the performance of the Architect's obligations under the Architectural Agreements described in the Assignment. Architect agrees that, by virtue of the foregoing Assignment, Commission has succeeded to all of Developer's right, title and interest in, to and under the Architectural Agreements and the Plans and Specifications and, therefore, so long as the Architect continues to receive the compensation called for under the Architectural Agreements, Commission and its successors and assigns may, at their option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligations under the Architectural Agreements for the benefit and account of Commission and its successors and assigns in the same manner as if performed for the benefit or account of Developer in the absence of the Assignment. Architect warrants and presents that it/he has no knowledge of any prior assignment(s) of any interest in either the Plans and Specifications and/or the Architectural Agreements. Except as otherwise defined herein, the terms used herein shall have the meanings given them in the Assignment. Executed on , 200_. "Architect" ,a B y: Name: Its: Architect's Address: Phone No.: Fax No.: EXHIBIT "M" Page 3 of 3 1\cdcut\dataI\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I l.doc EXHIBIT "A" PROPERTY DESCRIPTION Exhibit "A" to Assignment of Architectural Agreements and Plans and Specifications dated as of , 200_, between, , L.P., a California limited partnership, as Developer, and COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic. [attached] EXHIBIT "A" TO EXHIBIT "M" Page 1 of 1 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc EXHIBIT "N" LIST OF ENVIRONMENTAL DOCUMENTS Public Works Yard (APNs 560-391-08, 560-396-06, southern portion of 559-124-05) Report of Subsurface Activities (June 7, 2005) UST Removal Report (June 2006) Well Installation Report (March 12, 2007) Phase I Environmental Site Assessment (February 2009) Draft Phase II Site Investigation (February 2010) Risk Assessment Memorandum (June 2, 2009) 2011 Quarterly Groundwater Monitoring (In progress) Ille's Property (APNs 560-206-05 and 560-391-10) Phase I Environmental Site Assessment (January 10, 2010) Phase II Site Investigation (August 16, 2010) 1.5 Acre Property (APN 559-104-10) Phase I ESA (February 2009) Note that the Phase I was completed for both the 1.5 and 2.1-acre areas combined PEA (June 2006) Focused PEA (June 2009) 2.1 Acre Property (APNs 559-125-15 and northern portion of 559-124-05) Phase I ESA (February 2009) Combined with 1.5-acre Phase I report. PEA (June 2007) Areawide Environmental Inventory for Westside Specific Plan area dated November, 2007 EXHIBIT "N" Page 1 of 1 \\cdent\datai\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "O" DISBURSEMENT REQUEST FOR APARTMENTS PROJECT PHASE [ ] PREDEVELOPMENT WORK LOAN DISBURSEMENT REQUEST Property Address: , National City, California Disbursement No. The undersigned, on behalf of PARADISE CREEK HOUSING PARTNERS, L.P., hereby requests a disbursement in the amount, and on the date, set forth below, pursuant to that certain Disposition and Development Agreement (the "Agreement") dated as of June 21, 2011, between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("Commission"), and PARADISE CREEK HOUSING PARTNERS, L.P., a California limited partnership ("Developer"). Capitalized terms used and not otherwise defined herein shall have the meanings set forth for them in the Agreement. REQUEST AMOUNT: REQUEST DATE: Developer hereby represents and warrants to Commission that: 1. The requested disbursement shall be applied to pay Phase [] Predevelopment Work costs in accordance with the itemized Payment Request attached hereto. 2. All costs shown in all prior Disbursement Requests (and Payment Requests) have been paid in full, Developer has received valid lien releases or waivers from all contractors, subcontractors and materialmen with respect to all payments made for work and materials if the work or materials could give rise to a mechanic's or a materialmen's lien against the Property, and Developer has no knowledge of any mechanic's lien claims against the Property. 3. The Predevelopment Work is being performed in substantial conformance with the Phase [_] Predevelopment Plan and Budget, and all applicable governmental requirements, and the Phase I Predevelopment Work has progressed to the point indicated on the attached Payment Request. EXHIBIT "0" Page 1 of 2 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 Ldoc 4. The attached Payment Request is an accurate and complete statement of all amounts previously paid or now due and all amounts expected to be incurred in connection with the completion of the Phase [-) Predevelopment Work. 5. All representations and warranties in the Agreement and the other Project Documents are true and correct as of the date of this request as if made on and as of the date of this request. No Event of Default by Developer remains uncured, and no event has occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer. DATE: Designated Representative Contractor hereby certifies that Paragraphs 2 (with respect to costs covered by Contractor's Contract), 3 (with respect to work covered by Contractor's Contract), 4 (with respect to costs and work covered by Contractor's Contract) and 5, above, are true to the best of Contractor's knowledge. PAYMENT APPROVED: Contractor Commission Inspector Commission Officer APPROVED CHANGE ORDERS: Order No. Work Item Amount Approved Date EXHIBIT "0" Page 2 of 2 1\cdcnt\datat\users\PBeard\pyatok\Finui DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc EXHIBIT "P" PRELIMINARY PHASE II PREDEVELOPMENT PLAN AND BUDGET wMASA&Pw[OOKLOPIEIT PLM Me0 MNGET .id+el7ee M eipmwlo Poo&am Its GIAltAgw Coosicbon Cods {AMac-F CC.AC S TCAC Its TOTAL Pniatl Oar [etbwMd Parttaltl Im. libemmnt 1Ma Paean! Pn*vMopm. S Plan Tad eptlbet Pao mod MON! Ma am MOO SO $E!OO..ati' V.700.000 SO 1125.0i'0 5125.000 SO S1PS.Opa SI110;000 SO 5500.0o0 is 5500,000 SO 11c5.000 4115;¢130 bP {Ij Ttew6Twl%Pm pat becpei%*M€fIon Osman aetaal b pang/ a COAL appzatio am Owe le LCmvb Otto a Mealiest retro0aa ogpornoty_ $T$ Require‘ m^P+te. Mao% EXHIBIT "P" Page 1 of 1 \\cdcnt\datal\uscrs\PBeard\pyatok\Fnal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc EXHIBIT "Q" EXHIBIT "Q" DRAFT TEXTUAL AMENDMENT to the REDEVELOPMENT PLAN for the NATIONAL CITY REDEVELOPMENT PROJECT AREA INTRODUCTION This Amendment to the Redevelopment Plan for the National City Redevelopment Project Area ("Amendment") accomplishes the following changes in the Existing Area: • increase the annual tax increment limit from $300 million to $475 million, • increase the amount of bonded indebtedness from $100 to $150 million, • increase by ten (10) years the timeframe to receive tax increment and the effectiveness of the redevelopment plan, • increase by ten (10) years the effectiveness of the redevelopment plan, • modify the duration of affordability for residential projects affordable to low- to moderate -income households, • reinstate the time frame to commence eminent domain on certain properties within the Existing Area for non-residential properties for twelve (12) years from the date of adoption of the ordinance approving the Amendment, and • modify Exhibit D delineating properties subject to eminent domain. The Amendment will enable the Agency to retain all tools available to the Agency in implementing the Redevelopment Plan. The changes by this Amendment are not to be construed to amend, modify, change or affect in any other provisions the text of the Plan and does not add or delete territory from the boundaries of the National City Redevelopment Project Area. The Plan is hereby amended as follows: EXHIBIT "Q" Page 1 of 5 \\cdcnt\datal\uscrs\PBeard\pyatok\Final DDA does\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc AMENDMENT to the REDEVELOPMENT PLAN for the NATIONAL CITY REDEVELOPMENT PROJECT AREA AMENDMENT That Section 603 of the Redevelopment Plan entitled "Acquisition of Real Property" is hereby amended to modify the 4th paragraph to read as follows (Changes are in redline and strikethrough): Except as otherwise provided herein, or otherwise provided by law, no eminent domain proceeding to acquire property within the Project Area shall be commenced within the Center City Area, the Downtown Original Area, the Downtown 1985 Amendment Area, and the Added Area after ten (10) twelve (12) years following the date of adoption of the 2007 2011 Ordinance amending this Plan. Such time limitation may be extended only by amendment of this Plan. That Section 638 of the Redevelopment Plan entitled "Duration of Affordability" is hereby amended to modify the 2nd and 3`d paragraphs to read as follows (Changes are in redline and strikethrough): "a. Fifteen Fifty -Five years for rental units. However, the CDC ..." "b. Ten Forty -Five years for owner -occupied units. However, the CDC may permit sales of owner -occupied units prior to the expiration of the 4-0 45-year period for a price in excess of that ..." That Section 802 of the Redevelopment Plan entitled "Tax Increment Revenue" is hereby amended to modify the 7th, 8`h 9t , 10th, 11`h, 12'h and 13th paragraphs to read as follows (Changes are in redline and strikethrough): "The number of dollars of taxes which may be divided and allocated to the CDC pursuant to Section 33670 of the Redevelopment Law, inclusive of payments to taxing agencies, shall not exceed $3-00 475 million, ...." "With respect to the E.J. Christmanl Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code EXHIBIT "Q" Page 2 of 5 \\cdcnt\datal\users\PBcard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after November 18, 2019 December 18, 2030. These limitations ..." "With respect to the South Bay Town and Country Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after June 21, 2025 July 25, 2036. These limitations ..." "With respect to the Center City Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after April 13, 2026 May 13, 2037. These limitations ..." "With respect to the E.J, Christman2 Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after December 13, 2027 January 13, 2039. These limitations ..." "With respect to the Downtown Original Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after December 1, 2031 January 1, 2042. These limitations ..." "With respect to the Downtown 1985 Amendment Area, notwithstanding any other provision of this Plan,... the CDC shall not pay indebtedness with the proceeds of property taxes received pursuant to Heath and Safety Code Section 33670 or receive property taxes pursuant to Health and Safety Code Section 33670 after April 16, 2035 May 16, 2046. These limitations ..." That Section 803 of the Redevelopment Plan entitled "CDC Bonds" is hereby amended to modify the 4th paragraph to read as follows (Changes are in redline and strikethrough): The amount of bonded indebtedness, to be repaid in whole or in part from the allocation of taxes pursuant to Section 33670 of the Redevelopment EXHIBIT "Q" Page 3 of 5 \\cdcnt\data]\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-I 1.doc Law, which can be outstanding at one time shall not exceed $100.0 150.0 million, except by amendment to this Plan. That Section 1100 of the Redevelopment Plan entitled "Duration of Plan" is hereby amended to modify the Pt, 2aa 3rd4 , 5th and 6th paragraphs to read as follows (Changes are in redline and strikethrough): "With respect to the E.J. Christmanl Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on November 18 2009 December 18, 2020. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the South Bay Town and Country Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on June 24, 2015 July 25, 2026. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the Center City Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on April 13, 2016 May 13, 2027. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the E.J. Christman2 Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on December 13, 2017 January 13, 2029. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the Downtown Original Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on December 1, 2021 January 1, 2032. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." "With respect to the Downtown 1985 Amendment Area, except for the nondiscrimination and nonsegregation provisions which shall run in perpetuity, the provisions of this Plan shall expire on April 16, 2025 May 16, 2036. After this time limit, the Agency shall have no authority to act pursuant to this Plan except..." EXHIBIT "Q" Page 4 of 5 \\cdcnt\datal\users\PReard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc That Exhibit D of the Redevelopment Plan entitled "Location of Real Property Potentially Subject to Acquisition by Eminent Domain" is hereby amended to add 1st and 2nd bullet points as follows: Existing Area (as defined in Section 300 of this Plan) • All parcels located between Highland Avenue and Interstate 805 on the north and south sides of Plaza Boulevard as indicated on the attached map. • All parcels located between East 18th Street on the north Interstate 805 on the east, Highway 54 on the south, and "N" & Palm Avenues on the east as indicated on the attached map. • All parcels located immediately east and adjacent to National City Boulevard, between... EXHIBIT "Q" Page 5 of 5 \\cdcnt\datal\users\PBea d\pyatok\Fiinal DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc EXHIBIT "R" HOME PROGRAM REQUIREMENTS A. Affordability. Developer shall ensure that the housing assisted with HOME funds meets the affordability requirements of 24 CFR 92 and 94, as applicable. B. Affirmative Marketing Procedures. Developer shall adopt affirmative marketing procedures and requirements for all HOME assisted housing in compliance with 24 CFR § 92.351, as well as City's affirmative marketing responsibilities. Affirmative marketing steps consists, at a minimum, of actions to provide information and otherwise attract eligible persons from all racial, ethnic, and gender groups in the housing market area to the available housing assistance program The procedures and requirements must include methods for informing the public and owners about fair housing laws and policies so as to ensure that all individuals, without regard to race, color, national origin, religion, or sex are given an equal opportunity to participate in the program. Developer shall be solely responsible for the effective marketing responsibilities necessary to achieve Developer's production goals set forth in Section 2. C. Environmental Review. The City has assessed the activities carried out under this agreement in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) and the related authorities listed in HUD's implementing regulations at 24 CFR parts 50 and 58. The City has determined that the activities described in the Scope of Work are exempt from environmental review as described at 24 CFR 58.35(b) 6. D. Displacement, Relocation, and Acquisition. Developer will comply with 24 CFR § 92.353 if any individual or business is displaced or relocated as a result of any predevelopment activities. E. Procurement. Unless specified otherwise within this agreement, Developer shall procure all materials, property, or services in accordance with the requirements of 24 CFR 84.40-48. Developer will follow their written policy for procurement. F. HOME Program Conflict of Interest. No member, officer or employee of City or its designees or agents; no member of the governing body of the locality in which the Program is situated; and no other public official of such locality or localities, who exercises any functions or responsibilities with respect to the program funded hereunder during their tenure or for one year thereafter, shall have any interest, direct or indirect, in any Contract or subcontract, or the proceeds thereof, for work to be performed hereunder. Developer agrees to incorporate, or cause to be incorporated, like language prohibiting such interest in all contracts and subcontracts hereunder. No officer, employee, member or program participant of Developer its contractors or its subcontractors shall have a financial interest, direct or indirect, in this Contract or the monies transferred hereunder or be financially interested, directly or indirectly, in the EXHIBIT "R" Page 1 of 5 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-1 l.doc sale to Developer of any land, materials, supplies or services purchased with any funds transferred hereunder, except on behalf of Developer, as an officer, employee, member or program participant. Any willful violation of this paragraph with the knowledge, expressed or implied, of Developer or its subcontractors shall render this Contract voidable by City. G. Lead -Based Paint Hazards. Developer agrees that any residential structures with assistance provided under this Agreement shall be subject to HUD Lead -Based Paint Regulations at 24 CFR Part 92.355. Such regulations pertain to all HOME -assisted housing and require that all owners, prospective owners, and tenants of properties constructed prior to 1978 be properly notified that such properties may include lead -based paint. Such notification shall point out the hazards of lead -based paint and explain the symptoms, treatment and precautions that should be taken when dealing with lead -based paint poisoning and the advisability and availability of blood lead level screening for children under seven. The notice should also point out that if lead - based paint is found on the property, abatement measures may be undertaken. The regulations further require that, depending on the amount of Federal funds applied to a property, paint testing, risk assessment, treatment and/or abatement may be conducted. H. Flood Disaster Protection. In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001), Developer shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation). I. Reversion of Assets. Upon the termination or expiration of the term of this Agreement, Developer must transfer to the City any HOME funds on hand at the time of expiration and any accounts receivable attributable to the use of HOME funds. J. Program Income. All program income produced or funds recaptured under this Contract Agreement and obtained by Developer shall be retained by Developer during the contract period for eligible uses on the Project. Developer shall refund any program income to the City attributable to the use of HOME funds under this agreement at the time of cancellation, expiration, or termination. K. Program Monitoring. In accordance with 24 CFR § 92.254, the City will monitor Developer, no less than one (1) time per year. Each review shall also include, but not be limited to on -site inspections to determine compliance with all HOME regulations and standards. Developer shall fully cooperate with the City in monitoring the effectiveness and work performed by Developer in compliance with the terms of the Agreement. City shall have access at a reasonable hour to all offices and records (dealing with the use of funds that are the basis of this Agreement) of Developer, it officers, directors, agents, employees, and subcontractors for the purposes of such monitoring. City shall give Developer reasonable notice for accessing offices and records. EXHIBIT "R" Page 2 of 5 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc L. Uniform Administrative Requirements. Developer agrees to comply with the HOME requirements 24 CFR § 92.505 and the requirements and standards of OMB Circular A-122, "Cost Principles for Non -Profit Organizations" and with the following Attachments to OMB Circular No. A-110 and any changes to either Circular. It is understood that certain items below may not be applicable to Developer's operations and to the performance of this contract: a) Attachment A, "Cash Depositories," except for Paragraph 4 concerning deposit insurance; b) Attachment B, "Bonding and Insurance"; c) Attachment C, "Retention and Custodial Requirements for Records"; d) Attachment F, "Standards for Financial Management Systems"; e) Attachment H, "Monitoring and Reporting Program Performance," paragraph 2; f) Attachment N, "Property Management Standards," except for paragraph 3 concerning the standards; g) Attachment 0, "Procurement Standards"; and h) Attachment P, "Audit Requirements." i) Audits must be conducted in accordance with 24 CFR Part 44 and OMB Circular A-133. M. Enforcement of the Agreement. If assisted housing does not meet the applicable requirements under 24 CFR § 92.252 the CHDO Predevelopment Funds provided to the assisted project must be repaid to Developer within 60 days of failure to comply. Specific property recapture provisions must be stated in a HOME Affordability Agreement between the City and Developer that sates how the applicable requirements of 24 CFR § 92.252 will be met. N. Hatch Act. Developer agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of the U.S.C. O. Conflict of Interest. Developer agrees to abide by the provisions of 24 CFR 84.42 and 570.611, which include (but are not limited to) the following: a. Developer shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds. b. No employee, officer or agent of Developer shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. EXHIBIT "R" Page 3 of 5 \\cdcnt\datal\users\PReard\pyatok\Final DDA docs\DDA v 6 6 1 I s x FINAL FINAL 6-8-1 I.doc c. No covered persons who exercise or have exercised any functions or responsibilities with respect to HOME -assisted activities, or who are in a position to participate in a decision -making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the HOME - assisted activity, or with respect to the proceeds from the HOME -assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a "covered person" includes any person who is an employee, agent, consultant, officer, or elected or appointed official of the Grantee, Developer, or any designated public agency. P. Lobbying. Developer hereby certifies that: a) No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; b) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and c) It will require that the language of paragraph (d) of this certification be included in the award documents for all sub awards at all tiers (including subcontracts, sub grants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients and contractors shall certify and disclose accordingly: d) Lobbying Certification. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. Q. Conditions for Religious Organizations. If applicable, Developer must meet the conditions in 24 CDF Part 92.257 regarding the use of HOME funds involving a primarily religious entity. EXHIBIT "R" Page 4 of 5 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 11 s x FINAL FINAL 6-8-11.doc R. Closeout. HOME funds will be closed out in accordance with procedures established by HUD. EXHIBIT "R" Page 5 of 5 \\cdcnt\datal\users\PBeard\pyatok\Final DDA docs\DDA v 6 6 II s x FINAL FINAL 6-8-11.doc OFFICE OF THE CITY CLERK 1243 National City Blvd. National City, California 91950 Michael R. Dalla, CMC - City Clerk 619-336-4228 phone / 619-336-4229 fax June 27, 2011 Ms. Anne Wilson Paradise Creek Housing Partners, LP c/o Community Housing Works 4305 University Avenue, Suite 550 San Diego, CA 92105 Dear Ms. Wilson, On June 21st, 2011, Resolution No. 2011-136 was passed and adopted by the Community Development Commission of the City of National City, approving a Disposition and Development Agreement (DDA) with Paradise Creek Housing Partners, LP. We are enclosing for your records a certified copy of the above Resolution and a fully executed original DDA. Sincerely, Esther Clemente Deputy City Clerk Enclosures cc: Community Development Commission Frank Cardone, Paradise Creek Housing Partners, LP RESOLUTION NO. 2011 — 136 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AND PARADISE CREEK HOUSING PARTNERS, LP FOR THE DEVELOPMENT OF 201 UNITS OF AFFORDABLE HOUSING, PUBLIC FACILITIES, OPEN SPACES, AND COMMUNITY SERVICES ON 12.75 ACRES KNOWN AS THE NATIONAL CITY PUBLIC WORKS CENTER AND ILLES FAMILY TRUST SITE WHEREAS, as the result of a competitive request for qualifications process, the Community Development Commission of the City of National City ("CDC"), Re►ated Companies of California, and Community Housing Works entered into an Exclusive Negotiation Agreement on March 3, 2009, to plan for an infill affordable housing project described in the Westside Specific Plan; and WHEREAS, the City of National City owns all of the sites needed to develop the project (APN Nos. 560-206-03, 05, 560-391-05, 10, 08, 560-396-06, 559-104-10, 559-124-05, 559-125-15); and WHEREAS, Related Companies of California and Community Housing Works formed the Limited Partnership called Paradise Creek Housing Partners, LP to complete the project; and WHEREAS, development of the proposed 201-unit infill affordable transit - oriented project is consistent with the Redevelopment Plan for the National City Redevelopment Project, the National City General Plan, and the Westside Specific Plan; and WHEREAS, the CDC pledges to fund: 1. Phase I of the project — 109 housing units and the expansion of Paradise Creek Education Park with $6,000,000 in Low Moderate Housing Fund reserves and $14,957,000 in 2011 Tax Allocation Bond proceeds; and 2. Phase II of the project — 92 housing units with $14,909,000 in future Tax Allocation Bond proceeds. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby approves a Disposition and Development Agreement by and between the Community Development Commission of the City of National City and Paradise Creek Housing Partners, LP for the development of 201 units of affordable housing, public facilities, open spaces, and community services on 12.75 acres known as the National City Public Works Center and Illes Family Trust site. Said Disposition and Development Agreement is on file in the office of the City Clerk. Resolution No. 2011 — 136 Page Two BE IT FURTHER RESOLVED that the environmental affects of the infill affordable housing project which is the subject of this DDA, have been fully assessed, analyzed, and addressed in the Final Environmental Impact Report SCH No. 2008071092 for the Westside Specific Plan, certified by the City Council on March 16, 2010, and there are no substantive changes to the project that would require further environmental review. BE IT FURTHER RESOLVED that the Community Development Commission Board has considered that the Final Environmental Impact Report SCH No. 2008071092 for the Westside Specific Plan serves as adequate environmental documentation, together with any comments received during the public review process, and finds on the basis of the whole record that that the project was adequately considered by the Final Environmental Impact Report, which reflects the Community Development Commission Board's independent judgment and analysis, and hereby authorizes the filing of a Notice of Determination. PASSED and ADOPTED this 21st day of June, 201 on Morrison, Chairman APOV,DASTOF•'M: CIa CD — enerancil